The Capitalist Professor with George Reisman, Ph.D. - Free College Courses on Capitalism

Inflation. Exposition and critique of alternative theories of rising prices, leading to the conclusion that the quantity theory of money is the only valid explanation. The meaning of inflation. Its roots in deficits, the welfare state, and the unemployment and easy money arguments. Further effects of inflation: a. growth in government, including wage and price controls; b. the redistribution of wealth and income; c. the undermining of saving and capital accumulation and the productivity of labor; d. how inflation sets the stage for depression and deflation—why it is not a cure for unemployment or a source of capital; e. why inflation tends to accelerate to the point of destroying credit and ultimately money itself. The current state of inflation. READINGS Reisman: Chapter 19 Hazlitt: pp. 164-176 (chap. XXIII) Ludwig von Mises, “Wages, Unemployment, and Inflation” and “The Gold Problem” in Supplementary Readings in Macroeconomics [Ludwig von Mises, Planning for Freedom, pp. 150–160, 185–194] Library reading: Ludwig von Mises, Human Action, pp. 466-478. Samuelson, Chapter 13

Keynesianism and Neo-Keynesianism. Exposition and critique of the Keynesian analysis: the unemployment-equilibrium doctrine and the IS curve; the consumption and savings functions; the diminishing marginal efficiency of capital; liquidity preference and the liquidity trap; compensatory fiscal policy and the multipliers. The economic consequences of Keynesianism. READINGS Reisman: Chapter 18 Samuelson: Chapters 6–8 (to p. 142) Optional: Samuelson, Chapter 15 Ludwig von Mises “Stones Into Bread, The Keynesian Miracle” and “Lord Keynes and Say's Law” in Supplementary Readings in Macroeconomics. [Ludwig von Mises, Planning for Freedom, pp. 50–71] Optional: Adam Smith, “Of Public Debts” in Supplementary Readings in Macroeconomics. [Adam Smith, The Wealth of Nations, Book 5, Chapter 3]

Relationship of the net-consumption/net-investment theory to the time-preference and productivity theories. The alleged problems of underconsumption and lack of “investment opportunities.” How the demand for capital goods and labor can permanently exceed the demand for consumers' goods and the rate of profit be positive. More on why savings cannot outrun the need for savings; the automatic adjustment of the rate of saving to the need for capital. READINGS Reisman: pp. 787–797, 838–85

Capital accumulation and its causes. The role of saving. The role of technological progress and the productivity of capital goods. The role of economic freedom. Critique of the secular-stagnation doctrine. National income and consumption. READINGS Reisman: review of 622–642 Optional: Samuelson, pp. 326–333.

Capital accumulation and its causes. The role of saving. The role of technological progress and the productivity of capital goods. The role of economic freedom. Critique of the secular-stagnation doctrine. National income and consumption. READINGS Reisman: review of 622–642 Optional: Samuelson, pp. 326–333.

The role of saving in spending and income payments. Saving versus hoarding. Saving and aggregate economic accounting: the national income/net national product identity. J. S. Mill's proposition that demand for commodities is not demand for labor and the issue of double counting. READINGS Reisman: pp. 673–699, review of 441–447, then 699–715 Hazlitt: pp. 177-190 (chap. XXIV) Samuelson: Chapter 5; Optional: Samuelson, Chapter 11 Ludwig von Mises, “Capital Supply and American Prosperity” in Supplementary Readings in Macroeconomics. [Ludwig von Mises, Planning for Freedom, pp. 195–214]

The role of saving in spending and income payments. Saving versus hoarding. Saving and aggregate economic accounting: the national income/net national product identity. J. S. Mill's proposition that demand for commodities is not demand for labor and the issue of double counting. READINGS Reisman: pp. 673–699, review of 441–447, then 699–715 Hazlitt: pp. 177-190 (chap. XXIV) Samuelson: Chapter 5; Optional: Samuelson, Chapter 11 Ludwig von Mises, “Capital Supply and American Prosperity” in Supplementary Readings in Macroeconomics. [Ludwig von Mises, Planning for Freedom, pp. 195–214]

Mass unemployment: the causes and the remedy. Real wages and the productivity of labor. Is government intervention to promote labor unions and raise wages in the self-interest of the wage earners or is its actual effect to cause unemployment and hold down the rise in real wages? READINGS Reisman: pp. 613–663 Hazlitt: pp. 134-151 (chaps. XIX-XXI) Samuelson: Chapter 14

Say's Law. Monetary demand and real demand; why only more production and supply can increase real demand. Say's Law and the harmony of long-run self-interests. Say's Law and the impossibility of a general overproduction; why falling prices caused by increased production do not represent deflation. READINGS Reisman: pp. 559–599 Optional: James Mill, “Consumption” and “Of the National Debt” in Supplementary Readings in Macroeconomics [James Mill, Commerce Defended, reprinted in James Mill Selected Economic Writings]; Optional: Samuelson, Chapter 12

The economic problem and its denial: production versus consumption—the scarcity of wealth versus the alleged scarcity of the need or desire for wealth; the making of goods versus the making of work. Opposite appraisals of the causes of depressions, and of the economic effects of machinery, worker competition, war, government spending, population growth, advertising, foreign trade, imperialism, and technological progress. READINGS Reisman: pp. 42–49, 54–61, 542–559 Hazlitt: pp. 7-102 (chaps. I-XIV)

The origin and evolution of money and the contemporary monetary system: from barter to media of exchange, to gold and silver commodity money; 100 percent reserve banking and fractional reserve banking; standard money, fiduciary media, and fiat money. Central banking: the Federal Reserve System and its powers of money creation. The quantity of money, the demand for money, and the business cycle. READINGS Reisman: Chapter 12 Samuelson: Chapter 9 (to p. 173), Chapter 10 Frederic Bastiat “The Balance of Trade” and “A Petition” in Supplementary Readings in Macroeconomics. [Frederic Bastiat, Economic Sophisms, pp. 51–60] Optional: Adam Smith “Of the Principle of the Commercial or Mercantile System,” in Supplementary Readings in Macroeconomics. [Adam Smith, The Wealth of Nations, Book 4, Chapter 1]

The origin and evolution of money and the contemporary monetary system: from barter to media of exchange, to gold and silver commodity money; 100 percent reserve banking and fractional reserve banking; standard money, fiduciary media, and fiat money. Central banking: the Federal Reserve System and its powers of money creation. The quantity of money, the demand for money, and the business cycle. READINGS Reisman: Chapter 12 Samuelson: Chapter 9 (to p. 173), Chapter 10 Frederic Bastiat “The Balance of Trade” and “A Petition” in Supplementary Readings in Macroeconomics. [Frederic Bastiat, Economic Sophisms, pp. 51–60] Optional: Adam Smith “Of the Principle of the Commercial or Mercantile System,” in Supplementary Readings in Macroeconomics. [Adam Smith, The Wealth of Nations, Book 4, Chapter 1]

Orientation/review. The dependence of the division of labor on money. The vital connection between money making and productive activity in a division-of-labor society. Money-making and the distinction between production and consumption, productive expenditure and consumption expenditure, capital goods and consumers' goods. The quantity theory of money. The increase in the quantity of money as the cause of rising prices. READINGS Reisman: pp. 141–144; 441–462 Optional: Samuelson, Chapters 1 and 4

1. To provide the student with a comprehensive knowledge of the operations of a free-enterprise, division-of-labor society, with special emphasis on the phenomena of money, production, real wages and the productivity of labor, profit, saving and capital accumulation, and economic progress. The consequences of government intervention with respect to these phenomena will be considered in depth. 2. To teach the student to think of economic phenomena in terms of their long-run effects on all groups, not merely their short-run effects on those directly concerned. OVERVIEW OF THE COURSE The course will focus on the current or recent problem areas of the banking system, unemployment, economic stagnation, budget and trade deficits, and inflation, in the light of the contrasting analyses of the Keynesian and “Classical” schools (the latter including the Chicago and Austrian schools). Policy solutions to these problems will be explored—in particular free-market wage rates, balanced budgets with low taxes, and limitation of money-supply growth versus expansionary fiscal and monetary policy. Two leading themes of the course will be 1) The possibility of continuous capital accumulation and economic progress based on the combination of economic freedom, private ownership of the means of production, division of labor, saving, and technological progress. 2) The ethical implication of the harmony of the rational self-interests of all men under these conditions. BOOKS FOR THE COURSE George Reisman, Capitalism: A Treatise on Economics. Ottawa, Illinois: Jameson Books, 1996. Henry Hazlitt, Economics In One Lesson (paperback). George Reisman, editor, Supplementary Readings in Macroeconomics (to be distributed in class). [The essays contained in this title appear below with references to their original sources.] Paul Samuelson and William Nordhaus, Macro-Economics (paperback), 15th Edition, (New York: McGraw Hill, 1995). (Optional) Ludwig von Mises, Human Action (paperback), Third Edition.

The division of labor and the concept of productive activity. Exposition and critique of the Marxian exploitation theory. The productivity theory of wages. Labor unions and labor legislation. A reinterpretation of modern economic history. The productive functions of businessmen and capitalists, of retailing, wholesaling, and advertising. READINGS Reisman: Chapters 11 and 14 von Mises, Human Action: pp. 592-623, 628-634, 769-779 Optional: Samuelson, Chapter 13

The division of labor and the concept of productive activity. Exposition and critique of the Marxian exploitation theory. The productivity theory of wages. Labor unions and labor legislation. A reinterpretation of modern economic history. The productive functions of businessmen and capitalists, of retailing, wholesaling, and advertising. READINGS Reisman: Chapters 11 and 14 von Mises, Human Action: pp. 592-623, 628-634, 769-779 Optional: Samuelson, Chapter 13

The monopoly question. The political versus the economic concept of monopoly. Capital requirements and entry “barriers.” The alleged tendency toward universal monopoly. The predatory-pricing doctrine. Marginal revenue and marginal cost. The pure-and-perfect-competition, oligopoly, and monopolistic-competition doctrines. READINGS Reisman: Chapter 10; [Optional: von Mises, Socialism: 361–392]

Economic inequality and economic competition. Equality of opportunity. The law of comparative advantage and the pyramid-of-ability principle. Free international trade. Population growth and the freedom of immigration. READINGS Reisman: Chapter 9, Part C von Mises, Human Action: pp. 743-757, 833-861; [von Mises, Socialism: pp. 314–358] Optional: Samuelson: Chapter 22

Universal price controls and de facto socialism. The chaos of socialism. Understanding the collapse of Soviet Russia and the communist bloc on the basis of price theory. The tyranny of socialism. READINGS Reisman: Chapter 8 von Mises, Human Action: pp. 689–710, 716–719, 732–736; Optional: pp. 710–715 [von Mises, Socialism: pp. 114–142, 196–220, 516–521] Samuelson: Chapters 8–10; Chapter 18, Part B

The free market's efficiency in responding to economic change. Factor prices. Price controls, shortages, and economic chaos. Illustrations from the energy crisis and rent controls. From partial price controls to universal price controls. READINGS Reisman: Chapter 7 von Mises, Human Action: pp. 730-736, 758–769; [von Mises, Socialism: pp. 527–543]

The free market's efficiency in responding to economic change. Factor prices. Price controls, shortages, and economic chaos. Illustrations from the energy crisis and rent controls. From partial price controls to universal price controls. READINGS Reisman: Chapter 7 von Mises, Human Action: pp. 730-736, 758–769; [von Mises, Socialism: pp. 527–543]

Tendencies toward uniform prices over space and time; applications to the Arab oil embargo and commodity speculation. Tendency toward a uniformity of wage rates at any given level of ability. Equal pay for equal work. Permanent inequalities in wage rates. Prices and costs of production. Ultimate analysis of cost of production. Cost of production and supply and demand. READINGS Reisman: Chapter 6, Part B Samuelson: Chapter 6, Part A; Chapter 7, Parts A and C

Demand and supply curves. The law of demand. Elasticity of demand. The uniformity-of-profit principle and its applications to consumer sovereignty, economic progress, farm subsidies, rent and price controls, profit taxes, and racial discrimination. READINGS Reisman: Chapter 5, Part B; Chapter 6, Part A Samuelson: Chapters 3–5 (to p. 86)

The division of labor as the central requirement of a high and rising output per capita; its advantages and alleged shortcomings. Dependence of the division of labor on the economic institutions of capitalism, especially the price system. Prices, economic planning, and economic coordination. READINGS Reisman: Chapter 4; Chapter 5, Part A; Chapter 8 von Mises, Human Action: pp. 143-176

Natural resources, the law of diminishing returns, and conservationism. The ecological critique of economic progress: a rebuttal. READINGS Reisman: Chapter 3 von Mises, Human Action: pp. 119-131, 654-663 [von Mises, Socialism: pp. 404–408] Samuelson, pp. 96–97 (upper left); Optional: Chapter 19

The role of wealth in human life. “Scarcity” and the limitless need for wealth. The law of diminishing marginal utility and its reconciliation with the limitless need for wealth. READINGS Reisman: Chapter 2 27 von Mises, Human Action: pp. 257-326 [von Mises, Socialism: 289–313, 395-403, 452-453] Samuelson: Optional: Chapter 1

Week 1 Introduction: The nature and value of economics. An overview of the subject's content and history. Principal applications. The philosophical foundations of economic activity. Economics and capitalism. READINGS Reisman: Introduction and Chapter 1 von Mises, Human Action: pp. 1-3, 7-10, 862-885. Also see glossary at the end of this syllabus. Download course and supplemental materials here. Order the book CAPITALISM (On sale for $9.99 on Kindle for approx. 1000 pages). Visit Dr. Reisman's website capitalism.net

Download course and supplemental materials here. Order the book CAPITALISM (On sale for $9.99 on Kindle for approx. 1000 pages). Visit Dr. Reisman's website capitalism.net OBJECTIVES 1. To provide the student with a comprehensive knowledge of the nature, foundations, and operations of a division-of labor, capitalist society, with special emphasis on the institutions of private ownership of the means of production, competition, the profit motive, and the price system as the basis for economic coordination and economic progress. The consequences of government intervention with respect to these institutions will be considered in depth. 2. To teach the student to think of economic phenomena in terms of their long-run effects on all groups, not merely their short-run effects on those directly concerned. OVERVIEW The course will focus on five main current problem areas: 1) The validation of economic activity and fundamental economic institutions in the face of widespread criticisms. 2) Environmentalism and energy supplies. 3) Economic “planning” and the reasons for the worldwide collapse of socialism. 4) The monopoly question and antitrust policy. 5) Prevailing ideas on the nature of productive activity and the effect of government intervention on the standard of living of the average wage earner. Two leading themes of the course will be 1) The possibility of continuous economic progress based on the combination of economic freedom, private ownership of the means of production, division of labor, saving, and technological progress. 2) The ethical implication of the harmony of the rational self-interests of all men under capitalism.