Free Markets: An Interview with David Gordon

0:00My guest today is Dr. David Gordon. David is the leading expert on the work of Murray Rothbard. David is the author of The Essential Rothbard, which is an excellent book, published in 2007. My listeners who read The Freeman Magazine probably remember David's November 2007 article, Murray Rothbard's Philosophy of Freedom. Dr. Gordon is a senior fellow at the Ludwig von Mises Institute in Auburn, Alabama. David, welcome to the show. Thank you, Mike. It's nice to be with you. Well, it's a pleasure for you to take time out of your schedule to do this. I'm excited about this. Let's do this, David. Would you tell us a little bit about yourself first?

0:46Because I think you have an interesting background as far as your academic training and experience. Well, I first became interested in Murray Rothbard's ideas when I was in junior high. I remember when Man Economy and State came out in 1962. I read it right away. I read Mises' Human Action around that time also, but I didn't meet Murray Rothbard until 1979. in 1979. Meanwhile, I'd gone to UCLA and I got all my degrees in history. I got a Ph.D. in history. And then after I met Rothbard in 1979, I got a job for a short time with the Cato Institute where he was working.

1:38And then after he shifted to the Mises Institute, I started working for them and I've been with them ever since. I was also, for a brief time, I was on a grant from the Social Philosophy and Policy Center of Bowling Green State University in Ohio and I did a book called Resurrecting Marx, which was on a particular kind of Marxism called analytical Marxism. Oh, interesting. Because I remember David when we were chatting together over the phone the other day, your doctorate is in history but you've also done a lot of writing in philosophy as well. Oh yes, I found actually it was easier to do philosophy articles because all you have to do is come up with arguments.

2:28Management. I used to send in articles to different philosophy journals like Analysis, that was a magazine published in England, it had 11 articles in that one. I wrote for, I'd had one article in Mind, which was a leading English philosophy journal. I'd had various other articles, but when I worked at the Mises Institute, you see I do I do a book review magazine. It's an online magazine called Mises Review and I do two reviews a month. I've been doing that since 1995 and a number of those books are on, I do political philosophy, economics, history, law, whatever seems suitable, I'll just do a book review.

3:18I'm afraid I'm infamous for rather negative reviews sometimes. I like to say, if you can't say anything bad about a book, why say it at all? But I must say, I do sometimes have favorable reviews. I mean, there are some very good writers out there. Yes, I've read a few of your favorable reviews. That's true. I was going to ask you, David, So tell us a little bit about how you met Murray Rothbard and was that back around the beginning of the Mises Institute? No, that was a little before then, you see what had happened is I had mentioned I had read Man Economy and State in 1962 and then Murray's Great Depression which came out The Theory of Money and Credit

4:40The invitation to go to a conference put on by the Cato Institute, which was in June 1979. I had further talks with Rothbard. I met Ralph Reiko and Ronald Hamoway, who were two of Murray's greatest friends, who were also teaching at that conference. And then shortly after that, they offered me a job with the Cato Institute, and I was Working, particularly with Ronald Hamoway, and Ralph Reiko was the book review editor of Inquiry, which I wrote book reviews for, but he wasn't in San Francisco where I was working. And then I became very good friends with Rothbard after that, and that continued until Rothbard's death in January 1995.

5:32I see. Okay. Well, I thought what was interesting too when we chatted the other day is you told me when you were writing the book, The Essential Rothbard, that you had full access to all of Murray's private correspondence and so forth. Oh yeah, you see, what happened after Murray died, all his papers went to the Mises Institute, which is in Auburn, Alabama, the group I work for, so I actually was one of the first to go through those papers, I was doing some preliminary sorting, so one of the most important things in the paper is that he worked for a number of years as a consultant to this group called the Volcker Foundation, which was one of the, in the late 1950s, early 60s, was Rothbard was one of the most important foundations that was sponsoring individualist and liberty-loving thought.

6:35They sponsored a lot of the main intellectuals that we study today, like Milton Friedman was one, Friedrich Hayek, these people all got Volcker grants. Rothbard wrote all sorts of book reviews and reports on various figures. He went to conferences for them. So you have his evaluations of all sorts of different thinkers and movements that are, many of them are unpublished. There's actually, the Mises Institute is going to be bringing out some volumes of some of these unpublished papers in the near future. Yeah, that's great. Actually, I'm going to come back toward, maybe toward the end of the show, David, and talk a little bit about the Mises Institute as a resource, because I think all my listeners ought to know about that.

7:25What I'm going to have to do, David, is jump in then and talk a little bit. Well, actually, what I was trying to do there is give my listeners a sense that you, like Rothbard, have this really wide and deep knowledge of, you know, half a dozen different areas, of the World, The Theory of Money and Credit, The Theory of Money and Credit, The Theory

9:12to the government. So what Rothbard said is if we consider seriously implications of being opposed to slavery then we'll be opposed to taxation as well. The government will not be able to take money from us by force. Another friend of mine, philosopher Robert Nozick, makes this point also in his book In 1974 at NIT State, you told me that taxation is akin to forced labor, so it's really a form of slavery. Herbert Spencer was one in the 19th century, the great 19th century philosophers that made the same point. Yeah, it's a powerful argument. It's hard to get around that one.

10:02Well, so let's talk a little bit more about, because I know Rothbard also took the slavery as wrong to, you know, also address issues like the military draft. Oh, yes. Now, you see, this is certainly, I mean, you're being forced to, this is perhaps even more of a direct example of slavery than taxation, In the draft, you're not only required to give your money to the government, you're not only required to labor for the government, but you could even be required to risk your life. I mean, supposing you're drafted and the government can send you into combat in a situation where you're likely or even certain to lose your life, and it may be for a war that you don't even think is justified.

10:56Now, I think it's interesting if you look at what used to be at any rate the leading textbook in economics that was studied in college, which was by Paul Samuelson. It's a famous book. I remember studying that myself when I took economics. Samuelson, in the early editions of the book, said, well, you know, there are some government programs that no one really opposes, and he mentioned Social Security is one of them, but he also mentioned the draft was one of them. David, let me jump in there, we're not to come up on a break, but I think this is a great way to keep the listeners engaged.

11:41We're talking here about a couple of things that should shake your assumptions, even if if you are a Libertarian. Before the break, we were talking about the military draft and the morality behind that. And David was talking about Paul Samuelson's text, and I'm sure just about everybody who's ever taken an economics course is familiar with that. Can we go back to that and pick that up again, David? Oh, yes. Well, Mike, what I was saying was that Samuelson in this introductory textbook was giving examples of government programs he thought that were non-controversial but no one would challenge at the time he was writing it. His book originally came out in, I think, in 1948 or so, but he kept producing new editions in the 50s and 60s, so he said no one would really challenge the draft.

12:40This is really, we consider it as an odd thing to say because the draft really is one example where the government has total control of your life and it can send you into a situation where you're almost certain to lose your life, but Samuelson not only favored that, he said no one would find it controversial, I suppose he was saying that because he was writing just after World War II where, of course, we did have a draft and we had one in the Korean War as well, so I remember when I was in college, people were very concerned about being drafted for the Vietnam War, so this is, and it was really, many free market economists like Milton Friedman were strongly opposed to this, so we don't have the draft Now, but for a long time in the 20th century, it was very much a part of life that the people of military age had to cope with.

13:47Well, it's an interesting topic, David, because you still hear people in Congress bringing it up. It's going to become necessary if we start another war somewhere else in the world. We wouldn't have enough people. We'd have to start drafting again, and I guess what you're bringing up is important I guess we don't really consider the philosophical issues behind what we're doing there. I guess it's practical for me now because I have two sons and I'm not too concerned or too interested in them fighting a war that neither they or I would have any support for. But like you said, it's being done by force. Yes, well, I think one thing that's very important when you mention the argument that some congressmen have is that, well, we might not have enough people to fight in the war if we relied on voluntary measures.

14:45Of course, you could raise the point there. Well, maybe that would just show the pay and conditions they're offering for service aren't high enough. But I think there's perhaps a deeper point is, and again we could also question whether the particular war is justifiable or not, but I mean supposing that it is, which I think is very unlikely in the current administration, they would come up with a justifiable war, but I'm supposing they did, then we would have, I think, a basic question, Flossie. Even if you have a goal that's justifiable, it doesn't follow that you can use any means The Theory of Money and Credit

15:51Supposing there was some medicine that your children really needed and you couldn't afford to buy it for them, it wouldn't follow, at least there's a lot more argument to say, well, then it's all right for you to go into the pharmacy and rob the place in order to get the medicine. Right, right. There was an argument I heard too, David, and I can't remember, I wish I could tell you who said this, but basically what his argument was, he said, you know, if the country was ever invaded, he's absolutely convinced that you'd have more volunteers than you knew what to do with, so that certainly wouldn't be a problem.

16:43He came back to basically what you were saying about if the war somehow has merit, people will volunteer to go. You shouldn't have to do it at gunpoint. Yes, I think this is certainly a very good point. If someone is going to be attacking your house, you're going to do something about it. I mean supposing there's some situation, I would say is the case with the Iraq war, where the matter really, at least in the opinion of many people, doesn't have much to do with us, so it's not clear why we're supposed to be in danger from various regimes in that area of the world, then people might, we might have trouble getting volunteers, of course We don't have a draft now, but people don't really want to go over there.

17:40It's a very unpopular war, and they're having a lot of trouble getting enough troops. That's why people are talking about a draft now, because we have a very unpopular war. I think that was the case in Vietnam. People got very upset over the draft because it was unpopular, and that was one of the reasons it was abolished after that. That's right, yeah. And David, I'm probably about your age. I remember the Vietnam War, too. I don't want to see us go back to something like that. No, that was a very unfortunate situation. It was a very unpleasant time, to say the least. The next thing I was going to ask you about here, David, Rothbard talked about, and again, this sounds very straightforward, but there are a lot of implications to this.

18:29He said a person owns his own labor. What are the implications according to Rothbard there? Well, that would be one that would be quite similar to the point about slavery. You can't, no one can take your labor away from you and it would follow if you own your own labor that you're free to enter into any arrangements you want to with other people The Theory of Money and Credit

19:26You don't have to give workers a living wage. It isn't fair to say that people earn only a few dollars an hour, but what this kind of legislation does is to prevent those people who are only employable for fairly low salaries from getting the job. This is harming them, not helping them. Right. Yeah, that's an interesting argument because I think, David, you told me that you know Robert Murphy, and Robert Murphy was on your show. Yeah, yeah, and Bob made that same argument about the minimum wage laws are actually hurting the people they're supposedly helping.

20:12This is actually one of the greatest of all the free market economists, Ludwig von Mises, said that this is a fundamental argument against all kinds of interference with the free market. I should say Mises was one of Rothbard's teachers and Rothbard went to Mises' seminar at New The Theory of Money and Credit

21:06Without making any controversial assumptions about values, you could show that these measures are wrong because they wouldn't work from the point of view of the people who supported them themselves. Rothbard thought you could go a long way with that argument, but he thought there were problems with applying it universally. I think it is, as far as it goes, a very valuable point. You don't have to assume any controversial ethical point of view. Supposing you say, well, I'm in favor of freedom. Somebody, sort of a left-wing person, says, well, I believe more in equality. I don't accept your assumption. You could still argue that these various measures of intervention won't work even from their point of view because they just won't achieve what they're supposed to achieve.

22:01That's really interesting. This might have to be something we can pick up after the break. As I understood the argument between Mises and Rothbard, Mises being, I guess, more the mentor, I think it was Rothbard that was saying a value-free defense of the market cannot stand by itself. Is that right? Well, he thought that you couldn't really show that in all cases that these measures would fail from the point of view of the ones who advocated them.

22:48For example, he said one of the arguments that Mises used is he said minimum wages cause unemployment in the way I just mentioned, that those workers who aren't valuable enough to the employers to earn more than the minimum wage won't be employed by them. So Rothbard said, well, what if the people who favor the minimum wage don't really care about the unemployment, they're just trying to benefit a certain group of workers, like certain labor unions are just interested? Are we talking in terms of a practical, pragmatic justification for free markets versus a value-based or moral...

23:34Well, I think to some extent, I think Mises and Rothbard had different views of the nature of morality. They would, to a large extent, concur in the particular judgments they made, but Mises Mises thought that values are really subjective, just as in economic theory we talk about whatever values the person has and we try to explain their conduct on that basis. Mises thought that was all there was to it. We can't say they're values that are objective in the sense we can say that if you have certain values, these are the wrong ones. So according to Mises, people's values are subjective.

24:24Now he thought there was really a way of getting around this point that he thought that even though values are subjective, almost everyone will agree on certain values, say we all want to live in a free and prosperous society. So it isn't that it's objectively correct that we should live in a free and prosperous society. It's just that everyone will want to do that. So given that that's the case, we can ask, what are the best means by which we can achieve that goal? And that was something he thought did have an objective answer. Now, Rothbard disagreed with that. He of course agreed that people want to live in a free and prosperous society but he thought that we could show that certain values are not just ones people have but ones that they ought to have that are right or wrong.

25:26His ethics was really kind of Aristotelian style ethics and he thought that based on I think that's fascinating, David, because, as you know, in my book, Rational Individualism, the subtitle was actually a moral argument for limited government and capitalism. And you know, I've had people, you know, send me emails and people I've known for years Well, Mike, you've been in the business world all your life, and you've been a business professor, and we would have expected a practical argument instead of a philosophical kind of argument.

26:15And I think it's just fascinating that I think my listeners should be thinking in terms of how do we argue for our libertarian or free market views? What kind of a foundation do we have for that? I think that this is really an interesting thing to challenge my listeners on. We have to really, in the future, bring that up. Yes, I think one theory and practice go together. I mean, if we have a theory that doesn't work, then we've got the wrong theory. I mean, some people say, well, this is all right in theory, but it wouldn't work in In practice, sometimes people say that about libertarians and they'll say, well, it's a very appealing sounding idea, but we couldn't really put it into effect in the real world.

27:10Well, if that were true, then that would show there's something wrong with the theory. If the arguments are right, then it will work. That would be very interesting. Immanuel Kant wrote a short pamphlet on this particular point, something I've called, on the old, saw that this is true in theory but not in practice, and he said, no, this is just, if you think about it, it's just nonsense. If something doesn't work, then there must be something wrong with the theory. Right. Well let me ask you this because I think one thing I wrestle with David as a libertarian and I'm sure many of my listeners wrestle with as well is with Rothbard and a number of other people who are considered libertarians, they talk in terms of anarcho-capitalism.

28:13Can you talk a little bit about that and how would they justify or argue for that from a practice point of view? The way Rothbard arrived at that was he had been going to Mises' seminar when Human Action came out in 1949 and he had become convinced both from that and earlier about the benefits to the Free Market, and then when he was visiting the Foundation for Economic Education, Fee and Earlington, he had a conversation with someone where someone said, well, how could if all these free market arguments show that the various activities shouldn't be, government shouldn't engage in these various activities, how can you justify government at all?

29:04The Theory of Money and Credit

29:34is correct, is not that we don't need defense or police protection or justice, but that these can be supplied by the free market. We don't need to use coercion and compel people to just to have one government, one monopoly agency providing these various services. I think this is a fascinating argument, as I was saying at the beginning of the show, I still am comfortable, at least at this point in my life, with the government providing military, police and the court system, but in a discussion, and again this was with Bob Murphy a few weeks ago, I talked about abolishing the Federal Reserve, and I was glad that Bob Bob agreed with me on that item, and Bob made an interesting comment.

30:36He said, well, it's interesting, Mike, that a lot of free market advocates talk about free markets and this and free markets for that, but when then they're asked about what should the Federal Reserve do with interest rates so quickly to respond, well, they should lower it at a half a point, so their argument somehow breaks down when it came to the Federal Reserve. So I think what you're bringing up is a challenging point, David, because we do have to be thinking in terms of we want limited government and how should it be limited? Are we limited somehow philosophically or pragmatically or how are we thinking about that? Well, you see, I think one thing to bear in mind there, remember we were talking earlier about taxation and being forced labor, now if you have even a limited government, it's It would be very difficult for the government to operate without taxation, so even a limited government would be relying on taxation or forced labor.

31:39Now, Ayn Rand tried to get around that by coming up with some measure where people would pay for the various services that they wanted, say if you were going to trial, you would pay for having a court, but it seems to me doubtful whether they could raise enough money on that basis to operate. Right, I'm a big Ayn Rand fan myself and I have to admit that

32:10that's one of the weaker arguments that's true because raising the amount of money to support the function is doubtful. Oh yes, you know one point that is interesting about Rothbard, he had a rather odd relationship with Ayn Rand. He had first been rather critical of her, but then when Atlas Shrug came out, he was really tremendously impressed by the novel and he wrote to her. They met earlier, but he wrote a big fan letter to her and for For a while Rothbard, his small group, which is called the Circle Bastiat group of people including Ralph Raekel, Hamoway, Leonard Ligio, George Reisman, they came over and had long discussions with Ayn Rand and her group.

33:06For a while they were getting along very well but then there were some various incidents came up and they had a very bitter quarrel and after that Rothbard was very critical of her, but for a while they were friendly. That's fascinating. I wasn't aware of that at all. That's very interesting. What we want to do this last segment is take a look at the Ludwig von Mises Institute, which is located in Auburn, Alabama. David's very active involved there. David, could you tell us a little bit about your work at the Mises Institute? The Mises Institute is an educational group devoted to promoting Austrian economics.

33:57Austrian economics is the kind of economics that Mises and Rothbard taught. and they have both publications and educational programs and I write as a book review magazine as I mentioned before called the Mises Review, it's an online journal and they have other magazines and journals like the Quarterly Journal of Austrian Economics which is most This is the most important journal for free market Austrian economists. It is edited by Joseph Salerno. He is an excellent economist. If you go to the website www.meses.org, you can have all sorts of lectures and books by Rothbard, Mises, Henry Hazlitt, all sorts of Free Market Thinkers are available on the website.

34:58You can download all the books and listen to Mises and Rothbard lecture. They also have programs such as we have, the probably most important one is the Mises University which is a week long program usually held in August and we get about over 100 students applied that can come to that, mostly college students, both undergraduate and graduate. David, you're very involved in that, right? Yes, yes. I lecture for that. I've been lecturing for that since 1987. We get the various economists such as Tom DeLorenzo was on your show and Bob Mercy both in that one. We get Joseph Salerno, other outstanding economists and we have a week-long program and then we also have other programs like we had, we're having this year, The Rothbard Graduate Seminar, which is a more advanced program, a week long program, where we go through Rothbard's main theoretical work on economics called Man Economy and State.

36:07And then we also have, usually in March, there's an Austrian Scholars Conference where we get scholars from all over the world who give papers on various aspects of Austrian economics. The Mises Institute is, in my opinion, the most important free market organization. Of course, I'm a little bit prejudiced since I work for them, but this is really, if you want to get the Mises economics and Rothbard's theories, this is the place to go. Oh, you're right David. Mises.org is just a wonderful resource. I wanted to quickly mention too one of the resources I know at the Mises Institute is a booklet by Rothbard called What What has government done to our money?

37:20And I think I would encourage all libertarian, free market advocates to read that, even if you're not interested in anarcho-capitalism or one of the other Rothbard issues. That particular booklet, and I think David, you and I chatted about that the other day, that is the best booklet on money I have ever read, it's an incredible work. Oh yes, I remember when it came out. It was originally a pamphlet for the Freedom School run by Bob LaFave. I think it came out around 1963. And the basic point Rothbard makes there, it's a very short, easy to understand essay, is that money is a commodity like any other commodity.

38:05It has, of course, there are differences. Money does have some differences from other commodities. Basically, we should consider money not something that's created by the government, but something that is a commodity. If the government tries to change that and create fiat money, this will have all sorts of very bad results. Money must emerge from the free market as a commodity. It isn't an arbitrary creation of a government. I think that is so powerful because the argument I've made and some of my other guests have made is inflation is nothing more than the government just overflating the currency that's printing too much money. Yes, this is one of the basic points Rothbard makes in that essay.

38:55If you want to understand the current economic crisis, this is, I think, really essential reading. One more time, it's called, What Has Government Done to Your Money? by Murray Rothbard, just an absolutely wonderful document. Let me ask you too quickly, David. Some of my listeners, I'm sure, are going to want to read some of your works, and I know you've published quite a few things for lewrockwell.com. Can you just give us an idea of some of the things you've published there? I should say, Lew Rockwell was probably Murray Rothbard's closest friend and follower. When he established the Mises, he's the head of the Mises Institute, the founder and president of the Mises Institute.

39:46He set up the institute to promote Mises and Rothbard's work. Now, on lewrockwell.com, it promotes Austrian economics, but it also comments on current and Affairs and whatever topics that Lew Rockwell thinks are interesting. He has to come up with new articles every day, but I publish, sometimes he'll reprint some of my book reviews on the site, but I've done articles on other topics and many of them are on foreign policy. I had one, he put up this extremely long article, it was about a hundred pages, and it criticized In my road of Harry Jaffa, who was a political philosopher, he was written on Abraham Lincoln.

40:35So I had a 100-page essay on him that's available on the site. I have various articles on foreign policy topics. He really gets a broader range of people than just strictly libertarian people. has various writers on foreign policy and if you go to that you'll get a very good perspective on current events from a libertarian point of view. Yeah, I printed out a copy. They have an archive set up for each of the authors and I think your archive here is about six pages long, David, but there's some really fascinating articles in here for people to read.

41:22This is great stuff, David. I also want to go back and just remind all my listeners that David's book is called The Essential Rothbard. As I recall, that was also published by the Mises Institute, wasn't it? Yes. That came out in 2007. That's another excellent publication. So I guess I would suggest for my readers, read the essential Rothbard or go back and read that November 2007 article in the Freeman called Murray Rothbard's Philosophy of Freedom. That's about a four-page article that David did on Rothbard's work.

42:12I want to thank my guest today, Dr. David Gordon, obviously an expert on Murray Rothbard's work. His book is The Essential Rothbard. I want to thank David very much for being with me today.