When Murray Rothbard wrote “Science, Technology, and Government” in 1959, supporters of the free market needed to confront a challenge that remains relevant today. In 1957, the Soviet Union launched its “Sputnik” satellite, thereby defeating the United States in the race between the two countries to be first into space. Did this victory show, or at least suggest, the superiority of Soviet centrally-planned science to the American market economy? Critics of the free enterprise system like John Kenneth Galbraith (one of Rothbard’s least favorite economists) claimed that scientific research and development required government planning and control. The free market, these critics claimed, could not carry out the vast efforts research now required. Could private enterprise have built the atomic bomb? The Soviets have long since departed, but the fallacies in the arguments for centrally-controlled science live on today. Government spending on science and technology has increased far beyond its level in 1959.
Contrary to common belief, a tax exemption is not simply equivalent to a government subsidy. For a subsidy mulcts taxpayers in order to give a special grant to the favored party. It thereby adds to the ratio of government activity in the economy, distorts productive resources, and multiplies the dangers of government control and repression. A tax exemption, or any other type of tax reduction, on the one hand, reduces the ratio of government to private action; it frees private energies and allows them to develop unhampered; it reduces the danger of government control and distortion of the economy. It is a step toward the free market and the free society, just as a government subsidy is a step away from the free society.
This essay was found among Rothbard’s papers. But the exact circumstances under which it was written have not yet come to light. As readers will soon discover, it contains an astonishing wealth of insights.
Los Angeles, July 2015