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Economic Thought Before Adam Smith: An Austrian Perspective on the History of Economic Thought, Vol. 1

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This is the first extensive treatment from a modern Austrian perspective of the history of economic thought up to Adam Smith and as such takes into account the profound influence of religious, social and political thought upon economics. In Economic Thought before Adam Smith, Murray Rothbard contends that laissez-faire liberalism and economic thought itself began with the C This is the first extensive treatment from a modern Austrian perspective of the history of economic thought up to Adam Smith and as such takes into account the profound influence of religious, social and political thought upon economics. In Economic Thought before Adam Smith, Murray Rothbard contends that laissez-faire liberalism and economic thought itself began with the Catholic scholastics and early Roman and canon law, rather than with Adam Smith. The scholastics, he argues, established and developed the subjective utility and scarcity theory of value, as well as the theory that prices, or the value of money, depend on its supply and demand. This continental, or 'pre-Austrian' tradition, was destroyed, rather than developed, by Adam Smith whose strong Calvinist tendencies towards glorifying labour, toil and thrift is contrasted with the emphasis in scholastic economic thought towards labour in the service of consumption. Tracing economic thought from the Greeks to the Scottish Enlightenment, this book is notable for its inclusion of all the important figures in each school of thought with their theories assessed in historical context. Classical Economics, the second volume of Professor Rothbard's history of economic thought from an Austrian perspective, is also available.


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This is the first extensive treatment from a modern Austrian perspective of the history of economic thought up to Adam Smith and as such takes into account the profound influence of religious, social and political thought upon economics. In Economic Thought before Adam Smith, Murray Rothbard contends that laissez-faire liberalism and economic thought itself began with the C This is the first extensive treatment from a modern Austrian perspective of the history of economic thought up to Adam Smith and as such takes into account the profound influence of religious, social and political thought upon economics. In Economic Thought before Adam Smith, Murray Rothbard contends that laissez-faire liberalism and economic thought itself began with the Catholic scholastics and early Roman and canon law, rather than with Adam Smith. The scholastics, he argues, established and developed the subjective utility and scarcity theory of value, as well as the theory that prices, or the value of money, depend on its supply and demand. This continental, or 'pre-Austrian' tradition, was destroyed, rather than developed, by Adam Smith whose strong Calvinist tendencies towards glorifying labour, toil and thrift is contrasted with the emphasis in scholastic economic thought towards labour in the service of consumption. Tracing economic thought from the Greeks to the Scottish Enlightenment, this book is notable for its inclusion of all the important figures in each school of thought with their theories assessed in historical context. Classical Economics, the second volume of Professor Rothbard's history of economic thought from an Austrian perspective, is also available.

30 review for Economic Thought Before Adam Smith: An Austrian Perspective on the History of Economic Thought, Vol. 1

  1. 5 out of 5

    Mike

    "The inevitable result [of the Whig theory of history] is a complacent and infuriating Panglossian optimism. In the historiography of economic thought, the consequence is the firm if implicit position that every individual economist, or at least every school of economists, contributed their important mite to the inexorable upward march. There can, then, be no such thing as gross systemic error that deeply flawed, or even invalidated, an entire school of economic thought, much less sent the wo "The inevitable result [of the Whig theory of history] is a complacent and infuriating Panglossian optimism. In the historiography of economic thought, the consequence is the firm if implicit position that every individual economist, or at least every school of economists, contributed their important mite to the inexorable upward march. There can, then, be no such thing as gross systemic error that deeply flawed, or even invalidated, an entire school of economic thought, much less sent the world of economics permanently astray." "In recent years, economics, under the dominant influence of formalism, positivism and econometrics, and preening itself on being a hard science, has displayed little interest in its own past. It has been intent, as in any 'real' science, on the latest textbook or journal article rather than on exploring its own history. After all, do contemporary physicists spend much time poring over eighteenth century optics?" "For if knowledge buried in paradigms lost can disappear and be forgotten over time, then studying older economists and schools of thought need not be done merely for antiquarian purposes or to examine how intellectual life proceeded in the past. Earlier economists can be studied for their important contributions to forgotten and therefore new knowledge today. Valuable truths can be learned about the content of economics, not only from the latest journals, but from the texts of long-deceased economic thinkers." I finally finished this...well, finished at least half of this giant tome of economic history. Murray Rothbard was an Austrian by trade, so the book presents economic history - and then often criticizes economists and economic schools of thought from that perspective. I'm fine with that, as I find the Austrian school to be one of the most theoretically consistent and fundamentally sound schools. I'm not a full Austrian purist, but neither do I throw a whole school of economic thought away because they're super scary anarcho-capitalists. This, the first of two volumes, covers economic thought before Adam Smith. After Adam Smith everything changes. BAS v. AAS. I actually found almost all of the time periods fascinating...though not all equally impactful on the course of economic history. He starts with the first philosopher-economists, the Greeks. From Hesiod's poetry containing themes of scarcity, to Plato's right-wing collectivist utopia, to Aristotle's notions of private property, the division of labor, and money. Interesting note: the first libertarians were the Taoists of ancient China! The Christian Middle Ages from the Carolingians and Canonists to my favorite Catholic Saint, St. Thomas Aquinas. Leading up to the Renaissance you had the rise of absolutism and the break up of Thomism, Buridan and Oresme's monetary breakthroughs, and the start of the great, seemingly never-ending battle over usury. Seriously, like, it still hasn't ended - and it will never end. I just heard a politician the other day, in 2019, criticizing the charging of interest on loans and actually calling it 'usury'. If you buy into the Whig theory of history, you're naive. The usury problem has been economically solved and unsolved like 50 times. The chapters revolving around scholasticism were probably some of my favorite. I'm a Catholic, but I had no idea how many of these church fathers made massive contributions to economic thought. Most of it gets lost because it occurred BAS...and also probably because our current culture views the dark ages as some sort of theocratic caricature, devoid of all thought and logic. One of the other highlights of the reading of this book were the chapters on totalitarian communism of the Anabaptists in 16th century Germany. They were laugh-out-loud funny and utterly terrifying at the same time. If only Luther knew the Pandora's Box he was opening. Rothbard is right, too. History of economic thought isn't a march upward, towards enlightenment. It winds up being a story of free markets, and their never-ending zig-zag struggle with power and people who want to control other peoples live's and trade. You then spend a great many chapters on mercantilism and how it spread throughout Europe. Then you get to the real founding father of modern economics: Richard Cantillon. We spent some time in France with the physiocrats, and finish up with the brillant Turgot, before we get to the real meat of this book. If you can only read one chapter of this giant book, let it be the chapter on Adam Smith. The great meeting point, the critical event that these two volumes revolve around, BAS to AAS. "Adam Smith is a mystery in a puzzle wrapped in an enigma. The mystery is the enormous and unprecedented gap between Smith’s exalted reputation and the reality of his dubious contributions to economic thought…Smith’s reputation almost blinds the sun. From shortly after his own day until very recently, he was thought to have created the science of economics virtually de novo. He was universally hailed as the Founding Father. Books on the history of economic thought, after a few well-deserved sneers at the mercantilists and a nod to the physiocrats, would invariably start with Smith as the creator of the discipline of economics. Any errors he made were understandably excused as the inevitable flaws of any great pioneer. Innumerable words have been written about him." Spoiler alert: Rothbard...not the biggest Adam Smith fan. I actually get it, because Hagiography after Hagiography has catapulted this one economist, among thousands of years of economic thought, into immortal greatness when it doesn't take a genius to see that he made some grave errors that took economics and whole societies down some pretty dark paths. Adam Smith has a lot to answer for at the bar of history. His vast overemphasis on the Division of Labor within industries, while under-emphasizing it among industries. His fallacious views of productive v. unproductive labor, of which even his most strident disciples cringe at today. His theory of distribution, which omitted entrepreneurs from the economic process almost altogether. His hopelessly inadequate, scattered and confused, theories of money and international monetary relations. All this was bad, but the real harm from Smith came from the unmitigated disaster that was his theory of value presented in Wealth of Nations. Ironically, this very theory contradicted what he preached in his own recorded lectures from earlier in his life. Suddenly, a decade removed from his lectures on the subject, in the Wealth of Nations, Smith finds himself completely unable to solve the paradox of value - which had been solved for a very, very long time. He introduced the labor theory of value, that could plausibly make him responsible for the emergence and horrifying consequences of Marxism. The idea that prices and values could be explained by the 'quantity of labour' embodied in the production is absurd. His obsession with long-run equilibrium pricing and its determinants became more important than market prices paid in the real world by real people - which had always been the focus of economists. Long-run normal prices are useful only in directional tendencies and underlying structures of an economy, but not much else. "Value and price theory shifts, because of Adam Smith’s unfortunate and drastic change of focus in the Wealth of Nations, from prices in the real world to a mystical non-existent price in the never-never land of long-run ‘equilibrium’." Paul Douglas wrote: "Smith helped to divert the writers of English Classical School into a cul-de-sac from which they did not emerge, in so far as their value theory was concerned, for nearly a century.” Emil Kauder, a disciple of Smith, wrote: “Instead, the father of our economic science wrote that water has a great utility and a small value. With these few words Adam Smith had made waste and rubbish out of the thinking of 2,000 years. The chance to start in 1776 instead of 1870 with a more correct knowledge of value principles had been missed." So...Smith clearly got some things wrong. Even if you're a big Adam Smith fan, you virtually have to grant that. But, why? Some of his earlier work and lectures were much more sound. What happened? "There is a more fundamental and convincing reason for Adam Smith’s throwing over centuries of sound economic analysis, his abandonment of utility and scarcity, and his turn to the erroneous and pernicious labour theory of value. This is the same reason that Smith dwelled on the fallacious doctrine of productive versus unproductive labour. It is the explanation stressed by Emil Kauder, and partially by Paul Douglas: Adam Smith’s dour Calvinism. It is Calvinism that scorns man’s consumption and pleasure, and stresses the importance of labour virtually for its own sake." Smith's work, warts and all, eventually swept Europe. Even in France, sounder economic minds still rooting themselves in the subjective utility-scarcity approach to value did so only while claiming devotion to Smith as the founder of free markets. I suppose that's where I disagree with Rothbard. He's just so aggressively critical of Smith, that I think he overlooks some of the good that the success of the Wealth of Nations had on the world at large. It meant a widespread appreciation and devotion to free markets. It meant universal acknowledgement of the virtue of saving and investment, and a refutation in the proto-Keynesian worry about 'hoarding' or underconsumption. It meant opposition to wildly inflationary schemes of expansion of money and credit. And in his defense, if you could show him the future, of Marx taking his poorly formulated value theories and taking them to their logical and grim conclusions, of the hundred million corpses buried in mass graves as a result of Marx's continuation of his fault in value theory...I'm pretty sure he'd be appalled. I don't think there was malice in his writing. I just think he made some really big mistakes. Loved the book. I'll definitely read Volume II...but not for awhile. I need a break from this. Recommend to anyone interested in the history of economics BAS. 3.75 stars.

  2. 4 out of 5

    8314

    From this book you will know that the Austrian school 1) hates government interventions and Marxism, 2) hates numerical/quantitative methods, 3) hates Adam Smith for his fixed labor-value theory and have a thing called marginal revenue instead, 4) believes values are determined by the market and the consumers as individuals alone. That said, this pile of whatever is definitely not a history book exactly because it kept pushing these doctrines pages after pages down your throat. And the sheer arro From this book you will know that the Austrian school 1) hates government interventions and Marxism, 2) hates numerical/quantitative methods, 3) hates Adam Smith for his fixed labor-value theory and have a thing called marginal revenue instead, 4) believes values are determined by the market and the consumers as individuals alone. That said, this pile of whatever is definitely not a history book exactly because it kept pushing these doctrines pages after pages down your throat. And the sheer arrogant attitude to judge whatever culture and whatever era and whatever prevailing object-relation structure within a society* by the One True Standard, the modern standard, the enlightened standard, the correct standard — namely, their standard — is simply repulsive. It is, ironically, as much a propaganda as philistine interpretation of Marx's Kingdom Come. And it's written by an awful author who couldn't even read properly, but instead kept getting triggered by some keywords and kept performing presentism interpretations. I refuse to review it properly, which in my mind would translate into a Tarantino-esque script of economists getting Tarantino-ed, unless someone would be willing to pay me 5 digits for compensating the necessary toil I'll have to go through. *Why the hell, one might ask, is the name of a psychoanalytic school popping out at this joint?

  3. 5 out of 5

    Martin Hrabal

    Excellent book describing the economic thinking from Greeks and Taoists, scholastics and protestants to mercantilists and Smith. Rothbard proves that great economists existed before Smith, many important theories discovered by e.g. Salamanca school, Cantillon or Turgot, or that many fallacies promoted by Keynes or today´s economists and politicians were supported (or even implemented) in middle ages (costs regulation, interests rates manipulation, monopoly creation, all resulted to violence of s Excellent book describing the economic thinking from Greeks and Taoists, scholastics and protestants to mercantilists and Smith. Rothbard proves that great economists existed before Smith, many important theories discovered by e.g. Salamanca school, Cantillon or Turgot, or that many fallacies promoted by Keynes or today´s economists and politicians were supported (or even implemented) in middle ages (costs regulation, interests rates manipulation, monopoly creation, all resulted to violence of some king, even to totalitarian terror of e.g. protestant Geneva and others). I recommend to all fans of history , economics and business.

  4. 5 out of 5

    Oolalaa

    20/20

  5. 5 out of 5

    Lisa

    The Greeks were the first civilized people to use reason to systematically analyze the natural world around them, as opposed to thinking that natural events and things resulted from, and were subject to, the whims of the gods. They developed a system of thought and scientific investigation that they called Natural Law. They examined the natural world and its properties, and classified things into categories. This included the study of man. According to Aristotle, man's existence is limited and n The Greeks were the first civilized people to use reason to systematically analyze the natural world around them, as opposed to thinking that natural events and things resulted from, and were subject to, the whims of the gods. They developed a system of thought and scientific investigation that they called Natural Law. They examined the natural world and its properties, and classified things into categories. This included the study of man. According to Aristotle, man's existence is limited and not necessary. According to Plato, however, man's existence is eternal and necessary; man has simply degraded from this original form; we are supposed to transcend and work our way back to our original, perfect, eternal selves. In political thought, both Aristotle and Plato favored the aristocratic, oligarchical rule of the "polis," the city-state, where individual aspirations and endeavors are subjugated to the needs of the state, in this case, the polis; the "good" is not to be pursued by the individual, and the individual has no rights. Rather, virtue and the good life is to be found in the context of the polis. This statist view led to a feeling of contempt for innovation, entrepreneurship, labor and trade for profit. Hesiod, an early Greek poet, was the first "economist," as one of his poems, Works and Days, focuses on the problem of how humans use scarce resources towards abundant ends; labor, Material, and time must be allocated efficiently and harmoniously through the just application of laws. Other pre-Socratic theorists include Pythagorus and Democritus who founded "subjective value theory," i.e. wealth is a subjective value, although an over-abundant good is necessarily less valued. He also defended the idea of private property because it provides an incentive for work. Plato, Rothbard argues, favored in his Republic a "right-wing collectivist utopia." That is, the two ruling classes, the philosopher-kings and the soldiers were to live under absolute communism, sharing property, women, children, and meals, because private property corrupts virtue. The state would also be totalitarian where freedom of speech and the arts are suppressed. He proposed the idea of division of labor, although he ranked hierarchically the individual occupations, with laborers at the bottom. He denounced the use of gold and silver as money. Zenophon wrote on household management. One of his ideas was that an increase in supply of a commodity leads to a decrease in price. Aristotle was in favor of private property, and this idea heavily influenced the middle ages as it considered itself Aristotelian. He also denounced the "communism of the ruling class called for by Plato" because private property is more productive and leads to progress. Plato argued that communism would lead to peace, whereas Aristotle argued that it would lead to conflict. Aristotle also provided the concept that only private property allows people to behave morally because it allows for philanthropy and benevolence. He opposed the accumulation of wealth, however, & charging interest. After Greek society was absorbed by Rome, economic thought was consumed by the ideas of dealing with scarcity by accepting fate and curbing desires, ie. stoicism, cynicism, epicureanism. The stoics developed the concept of natural law (just law discovered by man's reason) that focused on the individual and on states everywhere rather than the Greek polis. Via mainly Cicero, the anti-statist stoic doctrine of natural laws influence Roman law, which touted property rights, which in turn influenced English common law and the civil law of the continent. In China the legalists were statists, the Taoists libertarians (no interference by state), and Confucions middle of the road. Private property rights and the idea of laissez-faire came to the west via the Theodosian code and the Corpus Juris Civilis of Justinian - a "just price" is any price freely arrived at by buyer and seller. "Canon Law" was the law governing the church. During early middle ages canon law incorporated Roman law but also the capitularies of the Carolingian empire which fixed "fair prices" (prices commonly charged) & prohibited usury. In the high middle ages, the University of Bologna published the Decretum (collection of canon law)which took an anti-merchant position. Later, a more favorable view of private property and merchants grew. "Thomism, in contrast, demonstrated that the laws of nature, including the nature of mankind, provided the means for man's reason to discover a rational ethics." Late 13th century scholastics: Franciscans and utility theory: Pierre de Jean Olivi said value is determined by scarcity (supply), usefulness, and desirability (subjective utility). Utility is relative to supply and not absolute. Value of a good is determined by its marginal utility. Olivi also brought into economic thought the concept of capital (a fund of money invested in a business venture).

  6. 4 out of 5

    Marrkvz

    Esse primeiro volume da história do pensamento econômico escrito por Murray Rothbard é grandioso em sua extensão: contra a prática Whig de iniciar a historiografia com Adam Smith, sem antes é claro ridicularizar os mercantilistas e dar um "oi" aos Fisiocratas, Rothbard inicia com Platão e Aristóteles, e até vai mais atrás ao apontar as idéias econômicas de poetas gregos do Século VIII antes de Cristo, depois passa ao pensadores medievais e suas idéias sobre valor e suas posições sobre o fenômeno Esse primeiro volume da história do pensamento econômico escrito por Murray Rothbard é grandioso em sua extensão: contra a prática Whig de iniciar a historiografia com Adam Smith, sem antes é claro ridicularizar os mercantilistas e dar um "oi" aos Fisiocratas, Rothbard inicia com Platão e Aristóteles, e até vai mais atrás ao apontar as idéias econômicas de poetas gregos do Século VIII antes de Cristo, depois passa ao pensadores medievais e suas idéias sobre valor e suas posições sobre o fenômeno da "usura". Os pensadores da Escola de Salamanca são especialmente reverenciados pela solidez e perspicácia de suas idéias. Os mercantilistas são tratados pelo que são: propagandistas do engrandecimento estatal e lobistas em favor dos poderes constituídos. Richard Cantillon, em um capítulo dedicado a ele, recebe os créditos devidos por ter sido o primeiro economista próprio ao elaborar um curto tratado baseado na sólida análise econômica quase meio século antes de Adam Smith. ARJ Turgot, longe de ser um mero fisiocrata, é apropriadamente elevado à posição que merce como um excelente analista do valor e dos juros, tendo precedido mesmo Bawerk e sua teoria do juro como originado na preferência temporal. Os três capítulos finais são dedicados aos Iluministas Escoceses; em um, os precursores de Smith, Francis Hutcheson e David Hume; no penúltimo capítulo uma avaliação completa de Adam Smith e seu suposto mérito como Grande Economista e Eminente Liberal é levada a cabo com grande maestria — basicamente o que há de novo em Smith está errado e o que há de certo em Smith foi herdado de percursores maiores que ele; e, por fim, temos uma visão do espalhamento das idéias smithianas pela Europa. Este livro é um marco em seu campo e a última obra prima da pena de Rothbard, seu testamento.

  7. 5 out of 5

    Jake Desyllas

    If you studied economics, this is a must read. If you are pushed for time, just read the chapter on Adam Smith- it is a fascinating demolition. Smith contributed nothing new to economics except some disastrous fallacies such as the labour theory of value and the removal of the entrepreneur from economic theory. Rothbard explains that Smith led economics disastrously astray for over a century (it has still not fully recovered). Rothbard provides fascinating commentaries on Aristotle, David Hume, If you studied economics, this is a must read. If you are pushed for time, just read the chapter on Adam Smith- it is a fascinating demolition. Smith contributed nothing new to economics except some disastrous fallacies such as the labour theory of value and the removal of the entrepreneur from economic theory. Rothbard explains that Smith led economics disastrously astray for over a century (it has still not fully recovered). Rothbard provides fascinating commentaries on Aristotle, David Hume, Francis Bacon and many other thinkers that gave me a whole new perspective on their influence.

  8. 5 out of 5

    John Schneider

    As much as this work is about economics, it is also about the history of thought in the West. Anyone who wants to understand better the development and disintegration of thought in the West should read this work. I expected a rich history and insightful commentary on economic thought; I received that and much more! In fact, the book might be too detailed despite its superb ability to summarize since it covers so much territory. Nonetheless, I am glad that I read this book and will be reading the As much as this work is about economics, it is also about the history of thought in the West. Anyone who wants to understand better the development and disintegration of thought in the West should read this work. I expected a rich history and insightful commentary on economic thought; I received that and much more! In fact, the book might be too detailed despite its superb ability to summarize since it covers so much territory. Nonetheless, I am glad that I read this book and will be reading the second volume sometime in the summer.

  9. 5 out of 5

    Zachary Moore

    Rothbard's first volume provides a strong introduction to economic thought before Adam Smith, showing the sophisticated market analysis was being undertaken by the medieval scholastics and that later continental schools of thought advanced the discipline, noting especially the contributions of Turgot and Cantillon. A strong work and a reminder of how radically knowledge can be lost in the social sciences.

  10. 5 out of 5

    Qasim Zafar

    I thoroughly enjoyed reading this book, though, considering the sheer number of ideas and facts that are contained within it... I will definitely have to read it once or twice more to fully grasp what the material. It is then, perhaps, that I will write a review befitting this masterpiece.

  11. 5 out of 5

    Christopher

    Apparently Adam Smith was a dope, and Bacon a waste of time. Good to know. Nothing better than a heavy dose of econ and history.

  12. 4 out of 5

    John Boettcher

    Very Dense.

  13. 5 out of 5

    IMPERIVM

    Early history of market economists.

  14. 4 out of 5

    Ken Silva

    Very informative in terms of factual information, but beware of Rothbard's storytelling.

  15. 4 out of 5

    Preston

  16. 4 out of 5

    Santiago Duque

  17. 4 out of 5

    Matt Mecca

  18. 5 out of 5

    Dan Minter

  19. 5 out of 5

    Heinz Wehlman

  20. 4 out of 5

    Lee B

  21. 4 out of 5

    Thomas Achord

  22. 5 out of 5

    Ryan

  23. 4 out of 5

    Bill

  24. 4 out of 5

    Ricardoroy

  25. 5 out of 5

    Benjamin Juhlin

  26. 4 out of 5

    Mark Koyama

  27. 4 out of 5

    Antonio José

  28. 4 out of 5

    Darragh

  29. 4 out of 5

    Alex

  30. 4 out of 5

    John

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