Murray N. Rothbard on Research in Economic History, Volume 4 (1980)

Murray N. Rothbard’s review of the 1979 volume of Research in Economic History, edited by Paul Uselding, evaluates selected contributions through a common methodological concern: economic historians must establish the reality of the phenomena they explain, choose measures appropriate to their claims, and attend to monetary causes and market adjustment. He welcomes the annual as an indication of current research interests, but concentrates on four of its seven articles: two studies of Kondratieff long waves and two of northern agriculture before the Civil War. The review moves from an extended critique of cyclical explanation to a comparison of agricultural profitability studies, ending with praise for historically grounded research.

Hartman and Wheeler locate long waves in technological innovation, while Rostow and Kennedy explain them through changes in agricultural prices relative to industrial prices. Rothbard questions both the evidence and the causal frameworks. Counting patents, he argues, cannot reliably measure consequential technological change. More damagingly, the post-1940 period resists the proposed chronology: an expansion lasting forty-odd years sits awkwardly within a cycle supposedly lasting about fifty, and continuing innovation contradicts the expected slackening during an upswing. The association of earlier cyclical peaks with major wars also leaves World War II unexplained; invoking Vietnam does not establish a corresponding peak.

Rostow and Kennedy accommodate the postwar period by identifying a peak in 1951 and a trough in 1972, based on falling real agricultural prices. For Rothbard, this solution exposes circular reasoning:

But here we have the dead end of their methodology: Seeing the movement of real agricultural prices as the key to alleged long swings in the economy, Rostow ends by defining an economic downswing by this very movement, even though every other economic indicator was booming to a marked degree.

The objection concerns more than dates. A proposed explanatory variable becomes the definition of the phenomenon it supposedly explains. Declining agricultural prices therefore count as an economic downswing even when other indicators show prosperity. Rothbard insists on distinguishing movements in particular prices from movements in economic activity as a whole.

His causal criticism turns on the omission of money and bank credit. Accounts of wartime price increases should consider military expenditure financed by monetary creation. Similarly, explaining the boom of 1815–18 and depression of 1819 without the Bank of the United States or the financial panic excludes mechanisms directly relevant to the historical episode. Physical and technological explanations based on investment gestation periods and lags also require an account of why entrepreneurs repeatedly fail to anticipate predictable conditions. Rothbard does not endorse the stronger claims of contemporary rational-expectations analysis, but invokes the market’s capacity to learn and adjust:

Bank credit expansion, in contrast, distorts such market signals as the rate of interest, and hampers the market’s capacity to adjust and equilibrate.

This distinction supplies the review’s central theoretical move. Technological delays need not generate persistent cycles if market participants can recognize and accommodate them; credit expansion, however, can interfere with the signals on which adjustment depends. Rothbard offers this contrast as a reason to question explanations that exclude monetary institutions, rather than developing a complete alternative account of each historical fluctuation.

The deeper issue is whether the long cycle itself has been demonstrated:

Before we set out to explain phenomena, furthermore, we should make quite sure that they really exist. Is there a long cycle at all?

Three and a half alleged cycles—or four and a half under the revisionist chronology—provide a weak basis for a regular historical law. Moreover, Rothbard argues that the observed movements chiefly concern wholesale prices: nineteenth-century periods of falling prices could also be periods of growth and prosperity. He proposes that productivity and output growth may explain a secular tendency toward lower prices, interrupted by war-related monetary inflation and prolonged inflation after World War II. His closing suggestion shifts attention from economic periodicity to intellectual history: renewed interest in Kondratieff theory during the Great Depression and contemporary stagflation might reveal how economists respond when prevailing orthodoxy cannot explain their circumstances.

The agricultural studies extend the same concern with measurement and adjustment. Bateman and Atack’s findings for 1860 imply that farmers invested excessively in agriculture because its returns were lower than those in manufacturing. Rothbard challenges the inference of irrationality. Capital markets were imperfect, manufacturing offered relatively few corporations capable of attracting broadly pooled investment, and the capitalization of returns could tend over time to equalize rates across sectors. A single year also cannot establish representative profitability without determining whether its harvest conditions were unusual.

Clarence Danhof’s companion study earns praise because its sample of 190 northern farms spans four prewar decades, reveals varied returns, and considers capitalization in older farms:

Danhof's sample of 190 northern farms ranges over four decades before the Civil War, reveals considerable diversity of returns, stresses the role of capitalization and hence the leveling of returns in older farms, and cautiously points to the high profitability of American agriculture.

Danhof’s account connects agricultural growth to farms’ increasing participation in the market economy. For Rothbard, its cautious conclusions exemplify the historical judgment missing from more striking but less securely grounded claims. The review’s relevance lies in this sustained distinction between statistical patterns and defensible economic explanations: neither cyclical regularity nor investor irrationality should be inferred without representative evidence and attention to the institutions through which markets operate.