Rothbard’s historical-critical essay challenges Adam Smith’s reputation as the founder of economics and an exemplary advocate of laissez-faire. Moving from historiography through value and monetary theory to religious and political commitments, it portrays Smith as interrupting a sophisticated Continental tradition. Its claim is not merely that Smith had predecessors, but that his authority displaced their achievements.
No thinker, in economics or out, has enjoyed as good, even rapturous, a "press" as Adam Smith.
This opening establishes the essay’s polemical target: a reputation that, Rothbard argues, has survived substantive criticism. Drawing on Schumpeter, Kauder, de Roover, and Grice-Hutchinson, he challenges an Anglocentric history of economics that marginalizes medieval scholastic and later French and Italian contributions.
The leader of these revisionists was Joseph Schumpeter, whose majestic History of Economic Analysis (1954) can be interpreted as largely a bitter and trenchant assault on the Smith-Ricardo orientation of the orthodox history of thought.
Rothbard reconstructs a lineage from Olivi’s subjective valuation and Buridan’s account of exchange through Salamanca to Cantillon and Turgot. These thinkers connected prices to consumer utility and scarcity; Cantillon and Turgot also developed accounts of entrepreneurship, monetary adjustment, capital, and interest. Rothbard interprets this inheritance as anticipating Austrian economics. Buridan illustrates how early theories could explain exchange through differences in valuation rather than equality between the goods exchanged.
Buridan also rejected the Aristotelian view that two goods exchanging for each other must be equal in value.
The value paradox supplies Rothbard’s decisive example. Bread and water command low prices despite their usefulness because they are abundant; diamonds command high prices because they are scarce. Earlier thinkers, he argues, understood that market choices concern goods under particular conditions of availability, not the usefulness of entire classes.
The scholastics noted that the key to the mystery is relative scarcity.
Smith’s early lectures accepted the traditional solution, yet The Wealth of Nations severed utility from exchange value. Rothbard interprets this reversal as opening the way to labor and production-cost explanations, ultimately informing Ricardo and Marx. He connects it to Smith’s abandonment of Hume’s monetary adjustment mechanism in favor of an account in which surplus specie simply leaves a country. His proposed unifying explanation is Smith’s preference for equilibrium over the processes through which markets adjust.
Two apparent inconsistencies thus become expressions of one methodological retreat. Consumer-centered analysis of exchange gives way to a “natural price” determined by production costs, while monetary equilibrium appears to require no temporal adjustment. Rothbard consequently treats Smith’s innovation as a loss of explanatory power rather than a scientific advance.
The argument then shifts from method to religious culture. Adopting Kauder’s speculative interpretation, Rothbard contrasts Catholic and Thomist acceptance of moderate consumption with Calvinist elevation of labor as an end. He reads Smith’s hostility to luxury and endorsement of interest-rate ceilings as evidence of this orientation. Such ceilings, on his account, redirect credit away from consumers and speculators toward borrowers Smith considers worthy.
Rothbard also tests Smith’s liberal reputation against his support for usury restrictions and navigation acts, and his energetic enforcement of customs revenue. He contrasts these commitments with the French laissez-faire tradition, especially Turgot’s efforts to liberalize trade, reduce taxation, and abolish forced road labor. French natural-law rationalism appears here as a firmer foundation for liberty than Scottish appeals to custom and limited human knowledge.
The final section broadens the critique to the Scottish Enlightenment and Hayek’s admiration for it. Rothbard depicts the Presbyterian Moderates as religiously tolerant but committed to royal patronage, the established church, and British state power, distinguishing intellectual tolerance from political liberty. He traces their treatment of unintended consequences to providential explanations of the Jacobite rebellion, challenging Hayek’s celebration of the concept as an explanation of spontaneous social order.
The conclusion presents Austrian economics as recovering the subjective-value tradition Smith displaced, while accusing Marshall of weakening that recovery. Consumer choice, market process, and consistent laissez-faire provide Rothbard’s evaluative standards. His revisionist history combines methodological criticism with a polemical religious and political genealogy, contesting both Smith’s theoretical achievement and his liberal reputation.
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