Hyperinflation and Hyperreality: Thomas Mann in Light of Austrian Economics
With the worldwide collapse of socialism as an economic system, Marxism today stands thoroughly discredited as an intellectual position. Made prophetically early in this Ludwig von Mises's claim that economic calculation is impossible in the absence of free markets has been vindicated by the manifest failure of Soviet communism. Decisively refuted by the facts of economic life, Marxism has been forced to retreat to the one place in the academy where empirical reality seems to carry no weight in an argument: the humanities departments. As has often been noted, the great paradox of academic life at the moment is that just when Marxism has lost all credibility in the practical world, it has come to dominate the study of the humanities in American universities. Deconstruction and other forms of poststructuralism prepared the way for this outcome. By calling into question any notion of truth and objectivity, these movements in literary theory left humanities departments vulnerable to the lingering bewitchment of Marxism in a way to which other disciplines more in touch with reality have been comparatively immune.
In the grand sweep of world history, it may seem a fair exchange to see millions of people liberated from the Marxism that was forced upon them, while a handful of literature professors voluntarily subject themselves to an outmoded and refuted dogma that somehow flatters their egos and soothes their social consciences. And despite the grandiose claims of literary critics to be changing the world, no one — not even a Chairman of the Federal Reserve — has ever been foolish enough to turn to a professor of English for economic advice. Thus one might be tempted to accept the apparently benign use of American humanities departments as retirement homes for washed-up Marxists. But we should not underestimate the danger of abandoning the study of literature to Marxist theorists; how our students view the humanities may well affect their broader view of the world. And in particular we need to guard against the possibility that Marxism may be repackaged under such slogans as "socialism with a human face." Having lost all respectability as an economic theory, Marxism is likely to continue to resurface periodically as a vaguely humanistic program. In a recent article, Richard Rorty forthrightly and courageously admits the economic failure of Marxism, and yet he cannot help looking back nostalgically to the days when socialism seemed to be a viable economic alternative:
But I have to admit that something very important has been lost now that we can no longer see ourselves as fighting against "the capitalist system." For better or worse, "socialism" was a word that lifted the hearts of the best people who lived in our century. A lot of very brave men and women died for that word. They died for an idea that turned out not to work, but they nevertheless embodied virtues to which most of us can hardly aspire.1
Setting aside the fact that a lot of equally brave men and women died fighting against socialism, we can see in Rorty's statement the danger of allowing socialism to retain its claims to the moral high ground. One way of salvaging the cause of socialism is to insist that, however much a failure it may have been as an economic alternative to capitalism, it still provides a kind of ethical alternative in some vaguely humanistic sense.
At the heart of the form of deconstructed or aestheticized Marxism that currently dominates humanities departments stands the belief that literature with its higher ethical sense somehow still points us in the direction of socialism. But there is no reason why the left should have a monopoly on the study of literature. Even though many authors have in fact been socialist in their leanings, the prevailing notion that literature can only be used for leftwing purposes is just a myth. In a brief paper, I cannot hope to demolish systematically such a long-standing and ingrained prejudice. But I do want to use one concrete example to suggest that literary analysis need not be the exclusive preserve of the academic left, but is in fact compatible with Austrian economics. I will discuss a short story Thomas Mann wrote in 1925, "Unordnung und frühes Leid," or, as it is known in English, "Disorder and Early Sorrow."2
Set in Weimar Germany during the time of the hyperinflation, this story takes on new meaning once it is analyzed in terms of Mises's theory of inflation and the crack-up boom. With Mann's uncanny ability to mirror economic and social reality in his fiction, he succeeds even without any knowledge of Austrian economics in bringing out the psychological ramifications of an inflationary environment with a subtlety of insight Mises would have admired. Moreover, as we analyze "Disorder and Early Sorrow" in light of Mises's theory of inflation, we will see that the story has larger implications for our view of twentieth-century cultural history. A reading of Mann in terms of Austrian theory helps to uncover a connection between the economic facts of the twentieth century and the very poststructuralist ideas that have given Marxism a second life in today's humanities departments. In short, I hope to show that, despite all indications to the contrary from my colleagues, it is possible to talk about literature and still make economic sense.
II.
At first sight, "Disorder and Early Sorrow" may appear too insubstantial a story to bear up under the weight of any kind of sustained analysis.3 Mann tells the tale of an apparently average day in the life of Dr. Abel Cornelius, a professor of history. His teenage children, Ingrid and Bert, are holding a party for their friends, a typical cross section of youthful acquaintances, including students and entertainers. Everyone enjoys the party, especially the professor's younger children, Ellie and Snapper, who relish the opportunity to spend time with the grownups. Finding his routine disturbed by the presence of all the young people, the professor is nevertheless in some ways attracted to them and their modern way of life. He wanders in and out of the party, tries to get some work done in his study, and eventually goes out for his daily walk. He returns to find his house in an uproar. His five-year old daughter is throwing a tantrum, as a result of feeling spurned by an engineering student named Max Hergesell, for whom she rather precociously developed a crush while he playfully danced with her. Upset that Hergesell cannot be her brother, little Ellie is not consoled until Max gallantly comes to her room to wish her good night, thus bringing the tale to a close with a poignant hope of innocence restored.
Though seemingly slim in substance, "Disorder and Early Sorrow" presents the kind of world familiar to us from the great texts of literary modernism, such as Eliot's The Waste Land or Mann's own "Death in Venice." The story charts the dissolution of authority, as we watch a social order breaking down and see the confusions that result. In particular, Mann portrays a world in which parents are losing their authority over their children. Obviously viewing their parents as old fogies, the children think of their generation as smarter than the preceding one. Mann portrays a world that has gone mad in the worship of youth. As a sign of the resulting confusion, we are introduced to the "big folk" (die Grossen) in the first paragraph (p. 179), only to discover in the second that the term applies to the teenagers, not, as one would expect, to their parents. The little children already call their father by his first name. As a story of people growing up too fast, "Disorder and Early Sorrow" appropriately concludes with the incident of Ellie's infatuation with Max. The image of a five-year old girl having her first love affair becomes Mann's way of crystallizing our sense of the absurd pace of development in this world.
In "Disorder and Early Sorrow" all categories are breaking down. While the children behave like adults, the adults start behaving like children; in order to play with Ellie and Snapper, Cornelius "will crook his knees until he is the same height with themselves and go walking with them, hand in hand" (p. 191). This image of a "diminished Abel" (p. 191) points to the broader collapse of hierarchy in Cornelius's world, especially any sense of social distinctions. He has a hard time telling his son from his servant; they dress alike and are prone to the same youthful fads and fashions (pp. 179–80, 203). The world of "Disorder and Early Sorrow" has become so confusing that it is difficult for the characters simply to tell what is real anymore. This aspect is brought out by the presence of actors throughout the story. Mann emphasizes elements of imitation and parody; Ingrid has "a marked and irresistible talent for burlesque" (p. 179), which she and her brother love to put to use:
They adore impersonating fictitious characters; they love to sit in a bus and carry on long lifelike conversations in a dialect which they otherwise never speak. (p. 183)
When an actor named Ivan Herzl shows up at the party in heavy makeup, he provokes Cornelius into thinking about how people no longer are what they seem: "You would think a man would be one thing or the other — not melancholic and use face paint at the same time" (p. 196). Mann creates a pervasive sense of inauthenticity in the story; the modern world is a counterfeit world.
With all stable points of reference gone, the only law of "Disorder and Early Sorrow" appears to be perpetual change. Against this instability, Mann sets his central character. As a professor of history, Cornelius is always searching for something solid to grab hold of in the midst of all this mutability, and he wistfully contrasts the fixity of the past with the everchanging world of the present:
He knows that history professors do not love history because it is something that comes to pass, but only because it is something that has come to pass; that they hate a revolution like the present one because they feel it is lawless, incoherent, irrelevant — in a word, unhistoric; that their hearts belong to the coherent, disciplined, historic past. ... [He seeks] the temper of eternity. (p. 186)
Thus like The Waste Land, "Disorder and Early Sorrow" counterpoints the coherence of past eras with the incoherence of modern times.
III.
Thus far Mann's story sounds like many other modernist works, chronicling the breakdown of order in twentieth-century life. But when one looks in the story for Mann's sense of what is responsible for this breakdown, the uniqueness of "Disorder and Early Sorrow" begins to emerge. Modernists have put forward many explanations for the incoherence of twentieth-century life. In The Waste Land, for example, Eliot correlates the disorder of the modern city with a failure of religious faith and a loss of the traditional myths that used to give coherence to life. But in "Disorder and Early Sorrow," Mann explores another possibility, correlating his portrait of modern life with a specific historical event — the German inflation of the 1920s, an economic development so extraordinary that a new term had to be coined to describe it — hyperinflation. The absurdity of modern life has been traced to many sources, but here Mann looks to the absurdity of modern economic policies. He suggests that if we seek an explanation of the dissolution of authority in the world he is portraying, we should look to the monetary madness of the Weimar Republic.4 As he shows, inflation eats away at more than people's pocketbooks; it fundamentally changes the way they view the world, ultimately weakening even their sense of reality. In short Mann suggests a connection between hyperinflation and what is often called hyperreality.5
If modernity is characterized by a loss of the sense of the real, this fact is connected to what has happened to money in the twentieth century. Everything threatens to become unreal once money ceases to be real. I said that a strong sense of counterfeit reality prevails in "Disorder and Early Sorrow." That fact is ultimately to be traced to the biggest counterfeiter of them all — the government and its printing presses. Hyperinflation occurs when a government starts printing all the money it wants, that is to say, when the government becomes a counterfeiter. Inflation is that moment when as a result of government action the distinction between real money and fake money begins to dissolve. That is why inflation has such a corrosive effect on society. Money is one of the primary measures of value in any society, perhaps the primary one, the principal repository of value. As such, money is a central source of stability, continuity, and coherence in any community. Hence to tamper with the basic money supply is to tamper with a community's sense of value. By making money worthless, inflation threatens to undermine and dissolve all sense of value in a society.
Thus Mann suggests a connection between inflation and nihilism. Perhaps in no society has nihilism ever been as prevalent an attitude as it was in Weimar Germany; it was reflected in all the arts, and ultimately in politics. It would of course be wrong to view this nihilism as solely the product of an inflationary environment. Obviously Weimar Germany faced many other problems, some the legacy of World War I and the Treaty of Versailles, some the legacy of nineteenth-century German thinkers such as Nietzsche. But as Mann's story reminds us, we should not underestimate the role of inflation in creating the pervasive sense of nihilism in Weimar Germany. A glance at the back of an American dollar bill shows two phrases: "United States of America" and "In God We Trust." Somehow our money is connected with our political and even our religious beliefs. Shake a people's faith in their money, and you will shake their other faiths as well. This problem has become particularly acute in the twentieth century, because ours is the age of paper money, money that has to be taken on faith alone. That is why we have to put "In God We Trust" on the back of our dollars; nobody really trusts the Chairman of the Federal Reserve. In "Disorder and Early Sorrow," Mann invites us to consider what happens to our lives when we are forced to take our money purely on faith and that faith is betrayed by the government.
Unlike many economists and historians to this day, Mann is not mystified by the cause of inflation6; he makes it clear in the details of the story that what has gone haywire in Weimar Germany somehow involves the money supply. We cannot help noticing that something is wrong when we hear of Cornelius drinking a "watery eight-thousand-mark beer" (p. 184). And Mann is aware that government fiscal policies are the source of the trouble. It cannot be an accident that the historical subject Cornelius is studying is precisely the beginnings of modern central banking and deficit financing, and hence the origins of inflation as a tool of modern public policy:
First he reads Macaulay on the origin of the English public debt at the end of the seventeenth century; then an article in a French periodical on the rapid increase in the Spanish debt towards the end of the sixteenth.7 (p. 192)
Financial details chronicling the absurdity of hyperinflation are scattered throughout the story. Cornelius is making a million marks a month, and that is merely "more or less adequate to the chances and changes of post-war life" (p. 182).
Under these insane conditions, people become obsessed with the economic facts of life and must devote all their energy just to trying to stay above water. Frau Cornelius feels disoriented in the most basic tasks of daily life:
The floor is always swaying under her feet, and everything seems upside down. She speaks of what is uppermost in her mind: the eggs, they simply must be bought today. Six thousand marks a piece they are, and just so many are to be had on this one day of the week at one single shop fifteen minutes' journey away. (p. 183)
We see here how one government intervention in the economy immediately leads to others. Having produced scarcities in the market with their inflationary policies, the authorities introduce new regulations to try to deal with the irrationality they themselves created. But faced with the rationing of goods, the people in Mann's story learn to get around the government's tampering with the market:
For no single household is allowed more than five eggs a week; therefore the young people will enter the shop singly, one after another, under assumed names, and thus wring twenty eggs from the shopkeeper for the Cornelius family. (p. 183)
Here Mann presents the characteristic inauthenticity of the world he is portraying as a direct response to government intervention in the market, which forces people to become fakes.
Mann is aware of how absurd the German inflation became, and moreover he shows how that absurdity in turn worked to make all of life absurd in the Weimar Republic. He shows one of the moments in inflation Mises concentrated on, the flight into real goods:8
Before the young people arrive [Frau Cornelius] has to take her shopping basket and dash into town on her bicycle, to turn into provisions a sum of money she has in hand, which she dares not keep lest it lose all value. (p. 192)
With the value of money diminishing virtually hour by hour, people desperately search for some way to hold on to value, and that means they rush to exchange their largely fictitious money for something real, a real good. Thus inflation serves to heighten the already frantic pace of modern life, a pace that further disorients people and undermines whatever sense of stability they may still have.
Mann also shows how inflation disrupts the social order, producing as it does a huge underground transfer of wealth. Those people who had worked hard and put their money in the bank saw their savings become worthless almost overnight. Mann documents the fall of the middle class in the case of the Hinterhofers:
two sisters once of the lower middle class who, in these evil days, are reduced to living "au pair" as the phrase goes and officiating as cook and housemaid for their board and keep. (p. 191)
Mann shows how hard it is for these women to live with their sense of economic degradation, portraying the shame and bitterness of Cecilia Hinterhofer:
Her bearing is as self-assertive as usual, this being her way of sustaining her dignity as a former member of the middle class. For Fraulein Cecilia feels acutely her descent into the ranks of domestic service. ... She hands the dishes with averted face and elevated nose — a fallen queen. (p. 202)
A society composed of embittered people like the Hinterhofers is soon going to face major political problems, as the rise of fascism in Germany was to show.
At the same time as many people lost everything during the German inflation, some made their fortunes by taking advantage of the new economic conditions. Mann includes among the cast of characters the kind of speculators who profited from inflation:
They lead ... that precarious and scrambling existence which is purely the product of the time. There is a tall, pale, spindling youth, the son of a dentist, who lives by speculation.9 ... He keeps a car, treats his friends to champagne suppers, and showers presents upon them on every occasion. (p. 204)
Those who know how to exploit an inflationary situation can gain as much as others lose. As a result, inflation creates a topsy-turvy world. The fact that people are losing and making fortunes overnight is responsible for all the social confusions in "Disorder and Early Sorrow," such as Cornelius's inability to tell his son from his servant. In a world in which all distinct categories begin to dissolve, a pervasive sense of relativism develops. Cornelius's convictions begin to weaken and he feels unable to take a stand against the opinions of the younger generation. In a frightening anticipation of today's tyranny of political correctness, the history professor retreats into an academic skepticism when faced with the fanaticism of youth, trying to make his lack of conviction masquerade as a form of broadmindedness:
For in one's dealings with the young it behoves one to display the scientific spirit ... in order not to wound them or indirectly offend their political sensibilities; particularly in these days, when there is so much tinder in the air, opinions are so frightfully split up and chaotic, and you may so easily incur attacks from one party or the other, or even give rise to scandal, by taking sides. (p. 207)
Worried about taking any sort of stand, Cornelius begins to question his most fundamental certainties: "And is there then no such thing as justice?" (p. 207). Mann thus shows how inflation ultimately has a political effect, eating away at the basic beliefs that give a grounding to social order. By undermining all sense of stability and value in Weimar Germany, inflation ultimately led to the rise of Hitler and Nazism.10
IV.
Mann is as acute in portraying the psychological effects of inflation as he is in portraying the economic, social and political effects. As he shows, inflation fundamentally changes the way people think, forcing them to live for the moment. There is no use planning for the future, since inflation, especially hyperinflation, makes future conditions uncertain and unpredictable. As Mises demonstrated, the most insidious effect of inflation is that it makes economic calculation nearly impossible. It thereby destroys the Protestant ethic, which ever since Max Weber has been viewed as linked to capitalism. What is the use of saving one's money if that money will soon become worthless as a result of inflation? As Mann shows, in an inflationary environment, the rational strategy is to spend your money as fast as you make it. Thus inflation works to shorten everyone's time horizons, destroying precisely those attitudes and habits that normally make the middle class hard workers and prudent investors, those forces that lead them to restrict their present consumption for the sake of increasing future production.
This effect of inflation explains why youth has come to dominate the world of "Disorder and Early Sorrow," and why the older generation has lost its authority. The young are more adaptable to changing conditions, while the old are set in their ways. Hence the young cope better with inflation:
the upper middle class ... look odd enough ... with their worn and turned clothing and altered way of life. The children, of course, know nothing else; to them it is normal and regular. ... The problem of clothing troubles them not at all. They and their like have evolved a costume to fit the time, by poverty out of a taste for innovation: in summer it consists of scarcely more than a belted linen smock and sandals. The middle-class parents find things rather more difficult. (p. 182)
Mann notes that inflation even changes the way people dress, but, more importantly, he sees that it alters the dynamic between the generations in society, giving the young a huge advantage over the old. Not having experienced economic stability, the youth of Germany are more able to go with the inflationary flow.
In the person of Cornelius's servant, young Xaver, Mann portrays the perfect child of the inflationary era, the embodiment of its virtues and its vices:
He is the child and product of the disrupted times, a perfect specimen of his generation. ... The Professor's name for him is the "minute-man,"11 because he is always to be counted on in any sudden crisis, ... and will display therein amazing readiness and resource. But he utterly lacks a sense of duty and can as little be trained to the performance of the daily round and common task as some kinds of dog can be taught to jump over a stick. (pp. 202–3)
Xaver has the adaptability to changing conditions demanded by the era of inflation, but the price he pays for that is the total loss of the discipline once prized in German society. His lack of feeling for the past of course disturbs his master, the history professor, but as a child of inflation Xaver is constantly plunging into the future:
Dr. Cornelius has often told him to leave the calendar alone, for he tends to tear off two leaves at a time and thus to add to the general confusion. But young Xaver appears to find joy in this activity. (p. 203)
In a world in which the young are leaping into the future two days at a time, the old become increasingly irrelevant. Economists have long recognized that inflation is particularly cruel to the elderly in society, especially retired people who live on fixed incomes, which cannot keep pace with inflation. Mann fills in our sense of the psychological disruptions that accompany the economic ravages of inflation. More than any other factor, inflation discredits the authority of the older generation and turns power over to youth. It is not simply a matter of the old losing their economic advantage over the young. In an inflationary environment, all the normal virtues of the old suddenly start to work against them, while all the normal vices of the young suddenly seem to look like wisdom. Conservatism and a sense of tradition make it impossible to respond to rapidly changing economic conditions, while the profligacy of youth becomes paradoxically a kind of prudence in an inflationary environment. Mann's genius is to show how all the characteristics of the world in "Disorder and Early Sorrow" flow from the new economic facts of life. One still needs to turn to economists like Mises to understand the causes and the full economic ramifications of inflation. But what Mann does for us is to show the human reality of the phenomenon, how it alters not just economic conditions but the very fabric of everyday life, right down to the psyches of young children.12 Ellie's premature infatuation with Max is the emotional equivalent of inflation.
V.
In addition to all its economic, social, political, and even psychological consequences, inflation in Mann's view works to undermine the basic sense of reality.13 In the world of inflation, reality begins to attenuate. As we have seen, even an eight-thousand-mark beer is watered down. For a variety of reasons, prices cannot always be raised to keep pace with inflation; hence producers are forced to cheapen their products, to adulterate them. Mann portrays a pervasive cheapening of the world in "Disorder and Early Sorrow." Cornelius thinks of himself as a gentleman, but in his straitened circumstances, he cannot help cutting corners, even when offering cigarettes to his guests:
He ... takes a box from his supply in the cupboard: not the best ones, nor yet the brand he himself prefers, but a certain long, thin kind he is not averse to getting rid of — after all, they are nothing but youngsters. (p. 198)
Typically in this inflationary environment, things end up in a state of disrepair, as normal economic channels become disrupted:
The basin has been out of repair for two years. It is supposed to tip, but has broken away from its socket on one side and cannot be mended because there is nobody to mend it; neither replaced because no shop can supply another. (p. 193)
Once one realizes what is going on in "Disorder and Early Sorrow," one can see how the opening of the story is emblematic of the world Mann is portraying:
The principal dish at dinner had been croquettes made of turnip greens. So there follows a trifle, concocted out of those dessert powders we use nowadays, that taste like almond soap.14 (p. 179)
Clearly inflation is adversely affecting the diet of Mann's characters, but something more significant becomes evident here. Cornelius and his family live in a world in which they do not have desserts anymore, they have dessert substitutes. Forced to economize by inflation, these people can no longer afford the real thing:
These consult together meantime about the hospitality to be offered to the impending guests. The Professor displays a middle-class ambitiousness: he wants to serve a sweet — or something that looks like a sweet. (p. 182)
We are all familiar with this kind of food substitute, an artificial product that is always presented as superior to the real thing, but that is in fact merely cheaper (and perhaps less fattening). Such substitutes are characteristic of life in the twentieth century, and Germany, with its advanced chemical industry, led the way in developing them, so much so that we have taken the German word for substitute, Ersatz, into our language.
Thus in his ultimate indictment of the monetary policies of the Weimar Republic, Mann shows how inflation contributes to the ersatz reality of the twentieth century. We have come to live in a world of plywood rather than mahogany. Things are not real anymore; we are surrounded by clever (and cheap) substitutes, mere simulacra of the real things. Mann fills up the story with artificial substitutes, from the false teeth of the children's nurse (p. 189) to the fake leather in Hergesell's shoes:
They are the tightest I've ever had, the numbers don't tell you a thing, and all the leather today is just cast iron. It's not leather at all. (p. 195)
The artificially heightened pace of the inflationary economy produces more and more irrationalities, including increasing deception in the marketing of commodities. Much of what is traditionally and mistakenly regarded as the duplicity of capitalism is in fact the result of government intervention in the market in the form of tampering with the money supply. AB Mann shows, it is primarily the government-induced process of inflation that eats away at the substance of reality in the modern world.
To be sure, one cannot blame everything on inflation. Already in the nineteenth century, Alexis de Tocqueville had noted the tendency of democracies to produce a cheapening of products:
The handscraftsmen of democratic ages not only endeavor to bring their useful productions within the reach of the whole community, but strive to give to all their commodities attractive qualities that they do not in reality possess. In the confusion of all ranks everyone hopes to appear what he is not. ... To satisfy these new cravings of human vanity the arts have recourse to every species of imposture.15
Thus even before the paper money inflations of the twentieth century, one could detect a movement of the modern economy toward the simulacrum in place of the real thing. De Tocqueville reminds us that economic developments often have political causes, and many of the tendencies Mann portrays in "Disorder and Early Sorrow" can be attributed to the abrupt democratization of Germany after World War I. But Mann shows how inflation works to hasten and heighten these tendencies, forcing people to economize by accepting substitutes in a desperate attempt to maintain the shadow of their former standard of living.
With his novelist's feel for the texture of everyday life, Mann senses the connection between the world of inflation and the world of the modern media. The government creates an illusion of wealth by tampering with the fiduciary media; the communication media similarly contribute to the creation of an all-pervasive world of illusion. Writing in the 1920s, Mann is already aware of how modern technology and the increasingly mediated character of modern life create new possibilities of deception. Every medium of communication is potentially a medium of miscommunication. In the masquerades of Bert and Ingrid, the telephone has become an important medium:
The telephone plays a prominent part ... : they ring up any and everybody — members of government, opera singers, dignitaries of the Church — in the character of shop assistants, or perhaps as Lord or Lady Doolittle. They are only with difficulty persuaded that they have the wrong number. (p. 184)
The telephone is an example of how the modern communication media create an illusion, the illusion of immediacy. Bert and Ingrid enjoy the sensation of seeming to be in touch with the great public figures of their day, but in a sense, they are as much deceived as the people they try to fool. They think that they are dealing directly with these famous people, but in fact the telephone stands inbetween them; otherwise their deception would not work. Thus any relationship they establish over the phone is inevitably phony; as the German idiom for "wrong number" more forcefully suggests, they are "falsch verbunden" (p. 624), falsely connected.
In a telephone conversation, one does not see the person one is talking to, but has the illusion of being in his presence. Similarly, in a paper money economy, one does not see gold anymore, but the currency gives the illusion of the presence of wealth. The increasingly mediated character of the modern economy, especially the development of sophisticated financial instruments, allows the government to deceive its people about the nature of its monetary policy. When a government tries to clip coins or debase a metal currency, the results are readily apparent to most people. By contrast, the financial intermediation involved in modern central banking systems helps to shroud monetary conditions in mystery. At least initially the techniques of deficit financing and monetarization of debt conceal from the public what is happening to the money supply. Just as the jokes of Bert and Ingrid work only because the people they call cannot see them, the Weimar government's inflation worked only because it was hidden behind the smokescreen of modern central banking; with paper money one cannot at first see how the currency is being debased. As Mises has shown, the whole of inflationary policy depends on the confusion in any system of indirect exchange between money and capital, the illusion that pieces of paper are somehow really wealth.
Mann sees the pervasive inauthenticity of the modern world even in the music of the young people, who listen not to real live performances, but to mechanical reproductions on the gramophone. In the "new world" created by the gramophone (p. 198), music from all over the globe begins to blend together, and one loses sight of national origins (pp. 198, 199), or the distinction between authentic folk songs and popular hits (pp. 200–1). Seeming to make music from the whole world simultaneously available, the gramophone creates a false aura of cosmopolitan sophistication and thus adds to the sense of cultural relativism:
They move to the exotic strains of the gramophone ... : shimmies, foxtrots, one-steps, double foxes, African shimmies, Java dances, and Creole polkas. (p. 204)
Everywhere one looks in "Disorder and Early Sorrow," one sees illusions substituting for reality. The flight from the world of reality is best illustrated by Xaver's fanciful escape into the world of the cinema:
With his whole soul he loves the cinema. ... Vague hopes stir in him that some day he may make his fortune in that world ... — hopes based on his shock of hair and his physical agility and daring. He likes to climb the ash tree in the front garden. ... Once there he lights a cigarette and smokes it as he sways to and fro, keeping a lookout for a cinema director who might chance to come along and engage him. (p. 203)
Here Mann anticipates what was to become the Hollywood myth of being discovered in Schwab's drugstore. Such dreams are bred by an inflationary economy, which thereby corrupts the ambitions of youth. The young man fantasizes about making his fortune in the movies because he can only imagine becoming wealthy by making one big killing. In an inflationary environment, one must dream of becoming an overnight success because the slow steady way of amassing a fortune by working hard simply will not work. As Mann senses, the moving picture is the perfect art form for the age of inflation: a kinetic art for a kinetic era. He shows how the movies are already saturating everyday life; in his choice of cigarettes, Xaver smokes "a brand named after a popular cinema star" (p. 180). In the illusory world fostered by inflation, an image on a screen now works to shape a man's desires.
VI.
The references to telephones, gramophones, and motion pictures in "Disorder and Early Sorrow" build up a sense of how mediated modern life has become, how much we are surrounded by artificial reproductions and representations of life. Ultimately the issue of representation becomes central in Mann's story. Studying it carefully, we can see how a reconception of representation has occurred in our century, a major shift in our way of thinking that can be correlated with the shift to paper money and inflationary policies. In the older sense of money, a banknote referred to something outside itself. Under the gold standard, a dollar bill represented a fixed amount of gold, on deposit somewhere and obtainable on demand. That is what it meant to have a currency backed by gold — a paper banknote was redeemable in terms of a real commodity, namely gold, something that had independent value. But in the modern era of fiat money, a banknote just represents another banknote. One dollar bill can merely be exchanged for another dollar bill, but such a transaction has no point anymore, once no real commodity backs the currency. In the modern paper money system, money does not represent anything outside itself; money only represents itself.16
What is fascinating is that this change in the concept of representation in fiat money sounds like the prototype for the new concept of representation in modern art. Modern artists pride themselves on their discovery of the principle of non-representational art. Ask a modern painter what his scrawls on the canvas represent and he will patronizingly reply: "My painting doesn't represent anything external to it; it represents itself." Growing out of the nineteenth-century idea of art for art's sake, this attitude in modern art denies that the artist need refer to the external world; his works can exist within the self-contained world of art itself. The world of modern paper money is a similarly closed system. A currency with no commodity like gold backing it thus provides the model for the self-referentiality on which modern art prides itself.17
In a case like this it is difficult to speak of cause-and-effect. It would be simplistic to make a statement like: "Because we went off the gold standard, modern art became non-representational." One suspects that both developments have their roots in something deeper in modern life and modern culture, perhaps the democratization de Tocqueville traces. Still, it is worth considering that a change as fundamental as the switch from a commodity-based currency to fiat money might have widespread implications for a society, and might even affect basic cultural attitudes. If self-referentiality is really a defining characteristic of modern art, then perhaps the inflationary environment created by twentieth-century governments at least helped to foster the sense of irreality that pervades our culture. As money ceases to refer to anything real anymore, the traditional idea of referentiality is undermined. The architects of inflationary policy are to blame for many of the disasters, economic and political, of this century. "Disorder and Early Sorrow" suggests that we may also hold them responsible for the empty self-referentiality of much modern art.
Once art becomes severed from reality, artists turn to such notions as the surreal and the hyperreal as substitutes. The whole movement known as postmodernism grows out of the non-representational turn in modern art. We would have to go well beyond the boundaries of Mann's story to explore fully the relation between inflation and postmodernism.18 One of the central notions of postmodernist theory is the idea of the simulacrum, which we have already seen developed in "Disorder and Early Sorrow.19 According to one definition, a simulacrum is a copy for which there is paradoxically no original.20 But that is exactly the concept of fiat money. Under the gold standard, the dollar bill used to be the representation, for which a fixed amount of gold provided the original. In this situation, one could easily distinguish the representation from the original — the original was bright and shiny, while the representation was green and crumpled. But that kind of distinction is no longer possible in the world of pure paper money. One dollar bill merely represents another dollar bill — we are in a world of all copies and no originals.21
But this is exactly the kind of world Mann portrays in "Disorder and Early Sorrow," a world in which reality is constantly threatening to dissolve into mere representations of reality. Cornelius is distressed by his son's admiration for and imitation of the actor, Ivan Herzl:
Bert has entirely succumbed to Herzl's influence, blackens the lower rim of his eyelids ... and with youthful carelessness of the ancestral anguish relates that not only will he take Herzl for his model if he becomes a dancer, but in case he turns out to be a waiter at the Cairo he means to walk precisely thus. (p. 181)
In choosing an actor as his model, Bert ends up imitating an imitator, and thus threatens to become a mere simulacrum of a human being. What strikes Cornelius about Herzl is his total lack of authenticity; as an actor, he always seems to be putting on a show, and hence not to have any reality of his own:
It all, no doubt, comes from his heart, but he is so addicted to theatrical methods of making an impression and getting an effect that both words and behavior ring frightfully false. (p. 197)
Already in the 1920s, Mann prophetically saw the inauthenticity coming to pervade modern society and modern culture, linking this development to the modern communication media, but understanding its link to fiduciary media as well. Indeed his model for the loss of authenticity in the modern world is the loss of the reality of money that inflation causes.22
I can offer one particularly apt example to try to corroborate the connection I have been drawing between the epistemology of twentieth-century art and debates over paper money. At the core of post-modernism is the tendency to make the act of representation problematic. Postmodern images call attention to themselves, to the fact that they are merely images. In traditional art, the medium is, as it were, transparent; the artist wants us to look through his act of representation to the thing being represented, and hence does everything possible not to call our attention to his medium. But the postmodern artist throws a wrench into the process of representation, foregrounding his medium and thus making us concentrate on the act of representation itself, on the fact that we are watching something being represented. A famous example of this technique among the Surrealists, forerunners in many respects of postmodernism, is Rene Magritte's The Treachery of Images (Fig. 1). One of the many ways of reading the inscription on this clever painting is: "This is not a pipe; this is merely a representation of a pipe." Magritte short-circuits any tendency we might have to confuse the representation of a thing with the thing itself by explicitly calling attention to his act of representing the thing.23 The painting leaves us with a lingering sense of the inadequacy and even the duplicity of all acts of representation.
Magritte's painting, done in 1928–29, seems a perfect example of avant-garde art, the kind of work that could only be produced in the twentieth century. And yet it bears a striking resemblance to a famous cartoon by Thomas Nast, drawn as an illustration to David Wells's book, Robinson Crusoe's Money, first published in 1876 (Fig. 2). Wells's book was an attack on the paper money inflation brought about by the Civil War. He uses a Crusoe fable to expose the folly of the common people's belief in the reality of paper money.
But the latter term was conceded to be but a mere fiction of speech and a bad use of language, for every intelligent person at once saw that a promise to deliver a commodity ... could not possibly be the commodity or the thing itself, any more than ... the picture of a horse
[is] a horse.24
Nast's illustration brilliantly captures the heart of this argument by surrealistically confusing things with representations of things. Like Magritte, Nast reminds us that a picture of a cow is not actually a cow, but he is not making a merely aesthetic statement. He is drawing a more serious analogy between the duplicity involved in artistic representation and the duplicity involved in the government printing money and forcibly establishing it as legal tender, an analogy embodied in the parallel: "This is a Cow By the Act of the Artist" and "This is Money by the Act of Congress."25 Experiencing the Union Greenback inflation, Nast was led to question the reality of representation without benefit of having read Nietzsche. As in "Disorder and Early Sorrow," an inflationary environment raises the issue of the authenticity of representation in a way that provokes an artist to think about the illusions involved in his own craft.26
Figure 2: Milk-Tickets for Babies, in Place of Milk
"Disorder and Early Sorrow" may be just a short story, but, as I have tried to show, it is remarkable how complete a portrait of the modern world Mann is able to pack into this brief work, and how rich it is in economic detail. With his attention to the consequences of inflation for daily life, Mann provides a useful supplement to Mises's brilliant economic analysis of the phenomenon. Mises explains what happened in Weimar Germany; Mann gives a sense of how it felt to ordinary people, and in that way may help to convince his readers of the full horror of inflation. Though it may be a rare case, I offer this discussion of "Disorder and Early Sorrow" as an example of how an economic but non-Marxist analysis of literature is possible. Only if one approaches the story armed with the correct analysis of inflation supplied by Mises can one see what its true significance is and what its larger implications are. What is particularly interesting about the story is that it portrays the same world that modernist texts usually do, but offers a different explanation of the characteristics of that world. Mann traces the feeling of modern man that the ground has been pulled out from beneath his feet, not to some metaphysical principle of human life itself, but to the effects of a specific government policy, namely inflation. Moreover, he suggests that the inauthenticity of modern life, which has often been blamed on capitalist practices such as advertising, is more properly viewed as the result of the inflationary environment created by government. The Marxist critics who today dominate humanities departments act as if all economic analysis of literature must yield (for them) comfortingly leftwing conclusions. An Austrian economic analysis of "Disorder and Early Sorrow" shows that many of the problems characteristic of modern life are not, as literary critics tend to claim, the product of private enterprise, but rather of that very government intervention in the economy Marxists always recommend.
The twentieth century could be called the Age of Inflation,27 the Age of Paper Money, and "Disorder and Early Sorrow" suggests how this fact is related to the prevailing sense of inauthenticity in our time, the sense of a lack of reality and a loss of value. Critics often search as if puzzled to answer the question: how could authors such as Kafka come up with a view of the world as so absurd? The fact is that in its day-to-day consequences the German inflation of the 1920s was far more absurd than anything Kafka could dream up. When Gregor Samsa turns into an insect, it certainly introduces an element of craziness into his household, but at least the money his parents put away in the bank retained its value and allowed life to go on for his family, and when his sister went to do the shopping, she did not need a wheelbarrow to carry the banknotes necessary just to buy a loaf of bread.
It would of course be wrong to blame the development of the idea of the Absurd in modern literature purely on inflation. After all, we can find the Absurd in the literature of countries which never went through anything like the German hyperinflation (though it would be impossible to find any country in this century unaffected by inflation, not even Switzerland; in the modern world, we are always talking only about relative rates of inflation; inflation is the most pervasive economic fact of our time). Still, "Disorder and Early Sorrow" gives us much food for thought, and leads us to ask how much of an impact this all-pervasive economic phenomenon has had on modern literature and ways of thinking. Taking our cue from Mann, we begin to question whether inflation may in fact be an even more insidious phenomenon than we have realized, fundamentally altering our world and the way we view it.
Thus in a way very different from Marxist approaches,28 Mann suggests a connection between the spiritual history of the twentieth century and the economic, making us wonder whether the world became merely an image when money became merely an image. As I said at the beginning, deconstructionist and poststructuralist theories paved the way for Marxist takeovers of humanities departments by calling into question any standards of truth and reality, and thus making the demonstrable failure of socialist economic policies in the real world seem irrelevant in the thinking of literature professors. But analysis of "Disorder and Early Sorrow" suggests that these very theories do not, as they claim, provide insight into the human condition as such, but are in fact just a response to specific economic conditions in the twentieth century, the Age of Inflation. Theorists who triumphantly proclaim the illusoriness of human existence are merely reflecting the world created by government monetary policy, the web of illusions endemic to the era of paper money. In a strange way, one may say that Foucault, Derrida, and the other poststructuralists are right; they have evolved a philosophy appropriate to the Age of Inflation, the age when money itself comes to represent nothing, and hence all representation becomes problematic. The mistake occurs when these philosophers universalize from their limited historical experience, and see the world brought about by Keynesian economics as co-extensive with human life in general. Reading Mann's story can help remind us that it is not human life as such that is unreal — it is the money our governments have surreptitiously imposed upon us in an inflationary policy that has caused our sense of reality itself to attenuate in the twentieth century.