I Chose Liberty - Ludwig von Mises Institute

284 I Chose Liberty: Autobiographies of Contemporary Libertarians
In reading seven different classical authors, each one covering essentially the same ground,
and doing so at the age of twenty-one and twenty-two, instead of thirteen, I was able to
come to a genuine understanding of their work, including the profound differences between
their views and those of Marx, which are typically ignored.
What I gained from the extensive reading I had done in connection with my thesis
went far beyond the subject of value and costs. In the months immediately following, I
knew that I had learned a great deal that had not gone into the thesis—knowledge that
I could then not yet even explicitly formulate. I felt good about my state of mind and I
am pretty sure that I described my mental condition to myself as one of being “intellectually
pregnant.”
Back in the spring of 1958, I had succeeded in formulating to my own satisfaction
a set of conditions in which capital accumulation could take place indefinitely with no
accompanying fall in the rate of profit. I had tried to explain it to Rothbard, but without
success. That demonstration was one element in the back of my mind, before I even got
to the reading for my thesis. My exposure to principles of actual business accounting, as
the result of having taken a number of courses on investments and corporation finance
in the NYU program, provided another critical element besides what I had learned from
my reading.
In July of 1959, it all came together. The precipitating event was my reading an extensive
quotation from John Stuart Mill presenting the proposition that “demand for commodities
is not demand for labour.” This was a passage I had not read before. It appeared in Henry
Hazlitt’s newly published The Failure of the “New Economics.”
Very soon thereafter, I had a period of five successive days in which I was able to make
one connection after another and to answer one question after another from a list I had
compiled. In essence, I had put together, and was able to hold in my mind all at the same
time, an early version of what now appears in Capitalism as Figures 16-2 and 17-1 and derive
a succession of major implications from it.
As I made the new connections I wrote them down, sometimes jumping out of bed to
do so, lest I forget any of them. After the first five days, I had accumulated about fifteen
pages of notes, the most important part of which was an elaborate numerical example of
the most essential points in a form consistent with the principles of business accounting.
In August, I wrote a hundred-page-plus typed paper called “The Consumption Theory of
Interest,” which I showed to Henry Hazlitt. He was generally impressed with it, and, starting
with the third printing of The Failure of the “New Economics,” credited me with an
important application I had made in the paper identifying a simultaneous breakdown of
the Keynesian doctrines on consumption, employment, liquidity preference, and the rate
of interest, though he did not refer to my manuscript specifically. (See Henry Hazlitt, The
Failure of the “New Economics,” p. 196, n. 6.)
Not long after I made my discoveries, I decided that they should be the main subject
of my doctoral dissertation, which I began to do research for soon after passing my oral
examination in the spring of 1960. For the sake of thoroughness, I wanted to include not
only my own views, but also a critical analysis of all significant alternative views. I set out
to follow the example of Böhm-Bawerk, who had done just that. Thus, in preparation for