Sciabarra Encyclopedia Article on Libertarianism

Chris Sciabarra has an excellent article on "Libertarianism" included in the International Encyclopedia of Economic Sociology.

Mises located the central ‘caste conflict’ in the financial sector of the economy. In such books as The Theory of Money and Credit, he contends that government control over money and banking led to the cycle of boom and bust. A systematic increase in the money supply creates differential effects over time, redistributing wealth to those social groups, especially banks and debtor industries, which are the first beneficiaries of the inflation.

Mises’ student, Murray Rothbard, developed this theory of ‘caste conflict’ into a full-fledged libertarian class analysis. Rothbard views central banking as a cartelizing device that has created a powerful structure of class privilege in modern political economy. These privileges grow exponentially as government restricts market competition and free entry, thereby creating monopoly through various coercive means (e.g. compulsory cartelization, price controls, output quotas, licensing, tariffs, immigration restrictions, labour laws, conscription, patents, franchises, etc.).

Rothbard’s view of the relationship between big business and government in the rise of American ‘statism’ draws additionally from the work of New Left historical revisionists, such as Gabriel Kolko and James Weinstein. These historians held that big business was at the forefront of the movement towards government regulation of the market. That movement, according to Rothbard, had both a domestic and foreign component, since it often entailed both domestic regulation and foreign imperialism to secure global markets. The creation of a ‘welfare-warfare state’ leads necessarily to economic inefficiencies and deep distortions in the structure of production. Like Marx, Rothbard views these ‘internal contradictions’ as potentially fatal to the economic system; unlike Marx, Rothbard blames these contradictions not on the free market, but on the growth of statism.