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In this issue: -
T
HE
S
CHUMPETER 
 
The State of European Banking - Vault.comWelcome from the EditorHistory of Economic Thought - Dr Andy DenisEconomics SocietyInstances of Inflation - Tim Robinson
Dear all,
This is the first edition of the EconomicsSociety Magazine. The society elections willbe held in the near future; those hoping to runfor any of the roles have a look at the detailson page 7. The role of the magazine in thesociety is going to be given prominence thisyear with articles from a different range ofindividuals and groups in this issue and weintend to extend the use of the EconomicsSociety Website in an effort to keep in contactwith members.Any suggestions or comments you have feelfree to contact the society(econsoc@city.ac.uk) or me(timothywrobinson@googlemail.com)With our great thanks to all those who havecontributed and helped to get this first editionpublished.
Tim Robinson
Editor 
2357
News Update
8
Events
8The Economics Society Magazine is funded bymember contributions, and relies on the contributionof students and lecturers for articles. If you wouldlike to get involved writing for us please email:
econsocnews@googlemail.com
The Economics Society Magazine
 
 
N
ot only is History of Economic Thought(HET) useful and intellectually stimulating,it’s also packed full of incident, drama andpersonality. We might learn not only aboutthe
Wealth of Nations 
, but also about thetime a young Adam Smith was kidnapped – and then rescued at gun-point by hisuncle. We might find out whether thePhillips machine was actually any good atmodelling the economy or just a quick wayto cover the floor with coloured water. Andwe might explore why there’s a deadeconomist in a glass box (JeremyBentham’s
Auto-Icon 
) in the corridor atUniversity College London. A good HETcourse will turn up some surprises for thestudent!HET courses vary widely. A typical surveycourse will attempt to chart thedevelopment of the discipline – from AdamSmith to the present. Some courses focuson trying to show how the past has formedthe present – how ideas such as demandcurves and different market structures firstemerged and how they evolved to theirpresent form. In others the emphasis is onthe emergence and submergence of ideasin the controversies of the past. Justbecause an idea has been forgotten doesnot necessarily mean that it can beassumed to be without merit, and the factthat it has changed shape need notnecessarily imply progress. Other HETmodules might illustrate the history of thediscipline by reference to a case study – how, for example, economists havearticulated the case for the particulareconomic role of the state that theyadvocate.HET is often confused with EconomicHistory, but they are distinct areas.Economic history is the history of theeconomy (an examination of thedepression of the 1930s, for example),rather than the history of
the study 
of theeconomy (for example, the emergenceand reception of Keynes’s
General Theory 
). There is clearly a link: what ishappening in the economy should affect thedevelopment of ideas in economics. SomeHET courses will teach the development ofthe discipline be referring to changes in theeconomic world at different times. Othersmay take a more austerely intellectualapproach, with the development of thediscipline explained by reference to the innerlogic of the ideas themselves.Finally, an understanding of the history ofthe discipline is extremely helpful forevaluating the claims of the various minorityschools of thought in the discipline today,including Marxians, Austrians, Feminists,Post Keynesians, Institutionalists, andCritical Realists, and some HET courses willgive some attention to the emergence ofthese trends, what divides them, and whatthey share with the neoclassicalmainstream.
Dr Andy Denis is the Senior Lecturer inPolitical Economy at The City University,London.
‘What weight can we place on what [economists] say? Economics, because it is a social science, is an arena of controversy: every pronouncement of the discipline has implications for policy – and every policy has winners and losers. To appraise today’s economics requires an understanding of its origins and the agenda and standpoint of its originators.’ 
Dr. Andy Denis, CityUniversity
 
On the History of Economic Thought
-
 Dr Andy Denis
 
 
 
500 billion notes showing the portrait of Serbian Poet Jovan Jovanovi 
ć 
 
Instances of Inflation
- By Timothy Robinson, City University"All that is solid melts into air"
- Karl Marx
"And do my people value this as gold, Do court and army think these payments hold?"
- Faust, Goethe.
I
n March 1987 in a ski resort restaurant inSlovenia the Yugoslav Prime Minister BrankoMikuli
ć
was refused service by striking waitersprotesting the ceiling placed on wages by him.The wage ceiling was one of Mikuli
ć
's effortsto reduce the runaway levels of Yugoslavianinflation. In the late 80s and early 90s theRepublic of Yugoslavia underwent the highestrecorded levels of inflation culminating the inthe 500 Billion Dinar note shown. TheRepublic reformed the currency in 1990resetting 1 new dinar to be worth 10,000 olddinar, in 1992 (1 new for 10 old), 1993 (1 newfor 1 million old) and twice in 1994 (1 new for1 billion old then a month later 1 novi dinar for10.5 million dinar)The line of Mephistopheles from the playabove "such paper-wealth, replacing pearls orgold is practical: you know just what you hold"falls short of reality. The value of moneyshould by definition be stored over time, withcurrency this is not always the case, to variousextremes.
The Case of Rome
In the 3rd Century Roman Empire thedebasement of the coinage (as successiveemperors began to adulterate the currency tomeet military and administrative costs) led tosuch widespread distrust in the currency valuethat the government ceased to accept it aspayment for taxes. The fleeting nature of thetenure of some emperors made banks hesitantto accept the coinage minted by usurpers. (Forexample the coins of the sons of FulviusMacrianus , Macrianus Minor and Quietus whoreigned in 260-1, and rose to the throne afterthe death of Valerian; in certain cases banksshowed an "unwillingness to accept the divinecoin of the emperors"
1
. Which given thelength of their reign proved prescient.)Perhaps the most well known reaction to thisinflation was Diocletian's edict on maximumprices (not an uncommon reaction, more recently theZimbabwe government fixed the prices of certaincommodities), fixing an upper ceiling on the pricesand wages (for example a higher quality scribe couldcommand up to 25 denarii for 100 words, but nomore) as well as replacing the debased currency witha new coinage.By means of policing these price fixes across theEmpire artisan guilds would have to file schedulesstating they were not exceeding the maximum pricesset. (Arguably not a very vigorous method of policing)The Diocletian reforms came on the heel of a seriesof debasements which had seen the silver content of the denarius fall 99% since the time of MarcusAurelius (A period of about a century).
The Case of Modern Europe
In the 20s Austria, Hungary, Germany, Poland andRussia all suffered from fairly sustained periods of hyperinflation. Partially because of effort to fundthe costs of the bureaucracy, partially because in theaftermath of war large amounts of territory were lost,and partially because of funding other wars. Austria
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