The Great Wave

"The history of prices is the history of change", writes David Hackett Fischer in this broad sweep of western history from the middle ages to our own time. His primary sources are price records, which are more abundant for the study of historical change than any other type of quantifiable data. Fischer uses these materials to frame a narrative of price-movements in western history from the eleventh century to the present. He finds that prices tended to rise throughout this long period, but most of their increase happened in four great waves of inflation - which he calls the price-revolutions of the thirteenth, sixteenth, eighteenth, and twentieth centuries. The four waves shared many qualities in common. All had the same movements of prices and price-relatives, falling real wages, rising returns to capital, and growing gaps between rich and poor. They were also very similar in the structure of change. Each of them started silently, developed increasing instability, and ended in a shattering crisis that combined social disorder, political upheaval, economic collapse, and demographic contraction. These crises happened in the fourteenth, seventeenth, and late eighteenth centuries. They were followed by long periods of comparative equilibrium: the Renaissance, the Enlightenment, and the Victorian era. In all of these eras prices fell and stabilized, wages rose, and inequalities diminished. Then another great wave began and the pattern repeated itself, but not in precisely the same way. Fischer quotes Mark Twain: history doesn't repeat itself, but it rhymes. Through all of these movements, Fischer explores the linkages between economic trends, social tendencies, political events, andcultural processes. He finds that long periods of price-equilibrium were marked by a faith in order, harmony, progress, and reason. By contrast, price-revolutions created cultures of despair in their middle and later stages. Fischer examines the cause of these movements, and discusses the models that have been used to explain them. He also considers their consequences. Fischer does not attempt to predict what will happen next, noting that "uncertainty about the future is an inexorable fact of our condition". Rather, he ends with an analysis of where we might go from here, and what our choices are now. This book should be required reading for anyone who is seriously concerned about the state of the world today.