Price Controls Are Back!

Murray N. Rothbard’s “Price Controls Are Back!” is a short polemical chapter of economic commentary. Its scope is the recurrence of state price-fixing from ancient and revolutionary precedents to the Clinton administration’s cable-rate rollback and threatened health-care controls. Rothbard’s thesis is stark: legal ceilings do not cure inflation or help consumers; they suppress the price signals that coordinate supply and demand, producing scarcity, evasion, rationing, lower quality, and coercive enforcement.

In every age, in every culture, price controls have never worked. They have always been a disaster.

The essay is organized as a cumulative indictment. Rothbard first invokes Rome, the French Revolution, the Soviet Union, Nationalist China, South Vietnam, the world wars, Truman, Nixon, and Carter to show, in his view, that the same mechanism reappears across regimes. The conceptual move is to distinguish visible cheapness from real access: a controlled price may look humane, but if it lies below the market-clearing level it makes the good disappear or shifts it into queues and black markets.

Price controls, I, and countless economists before and since, pointed out, never work; they don't check inflation, they only create shortages, rationing, declines in quality, black markets, and terrible economic distortions.

His central historical exhibit is the 1946 meat crisis. Rothbard recalls writing his first economic memorandum against Truman’s meat controls, then reconstructs the sequence by which controls left on meat generated empty markets and even shortages of insulin, a meat-derived product. Truman’s reported consideration of nationalization and troop seizures lets Rothbard connect price policy to political force: when owners and producers refuse to supply at commanded prices, enforcement escalates from regulation toward confiscation. The sudden end of the crisis after decontrol supplies the essay’s strongest empirical punch.

In a couple of days there was plenty of meat for consumers and the diabetic alike. The meat crisis was over.

For Rothbard, this does not merely show that decontrol worked; it reveals what the word “shortage” meant in the first place. The shortage was not a natural absence of goods but the result of forbidding market prices to perform their coordinating function. Truman’s retreat is therefore read as an unwitting admission that the policy had manufactured the emergency it claimed to manage.

The most remarkable part of this affair went unremarked: that President Truman, apparently without knowing it, had conceded the crucial point: that the “shortage” was, pure and simple, an artificial creation of his own price controls.

The Nixon section shifts from economic causality to political psychology. Rothbard remembers denouncing the 1971 wage-price freeze and debating Herbert Stein, who, in Rothbard’s telling, knew controls were harmful but blamed economists for failing to educate the public. Rothbard rejects this exoneration of officials. He sees a recurrent temptation among administrators: even when the theory is known, controls offer a gratifying expansion of state power and a way to appear active against inflation without addressing its monetary causes.

The final movement brings the lesson into 1993. The FCC’s cable-rate rollback and the Clinton health-care agenda are presented as the newest forms of the old error. Rothbard attacks the cable rationale—that rates rose faster than general inflation—as statistical sleight of hand, since averages necessarily contain above-average prices. In health care, he stresses that controls would be imposed on a sector already heavy with government-driven administrative costs and rapid innovation. Shortages, in this reading, are not an unfortunate accident but the opening for rationing: once prices no longer allocate care, officials will allocate it by priority and command.

We should know by now that reasoned arguments by economists or disillusioned ex-controllers are not going to stop them: only determined and militant opposition and resistance by the long-suffering public.

The chapter’s relevance lies in its compressed Austrian-libertarian account of prices as social coordinators and of price ceilings as political violence. Its rhetoric is deliberately sweeping, but its structure is clear: historical recurrence, economic mechanism, illustrative case, elite incentive, contemporary warning. Rothbard’s core claim is that price controls replace voluntary adjustment with queues, black markets, bureaucracy, rationing, and force, while leaving the underlying inflationary problem untouched.