Bruce Ramsey’s critique of Meltdown by Tom Woods is completely bizarre coming from a self-professed libertarian in a magazine called “Liberty.” Specifically, Ramsey claims that the “proper” way to do economic history is to ignore theory and focus instead on “facts” and see where they lead you. This, he says, is what libertarians should do.
This is exactly the mode of analysis that statist enemies of economic freedom have employed for more than 150 years, beginning with the “economic nationalist” school founded by the German statist Friedrich List. Economic theory in particular has always helped to point to the folly of economic interventionism, from protectionist tariffs to regulation of industry to central banking monopolies. That’s why statists and totalitarians of all descriptions have always eschewed economic theory and relied instead on the kind of ad hoc theorizing that Ramsey says libertarians should employ. Tom Woods’s creative and learned application of economic theory to the study of history is what makes his books so compelling that they end up on the New York Times bestseller list — unlike anything Bruce Ramsey has ever written or is likely to write.
In other words, Ramsey’s critique is pure nonsense from the perspective of real libertarians. As Ludwig von Mises wrote in Human Action (Scholars Edition, p. 875): “The paramount role that economic ideas play in the determination of civic affairs explains why governments, political parties, and pressure groups are intent upon restricting the freedom of economic thought. They are anxious to propagandize the “good” doctrine and to silence the “bad” doctrines [i.e., laissez faire].” Referring to the statist domination of economic policy discussions during his time, Mises further remarked that “The public discussion of economic problems ignores almost entirely all that has been said by economists in the last two hundred years. Prices, wage rates, interest rates, and profits are dealt with as if their determination were not subject to any law.”
That’s what happens when historians who write about economic subjects ignore economic theory and take Bruce Ramsey’s advice and merely “follow facts.” “Following facts” without theory is like trying to find one’s way around a strange city without street signs.
