It laughed at the point that the Southern Journal of Economics made on the COP affecting the price of the good. I believe Hazlitt took this common fallacy that mainstream economists have to the cleaners. No one will buy a good unless he deems the utility he would have by purchasing said good as being higher than keeping the good (or goods) he would have had without making the purchase; few people could care about how much time someone spent in the good (and if they did care, it would be because the believed it would affect the utility of the good in question; not out of charity or some ridiculous economic ‘theory’ that states that consumers would spend more than the COP.)

Lastly, the critique on Rothbard’s view of monopoly theory is ridiculous. Apparently there is no difference, in said authors mind, of being forced to pay for something at a lower ‘market price’ (I said market price because State monopolies might charge less for goods, but the real ‘cost’ of the good is externalized onto taxpayers through regulations and taxation) versus the true cost of a good in a market setting, where no strings are attached and no one has a gun pointed to his head and is being forced to subsidize the cost of the good.

Looking at it this way, one could surmise that State monopolies ‘cost’ more than market ‘monopolies’.

Again, the mainstreamers get it all wrong with Austrian economics. Even relatively deep introspection can do away with these criticisms; surely a trained economist should be able to do the same before submitting such rubbish.

I guess the main reason why I don’t like mainstream economists is their foggy approach to economics and their support for State intervention and quasi-free market views.

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Rothbard de-emphasizes costs of production, insisting that costs are price-determined, rather than price-determining. To the extent that costs of production are analyzed, they are given the subjective interpretation of psychic costs involved in the disutility of labor and waiting.
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Obviously, there are costs of production. However, costs of production are not the factor in determining the price of the goods sold. A good can be sold when a buyer wishes to buy up to a certain maximum limit ($X), which is equal to or above the minimum price at which the seller is willing to sell the good ($Y). The buyer has a sense of how high he will pay for the good (either an absolute limit he sets, or an inuitive fly-by-wire feel). Likewise for the seller and how low is the price at which he will sell the good. As it happens, sellers will sell goods at prices below their costs of production. This is because, if the market really doesn’t want to buy their product at the COP or higher, they are going to lose more money by not selling, as opposed to selling.

I would make the following observation, regarding the COP. Firstly, a large portion of the cost of production is not recoverable. Secondly, there is a small portion of it that is recoverable. For example, if I make a computer, and later cannot sell it at the cost of production, I can recover some costs of production, but not others. I cannot recover the labor-associated costs. Nor the opportunity-cost.

What I can recover is some of the material costs. If I tear it apart, I can recover part of the costs of the plastic, chips, electronics, monitor, keyboard, etc used to make it. From what I can recover, you must deduct several costs of recovery: (1) The cost of tearing the computer apart; (2) The amount by which the parts have depreciated; (3) The opportunity cost; (4) The cost of selling the parts individually. Let’s call this the Adjusted Cost of Recovery (ACOP).

Now, to determine whether or not I will tear apart the computer, we need to consider how much money I would obtain if I sold it. Thus, I would need to determine the highest price at which a consumer would buy the computer. From that, I will need to subtract the cost of finding that consumer and selling the good to him (opportunity cost and cost of sale). Lets call this the Adjusted Gain From Sale (AGS).

If the adjusted cost of recovery is greater than the adjusted gain from sale, I will not sell the computer as a whole, but will tear it apart and sell it’s parts separately. If I am in such a dysmal situation, I have obviously done a very poor job, as I have put various goods together in such a form that not only is the new good’s value less than the adjusted cost of production, but is also less than the cost of production.

Ultimately, it is the interaction between buyers and sellers that determines the price at which goods are sold. The relationship the entrepreneur perceives between the cost of production and the market value of the produced good will determine whether or not the entrepreneur actually produces the good. Barring other considerations, if the entrepreneur thinks that he can’t recover the cost of production, he probably wont make the good. However, entrepreneurs make mistakes. He may think that he can recover the cost of production, but reality may not bear him out. Mistakes such as this, even for the best entrepreneurs, are unavoidable.

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to say the very least. These axioms are not “apodictically true” in the absolute sense, but are relative truths, subject to so many qualifications that they cannot support Rothbard’s logical arguments. In the absence of the necessary qualifications, this reviewer would reject the axioms as meaningless nontruths.
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What qualifications? The author here merely asserts this, and does not (nor, I argue can he) back it up. There is no qualification of the action axiom. Likewise for the variety of resources, human and natural. We clearly live in a heterogenous world. Regarding leisure being a consumer good, this is something that is also undeniably true, though different individuals may place different value on it. At the very least, everyone needs a certain number of hours of sleep; hence, leisure is, at least to that extent, a consumer good. Regarding the axiom of indirect exchange, it’s simply a limiting condition for when indirect exchange is occuring.

Finally, the money-profit maximization postulate for firms is the one least central, and is simply a “rule of thumb”, with frequent exceptions. This is the one area where I am uncomfortable with the Austrians. However, even here, the Austrians are much more intelligent about this than mainstream ecomists, who almost always act as if monetary profit is the only thing considered by individuals. Regarding my criticism of Austrians here, it is really splitting hairs, but I don’t think that this should by any means be called a “postulate” (minor axiom). Rothbard partially soothes my concerns here by noting in his discussion of this axiom that it is a specific case of the more generalized form, that firms always aim to maximize their psycic profit (which is completely redundant with the action axiom).

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Involuntary unemployment, the concentration of economic power in the large corporation, and economic growth and development are among the contemporary economic problems which the author fails to recognize, either because he denies the existence of these conditions, or because he denies that such conditions constitute problems to a free market economy. Therefore, even if, for purposes of argument, we accept Rothbard’s analysis as logically valid, it would be of limited and doubtful usefulness as an intellectual tool for solving practical economic problems.
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Well, Rothbard illustrates how these problems really don’t exist, or how they really arent problems. He does not just assert that they don’t exist, with no argument to back it up. Using praxeology, he shows how they cannot exist or are not problems; and he uses historical facts to illustrates (not prove) his points. Austrian economics has proposed real solutions that would work for real problems caused by The State, and shown how decried “problems” with the free market aren’t fixed by State Intervention (or perhaps they are “fixed”, but new problems are created).

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Third, the analysis of monopoly is untenable, because grants of privilege by the state are identified as the sole source of monopoly. This analysis denies the existence of monopoly originating in the market power of large corporations and cartels.
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As Rothbard has shown, monopoly prices cannot originate on the free market. There are always competitors waiting to take advantage of opportunities created by over-pricing. Not only in the same area, but also in alternate solutions to the same problem. Cartels are unsustainable, and they invite competition into the field. One must conclude that if a company has obtained “monopoly size” in a market, that’s because it has arrived first and capitalized, or because it has outcompeted all competitors. However, the “monopoly prices” so decried cannot exist. Indeed, how could we possibly tell if the company was charing “monopoly prices”? This is a bunch of vague mumbo-jumbo. Furthermore, as Rothbard has shown, there is a practical limit to the size that a corporation can grow to, and after that point, it starts to run into calculation chaos.

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Rothbard does not recognize that concentrations of market power can be used coercively to establish monopolistic restraints of trade. Consequently, he develops an indefensible double standard of monopoly, according to which governmental monopoly is condemned as very bad, while corporate monopoly is regarded as nonexistent or harmless.
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If a company obtains “monopoly size” on the free market, it could not be because of coercion, but only because customers *chose* to purchase their products, as opposed to purchasing competing products, or not using said kind of products. One wonders what the revier think the word “coercion” means. Rockefeller didn’t point a gun to anyone’s head and mandate they buy his oil. The critic is succumbing to the nirvana fallacy here: there is no such thing as “perfect competition” (and Austrians don’t ever assume there is for any analysis), and furthermore, we can’t even determine the prices that “perfect competition” would produce. We should not be comparing the free market to a “perfect competition” scenario, but to what we’d have without these entrepreneurs — nothing.

Considering that, Rothbard has no double standard. He does not oppose the possibility of a company achieving “monopoly market share”, nor does he even declare it’s completely impossible. He is not really opposed to “monopoly prices” in the conventional sense, either, for that is a non-sensical position, as there’s no way to tell if one price is a “monopoly price” or not. Rothbard is opposed to The State using coercion to create monopolies. The only way there can be monopoly prices is if The State has used coercion to enforce a monopoly and ban competition.

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Fourth, there is a complete absence of empirical verification. Rothbard not only fails to verify axioms, postulates, and conclusions, but also insists that empirical verification is not proper analytical procedure, because he regards economic truth as empirically indeterminable.
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The reviewer here is not stating his unjustified and incorrect assumption that economic truths need to be determined empirically and that they can be determined empirically. As Mises has shown, this is impossible, as history is a complex phenomena, and open to multiple interpretations. We do not need to verify economic truths, because we already *know* the fundamental truths of economics, as we are human beings and can determine this by introspection.

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The reader is asked to accept both assumptions and conclusions as economic dogma, and is allowed to question only the internal logical consistency of the system.
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The reader is not “asked” to accept them. The reader cannot help but accept them; any denial of such is non-sensical. You cannot logically and consistently deny the action axiom.

The postulates are not so fundamental, but they too need no empirical verification. The diversity postulate is a priori to human action, and a result of the physical realities of this world. I have explained this above.

http://mises.org/rothbard/mes/reviews.asp

Other reviews:

http://www.amazon.com/exec/obidos/tg/detail/-/0945466323/103-1339353-4086224?v=glance#product-details

http://www.book.nu/0945466323

As for reviews from mainstream economists, you’ll have to look around. There aren’t many well-organized useful sites by mainstream economists).