Study Business-Cycle Theory Online with an Austrian Economist
Mises Daily: Friday, April 02, 2010 by Robert P. Murphy
Ever since the fall of 2008, interest in the Austrian theory of the business cycle has exploded. Judging from the email I receive after a Mises Daily article, or the type of people who go to a Mises Circle event, I can personally attest that it’s not just ideological students and college professors anymore. On the contrary, actual financial professionals — people with “real jobs” with real money on the line — are waking up to the fact that the guys on CNBC don’t know what they’re talking about.
These professionals have been intrigued by the public statements of people like Peter Schiff and Ron Paul, and many of them may have purchased Tom Woods’s bestseller Meltdown. Yet they want more.
Unfortunately, diving headlong into the work of Mises, or even Rothbard, can be very intimidating, especially for someone who just stumbled upon Austrian economics within the last few years. Many people want to learn more, but they need a guide.
As in so many other areas, here too the Mises Institute comes to the rescue. The newly unveiled Mises Academy is the online university for Austrian scholarship. I am very excited to be teaching the inaugural class, “Understanding the Business Cycle,” beginning Monday, April 12.
Outline of the Course
The course is nine weeks long. There are no prerequisites, either in mathematics or economics, for someone to take this class. In the beginning we will cover the basics of the Austrian School of economics, and give a general overview of the Austrian explanation of business cycles. We will then study in depth the Austrian approaches to capital and interest, and to money and banking.
Once we have these building blocks mastered, we will study how genuine savings leads to a sustainable increase in the productive capacity of the economy. As Hayek said, “Before we can meaningfully ask what might go wrong, we should first understand how things could ever go right.”
In week 6 of the course, we will finally be ready to explore the Mises-Hayek theory of the business cycle, where the central bank causes an unsustainable boom through its “easy-credit” policies. The unsustainable boom paves the way for a bust, when workers and other resources must be reallocated from their boom-time niches and into more appropriate sectors.
In the remaining three weeks of the course, we will survey other popular theories of the business cycle, as well as entertain some of the leading objections to the Austrian explanation. We will also cover Roger Garrison’s graphical presentation of the Hayekian story, and we will apply the Austrian theory to major historical episodes.
For far more details on the syllabus, as well as the weekly breakdown of lectures, discussion topics, and quizzes, please see this description.
Classroom of the Future
In preparation for the course, Grayson Lilburne and I have been testing out the software. It is amazing. Here is a screenshot:
During each week’s main lecture, the students will be able to see me through a live video and audio connection, while following along with my PowerPoint presentation. All the while, students can type in questions in a chat room format that I can see while I’m talking.
We have all known for years that, one day, we would transcend physical conferences such as Mises University, and hold in-depth instruction over the Internet. Up till now, the software was never adequate to do it right. At long last, the wait is over.
We are thrilled to open the Mises Academy, not just for this course but for all the future ones it will host. For those readers who have always wanted a guided tour of Austrian business-cycle theory, you now have that option — all from the comfort of your home computer.
In closing, let me anticipate one of the most frequently asked questions: Currently, the Mises Institute is not officially accredited. However, those who desire to do so can take a final exam and have the results posted online. In this way, economics majors can receive extra credit from professors friendly to the Mises Institute, and finance professionals can curry favor with their bosses if they are fans of the Austrian School.
Even if you aren’t interested in Austrian business-cycle theory, I urge you to click the link and see the possibilities. The launch of the Mises Academy may come to represent a major turning point in the public’s understanding of sound economics.
We have selected the business cycle as our first course not only because of its popularity, but also because of its relevance: If I had been asked a few years ago to design a scheme for the slow but thorough crippling of the US economy, it would be hard to top what Bernanke & Co. have done.
If I’m right, though, you shouldn’t just take my word for it, or the word of Ron Paul and other Austrians. In order to focus his own efforts on setting up the Mises Academy, Grayson Lilburne assembled passages of Mises’s that articulate what he calls the Misesian Injunction, some of which I excerpt here:
Everyone carries a part of society on his shoulders; no one is relieved of his share of responsibility by others. And no one can find a safe way out for himself if society is sweeping towards destruction. Therefore everyone, in his own interests, must thrust himself vigorously into the intellectual battle. None can stand aside with unconcern; the interests of everyone hang on the result. Whether he chooses or not, every man is drawn into the great historical struggle, the decisive battle into which our epoch has plunged us.
If you are willing to devote $255 and nine weeks of your time, I promise that you will emerge from the course with a much better understanding of why so many Austrian economists are very pessimistic about the future. You will have more clarity in the conduct of your personal finances, and you will have more confidence when you discuss these important issues with your friends and relatives.
So check out the details and think it over. I hope to see you in class!
Robert Murphy, an adjunct scholar of the Mises Institute and a faculty member of the Mises University, runs the blog Free Advice and is the author of The Politically Incorrect Guide to Capitalism, the Study Guide to Man, Economy, and State with Power and Market, the Human Action Study Guide, and The Politically Incorrect Guide to the Great Depression and the New Deal. Send him mail. See Robert P. Murphy’s article archives.