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Hans Sennholz, Teacher and Theorist

  • Hans Sennholz
February 3, 2003Joseph T. Salerno

Tags BiographiesAustrian Economics Overview

Ludwig von Mises once wrote: "The flowering of human society depends on two factors: the intellectual power of outstanding men to conceive sound social and economic theories, and the ability of these or other men to make these ideologies palatable to the majority."  

Hans Sennholz, professor emeritus at Grove City College, is one of a handful of men in intellectual history who were able to perform both of these functions with notable distinction. J. B. Say, Frederic Bastiat, Carl Menger, Eugen von Böhm-Bawerk, Edwin Cannan, the early Lionel Robbins, Henry Hazlitt, William Hutt, Murray Rothbard and Mises himself—these were all men who were blessed with that exceedingly rare combination of abilities needed to conceive new economic truth and to effectively propagate it among the general public.  

Not only did they publish academic papers, specialized monographs and scholarly treatises in which they advanced and refined economic theory, they also wrote prolifically for the popular and business press, tirelessly propounding sound economic principles and their applications to the burning issues of the day.  Perhaps more impressively, these men wrote so lucidly that even their most specialized works could be read with profit by the educated layman. Without doubt, Sennholz belongs in this august company of economists. 

Unfortunately, Sennholz has not always received due recognition, even among fellow Austrian economists, as a first rank economic theorist, especially in the area of money and banking. Part of the blame for this oversight lies with Sennholz himself. He writes so clearly on such a broad range of topics that he is in danger of suffering the same fate as Say and Bastiat. As Joseph Schumpeter pointed out, these two brilliant nineteenth-century French economists, who were also masters of economic rhetoric, wrote with such clarity and style that their work was misjudged by their British inferiors as "shallow" and "superficial."  

Happily, their reputations as profound and insightful economic theorists and forerunners of Austrian economics have been finally restored by contemporary Austrian scholars. 

I would like to highlight Sennholz’s contributions to the rebirth of interest in Austrian monetary and business cycle theory and the continuing importance of his works today.  Along with Mises and Rothbard, Sennholz was one of a handful of academic economists to stand fast against the postwar tidal waves of Keynesian macroeconomics and Friedmanite monetarism that swept over American academia in the 1950's and 1960's and threatened to completely submerge sound monetary economics.  

In the late 1960’s and early 1970's, a number of now classic works by Sennholz emerged as an island of refuge and hope for a young graduate economics student like myself who was desperately foundering in a sea of unrealistic and contradictory macroeconomic models.  These arcane symbols and meaningless equations all led to the same policy conclusion:  that the only way to stabilize the economy was for a monopoly central bank to create heaps upon heaps of paper fiat money.  

Sennholz refuted these crank models and their quack policy prescriptions in four publications that profoundly influenced my early development as a monetary economist.  There were two booklets—The Truth about the Great Depression and Inflation or Gold Standard? published in 1969 and 1973, respectively—and two articles—"Chicago Monetary Tradition in the Light of Austrian Theory" published in 1971 and "No Shortage of Gold" published in 1975.  

Together these works provided a clear and systematic exposition of sound monetary theory and its application to contemporary policy issues.  Later, in 1979, Sennholz published a valuable book-length treatment of these themes entitled Age of Inflation.  He followed up these works in 1985 with Money and Freedom, a book on monetary policy that contained devastating critiques of the monetary policies advocated by "free market" macroeconomic schools of thought then in fashion such as the supply-siders and the monetarists.  The book also proposed an original program for returning to sound money. 

In all these works, Sennholz displayed a breadth of historical, institutional, and doctrinal knowledge that characterized a bygone generation of monetary economists and is unparalleled among modern hyper-specialized macroeconomic modelers. 

All of the aforementioned works by Sennholz repay careful study today not only by neophytes in Austrian economics but by seasoned Austrian economists who aspire to advance the frontiers of monetary theory, because Sennholz has been laboring on these frontiers for almost a half century.  

And, I am happy to report that, at the dawn of the new millennium, Sennholz is hardly done teaching us younger Austrian economists.  His recent series of essays that has been posted on Mises.org between 2000 and 2002 contains the most perceptive and persuasive explanation that I have read of the sequence of events that constitutes the boom-bust cycle that has wracked the U.S. economy since the mid-1990’s.  

Lest it be thought that these last words are empty flattery on this festive occasion, I should note that I recently asked Sennholz’s permission to use some of his essays in a collection of papers I am editing for the Mises Institute on the Austrian perspective on the recent business cycle.  He has graciously granted his permission.  For that and for his outstanding contributions to Austrian economics, I thank him sincerely.


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