Mises Daily: Friday, July 09, 2010 by Llewellyn H. Rockwell Jr.
This is the tale of two economists who lived parallel lives, and then pursued two different and contrary goals. One was devoted to liberty and one was devoted to the state.
The first remained a teacher during his entire life, never in any prestigious institution and never exercising any power. Indeed, he used his post teaching against the exercise of power, and became the world’s most powerful intellectual voice for radical liberalism or libertarianism. This man who loved liberty died in 1995 and his work has taken flight the world over. His books are selling as never before, all of them, and his star is rising by the day.
His name was Murray N. Rothbard.
The second one became the most powerful and influential economist in the world, practically running the world for a very long time. While in power, he was revered by everyone who was anyone. His every utterance could cause hundreds of billions to be made or lost in the market. But he will live out the rest of his days under a cloud of derision and discredit, defending himself against the perception that he created history’s largest financial calamity.
His name is Alan Greenspan.
Let us track these two lives and consider the choices they made.
As Charles Burris has pointed out, they were both born in New York City, in 1926. Rothbard was born on Tuesday, March 2. The following Saturday, March 6, Alan Greenspan was born. They had a similar background and upbringing, Greenspan of German-Jewish heritage and Rothbard of Russian-Jewish heritage. Both attended private schools and pursued their respective passions.
It is after high school their lives diverged. Whereas Rothbard followed a very mainstream path in academic economics — one that would seem to set him up as a giant in the profession — Greenspan went to the Julliard School of Music to pursue his true love, which was the clarinet.
As remarkable as it may seem today, Greenspan was not interested in economics or banking or any technical field. His interests were the arts, at least initially. There is nothing wrong with that, and indeed music has long been considered a foundation of a great education.
I mention this because it is an implausible beginning for the man who would later take the helm of the institution that would purport to manage the world reserve currency — a man after whom a professorship at New York University has been named.
Meanwhile, Rothbard chose to attend Columbia University. He was not an economics major. His passion was mathematics — and this was even before the full mathematicization of the profession. At Columbia, he studied under the famed statistician Harold Hotelling. It might have been Hotelling who led Rothbard to economic studies, but very early on, Rothbard the mathematician could see what was wrong with that application of statistical methods to economic theory. He would later build on Mises to construct a systematic theory of economics rooted in logical deduction in the manner of 19th-century theorists. All the while, his libertarianism was also in strong formation from early in his youth.
As implausible as it may seem today, Rothbard’s biography would seem to be exactly that which would make for professional triumph with the mainstream of opinion and with the powers that be. What made that impossible were the choices he made — choices made on principle and for the love of truth and liberty.
Greenspan, for his part, declined to carry out his musical dreams. His grades were only average so he departed to play with the Henry Jerome Orchestra, playing saxophone or clarinet as necessary. He traveled the country on buses between engagements. Soon he tired of that life and in 1945 changed both his school and his major to economics.
The school was New York University, where Mises had begun teaching that very year. But Greenspan did not study with Mises, whom he might have regarded as a washed-up old man who could do nothing for his primary concern, which was his career. Instead, he chose the division called “the factory”: 9,000 students competed in various fields of specialization in business. He graduated with honors in 1945 and enrolled in the masters program, graduating in 1948.
At this point, the lives of Rothbard and Greenspan briefly intersect in an interesting way: at Columbia University. Two years earlier, Rothbard had received his own masters in economics from Columbia, and had enrolled in the PhD program. Professor Arthur Burns was the most prominent faculty member. Burns would later become Eisenhower’s head of the Council of Economic Advisers and head of the Federal Reserve. One might say that he was the Greenspan of his day.
Greenspan dropped out of the Columbia economics program to follow Burns to Washington and model himself after his tendency toward chasing powerful positions and powerful people. Greenspan watched Burns carefully, very impressed at how economics in an age of positivism can be used in the service of state-connected careers.
Rothbard meanwhile stayed behind at Columbia, writing and studying. One of his seminal articles in this period was published in a book in honor of Mises — that supposedly washed-up old man who just so happened to have a penchant for speaking truth to power.
Just as Burns became Greenspan’s model, Mises had become Rothbard’s model. Two more opposing career paths can hardly be imagined. Mises had been tossed out of two countries for his principled stance, and even forfeited a prestigious position in the profession for being unwilling to go along with the Keynesian revolution.
Rothbard would follow a similar path. His article written in honor of Mises, published in 1956, was a reconstruction of utility and welfare economics along nonmathematical lines.
Here we have the graduate student doing what a principled person does: he was pursuing truth through research and writing. He might have chosen to echo the rising Keynesianism and positivism of his day. Certainly he was intellectually capable of become the master of both fields. Instead, he rejected them intellectually and took a different path along lines laid out by Mises.
And what was Greenspan doing? He was running around Washington pandering to the big shots, watching their every move, striving to be like them, and attempting to follow in their footsteps by cultivating press contacts and relationships to people in high places.
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