Murray N. Rothbard, “Imputation”

Murray N. Rothbard’s dictionary article “Imputation,” originally published in 1987 and republished in the 2008 second edition of The New Palgrave Dictionary of Economics, explains how consumers’ valuations give rise to the prices of productive resources. Moving from Austrian value theory through marginal productivity and socialist calculation to Aristotle, Rothbard distinguishes the principle that means derive their value from ends from the market process needed to establish actual factor prices.

Wieser introduced “imputation” into economics by analogy with the legal attribution of responsibility. Its economic meaning, developed within the Austrian School, concerns the transmission of valuation from desired satisfactions to consumer goods and then to the factors used to produce them. Rothbard’s example makes the direction of explanation explicit:

In short, values are ‘imputed’ back to the prices of the factors of production; the rents of Champagne land are high because the consumers value the champagne highly, and not the other way round.

Production costs therefore reflect the value of forgone products rather than independently determining consumer valuations. Rothbard contrasts Menger and Böhm-Bawerk’s attention to the output lost when a factor unit is withdrawn with Wieser’s pursuit of precise value calculations. His objection to Wieser is methodological: subjective preferences are ordinal, so treating them as quantities that can be added or multiplied misconstrues their nature.

Rothbard credits marginal productivity theory with largely resolving the allocation problem, but qualifies the claim that variable factor proportions suffice to determine relative factor prices. What matters is also whether resources can move between different uses:

If two factors are each purely specific to a given product, then, even if their proportions are variable, there is still no principle by which the market can determine their relative prices except by arbitrary bargaining (Mises, 1949, p. 336).

He regards such complete specificity as rare, limiting the practical scope of this exception. More fundamental is the distinction between the derivation of value in principle and its realization through exchange. Factor prices emerge indirectly through market prices and entrepreneurial trial and error, not through arithmetic performed on consumers’ preferences.

There is no direct, abstract or pure process of imputing values.

This claim supplies the article’s connection to the socialist calculation debate. Schumpeter’s contention that consumers implicitly evaluate productive means when demanding final goods, Rothbard argues, bypasses the problem of how anyone acquires the knowledge necessary for calculation. Following Hayek, he emphasizes that valuations, scarcities, and demands are not completely known to participants. Market prices communicate knowledge; merely asserting a logical relationship between ends and means does not replace that function.

The closing discussion traces imputation to Aristotle’s Topics. Rothbard identifies both the dependence of instruments’ value on useful ends and a precursor of marginal analysis in comparisons between additions to, or losses from, an existing bundle of goods:

Good A will be more valuable than B if the loss of A is considered to be worse than the loss of B.

This historical conclusion places economic imputation within a broader theory of action. The article’s central contribution is its insistence that explaining why productive means have value and explaining how their prices become knowable are connected but distinct tasks. Subjective valuation establishes the direction of dependence; market coordination supplies the concrete process.