glyph 479: history of economics... Adam Smith's wrong turn, taken up by Ricardo ... Emil Kauder's revisionism, taken up by Murray Rothbard ... Austrian School ... scholastic revisionism complemented by work of Emil Kauder ... subjective utility vs. labor as explanation of prices ... equilibrium focused economics that assumes entrepreneurship away vs. an economics of entrepreneur and customer driven discovery processes
The Austrian School economist and historian, Murray N. Rothbard, in the introdution to his Economic Thought Before Adam Smith, describes the work of scholastic thinkers, and the radical thesis of Emil Kauder on the place of Adam Smith in the history of economics.
For me, the impact of scholastic revisionism was complemented and strengthened by the work ... of the German-born 'Austrian' historian, Emil Kauder. Kauder revealed that the dominant economic thought in France and Italy during the seventeeth and especially the eignteenth centuries was also 'proto-Austrian', emphasizing subjective utility and relative scarcity as the determinants of value. From this groundwork, Kauder proceeded to a startling insight into the role of Adam Smith that, however, follows directly from his own work and that of the scholastic revisionists: that Smith, far from being the founder of economics, was virtually the reverse. On the contrary, Smith actually took the sound and almost fully developed, proto-Austrian subjective value tradition, and tragically shunted economics on to a false path, a dead end from which the Austrians had to rescue economics a century later. Instead of subjective value, entrepreneurship, and emphasis on real market pricing and market activity, Smith dropped all this and replaced it with a labour theory of value and a dominant focus on the unchanging long-run 'natural price' equilibrium, a world where entrepreneurship was assumed out of existence. Under Ricardo, this unfortunate shift in focus was intensified and systematized.
Murray N. Rothbard, Economic Thought Before Adam Smith
October 7, 2009