The Praxeological Foundations of Murray Rothbard’s Study of the Ruling Elite

Introduction
Murray Newton Rothbard, a distinguished professor of economics and a luminary of the Austrian School, was profoundly influenced by Ludwig von Mises. In his seminal work, Human Action, Mises articulated a praxeological system grounded in the action axiom, from which he derived the core principles of economics. Rothbard, an ardent admirer of Mises, sought to extend this intellectual legacy, weaving together a comprehensive framework that illuminated the dynamics of power and society.

Theory and History
To grasp Rothbard’s analysis, one must begin with methodology. The Austrian School embraces methodological individualism, asserting that only individuals act, not collectives like states. Yet, these actions are inherently subjective, posing challenges for historical study. Ludwig von Mises addressed this in his final work, Theory and History: An Interpretation of Social and Economic Evolution. Mises developed a thymological method, blending scientific theory with subjective interpretation. As the book’s title suggests, history demands a theoretical lens to organize and interpret events coherently.

Rothbard continued Mises' work by systematically assembling the Austrian framework into a unified praxeological system. In the 1960s, he published Man, Economy, and State: A Treatise on Economics, followed in the 1970s by Power and Market: Government and the Economy. These works, often published together, form a praxeological treatise on economics and political science. In the 1980s, Rothbard added into this system ethics with The Ethics of Liberty.

As a historian, Rothbard authored the multi-volume Conceived in Liberty, a history of colonial and early independent America. Unlike most historians, he insisted that ethical considerations are integral to historical analysis, viewing history as a struggle between good and evil, freedom and oppression. Central to his historical perspective were the exploitation theory and the concept of the ruling elite. While Rothbard’s writings on the ruling elite are scattered across his oeuvre, they have been meticulously compiled into an excerpted summary. This essay builds on that effort, focusing on the theoretical underpinnings of Rothbard’s work and demonstrating how his praxeological approach transformed the traditional theory of the ruling elite into a compelling exposé of what he termed the Rockefeller World Empire (RWE).

Laws of Social Science
Ludwig von Mises argued that the laws of logic and social science are more certain than those of natural science, as they rest on the apodictic categories of thought and action. Rothbard built upon these absolute praxeological foundations, emphasizing that human nature and existence are constrained by our physical reality in a universe governed by natural laws. As individuals in a world of scarcity, conflicts can only be resolved through property rules. Property, Rothbard noted, is acquired either voluntarily or through aggression. Economics studies voluntary exchange, while politics examines aggressive interactions. Both disciplines derive their principles from the action axiom, deducing laws such as marginal utility and supply and demand from the pursuit of value maximization.

Rothbard stressed that historians must master these laws, along with concepts like barter, money, banking, and the price system, which coordinates the exchanges of millions. Without this understanding, historians cannot comprehend the mechanisms driving societal dynamics. Given the economy’s role as the material foundation of civilization, policies that undermine private property, voluntary exchange, or the price system profoundly impact society. This insight underpinned Rothbard’s focus on economic and political factors in his study of history and the ruling elite.

Laws of Politics

The Austrian School underscores the centrality of property and property rules. In The Ethics of Liberty, Rothbard advanced this principle with absolute propertarianism, asserting that all rights stem from objective property rights, deduced from self-ownership and the Lockean homesteading principle of first-use-first-own. Individuals own themselves and acquire property through homesteading, production, or voluntary contracts. All rights, Rothbard argued, are property rights.

In a propertarian society, all interactions are voluntary. However, aggression—exemplified by criminals, mafias, and, most pervasively, the state—disrupts this ideal. Rothbard viewed the state as an institution of aggression, inherently violating self-ownership by monopolizing arbitration. Political science, in his view, studies this institutionalized aggression, rendering the state akin to a mafia-like entity. This perspective radicalized the Austrian School into what can be termed the Radical Austrian School.

Rothbard demonstrated how political processes exacerbate the state’s mafia-like tendencies, fostering special interest groups that manipulate the state for subsidies, monopolies, and cartels. The state thus becomes a “statist cartel machine,” with two dire consequences: it increasingly violates property rights, embodying socialism, and it divides society into exploiters and the exploited. Since history is dominated by states, Rothbard interpreted it as a struggle between elitist exploiters and the oppressed masses.

Laws of Ethics

While Mises maintained that science should remain value-free, Rothbard diverged, arguing in The Ethics of Liberty that ethical science reveals clear distinctions between right and wrong. Grounded in natural law ethics and the axiom of self-ownership, Rothbard deduced that all voluntary interactions are ethical, while all aggression is unethical. This ethical framework imbues Rothbard’s historical studies with a moral dimension, judging actions and ideas as just or unjust, in the tradition of classical liberal historian Lord Acton. His histories, far from neutral, read like gripping crime narratives, exposing the moral stakes of historical events.

Thymology

Scientific theories provide the framework for understanding history, but they are insufficient alone. Rothbard, a systematic thinker, applied methodological individualism to history, moving from individual actions to broader social phenomena. This thymological approach blends objective science with subjective interpretation, requiring historians to evaluate individual motives, costs, and benefits within their social context—ideology, family, friendships, and career. Connecting these details into a cohesive narrative transforms history into a vivid tapestry, both an art and a science.

Intellectual History

From a praxeological perspective, ideas are the bedrock of history. While not all ideas yield practical outcomes, all actions stem from ideas. Rothbard emphasized intellectual history as the foundation of all historical study, arguing that belief in statism shapes the course of history. The state, as a monopoly on arbitration and violence, represents the most pernicious idea in human history, inherently aggressive and prone to escalating evil. Rothbard contended that voluntary relations suffice to organize society, including security, as Gustave de Molinari argued in The Production of Security. Yet, classical liberals like Frédéric Bastiat dismissed this idea, reinforcing the false consciousness perpetuated by state-controlled academia, education, and media.

Political History
When public opinion accepts the state, politics permeates all aspects of life, dividing society into rulers and the ruled. In monarchical times, this division was overt, but Rothbard argued that democracy merely cloaks the ruling elite’s power. The hallmark of the elite is control over the central bank’s money machine. Rothbard’s historical analysis thus centers on monetary history, particularly banking and central bank development, which is easier to study than the complexities of voluntary market interactions. By examining legislation and banking regulations, historians can discern the trajectory of a politicized, aggressive society.

Rothbard’s focus on Anglo-American history highlights the clear battle between liberty and statism, aided by robust record-keeping and the significant power of political leaders. In Wall Street, Banks, and American Foreign Policy, he organized American history by presidential reigns, revealing how political parties and presidents are influenced by special interest groups, particularly bankers. By asking “cui bono?”—who benefits?—Rothbard traced the flow of money to uncover the ruling elite’s true interests.

False Consciousness
Rothbard scrutinized special interest groups, peering beyond their rhetoric to uncover their pursuit of monopoly and cartel privileges. Manufacturers, labor unions, bankers, lawyers, doctors, teachers, and intellectuals all seek cartels for financial gain and to protect their reputations and networks. Modern democracy, Rothbard argued, is a vast cartel machine, with groups vying for privileges while denying them to others. Intellectuals, easily swayed by subsidies and cartel benefits, help the ruling elite shape ideologies and public debate, subjugating the public under a false consciousness that obscures their exploitation.

While the Chicago and Public Choice schools acknowledge the cartel nature of democratic states, Rothbard uniquely emphasized the central bank’s role as the most critical monopoly. He speculated that the central bank manipulates intellectuals through academia and media, and even buys off economic historians to obscure its power. Rothbard supported conspiracy research, cautioning against oversimplification but arguing that it uncovers the motives and responsibilities of the ruling elite. By discrediting conspiracy theories, the state deflects blame onto vague “social forces,” ensuring public compliance with its actions.

The War Between Bankers and the People
In America, the conflict between the people and bankers was starkly evident. The Jeffersonian-Jacksonian movement identified the money monopoly and banking cartel as the foundation of the ruling elite and the greatest threat to liberty. By the 1830s, President Jackson’s movement triumphed, dismantling the central bank’s privileges and extending this to other banks. However, classical liberals faltered ideologically, failing to advocate consistently for a pure gold standard and 100% reserve banking. Their ambiguous support for the gold standard, coupled with national currency names like the dollar, sowed confusion, enabling opponents to manipulate and abandon it. Similarly, weak opposition to fractional reserve banking, due to its complexity, allowed bankers to exploit the system.

Rothbard noted that fractional reserve bankers inherently lean toward statism, driven by the immense profits of such practices. Their symbiosis with the state—demanding bailouts in crises and financing state loans—becomes inevitable, particularly during wars like the American Civil War, which re-cartelized banking and the broader economy. By the early twentieth century, the power of cartels was evident, as highlighted in a 1911 McClure’s article identifying seven men—J.P. Morgan, James J. Hill, George F. Baker, John D. and William Rockefeller, James Stillman, and Jacob H. Schiff—as controllers of America’s fundamental industries through monopolies.

Rothbard echoed McClure’s thesis, systematically detailing the connections between bankers and politicians. Despite efforts by the elite to portray themselves as public-spirited, Rothbard exposed their self-interest. He highlighted how bankers cultivated economists as intellectual defenders and traced their personal networks—ownership, employment, friendships, and kinship. These networks revealed dynastic structures, a historical constant where successful business figures rely on family to form kinship-based dynasties, reducing information costs and fostering loyalty through genetic and emotional bonds.

Three American Dynasties
McClure’s identified three dominant dynasties—Morgan, Rockefeller, and Kuhn, Loeb. Rothbard integrated this with Carroll Quigley’s analysis of the British elite under Cecil Rhodes and Alfred Milner, forming the Anglo-American Establishment. The Morgans, elitist WASPs, faced challenges from the rising Rockefeller dynasty, which allied with ethnic minority dynasties. These dynasties operated hierarchical networks of families, businesses, and friendships—termed “ambits of influence”—with patriarchs like Junius Morgan, followed by J.P. and Jack Morgan, at the center. The Kuhn, Loeb dynasty, led by Abraham Kuhn and Solomon Loeb, cemented alliances through marriage, with Jacob Schiff rising to prominence. The Rockefellers, initially outsiders, built their power through oil and strategic marriages into political and banking families, controlling major banks like Chase and Citicorp.

Rothbard demonstrated how these dynasties collaborated to create a cartelized economy, first in America and then globally. They manipulated public opinion by funding progressive intellectuals, who supported state regulation while the dynasties captured regulatory agencies and the state itself. By 1913, they had achieved regulatory and state capture, justified as a “state-business partnership.” They also pursued a global empire, enforcing American-led cartels through policies like the Monroe Doctrine and military interventions. Crucially, they united to establish the Federal Reserve in 1913, a misnamed central bank, and began advocating for a world central bank.

While united in their cartel ambitions, the dynasties clashed over control. The Morgans sought supremacy, targeting the Rockefellers and Kuhn, Loeb, particularly through political maneuvering, including the assassination of Rockefeller-allied President McKinley. Morgan-backed Theodore Roosevelt targeted Rockefeller trusts like Standard Oil, while Rockefeller-supported President Taft retaliated against Morgan trusts. The public perceived this as a progressive war on Big Business, but it was a struggle for cartel dominance. Economics explains this conflict: cartels are unstable, prone to internal and external competition, with each dynasty vying for control of the Federal Reserve.

The Morgans nearly prevailed, leveraging Theodore Roosevelt’s Progressive Party to secure Woodrow Wilson’s presidency, which facilitated the Federal Reserve’s creation and Morgan control. Their alliance with the British Empire and profits from World War I cemented their global dominance. However, excessive money printing in the 1920s, supporting cartels and Britain, triggered the stock market crash and Great Depression, weakening the Morgans.

Rockefeller World Empire
Seizing the opportunity, the Rockefellers and Kuhn, Loeb allied with a coalition of ethnic minorities, electing Franklin D. Roosevelt. His New Deal targeted Morgan-dominated investment banking and utilities, undermining their power. Recognizing the Morgans’ British backing, the Rockefellers wisely made them junior partners alongside Kuhn, Loeb, establishing the Rockefeller World Empire (RWE) under their leadership.

Conclusion
Rothbard, a master system builder, transformed the Austrian School into the Radical Austrian School, crafting a praxeological framework from the action axiom to elucidate economics, politics, and ethics. Applying this to history, he depicted a struggle between the exploited and the exploiting elite, led by the Morgan, Rockefeller, and Kuhn, Loeb dynasties. These dynasties collaborated to forge an imperialist cartel economy, centered on the Federal Reserve, but vied for its control. The Morgans initially triumphed, bolstered by the British Empire, but their overreach led to the Great Depression. The Rockefellers capitalized on this, forming a coalition to defeat the Morgans and establish the RWE, prudently integrating the Morgans as junior partners.

The RWE drives globalism, seeking a world central bank and the erosion of national sovereignty through centralized states and cultural Marxism. Rothbard believed the Austrian School equips historians to scrutinize the ruling elite, yet even sympathetic scholars have hesitated to continue his work. Over two decades after Rothbard’s death in 1995, the challenge remains for historians to emulate his courage, naming the exploiters and exposing their machinations.