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David Hackett Fischer: The Great Wave:
price revolutions and the rhythm of history
(Oxford: 1996)


“Large questions about the nature of change have tended to belong more to philosophers than historians, and have been studied mostly by methods of deduction. The growing accessibility of quantitative evidence allows us to convert a metaphysical conundrum into an empirical question. Dr. Samuel Johnson would have understood. He once observed, ‘That, sir, is the good of  counting. It brings everything to a certainty, which before floated in the mind indefinitely.’”     
(Fischer, pp.xv-vi)

As economics has become more and more central to modern societies, a curious disconnect has gradually grown within that profession, with abstractly mathematical models dominating economic education, to the point where empirical testing and historical studies are now rarely part of standard programs of studies. To be sure, this trend has begun to reverse in the last few years - as the advent of the Non-Autistic Economics movement and a perusal of the list of recent Nobel laureates will indicate - yet few still read economic history, or understand how much its patterns recur, particularly in the long run.

And, of all the well-written economic histories easily accessible to lay readers, David Hackett Fischer’s The Great Wave has the most to teach us about our current economic situation; about how the social trends most troubling the West (crime, drugs, family breakdown) have all been seen closely clustered before - repeatedly - in eras boasting similar price/wage trends as are seen today; and about how such trends collapse.

The skills needed to understand Fischer’s work are not mathematical - at most, his argument merely asks the reader to compare sets of assumptions underlying different models - and the more abtruse and scholarly aspects of the debates are buried in the extensive appendices & notes which comprise the last half of the book, which most readers can safely leave unsampled. Yet numbers are the core of the argument, and for very good reasons:


“If one makes a leap of the imagination, numbers come alive. They do so both in what they allow us to know, and in how they help us to think. Numbers make it possible...to compare events that are otherwise incomparable. They tell us which way the world is moving. They help us to think in general terms about particular events, and then to test our generalizations against the evidence of empirical indicators....And only one type of source material spans the entire range of written history: the record of prices.”
(Fischer, pp. xiii-iv)

For those interested, Appendix A covers the more fragmentary records from the ancient world - which clearly show price revolutions of their own, despite the much more limited sway of markets in earlier periods. But the core of the book concentrates upon the last eight hundred years, in which price records are both ample and continuous, and can be closely correlated with a wide range of social/cultural trends and historical events. The result is a macro-historical account which is surprisingly gripping - albeit repetitive - and which makes sense of a range of factors which would otherwise appear unrelated. It also strongly suggests implications for our own near future that few current observers have noted. The basic facts involved, however, are simple in outline...albeit deeply complex in their workings:


“Most inflation in the last eight centuries has happened in four great waves of rising prices. The first wave continued from the late twelfth century to the early fourteenth century, and has been called the medieval price-revolution. The second was the familiar ‘price-revolution of the sixteenth century’, which actually began in the fifteenth century and ended in the mid-sevententh. The third wave started circa 1730, and reached its climax in the age of the French Revolution and the Napoleonic Wars. It might be called the price-revolution of the eighteenth century. The fourth wave commenced in the year 1896, and has continued since, with a short intermission in some nations during the 1920s and early 1930s. It is the price revolution of the twentieth century.”
(Fischer, pp. 3-5)

“These great waves were punctuated by periods of a different nature - when prices fell a little, then found an equilibrium and fluctuated on a fixed plane. One such era, which might be called the equilibrium of the twelfth century, coincided with the climax of medieval civilization. Another could be named the equilibrium of the Renaissance (ca. 1400-1480). A third may be thought of as the equilibrium of the Enlightenment (1660-1730). The fourth might be remembered as the Victorian  equilibrium, for it coincided with the life of Queen Victoria herself.... This alternating rhythm of price-revolutions and price-equilibria was discovered as early as the eighteenth century.... They have been documented in many studies, and are the most robust pattern of secular change in the history of prices - more so than Kondratieff cycles or any other cyclical rhythm, which must be derived by ‘detrending’ the data.”
(Fischer, p. 5)

“Before we begin to study these relationships, a caveat is necessary. It should be understood clearly that the movements we are studying are waves - not cycles. To repeat: waves, not cycles. Cyclical rhythms are fixed and regular. Their periods are highly predictable. Great waves are more variable, and less predictable. They differ in duration, magnitude, velocity, and momentum.... Even so, all shared the same wave-structure. They tended to have the same sequence of development, the same pattern of price relatives, similar movements of wages, rent, interest-rates; and the same dangerous volatility in later stages. All major price revolutions in modern history began in periods of prosperity. Each ended in shattering world-crises and were followed by periods of recovery and comparative equilibrium. These great waves also differ from cycles in their epistemic status. We know about them in different ways. Cycles must be teased from the data, commonly by statistical inferences in which the evidence is ‘filtered’ and ‘detrended’ by various techniques. The great waves are different in that respect. They appear on the surface of the evidence.... Each great wave is the major price trend in its own era.... To discover these secular trends in the data, it is necessary to do something that is very simple, and yet immensely difficult for many academic scholars. One must learn to look the evidence in the face, without fixed ideological, theoretical or epistemological preconceptions. We are sometimes told that this is impossible. So it is - for some people.”
(Fischer, p. 9)

Although demonstrating full awareness of the wide range of causal hypotheses that have been proffered for these trends, Fischer refuses to simplify the evidence - strongly suggesting multicausal factors - and takes a problem- (rather than theory- ) oriented approach, although the depth of this is only fully evident if the reader delves into the last half of the book, with its lengthy appendices and bibliographical notes. Upfront, the reader mainly gets the results - gracefully written, and inclusive of the best theoretical work whilst wasting little time (or politeness) on that which does not deserve attention.


“A French scholar observes from long experience that no historical problem of the long duree can be solved by economics alone. One might equally say that it cannot be solved by history alone. History and economics must advance together, if either is to advance at all.”
(Fischer, p. 245)

Too often in the contemporary humanities, we are treated to so-called “interdisciplinary” work which is mere empire-building, in which the scholar concerned has no real familiarity with the area colonized; either reinventing the wheel, or making gross errors due to poor knowledge of previous work. The Great Wave, on the contrary, is marked by enormously detailed reading in all relevent areas, and a strong synthesizing intelligence in casting its own muticausal explanation for these trends, dominated by the unexpected consequences of human expectations summed over good times, and bad:


“When prices are more or less stable, real wages are rising, rents and interest rates are falling, social stability is increasing, material conditions are improving, and cultural expectations are growing brighter...people begin to make major choices in different ways. They decide to marry earlier. They choose to have more children. They also make economic decisions in a different way, expanding the scale of their ambition and the scope of their activity. These choices are made not entirely or even primarily for reasons that can be explained in material terms, but because of changes in cultural mood and expectation. The result of these choices is that aggregate demand grows more rapidly than supply. Some prices increase faster than others. Food, energy, and shelter lead the trend, partly because their supply is less elastic, and partly because demand grows more rapidly for life’s necessities.... Real wages keep up at first, but then begin to lag behind, partly because population growth has expanded the supply of labor, and partly because the dynamics of change favor people with positional goods.”
(Fischer, p. 247)

In an era when inflation is declared “low” by government fiat - while prices for food, energy, and shelter go through the roof - it is refreshing to read an economic scholar who is willing to declare such a period one of persistent price inflation: and to explain that this (combined with stable or falling prices for manufactured goods) is hardly anomalous...and nor is the collusion of the powerful in attempting to obscure the facts of the case.


“For a time, these trends develop within the same range of fluctuations as in the preceding period of equilibrium. When they move beyond that...individuals and institutions...respond to inflation by making individual and collective choices that cause more inflation. The stock of money is deliberately enlarged to meet growing demand. Capitalists charge higher rates. Landlords raise the rent. Real wages fall farther behind. The cultural mood begins to change in a new way; there is a growing sense of material uncertainty and moral confusion.... Everyone tries to find a measure of protection or to profit from changing circumstances. People who possess power and wealth are best able to do so. For example, they demand tax-reductions and often receive them. Taxation becomes more regressive, and public revenues fall behind expenditures. Fiscal inbalances develop. Public deficits increase, the cost of debt service rises, and governments are reduced to near-insolvency, and the springs of public action are weakened. The cultural mood changes once more, with growing awareness of limits on human effort and a spreading sense of social pessimism - even social despair.”
(Fischer, pp. 247-8)

In an attempt to be concise, I have focussed here more upon Fischer’s causal hypotheses and summary statements, rather than excerpting much from his detailed historical account. This should be seen more as a bow to genuine strength of the former (and the richness of the latter) than any indication that the book scants historical detail for theoretical speculation. Moreover, when the pattern varies, as it frequently does - remember, waves not cycles! - Fischer is quick to note this, and incorporate it fully into his account. This makes his discussion of the twentieth century particularly engrossing, seen as it is through the patterns which have resurfaced repeatedly throughout the last eight hundred years of history:


“[In certain ways] the price-revolution of the twentieth century was different from its predecessors. In its early and middle stages real wages increased, and kept increasing until the late 1960s.... In the twentieth century, the role of trade unions, democratic politics, and welfare states had a major impact on returns to labor. At the same time, the distribution of income and wealth tended in general to become a little more equal, especially in the period from the 1920s to the 1950s. This equalizing tendency had also appeared in the first stages of other price-revolutions. In the twentieth century, however, it continued for a longer period than before.”
(Fischer, pp. 188-190)

The endgame of each great wave is disturbingly similar, and overly familiar to contemporary readers. Inequalities develop alarmingly...and crime, drug usage, family breakdown and religious fanaticisms grow apace, while resources are increasingly absorbed into speculative bubbles and luxuries undreamt of in earlier times. Sounds familiar, doesn’t it?


“Prices surge and decline in swings of increasing amplitude. Markets of many kinds - capital markets, commodity markets, labor markets - become dangerously unstable. Production and productivity decline or stagnate, while prices continue to rise; together these trends create stagflation. Political instability increases, and with it comes social disorder, internal violence, and international war. The cultural system becomes dangerously unstable; internal conflicts of value and identity growmore intense. Things are especially hard on young people, who find it difficult to get good jobs or start a family. They also have choices to make. Some decide to have a family anyway, outside of marriage. The proportion of children born and raised outside marriage increases rapidly. Other young children turn against social institutions, or merely turn away from them. Crime increases. The consumption of drugs and drink goes up. People of age and wealth have very different experiences, and do not understand why their own children are so troubled. But the young and the poor, especially the working poor, are driven to despair.”
(Fischer, p. 248)

“Finally, a triggering event that might have caused a minor disturbance in another era creates a major crisis.... More often - and most dangerously - it is a combination of disasters. Whatever they might be, these small events have sweeping consequences. They disrupt a cultural system that is dangerously unstable.... The result is a protracted period of political disorder, social conflict, economic disruption, demographic contraction and cultural despair. This general crisis relieves the pressures that set the price revolution in motion. Afterward, the economic trends run in reverse. Demand falls and price deflation follows. Real wages begin to rise. Interest and rent falls...[and] a period of equilibrium develops and the cultural mood grows more positive. Population increases, and aggregate demand begins to grow. The pattern begins again.”
(Fischer, pp.248-9)

Overall, perhaps the most intriguing aspect of great waves, to my mind, is the way that the appalling crises end up delivering strongly progressive social outcomes every time - nice for those who survive, but at horrible cost nonetheless.


“The Black Death...had many economic consequences. The price of food rose sharply during the epidemic years, then began to fall very rapidly, as there were fewer mouths to feed. At the same time, prices of manufactured goods tended to rise, partly because artisans and craftsmen could demand higher wages, and also because of dislocations in supply.... [But] from the long travail of the fourteenth century, a new society was born. Forms of status and obligation were altered in fundamental ways. England and western Europe underwent an economic process that historian M.M. Postan summarizes as ‘the commutation of labour services and the emancipation of the serfs. Similar trends also occurred in the cities of northern Italy, where urban workers improved their material condition. A major cause was the scarcity of labor that allowed workers to bargain for better terms. This process continued for nearly a century after the Black Death.”
(Fischer, pp.44-9)

Each crisis, considered in turn, produced similarly levelling social changes - but, importantly, with a progressively lower death toll - and the resulting changes increasingly shifted from the purely economic/demographic into the politically-mediated sphere of action. In short, things do get markedly better once each great wave crests, better than the last time, and the pattern is very robust...


“Each of these stages develops from a sequence of choices that are framed by environing conditions. The choices are freely made, but they become part of the context for the next set of decisions. The interaction of individual choices have collective consequences which nobody intends or desires. This is especially so in the later stages of price revolutions. In a free market, individual responses to inflation commonly cause more inflation. Individual defenses against economic instability cause an economy to become more unstable. This process might be called the irrationality of the market.”
(Fischer, p. 249)

The Great Wave is macro-history at its finest, drawing upon the best of the relevant social sciences in order to clearly delineate what only a broader viewpoint can reveal - the existence of patterns extending over hundreds of years which are invisible from our usual more time-bound perspectives. And make no mistake, despite their invisibility, the great waves strongly govern our social and cultural worlds, particularly in times such as these, in which a wave nears its peak. Both to understand economic history, and to gain real insight into the forces driving our current situation, this book is essential reading for our times. Moreover, in his approach to praise and blame he is astonishingly evenhanded for this polarized age.

For, rather than damning markets or governments alone (as opposing ideologues on the left and right are so idiotically prone to do), Fischer insists upon learning from history; which offers little comfort to those who would demonize either. Had he written this twenty years earlier, I have little doubt that his strongest rhetoric would have been saved for the left...but, in 1996, it was the right that was triumphalist, and badly needing the corrective. Here, to finish, is Fischer on the new right, the perils of catastrophically growing inequalities, and the appalling costs of restoring equilibrium in earlier times. We badly need this wisdom.


“Those who believe in the beneficence of a free market are correct in one tenet of their faith. It is true that the play of the market will in time correct almost any imaginable price-distortion. But to put our trust in the market is to ignore some hard historical facts. The free market restored equilibrium in the fourteenth century, but only after the Black Death. It did so again in the seventeenth century, but not until a general crisis had destroyed the peace of Europe. The free market recovered its equilibium in the Victorian era, but only after the slaughter of the Napoleonic Wars. In short, the laisser-faire prescription, ‘let the free market take its course’ has in the past eight hundred years created human suffering on a scale that is unacceptable. It is also unnecessary. A second historical fact also tends to be missed by believers in the free market. In economic history, equilibrium is the exception rather than the rule.... In the full span of modern history, most free markets have been in profound disequilibrium most of the time - often dangerous and destructive disequilibrium.”
(Fischer, p. 252)


John Henry Calvinist