Prices and Consumption

Rothbard’s approach to money prices is not as a barter exchange system. Instead, he made money prices the common denominator for all exchange ratios. You can now engage in economic calculation. Every homogenous product will tend to be bought and sold at one particular money price at any given time. The money regression theorem is in this chapter on prices and marginal utility.

There is no measuring or comparability in the field of values or ranks. Money permits only prices to be comparable, by establishing money prices for every good. Money is demanded and considered useful because of its already existing money prices. Regression is not infinite. The clue to its stopping point is the distinction between conditions in a money economy and conditions in a state of barter. Money must develop out of a commodity with a previously existing purchasing power, such as gold and silver had.

Money cannot be created out of thin air by any sudden social compact or edict of government.

An Alice J. Lillie Seminar. This lecture covers pp. 233-317 in the Scholar’s Edition of Rothbard’s Man, Economy, and State.