Politics and the Price Level. Inflations and economic policy paradigms in the 20th century

The current return of inflation after a long phase of price stability is a reminder that increases in the price level are a regular concomitant of capitalist economic activity. After the inflation rate in Germany was negative for the fourth time in the year in the month of November 2020, the value of money rose again with the turn of the year 2020/21 and exceeded the five percent mark at the end of 2021. Especially the prices for heating oil and fuels increased exorbitantly in autumn 2021. In mid-February 2022 - even before the start of the Russian war of aggression against Ukraine - the magazine Der Spiegel ran the headline: "Die kalte Enteignung - Inflation: Wen sie am härsten trifft, warum sie bleibt und was dagegen hilft" (Der Spiegel 7/2022). Yet the inflation figures of around five percent were only a foretaste of the price increases of 2022, when inflation swelled rapidly to over seven percent as a result of rising energy prices and European governments and central banks countered the development with price brakes and interest rate hikes.

Against this background, we decided to take a closer look at the topic of "inflation" in its historical depth dimension. In addition to the topicality of the subject, the current direct experience of pupils with inflationary developments and often a lack of financial knowledge, the comparatively marginal treatment of aspects of economic and especially financial history in history lessons also speaks for an examination of the subject. With the exception of industrialisation, there are hardly any elements of economic history in the elective and compulsory modules of the subject syllabus for secondary level II in RLP. Here, political history dominates with revolutions and the formation of nation states, the history of democracy and dictatorship, the Cold War and European integration - supplemented by colonialism and colonial heritage, migration and the environment. Political, social and economic developments are closely interlinked. This also applies to the topic of "inflation", which can neither be reduced to the hyperinflation in Germany in 1923 nor to current price increases. Inflations have also taken place beyond that and are always a social phenomenon because they influence structures of social inequality and, in extreme cases, can destroy the financial livelihoods of larger parts of the population. Damping them is therefore considered a central task of economic and monetary policy.

The lectures accordingly move at the intersections of economic and political history and explore the question to what different policy responses to the depreciation of currencies can be attributed. First, we broaden the perspective and examine comparatively the inflationary policy of European central banks during the 1920s. Then we focus on inflation after 1945, because even the Bonn Republic was by no means free of price increases. The inflation experiences of the interwar period led to an inflation-averse consensus that became an integral part of the German central bank's restrictive monetary policy in the first two post-war decades. Nevertheless, inflation rose again significantly in the 1970s and, in conjunction with the oil price crisis and the subsequent economic crisis, culminated in a state of stagflation. We will show how the fear of "galloping" inflation affected monetary policy practice in the Federal Republic in the 1970s and what adjustments British monetary policy made in the Thatcher era. Finally, we take an international perspective by asking why international policy initiatives and control attempts failed at the time, although it was assumed that a lack of coordination could usher in a second Great Depression.

The event will take place in the Zimeliensaal in the Museum of Musical Instruments at the University of Leipzig.