Gary North recently wrote a very, very good essay on behalf of using gold as money, entitled “Economists vs. the Gold Coin Standard.” His utter intellectual annihilation of the mainstream economics profession on this vitally important question is something to behold. I urge everyone to read and reread this brilliant article.
However, in the course of his essay, he makes several relatively minor mistakes.
But, before I get to them, let me say that I regard them as only minor errors in an otherwise excellent, no, make that magnificent piece on LRC. Gary explains in great detail why most mainstream economists think a full gold (coin) standard will lead to economic disarray. He also unearths in great detail the evils of the fed in suborning most mainstream money-macro economists.
What are the difficulties I see with this piece? There are several:
1. Normative and positive economics:
Gary states: “Austrian School economists oppose central banking.”
No, Austrian economists can’t oppose or favor anything. To say that they do is to violate the normative positive distinction. Austrians are limited to saying that a given policy will have thus and thus effects; they logically cannot say, qua Austrians, that a policy is good or bad, nor may they favor or oppose it, again qua Austrian economists. Certainly, they can do so as citizens, as ethicists, as philosophers, but economics per se is and must be value free, despite the fact that this stricture is all too often violated, as in the present case.
According to Gary: “[Mises’s] disciple Murray Rothbard promoted 100% reserve banking. But, because he [Rothbard] opposed the existence of the state, his call for 100% reserves was not a call for legislation requiring 100% reserves.”
Murray Rothbard of course opposed the state. But, according to Gary, Murray would therefore have to oppose all legislation or laws. Yet, clearly, Murray (as a libertarian, not an Austrian), favored laws against murder, rape, etc. In his view, they would be implemented not by the government, but by private defense agencies. It is a misconstrual of free market anarchism to say that advocates of this philosophy oppose all laws. Au contraire: We are supporters of proper law, i.e., laws upholding individual rights and private property. Indeed, our criticism of the government is that it violates such proper law.
3. Free banking:
States Gary: “As far as I can see, operationally speaking, his [Rothbard’s] position was the same as Mises’s position: free banking.”
No, Murray opposed (again, as a libertarian, not Austrian) the free banking (of Selgin and White). For example, see this article of his: Rothbard, Murray N. 1988. “The Myth of Free Banking in Scotland.” The Review of Austrian Economics, Vol. 2, pp. 229–245. Reprinted in The Logic of Action Two: Applications and Criticism from the Austrian School. Glos, UK: Edward Elgar Publishing Ltd., 1997, pp. 311–330.
4. Graduate School in Economics
In the view of Gary: “There has been a glut in Ph.D.s since 1969. It has gotten worse every year. But, because university departments are paid more by the university for graduate students than for undergrads, the faculties have an incentive to recruit students into graduate school. He was sucked in. He did not see my debate on why it is not a good idea to get a Ph.D. in economics.”
I don’t put this in the same category as the other three. Those were objective mistakes. This one I merely disagree with. With regard to that debate, Gary took the position that no one should go to graduate school for a doctorate in this field, whereas I took the far more moderate position that while to be sure this is not for everyone, surely it is an appropriate decision for some (they don’t call me Walter Moderate Block for nothing).
I find this article of Gary’s frustrating, as I did that debate at the Mises University. In both cases, Gary merely plows ahead with his views, and pretty much totally ignores his critics, me in this case. As for the debate, see this phenomenon for yourself. Several times during that event in 2011 I asked him, explicitly, to reply to my points. He did not. With regard to my point 4 regarding this article of his I am now discussing, I had previously criticized his viewpoint here. Did he condescend to respond to the points I made counter to his thesis? He did not. That procedure of his doesn’t seem to me to be a particularly scholarly one. The essence of this enterprise, at least as I understand it, it to get to the Truth. How can we scholars do so if we do not come to grips with the views of those who disagree with us?
Speaking of condescension, I tried to communicate my misgivings about Gary’s article, regarding the first three points mentioned above. His response? He stated: “Walter you ignore the obvious: At zero price, my time is in greater demand than supply. I must pick & choose my responses, writing 9 articles a day (paid subscribers), and being in the final phase of updating my 31 volumes” and referred me to more of his very voluminous (and for the most part very excellent) publications. Namely, he failed to come to grips with my criticisms, as is his wont.
Well, happily, I have a job that allows me the time to engage with fellow scholars, and not only during the summer break from university. Perhaps this is but one more bit of evidence that the academic life, for which a Ph.D. is required, is not all that bad, at least for some of us. If any readers are considering going to graduate school in economics and want some free advice, please e-mail me at firstname.lastname@example.org. I’ll have sufficient time to try to help you out with this decision.5:04 pm on June 7, 2012 Email Walter E. Block