How long have we been wringing our hands about the problem of grade inflation? I remember attending, as an eager college student, an eye-opening faculty meeting on the topic. It sometimes seems to me that, as with the pastime of bemoaning the state of our national grammar and usage, the battle is pitched between the Prescriptivists and the Descriptivists.
Prescriptivists think that grades should reflect how far short a student's efforts have fallen from the Platonic ideal of perfection (I'm referring here to the humanities and humanistic social sciences). This approach dominates in Europe, and tends to be accompanied by a hierarchical pedagogical philosophy. It is not unusual for the professor to lecture, uninterrupted, for hours, while the students busily take notes. Similarly, when I was a student at Oxford and at Cambridge, the cutoff for a First (on essays and examinations) was a 70.
Descriptivists think that grades should reflect a student's effort, or that grades are fairly arbitrary or meaningless ciphers required by an increasing tendency to quantification, or a necessary evil required by administrators, and professional graduate schools. Plenty of colleges don't give grades; some, like UC-Santa Cruz, provide narratives of a student's achievements and progress.
The Prescriptivist approach strikes me as more medieval: more invested in discipline, authority, and hierarchy. It is, I'm sure, no accident that my own encounters with Prescriptivist professors have been at European universities or with professors visiting from European universities. The Descriptivist method can seem more modern, as it valorizes the process and the individual over the ideal and the final result. But, just as concerns over currency inflation are rising these days, it seems that concerns about grade inflation are also rising at American universities, especially as more and more people are apparently wondering if it's "worth it" to go to an elite school. But these questions miss the point: the real issue is how do we, as educators, set educational goals for our students and communicate them effectively, give our students the tools they need to learn, and evaluate their efforts?