I had a great teaching experience early last school year. I taught the history of inflation, and I have never timed a course better. I have taught in colleges and universities since 1985, and I have often thought about doing a course on the history of inflation. But this time, current events pushed me to go ahead.
Of course, it was clear to me long before the spring of 2008 that the federal government was inflating the money supply. As a historian of war and a student of Austrian economics, I have long known that higher-than-normal monetary inflation would become painfully apparent during our glorious War on Terror, WMDs, Iraq, and Afghanistan. Since World War I and earlier, inflation has always been the handmaiden of war (inflation being a silent theft from the populace through which any war government can help finance the horrendous costs of the war). Moreover, the Fannie Mae/Freddie Mac fiasco and the massive credit expansion of the Fed were fueling a boom of really huge proportions.
But in any case, all scholars of Austrian School economics — readers of Ludwig von Mises all, and well versed in the business cycle — agreed that the bust would follow, but when? By the time of the spring of 2008, when I scheduled the course for the following fall, they were all predicting the same thing: soon.
So I wrote it up as a history topics course and got it approved by the various college entities. Preregistration produced a fairly small enrollment of five or six students, but at our small college, many upper-level courses are in this range. I thought it a good number for a seminar-style class.
Some time in early 2008, the media networks heard about inflation. Austrian economists and analysts had for months explained in print and in the electronic media how the business cycle was going to work in this case, and Ron Paul was using every conceivable opportunity in his presidential campaign to discuss inflation. YouTube was being peppered by musical analyses of the inflation crisis. So, eventually, the inflation finally made it to mainstream news sources, even the government station, NPR.
By the summer, it was apparent that I would have plenty of "motivational" help from current events: if Diane Rehm had discovered inflation, could the Dallas Morning News be far behind? And for those looking beyond the United States, the criminal hyperinflation in Zimbabwe and numerous other "high inflations" were occurring across the globe. Historians like topics that are conveniently past, but current events can help out with student interest levels sometimes!
Not that the networks and their invited talking heads made much sense in discussing the inflation. Almost all — networks and experts — floundered in the kind of mystical Keynesianism that has become part of the cult of the modern state: Prices rise sometimes, and this is a great mystery; but at other times, the primal force of money creation can be harnessed for good, through its continual expansion for the good of society. However, the mounting inflation of the summer of 2008 was so insistent that some of the experts, even the Keynesian ones, seemed a bit uneasy. But whatever the case, the issue was certainly current.
Pedagogically speaking, the only problem I had as I prepared for the course was deciding what I would have to leave out. The cases leapt to mind: the German hyperinflation, of course (modern Germany is my primary field); well, for that matter, every belligerent power during World War I (my special field too); without a doubt the French Revolution (best of times for the state, its minions, and well-connected stockjobbers, worst of times for nearly everyone else); Lincoln and the greenbacks, naturally; Nixon's blaming of housewives for inflation and the great stagflation; the great debasement of Henry VIII, obviously; and the John Law episode in France; but many more, mostly lesser known, cases too.
And there would have to be understanding of the processes too, through the theoretical literature. And there is of course the whole range of Keynesianism to comprehend, since you can't teach 20th-century inflation without including the cheerleaders! But the class would only be a semester long. So much inflation, so little time!
If you are curious how it all worked out, at the bottom of this article is a link to the syllabus that I worked up over the summer of 2008."The Keynesian model is not really a theory. It's more like an incantation."
The first class was September 3 — only six students, but a serious bunch, most of them history majors. We began with the question, "What is inflation?" and started a crash course in monetary inflation and the business cycle. Actually, you might say, "wait, it sounds like the only theory you presented is essentially Austrian theory." With some minor exceptions, you would be right. As will be seen below, one of the great features of the only real countervailing "theory" — the Keynesian "model" — is that it is not really a theory. It's more like an incantation.
Moreover, as we will see below, the flimsy, short-sighted understanding of monetary inflation that we call Keynesianism has all the intellectual nutrition of a candy bar. It has the effect of killing your hunger for more nutrition-filled food, while impacting your body negatively in a number of ways. I was trying to be sure to give countervailing theories, but honest to goodness, there was not much there.
This theoretical section I designed for the first three weeks of the course, but on Sunday, September 13, in the very midst of our crash course, the crash itself actually began happening: Lehmann Brothers filed for bankruptcy and Merrill Lynch sold itself to Bank of America. The students of my class, had already read, among other things, their first piece of Human Action. They were — on that fateful weekend — reading the following for class on Tuesday: Henry Hazlitt's What You Should Know About Inflation a long excerpt from Human Action, chapter 20, "Interest, Credit Expansion, and the Trade Cycle," and the Wikipedia entry on "Keynesian Economics."
On Monday, we all came to class and just stared at each other for a few minutes. Actually, once we began to sift through the news on banks falling, loans gone bad, etc., each student confessed that he (they were all guys) had felt something like an intellectual god over the weekend, or at least someone with an Olympic view in terms of understanding everything going on.
Ironically, while the crash was happening, I was having a mountaintop experience in the classroom.
One comment on the disciplinary nature of this experience — historians like to document individual trends, events, and personal histories, but in discussing the broad themes and narratives of history, limited by time in the classroom, most of us rely on broad characterizations of movements, ideas, etc., that help us move the narrative (whether it is in narrative form or not) along. So I might spend ten minutes in a class "summarizing" Nietzsche or encapsulating Romanticism because I am tying the particulars together into some kind of coherent story. I know from experience in team-taught classes that my philosophy or English colleagues would be — and have been — scandalized at how I toss off a few glib sentences on the topics that occupy them, at the most basic, for weeks. Luckily, as a historian I have carte blanche to do this, since I am trying to make sense of it all in a different way (and this is only part joke).
But thinking about inflations historically is a bit different. First of all, if you don't understand what inflation is, the actual course of inflation (what actually happened in the German hyperinflation, or Venetian bank runs, or the Zimbabwe "high" inflation of 2008) doesn't ever make much sense. Inflation as a simple financial phenomenon doesn't fit into any narrative, whether in mainstream-classical or Keynesian economics or in history. Indeed, I think I have hit upon something here.
The summer before I taught the course, I contacted several colleagues who teach history or economic history at Austin College, describing my course in general terms. I gave some examples of the readings and subtopics to show what kind of history course I had in mind. Then I invited each of them to visit my class and give their perspective on inflation at some point during the semester. I assumed that some of them would have an interesting "take" on a historical episode, or an interesting interpretive angle. I wanted the students to understand that there is more than one way to look at inflationary events and processes.
Some of those colleagues I invited could not even consider it, because of scheduling problems. One or two were on sabbatical. And some told me that they did not deal with inflation in their teaching enough to warrant dropping by. In the event, none took up my invitation. I should add that one of my colleagues in economics pointed me to a really useful reading, and they all wished me well, though some seemed puzzled that I would be dealing with such a topic. I am not criticizing these colleagues for not coming to my class, or for not talking about inflation all the time. They are good people and excellent scholars, every one, and extremely busy with their own work and teaching, every one. But from my talks with them, and from looking at history and economics texts over the years, it does seem to me that inflation enters in only very marginally, if at all, into what one might call the disciplinary narratives of modern disciplinary economic history and history.
So in terms of economic history, the stories of John Law in France or the greenback issues during the War Between the States get told — a little bit. And most economics classes probably deal briefly with some definition of inflation as a hardly fathomable "rise in prices." But in most narratives, the hyperinflation in France does not count in any significant way in the normal "mainstream" explanations of the French Revolution, or has any causational power in most tellings. This is certainly the case in the main history textbook accounts.
And from what my economics colleagues at my college told me, I suspect that one can say the same for "mainstream" economics pedagogy. In the mainstream glossary, inflation tends to mean rising prices: sometimes a beneficent government decides to help the masses by nudging inflation; Hoover should have done that; etc. But in this oddly simplistic framework of meaning, inflation plays no central role, has no explanatory power.1
Now I have put inflation into my teaching of modern Europe for many years — I teach the French Revolution and World War I all the time, after all. But the experience of this course has pushed me toward dealing with it even more centrally. It is only convention, and in part the statist culture, which dictates that the chief narrative of European or any other history is the narrative of state politics and great leaders. Marxists have understood this point very well, and historians of liberty can likewise include material on something besides a given presidential administration or the "achievements" of Peter the Great. Indeed, many of the standard political narratives gain a very important cohesion when we look critically at the inflationary, statist background as a part of the narrative, and when we deal seriously with the antistate opposition as well.
A link to the syllabus for the course is below, and it requires a bit of explanation."Inflation as a simple financial phenomenon doesn't fit into any narrative, whether in mainstream-classical or Keynesian economics or in history."
First, I have for many years attempted to minimize the reading costs for students in my courses — even more so since the oldest of my kids hit the college level starting in 2002 and I started actually paying for textbooks instead of just assigning them. Hence, these days I usually choose electronic sources where available and where it makes sense. For this course, since the Mises Institute, EconLibrary, JSTOR, and other sources offered such a wealth of sources, I decided that all the readings for the course would be online. This meant that some items I would have liked to use were not available; but, on the other hand, I found satisfactory replacements for nearly everything.
In one or two cases, I filled out with a few xeroxed pages that I brought to class. Anyone who reads the syllabus will, no doubt, find gaps, and of course I see many here myself. But choosing readings — above all, online readings — gets to be the art of the possible, as any teacher in higher education knows. But I do welcome suggestions (as I did in advance of the course), since I plan to teach the course again soon.
Second, there are many different readings in the syllabus, but the overall amount of reading per week is not overwhelming, when expressed, for example, in number of pages. It is my observation that contrary to the periodic hue and cry against higher education, especially among cultural conservatives, at many good colleges the load of work for courses has really increased over the years. This may in fact be partly the effect of the "dumbing-down" process that has afflicted most of the country's schools for decades — so much more remedial work is necessary these days, so much more defining of concepts and terms! So in spite of public perceptions of what happens in the college classroom, I really think this trend leads a good many professors to respond by adding more work overall, making the total work assigned to a given student nearly overwhelming.
These days, some college students are of course lazy, but many are simply deluged with work. Any shadow of careful intellectual contemplation goes by the board in these circumstances, and there gets to be no other minute but the last minute. But that is the subject for another essay.
In any case, I chose to pare down some of the readings, to assign sections rather than the whole book when possible, to give relatively limited writing assignments, but to stick absolutely to either reading quizzes or reading summaries in order to keep the students on their toes.
On the technical side, assigning only online readings is not quite as simple as it appears. Links change, the status of books offered on Google Books sometimes changes, the internet sometimes goes down. So I had to take care to make sure that all the readings were still available in the two or three days before the class, and to make sure that the students looked ahead to download or save whatever it is they need. Thank goodness for the solid technological infrastructure of the Mises Institute, and of the Online Library of Liberty as well.
So what were the results of all this? Well, as noted, for me and, I really think, for the students, there was a kind of perverse, Galgenhumor type of mountaintop experience during and after the crash weekend. (We kept this week "light" by playing Steely Dan's "Black Friday" periodically during that time.) And of course, the subject matter gave me an opportunity to teach all kinds of important historical topics: war financing, the Austrian School, the history of gold, the social and ethical impact of inflation, the rise of the state, etc. Good history topics all!
In the end, I did not convert all the students to free-market economics, nor was their conversion the goal. I wanted to present both a little-studied historical narrative and to introduce a praxeological approach to the students' understanding of history. And I made headway, as I know very well from their papers and from our many discussions.
A couple were already interested in issues related to liberty and took the class for that reason. Others made progress understanding the concepts but could not break away completely from ideas inculcated by years of government schools and the Keynesian media. But I think I went a substantial distance in instilling at least some of the central principles of human action, free-market economics, the nature of inflation, the eye to long-term effects of a given policy, etc.
Maybe this summary of the course or a look at the syllabus will be of use in triggering teaching ideas for others. The nonsense that is spouted on all the major news sources about the causes of the crash and the remedies for it are so simplistic, so totemistic, that a genuine teaching moment seems to have presented itself. As Gary North said in a lecture at the recent Austrian Scholars Conference, it is time to challenge head on the nonsense of the Phillips Curve, Keynesianism, and inflationary theft, and all the rest. Time, and about time. Inflation and its history may present an important breach in the wall: here's hoping enough of us charge through it.
- 1. I know that many of my teaching colleagues who read this and who are free-market-oriented scholars teach about inflation all the time, and I duly consulted some of them in preparing for the course. Many thanks to them for the help! But I am talking about "mainstream" historians and social scientists here.
Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.