Message from discussion To David Friedman: Antitrust

From: David Friedman <D...@best.com>
Subject: Re: To David Friedman: Antitrust
Date: 1998/05/12
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I now have a copy of the Rothbard book on which Vincent based his recent
assertions about Smith and his predecessors. I am afraid I have neither
the time nor the stomach for a full critique, but so far it is consistent
with my expectations. In particular, his discussion of Smith's economic
theory misrepresents it in striking fashion, attributing to Smith an
embedded labor theory of exchange value which Smith does not have (save in
the primitive society where labor is the only input). 

Rothbard falsely refers to Smith's "call for government-run education." I
have already posted Smith's real views. 

Rothbard asserts that Smith supported public works--including highways,
bridges and harbours, on the rationale that private enterprise would not
'have the incentive' to maintain them properly.(!?)"

The final parenthesis is Rothbard's, but could be mine, since this is an
example of careless reading by Rothbard. The actual passage is not a
discussion of private building of highways etc. at all but of the
possibility of turning over publicly constructed works to private owners,
on the theory that they will have a better incentive to maintain them than
a government agency would. Smith thinks this is a good idea for canals but
rejects it in the case of highways, on the grounds that the private owner
could collect tolls even if he didn't maintain the road, since roads
depreciate much more slowly than canals.

Rothbard says that Smith advocated government coinage; he offers no
evidence for the claim. So far as I can tell, Smith, like Turgot and
Cantillon, mostly took government coinage for granted.

Rothbard said that Smith advocated government intervention in the form of
"The Post Office, on the simple grounds-which will draw a bitter laugh
from modern readers-that it is profitable!"

As I already pointed out, Smith did not advocate it--he merely commented
that it was the one commercial activity which all kinds of governments
seemed to be able to run at a profit. I don't think he can be blamed for
failing to anticipate the incompetence of governments a century or two
after his death.

Rothbard's list of Smith's sins is essentially the same that Vincent
already gave. Rothbard provides no documentation for any of it, aside from
the quote on education that Vincent already posted. So I have no idea what
his basis is for thinking that Smith thought wages in kind should be
illegal, or registration of mortgages should be compulsory, or ... . Given
how unreliable Rothbard is when he is talking about parts of Smith's
position that I recognize, I see no strong reason to suppose that he has
any solid basis for those beliefs, although it is certainly possible.

Typically, Rothbard mentions that Smith spoke favorably of a tax on wool
exports (as a revenue measure, although Rothbard doesn't say so) without
mentioning that it is in the context of an attack on the existing
prohibition of exporting wool. 

Rothbard refers to Turgot as pro-laissez-faire, but for some reason does
not provide a catalog of his failings analogous to the catalog provided
for Smith--although, as I point out with a lengthy quote in another post,
Turgot's views on education were (by Rothbard's standards, and mine)
immeasurably worse than Smith's.

In fairness to Turgot, I should say that, despite his views on education,
his general political views, like Smith's, are moderate libertarian. He is
a thorough free trader and expresses libertarian sentiments on a variety
of other issues.
-- 
David Friedman
D...@Best.com
http://www.best.com/~ddfr/
"No man is secure in his life, liberty or property 
while the legislature is in session"