The Essential Rothbard - Ludwig von Mises Institute

The Essential Rothbard 77
Rothbard disagreed with his teacher, and his counterargument
strikes to the heart of the matter. He maintains that the use of false
assumptions in economics has in practice weakened theoretical
rigor. Whatever the rationale of Nagel and other positivists, the
use of false assumptions has had malign effects: “For if a theory or
analysis doesn’t have to be strictly true or coherently united to
other theory, then almost anything goes—all to be justified with
‘predictive value’ or some other such excuse.” 210
He documents his point to the hilt in his consideration of
Buchanan’s book, and the criticisms he offers apply far beyond
their immediate target. Buchanan and his coauthors talk about
monopoly, even though they
sense there is something wrong with the whole current theory
of monopoly, that it is even impossible to define monopoly
cogently, or define monopoly of a commodity. But while they
see these things, they never do anything about it, or start
from there to construct an economics that will stand up—
because they are thoroughly misled by their positivist attitude
of “well, this might be a useful tool for some purposes.” 211
In like fashion, these authors use the “fashionable jargon” of
short-run cost curves of the firm. They recognize that
it is all rather arbitrary; this they brush aside with the retort
that it can have some “predictive value.” The term that I
think best describes the shoddiness and eclecticism induced
by this philosophic approach is “irresponsibility.” 212
Bad theory leads to bad policy. Just as Rothbard deplored
sloppy theoretical assumptions, so did he protest against vague and
unsupported ethical premises. “The same grave philosophical confusion
permits them to suddenly slip their own ethical assumptions
into the book, undefended, and practically unannounced.” On
210 Ibid.
211 Letter to Ivan Bierly, February 3, 1960; Rothbard Papers.
212 Ibid.