Dr. Peikoff's monumental work lays the necessary groundwork for a complete
rehabilitation of the science of economics. Of course, every science needs a
rational philosophy at its base, specifically an objective theory of concepts.
But economics today sorely needs that base. For it's a science in slow-motion
collapse, bifurcated between the "theoreticians" and the
"empiricists," each unable to discover genuine truths about economic
activity or economic policy.
The theorists weave a web of patently unreal
theories such as "pure and perfect competition" and "market
failure" derived from admittedly arbitrary assumptions. Meanwhile the
empiricists are mired in the impenetrable complexity of concrete-bound events,
unable to make conceptual sense out of markets. Thus, one group creates nonsense
theories about a pseudo-reality while the other can make no sense of the reality
standing before them. The more "modern" economists now doubt whether
rational behavior can ever prevail in markets - a reflection of their own mental
chaos, not of the businessmen they purport to be studying.
Modern economics, taking its cue from modern
philosophy (which upholds the alleged "nobility" of self-sacrifice) is
also deeply suspicious of the ethic of self-interest, hence of the profit motive
that obviously inspires all business creators. Some economists admit that this
motive exists but presume it fosters unethical acts. Others deny that it's a
motive and yearn for an alternative.
No wonder economists today are widely ridiculed
for their inability to analyze markets coherently, forecast accurately, or give
policy advice objectively.
Dr. Peikoff's profound book provides a solution
to the dilemmas faced by modern economics, blazing a trail along which rational
economists may now walk. His book can ensure that economic analysis and policy
will be guided by reason and a respect for rational self-interest, thereby
enhancing material prosperity.
First, Dr. Peikoff rejects any breach between
reason and facts and defends the objectivity of concept formation. In so doing
he defines and validates the basic principles of a rational science of economics
(in the chapter "Capitalism").
Second, he defends rational self-interest as
the only ethic proper to man and the only one consistent with mutual
cooperation. In so doing he explains, among other issues: the role of reason in
creating wealth, the objectivity of prices, the source and justification of
profits, the nature of competition, the role of gold-based money and free
banking, the benefits of unrestricted free trade and the case for unadulterated,
Finally, he demonstrates why a rational
economist must be a pro-capitalist economist. If economics ever regains the
respect and attention it once received when the Classical Economists wrote, Dr.
Peikoff's book will be responsible for it.
Richard M. Salsman is President of InterMarket Forecasting,
Inc., an investment research
and forecasting firm based in Boston.