This is the tale of two economists who lived parallel lives, and then pursued two different and contrary goals. One was devoted to liberty and one was devoted to the state.

The first remained a teacher during his entire life, never in any prestige institution and never exercising any power. Indeed, he used his post teaching against the exercise of power, and became the world’s most powerful intellectual voice for radical liberalism or libertarianism. This man who loved liberty died in 1995 and his work has taken flight the world over. His books are selling as never before, all of them, and his star is rising by the day.

His name was Murray N. Rothbard.

The second one became the most powerful and influential economist in the world, practically running the world for a very long time. While in power, he was revered by everyone who was anyone. His every utterance could cause hundreds of billions to be made or lost in the market. But he will live out the rest of his days under a cloud of derision and discredit, defending himself against the perception that he created history’s largest financial calamity.

His name is Alan Greenspan.

Let us track these two lives and consider the choices they made.

As Charles Burris has pointed out, they were both born in New York City, in 1926. Rothbard was born on Tuesday, March 2. The following Saturday, March 6, Alan Greenspan was born. They had a similar background and upbringing, Greenspan of German-Jewish heritage and Rothbard of Russian-Jewish heritage. Both attended private schools and pursued their respective passions.

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It is after high school their lives diverged. Whereas Rothbard followed a very mainstream path in academic economics — one that would seem to set him up as giant in the profession — Greenspan went to the Julliard School of Music to pursue his true love, which was the clarinet.

As remarkable as it may seem today, Greenspan was not interested in economics or banking or any technical field. His interests were the arts, at least initially. There is nothing wrong with that, and indeed music has long been considered a foundation of a great education.

I mention this because it is an implausible beginning for the man who would later take the helm of the institution that would purport to manage the world reserve currency, and a man after whom a professorship at New York University has been named.

Meanwhile, Rothbard chose to attend Columbia University. He was not an economics major. His passion was mathematics — and this was even before the full mathematicization of the profession. At Columbia, he studied under the famed statistician Harold Hotelling. It might have been Hotelling who led Rothbard to economic studies, but very early on, Rothbard the mathematician could see what was wrong with that application of statistical methods to economic theory. He would later build on Mises to construct a systematic theory of economics rooted in logical deduction in the manner of 19th-century theorists. All the while, his libertarianism was also in strong formation from early in his youth.

As implausible as it may seem today, Rothbard’s biography would seem to be exactly that which would make for professional triumph with the mainstream of opinion and with the power that be. What made that impossible were the choices he made — choices made on principle and for the love of truth and liberty.

Greenspan, for his part, declined to carry out his musical dreams. His grades were only average so he departed to play with the Henry Jerome Orchestra, playing saxophone or clarinet as necessary. He traveled the country on buses between engagements. Soon he tired of that life and in 1945 changed both his school and his major to economics.

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The school was New York University, where Mises had begun teaching that very year. But Greenspan did not study with Mises, who he might have regarded as a washed-up old man who could do nothing for his primary concern, which was his career. Instead, he chose the division called “the factory”: 9,000 students competed in various fields of specialization in business. He graduated with honors in 1945 and enrolled in the Masters program, graduating in 1948.

At this point, the lives of Rothbard and Greenspan briefly intersect in an interesting way: at Columbia University. Two years earlier, Rothbard had received his own Masters in economics from Columbia, and had enrolled in the PhD program. Professor Arthur Burns was the most prominent faculty member. Burns would later become Eisenhower’s head of the Council of Economic Advisers and head of the Federal Reserve. One might say that he was the Greenspan of his day.

Greenspan dropped out of the Columbia economics program to follow Burns to Washington and model himself after his tendency toward chasing powerful positions and powerful people. Greenspan watched Burns carefully, very impressed at how economics in an age of positivism can be used in the service of state-connected careers.

Rothbard meanwhile stayed behind at Columbia, writing and studying. One of his seminal articles in this period was published in a book in honor of Mises — that supposedly washed-up old man who just so happened to have a penchant for speaking truth to power.

Just as Burns became Greenspan’s model, Mises had become Rothbard’s model. Two more opposing career paths can hardly be imagined. Mises had been tossed out of two countries for his principled stance, and even forfeited a prestigious position in the profession for being unwilling to go along with the Keynesian revolution.

Rothbard would follow a similar path. His article written in honor of Mises, published in 1956, was a reconstruction of utility and welfare economics along non-mathematical lines.

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Here we have the graduate student doing what a principled person does: he was pursuing truth through research and writing. He might have chosen to echo the rising Keynesianism and positivism of his day. Certainly he was intellectually capable of become the master of both fields. Instead, he rejected them intellectually and took a different path along lines laid out by Mises.

And what was Greenspan doing? He was running around Washington pandering to the big shots, watching their every move, striving to be like them, and attempting to follow in their footsteps by cultivating press contacts and relationships to people in high places.

Rothbard received his PhD in 1956 but only after jumping over a thousand barriers that had been put in his path by none other than Greenspan’s own mentor. There were times when Burns’s recalcitrance drove Murray to despair. He felt that he could not comply with Burns’s dictates and could not please Burns and that Burns seemed to be sabotaging his work.

Ironically, Rothbard and Burns had known each other since childhood. They lived in the same apartment building since high school. There can be no question that this was a personal attack against Murray.

Only once Burns became so wrapped up in Washington politics that he could no longer care did Rothbard finally win out. His PhD was rewarded in 1956.

Now let me make a few comments about Rothbard’s dissertation. It was an empirical account of America’s first serious business cycle, the panic of 1819. He scoured every source he could, producing many pages of detailed economic data. He also knew the importance of ideology and personality in the history of economics, so he recounted the debates over the policy response. Then as now, people urged intervention. But unlike today, the government did not respond to the demands for inflation, price supports, bailouts, and fiscal stimulus. As a result, the panic ended and the economy recovered very quickly.

What was the fate of this dissertation? For more than 50 years, it has been the standard reference on this episode. It was printed and reprinted many times. Today, the Mises Institute has an edition out of this book and it continues to sell on a large scale.

Let me hop ahead to Greenspan’s dissertation, which wasn’t filed with New York University until two decades later, in 1977. It was quickly sealed and continues to be unavailable to anyone. No one had any idea what was in it until last year, when a single copy was leaked to a reporter for Barron’s. What it contained was so irrelevant that it barely made the news. It was a collection of reports he had written for various purposes over the previous 20 years — a PhD granted for life experience, as it were.

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What did Greenspan do in the intervening years? He founded a consulting company, Townsend-Greenspan and worked for the National Industrial Conference Board.

To understand Greenspan’s firm and what it did, it is important to understand the role of the economic expert in an age of positivism. In the postwar period, the scientist with Gnostic-style knowledge and shadowy connections to power ascended to massive public fame. The substance itself didn’t matter so much as the illusion of expertise. What his firm sold was Greenspan, to such powerful, regime clients as J.P. Morgan and Co.

Greenspan carefully crafted his image as an omniscient pundit on all matters related to economics. He used his connections to Burns and rising connections to all related power elites to build up a reputation as a monk-like data collector, poring over charts and coming up with printable comments and predictions.

It was mostly illusion. There were no charts and data collections and machines to make perfect predictions. What Greenspan did was commodify his own pandering ways and sell them to a culture hungry for illusions.

All throughout the 60s and the decades following, he worked to craft his personae to fit perfectly with the prevailing ethos. That ethos was statism — the glorification of central management by the experts. Greenspan sought to be top of the heap.

Let me say a few words about Greenspan’s connection to Ayn Rand. The press routinely misunderstands the meaning of this relationship. The only writer who I think has gotten it right, aside from people in the inner circle like George Reisman and Nathaniel Branden, is Frederick Sheehan, author of Panderer to Power. Sheehan points out that Greenspan’s relationship to the Rand circle was always opportunistic and never really had any effect on Greenspan’s life.

She was a famous author on the rise. Greenspan was a master of hitching his wagon to any horse on the move. Rand herself called him the “undertaker.” She would frequently ask her associates: “Do you think Alan might basically be a social climber?” Her intuition was, of course, correct.

But what the Rand episode further illustrates is actually terribly unflattering for Greenspan. It is bad enough for a person to cravenly seek power while remaining in ignorance. But as Greenspan revealed in his 1966 article called “Gold and Economic Freedom,” he actually knew the truth. He knew that the Fed creates business cyles — he wrote this in his article, even getting the story of the Great Depression right. He knew that fiat money builds the state. He said that gold is the only monetary guarantee of freedom.

It is bad enough when a person devotes his life to the service of power when he does it in a state of intellectual ignorance. But when the same person pursues this path in a state of published knowledge, it is nothing short of reprehensible. Thus was his relationship to Rand no different from his relationship to anyone else: he used her as a stepping-stone toward his real goal.

It was only a few years following this article that Greenspan angled his way into the Nixon campaign of 1968, taking the job of coordinator of domestic policy research. He began a shuttle back and forth between New York and Washington that would define the rest of his life.

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In 1970, his mentor Burns was sworn in as the head of the Fed — and here is when Greenspan set his sights on that position as his lifetime goal. Every choice he made after that point was dedicated to this. All the while, he maintained his high public profile, making as many as 80 speeches a year and pulling in huge consulting fees, while otherwise pretending to live a monk-like existence, studying charts and tables and dolling out bits of advise and wisdom for high dollars.

Despite the personality cult he was building, his predictions were almost always wrong. Let me give only the most famous example. On January 7, 1973, the New York Times featured his picture with a spread on brilliant market forecasters. He was quoted as follows: “It’s very rare that you can be as unqualifiedly bullish as you can now.” Four days later, the market peaked and bottomed out 46 percent lower one year later. This was typical for him: somehow able to build a reputation as a prophet while being wrong on everything. His method was always the same: using high-flown rhetoric and obscure language while dissembling and faking his way through life.

It was a perfect method for government work. And so, that same year, he became head of the Council of Economic Advisers. In 1974, he urged President Ford to propose a new tax as a means of combating inflation. He was involved in the “Whip Inflation Now” campaign, complete with WIN buttons — though he knew full well that the real culprit was not a lack of morale but a Fed that would not stop the printing press.

A few years later he wormed his way into the Reagan inner circle and became head of the Social Security Commission that ended up raising payroll taxes, which seemed to save the system but only ended up delaying the inevitable.

All of this was mere prelude toward 1987, when the goal of his career was at hand. He was nominated for the position he had been training for during his entire life: head of the Fed. What happened soon after was the famous stock market crash of 1987. Here he did what he would do again and again during his 20-year tenure. He met every crisis with the same tactic: he opened the monetary spigots.

He did this again and again through his long tenure. Monetary pumping was his one weapon. Think of the occasions: the Mexican debt crisis of 1996, the Asian Contagion of 1997, Long-Term Capital Management in 1998, the Y2K crisis of 1999 and 2000, the dot com collapse, and finally the 9-11 terrorist incidents in Washington and New York. Oh, and never forget that Greenspan, on November 13, 2001, received the Enron Prize.

What was behind all of this? Essentially, he proved himself adept at serving the state whenever it needed help. Politicians used Greenspan as what Sheehan calls their “air-raid shelter.” He did them a favor and they returned it by appointing him again and again, and they fawned over him as no one has ever been fawned over. And it’s no wonder. He was history’s biggest counterfeiter.

You can see the map of this in the federal funds rate. Looking at the chart from the sixties to the present we see a huge arch, with the peak in 1979, and the rate trending steadily downward to the present level of zero. The only way this could be justified would be through a large increase in savings and capital, and we have not seen this. This picture of lower and lower rates is wholly artificial. Not only that, they are bubble inducing in the extreme.

What we are experiencing now, in the US and other countries, is a direct result of Greenspan’s tenure, which led to the greatest financial catastrophe in modern times. And make no mistake: every bit of this can be blamed on Greenspan directly.

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We know from on-record reports of everyone who worked with him that he ruled the Federal Open-Market Committee meetings with an iron fist, never seeking anyone else’s opinion nor tolerating dissent to his political intuitions. He would beat back any contrary view with withering stares and implicit and explicit rebukes. It was rule by fear and intimidation. He would frequently make declarations on the state of the economy that had no basis at all in reality, and everyone in the room would know it. But after a while, it became clear that no one could penetrate his brain. Instead, those gathered would just roll their eyes and walk away in despair, muttering among themselves. He could make or break subordinates and colleagues.

He continued to cultivate his public image as a way of crushing disagreement within the Fed. The message he sent through his high status was: don’t you dare disagree with this god on earth whom all people adore. For a time, we had the entire Wall Street and Washington establishment singing one long and united chorus of the hymn Thank God for Greenspan. He encouraged this, sending his minions out to tell the press that he deserved credit for all things: an uptick in employment, a downtick in the trade deficit, an optimistic earnings report from Wall Street. No matter what the news, he would take credit for it, even if the news had no bearing at all on any Fed policies.

Those were crazy times. A fake article appeared in the New Republic that told of a cult on Wall Street involving candles and an iconic image of Greenspan in the back room. The story was preposterous but believable. It took a very long time before anyone figured out that it was a fake.

As for his behavior within the Fed itself, his war on dissent, typical of any dictator, was too much for anyone at the Fed with intelligence and integrity. Janet Yellen resigned as governor in 1997, saying bitterly as she left that it is a “great job, if you like to travel around the country and read speeches written by the staff.” She recalled, for example, that Greenspan would not even let her talk to the Fed staff because he feared that they would develop some affection or loyalty toward anyone but Greenspan personally.

Bert Ely, a Fed consultant, concludes with a point written about most despots in human history: “The chairman is not a secure man. He has to be one in the spotlight, and he doesn’t want competition.”

I don’t need to tell you how the story of Greenspan ends. His world came crashing down around him. He spends all of his time today trying to explain his way out of the blame. Much to his everlasting disgrace, he has intimated on many occasions that the meltdown of 2008 was not his failure or a failure of the government at all but a result of inherent flaws in the market.

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Ayn Rand speculated that this undertaker might just be a social climber. She did not and could not have known that he would eventually climb his way to the top, fall all the way down, and while he was writhing in pain would betray the entire cause to which he pretended devotion. But anyone who looked at his life could see the pattern. It was not a complex one. He served the state. As Rothbard himself wrote of Greenspan: “Greenspan’s real qualification is that he can be trusted never to rock the establishment’s boat.” Indeed he served the establishment from the first day to the last.

Now, I would like to turn back to Rothbard and his life. When we last left him, he had completed his dissertation. He was about to embark on an enormous journey that would consume his entire life. He published in the established journals as long as he could but at some point, his quest for truth and love of liberty meant that he would be cut off from them.

Despite his brilliance, background, and credentials, he did not get a prestigious academic post. He worked for a private academic foundation, reviewing all the latest books on history, philosophy, law, and economics. His massive treatise on economics that appeared in 1963 began as a tutorial written on behalf of this foundation.

When he did get a position, it was at Brooklyn Polytechnic in New York. He had a dumpy office and taught mostly unimpressive students. But it hardly mattered at all to him. He had the freedom to write and publish and tell the truth, and that’s what he wanted more than anything.

And yet even here, his options were limited. As a supporter of the free market, one might think that conservative journals of opinion were open to him. But soon after the Cold War intensified, he could no longer be quiet on an issue that was vastly important to him; namely the relationship between liberty and military expansionism. He saw the warfare state as nothing but a species of socialism. And so he adhered to the credo of the old classical liberals: a free market plus a peaceful international outlook. For this, he was excommunicated by the conservatives.

The result was that he ended up building his own global movement, one that began in his living room and extended to the whole human race. His two-dozen books and thousands of articles ended up inspiring a vast, worldwide movement for liberty. His economic writings bridged the gap between Mises and the current generation of Austrians. His wonderful personality demonstrated to one and all that it is possible to have fun while fighting leviathan.

As for Rothbard’s own character, the contrast with Greenspan could not be starker. If Greenspan was the dreary undertaker, Rothbard was the happy warrior. Rothbard thrilled to spend time with students and faculty and anyone interested in liberty. When you spoke to him, he was glad to talk about the field of interest that was the other person’s specialization. Whether it was history, philosophy, ethics, economics, politics, religion, Renaissance painting, music, sports, Baroque church architecture, or even the soaps on TV, he always made others feel more important.

He was always excited to give credit to others and to draw attention to the contribution of everyone to the great cause. He never held a grudge for long: even for those who betrayed him personally, there was always an opportunity for reconciliation open. All of these traits extended from his amazing generosity of spirit, which I attribute to his love of truth above all else.

His too-short life was cut off in 1995. But that was also the year that the web browser became common in offices and homes. Those classes that Rothbard taught in his small New York classroom are now being broadcast around the world through iTunes and Mises.org. His books are all in print and selling as never before. There are not only his books but books on his books and an entire literature growing up around his legacy.

Many have said that Rothbard was his own worst enemy. People said the same of Mises. The idea here is that they could have helped their career by going along to get along. That is true enough. But is getting along all we really want out of life? Or do we want to make a difference in a way that will outlast us?

At some point in all our lives, we will all come to realize that all the money and all the power and goods we can accumulate will be useless to us after we die. Even large fortunes can dissipate after a generation or two. The legacy we will leave on this earth comes down to the principles by which we lived. It is the ideas we hold and the way we pursued them that is the source of our immortality.

Greenspan will leave an economy in shambles and a lifetime of pandering. Rothbard left a grand vision of liberty united with science, and example of what it means to truly think long term.

In all ages and in all times, people must make a choice. Will we accept the world as it is and try to fit in, getting as much as we can from the system until we bow out? Or will we stick to principle, pay whatever price that involves, and leave the world a better place? I submit to you that anyone who has ever truly loved liberty has chosen the second course. That is the course that the Mises Institute is dedicated to following. May we each make that choice too.

Reprinted from Mises.org.

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