The Essential Rothbard - Ludwig von Mises Institute

82 The Essential Rothbard
few things interested him more than the malign partnership of
government and business.
Another future Nobel laureate received much more detailed
scrutiny. In his analysis of Douglass North’s The Economic Growth
of the United States, 1790–1860, 226 we see Rothbard at the height of
his critical powers. Rothbard’s demolition may at first seem surprising,
as North is taken in most quarters to be a strong supporter
of the free market. But to Rothbard, conceptual clarity and rigor
are, as ever, foremost; the mistakes of supposed friends of the market
could be more deadly than the efforts of professed enemies.
Rothbard, like the protagonist of Ibsen’s Brand, could say, “The
Devil is compromise!”
Rothbard once more finds that errors in method lead to errors
in policy. North lacks an adequate view of causation: he does not
grasp that individuals act. Instead, he thinks mechanically, asking
for the mathematical relationships between certain variables.
North, like all scientistic-minded historians, has, at bottom, a
highly mechanical and deterministic view of economic
growth. There are resources, there are export industries . . .
and there are various “multiplier-accelerator” models of
impact of these various export industries. The role of individuals
acting, of entrepreneurs and innovators, North deliberately
and frankly deprecates; the role of capital investment—so
crucial [to] development—receives similar slighting
treatment. 227
Thus, North notes, accurately enough, that in developing
countries, exports industries play a crucial role. But, owing to his
mechanistic views, he reverses the direction of causation:
North has seen the obvious fact that, generally, the most
advanced industry, especially in an “underdeveloped” country,
is a leading export industry. But he concludes from this
226 Douglass North, The Economic Growth of the United States, 1790–
1860 (New York: W.W. Norton, 1966).
227 Letter to Ivan Bierly, May 1, 1961; Rothbard Papers.