The Essential Rothbard - Ludwig von Mises Institute

10 The Essential Rothbard
Nagel admitted the premise but denied the conclusion. An
explanation does not aim to reproduce the world, just to account
for it. If the economist says, e.g., that under certain conditions, if
the price of a good falls, the quantity demanded will increase, his
explanation cannot be faulted for failure to list every detail about
each particular market.
A theory must: (1) explain, (2) afford means for prediction. . . .
To criticize a theory (as do the institutionalists) on the
ground that the fundamental assumptions are not supported
by statistical evidence is very weak—it takes centuries to
accumulate evidence. 2
Rothbard absorbed Nagel’s point about explanation and never
deviated from it; but he soon came to reject Nagel’s views on prediction.
In accepting theory, he differed with the teaching of most of the
faculty of the Columbia economics department. Many of the most
important professors accepted the institutionalist creed. Heavily
influenced by Wesley Clair Mitchell, the key figure in the National
Bureau of Economic Research, Arthur Burns and John Maurice
Clark looked at economic theory skeptically. 3 Burns was himself an
excellent theorist, but his skills were mainly directed to the criticism
of the work of others. 4 Burns had known Rothbard since he
was a child, and David Rothbard asked Burns to “look out” for his
2 Notes from Nagel lectures; Rothbard Papers.
3 Nagel criticized Mitchell in his lectures; Rothbard Papers.
4 In Man, Economy, and State, Rothbard credits Burns for an important
criticism of the theory of monopolistic competition, presented in his
classroom lectures. In 2004, as Rothbard had originally intended, Man,
Economy, and State was published together with Power and Market. All
quotations and page references here are from this edition, Man, Economy,
and State with Power and Market, Scholar’s Edition (1962; Auburn, Ala.:
Ludwig von Mises Institute, 2004), p. 732.