The archive.

Germany's early-2000s stagnation, on this diagnosis, is no passing downturn but the accumulated weight of decades of welfare-state expansion, heavy taxation, labor-market rigidity, and subsidy. Beginning with German opposition to the Iraq War, the essay reads Schroeder's antiwar stance chiefly as electoral maneuvering that distracts from unemployment and malaise. The history runs from the freer conditions of the postwar Wirtschaftswunder through the Social Democratic turn after 1968 to Kohl's accommodation with intervention and the fiscal burden of reunification; the Red-Green coalition appears not as rupture but as another stage on the same trajectory, its tax cuts outweighed by energy levies, union power, and pension obligations. What Germany lacks, Sennholz concludes, is not technical knowledge but the political capacity to dismantle privilege and recover the market freedom he ties to the postwar miracle.

The official German position must be viewed in the light of politics, which is simple strife of party interests masquerading as a contest of principles.

A weakly mandated president and a divided Congress could agree on little in 2002, except the pleasure of spending, which swiftly turned projected surpluses into deficits through defense, farm, and countless other outlays. That bipartisan appetite is the essay's real subject. Federal Reserve money creation is cast as the hidden enabler, adding no real resource but issuing fresh purchasing-power claims against existing goods, falsifying capital signals, and priming boom and bust. A political sociology sorts Congress into four spending blocs, social-need advocates, parochial district-servers, Keynesian full-employment stimulators, and cost-wary conservatives, who converge in a guns-and-butter front weighted toward the butter. Entitlements and mandates, in the closing movement, divide the nation into a provider class and a dependent class, trading natural rights and self-reliance for claims on government.

Stone walls do not prisons make; they are houses of care and dependency.

Aggressive Federal Reserve rate cuts, rapid dollar money growth, a yawning trade deficit, and still, in 2001, the dollar climbed as no other currency shone so brightly. Sennholz explains the paradox first through the euro cash changeover, which drove holders of old European notes, tax evaders and criminal organizations among them, to liquidate quietly into dollars. The deeper account is Austrian: the dollar sits at the narrow base of an inverted pyramid of bank credit, securitization, derivatives, Eurodollar markets, and foreign Treasury purchases, so that crises abroad only strengthen it. Reserve-currency privilege is thus both power and vulnerability. Defending inflated asset prices and mortgage credit, he warns, will bring renewed inflation, rising yields, and a deeper recession beneath the bright surface.

Recessions, after all, are the corrections of the preceding excesses and maladjustments; they may be delayed for a while, but cannot be avoided once the harm has been done.

Falling prices, the popular story runs, are an economic abyss, the mirror of inflation but worse, paralyzing output and employment. That fear is precisely what this 2003 essay overturns. Inflation, Sennholz insists, originates in monetary expansion by the Federal Reserve and the banking system; what looks like deflation is often the corrective aftermath of that expansion, or simply the effect of a rising demand to hold money in fearful, stagnant times. When uncertainty swells cash balances, official stimulus loses force and the Fed is pushing on a string. Easy money lures firms into unsustainable ventures whose eventual liquidation is painful but wholesome, while low rates that no longer signal real saving merely prime fresh malinvestment. Japan's slump, he argues, was prolonged not by deflation but by the interventions meant to cure it.

Declining prices do not call for ever more Federal Reserve money and bank credit.

Interest rates should arise from market forces, not political or central-bank manipulation, because they coordinate entrepreneurial decisions across time; so this compact essay maintains. Sennholz defines the gross market rate as three components: the pure rate rooted in time preference, the inflation component reflecting currency depreciation, and the debtor's risk premium. Against this stands the Federal Reserve, whose rates held below market levels expand borrowing unsupported by genuine saving, inflate stock and real-estate prices, and let people mistake paper gains for wealth. The boom is thereby recast as capital consumption masked by rising asset values, and the ensuing downturn as the market's forced correction of falsified signals. Central bankers may ignore the market rate, he concludes, but they cannot abolish it.

But, in the end, there is general impoverishment.

Argentina stood near civil conflict in March 2002, with banks frozen, presidents falling in quick succession, and protesters dead in Buenos Aires. The catastrophe, this essay contends, sprang not from too much market reform but from reforms that stopped short of the root: Menem's 1991 convertibility plan tied the peso to dollar reserves and tamed inflation, yet left Peronist transfer politics, chronic deficits, and IMF-financed debt untouched. The bank freeze becomes the breaking point where fiscal insolvency turns into open assault on property. Sennholz's remedy is contractual monetary freedom, citizens free to hold and contract in dollars, euros, pesos, or gold, with creditors and debtors renegotiating without new controls, taxes, or compensatory schemes, and a labor market where the unemployed may accept work on freely chosen terms after political devices have failed.

The freedom to work is an economic necessity and a moral imperative.

On the first day of 2002, roughly 300 million Europeans traded their national currencies for a common medium of exchange, and Sennholz reads the changeover as a vast political experiment rather than a technical convenience. He credits the euro's real gains, lower transaction costs, price transparency, sharper competition, then turns an Austrian critique on the European Central Bank, whose mandate defines price stability as consumer-price growth of less than two percent a year. The ECB, he insists, is a political creation bound by the same incentives as every central bank before it: pressure to rescue failing institutions, accommodate welfare-state finance, and loosen money whenever recession threatens. Statutory independence cannot withstand them. Weighing dollar pegs, commodity baskets, and gold, he concludes that no anchor a mandate alone can furnish will hold.

Unfortunately, throughout the long history of central banking no central bank has ever managed to achieve the illusive goal of price stability.

The vitality of Mises's private seminar, set against Wieser's dull lectures, opens this interview's return to interwar Vienna, where Machlup wrote his dissertation and argued monetary theory, business cycles, and method with Kaufmann, Schutz, and Feigl. Looking back from 1980, he redescribes Mises's a priori economics as a domain of construction—powerful for the pure logic of choice, useless for predicting a concrete steel price—and holds that economics is most fertile in negative predictions and least trustworthy in regression and macro-forecasting. He names methodological individualism and subjectivism as the enduring core of Austrian economics once marginalism became universal, concedes that liquidationist advice failed politically in 1933, and turns Hayek's account of the stable 1920s price level and unsustainable investment against Friedman's neglect of relative prices and costs.

I would say methodological individualism and subjectivism are the most important of the whole lot. Marginalism is internationally accepted. No one is an Austrian just because he is a marginalist.

Eleven languages were spoken in the battle Hayek served in as the Habsburg empire collapsed, the scene, he later said, that first turned his mind toward the problems of political organization. Assembled from autobiographical notes and interviews and published here in its 1994 form, this dialogue follows him from imperial Vienna through Mises's private seminar and the marginal-utility tradition of Menger, to the London School of Economics and his long duel with Keynes, and on to Chicago, Freiburg, and the Nobel. He recalls The Road to Serfdom, his essay 'Economics and Knowledge' on the market as a coordinator of dispersed knowledge, and the psychology of The Sensory Order. Throughout, he casts economics not as a mechanics of equilibrium but as a theory of adaptation to the unknowable, and socialism's central error as the conceit of designing society.

There are two alternative methods of ordering social affairs—competition and government direction. I am opposed to government direction, but I want to make competition work.

Economic thought did not climb steadily from Smith to Ricardo to Mill; it discovered truths and then lost them. That wager governs this second volume of Rothbard's Misesian history, which demotes Adam Smith from founder to interrupter — the man who shunted a nearly complete proto-Austrian tradition of subjective value onto the dead end of labor and cost. Ricardo deepens the error with class-conflict distribution and abstract model-building, while Nassau Senior and a neglected Irish school of utility theorists mark the road not taken. Long chapters follow the bullionist controversy, Peel's Act, and the currency-versus-banking debate over fractional reserves, then reconstruct Marxism as heir to millenarian communism from Babeuf onward. Throughout, the reversal is the same: cost never creates value, and entrepreneurs spend only because they anticipate what consumers will pay.

‘Value does not spring from the labour of the producer, but from the desire of the consumer’.

Against the reigning story in which Adam Smith fathered economics, this first volume of Rothbard's Austrian history insists that economic thought can move backward as well as forward, and that Smith diverted a rich pre-classical tradition toward labor-value theory and equilibrium. Writing as an avowed Misesian, Rothbard reconstructs two millennia of neglected analysis: Aristotle on exchange as reverse inequality of valuations, the Spanish scholastics of Salamanca groping toward marginal utility, the medieval usury debates, Buridan's commodity theory of money, and the hard-money critique of royal debasement from Oresme to Mariana. He ties competing doctrines to Catholic-Thomist versus Calvinist culture and treats politics as inseparable from economic theory. The result recovers a proto-Austrian lineage buried by the Whig-progressive narrative.

Adam Smith (1723–90) is a mystery in a puzzle wrapped in an enigma.

Everything follows from a single axiom: no one may initiate physical violence against another person or their property. From that nonaggression principle Rothbard builds an uncompromising system that asks not for smaller government but for none at all, with privatized courts and police, homesteaded property, and the abolition of conscription, welfare, and the central bank. He grounds self-ownership in natural law rather than utilitarian calculation, derives civil liberties from control of material resources rather than treating them as a separate class of human rights, and reads the State as an organized criminal band living by taxation and war. Ranging across schooling, inflation, ecology, victimless crime, foreign policy, and stateless medieval Ireland, this manifesto casts libertarianism as the true heir of America's revolutionary radicalism.

In fact, there are no human rights that are separable from property rights.