Money and War in Murray Rothbard's a History of Money and Banking in the United States

By Zelmanovitz, Leonidas | Libertarian Papers, January 2010 | Go to article overview

Money and War in Murray Rothbard's a History of Money and Banking in the United States


Zelmanovitz, Leonidas, Libertarian Papers


I. Introduction

THE THESIS PROPOSED IN THIS PAPER is that strong as the protection of private property rights may seem to be in the united states, the lesson from Prof. Rothbard's account of the history of money and banking in the U.S. has been one of the relativization of those rights, especially through interventions in the monetary and financial arrangements whenever the necessities of war financing so required.

Institutions and Progress

The evolution of a civilization is a matter of historical record. (1) It can be measured by its successes in many different fields. For instance, material progress, increase in population, territorial expansion, artistic and scientific accomplishments are all dimensions of the advancements of a civilization.

It is possible to identify a parallel between the evolution of a civilization as recorded by history and its institutions in general and political institutions in particular. That is so because political societies are no more than groups of individuals and their institutions are no more than forms of interaction among those individuals, everyone pursuing their own interest in different fields.

In other words, it is the sum of the accomplishments of its members in different fields of human interaction and the unintended social results of their

individual effort that, once recorded by history, is understood as the progress of a civilization.

Let's clarify, perhaps the word "progress" may convey an idea that the evolution of civilizations here mentioned is unidirectional, but that is a wrong idea. "Progression" is here utilized meaning "whatever lies ahead"; not necessarily "good" or "better" circumstances.

For instance, the Greeks, who defeated the Persians twice, were able of noble and amazing feats that can only be compared in their exceptionality, as time goes by, with the ignoble and mean actions taken by their descendants during the self-destructive Peloponnesian war. The capacity of Greek leaders for two generations to coordinate the actions of a myriad of independent cities against the Persians without compromising their political independence was an amazing achievement; the incapacity of the leaders of the next generation to avoid self-destruction in a fratricidal war is beyond comprehension.

This perceived parallel between the recorded events and the quality of human interactions as reflected in the many different institutional dimensions of a society is true for an entire civilization and may also be valid for one of its independent political entities.

The generation of Athenians that defeated the Persians, built the Parthenon and established supremacy over the Aegean had surely more effective forms of interaction among them and with their neighbors than the generation who faced disaster in Sicily, indulged alternately in democratic excess and tyranny and was finally defeated in the Peloponnesian war.

The argument here is that what history shows, aside from the vagaries of fortune, (2) is the quality, the nature of human interaction in a given social group. It may be understood that the nature of their relationships is embodied in their institutions, in all their dimensions; being these institutions the fruit of the "common will" (those which are product of legislation) mentioned by Carl Menger, or those "which development come into being without a common will directed towards establishing them" (Menger, 1963: p. 146). And so understood, the institutions frame all aspects of social life such as the cultural, social, political, educational, and economical.

The eruption of the Vesuvius in 70 AD and the attack in Pearl Harbor in December 1941 were not produced by the Ancient Romans or mid-twentieth-century Americans; but they were responsible for their responses to those cataclysmic events; despair and fatalism was shown in the former with the abandonment of the site and fortitude, courage, determination was show in the latter with the mobilization for war.

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