David Hackett Fischer's new book is a history of price trends and how they may have correlated with historical movements in the Western World during the past eight hundred years. Drawing from a rich and extensive body of economic sources, Fischer asserts that prices in the western world in the last eight hundred years have been rising though this inflationary trend has not been constant. Fischer maintains that this phenomenon can be grouped into four great waves, which historians have labeled price revolutions (3). The significance of these price waves was pointed out by the French historian Fernand Braudel who described them as "the strongest secular pattern in modern economic history"(7). By understanding these price waves, writes Fischer, we can gain a different and vital perspective from which to approach the pressing problems of our day, such as the rise in violence and the disintegration of the family.
Fischer identifies four price revolutions which he examines in terms of timing, duration, fluctuation, and volatility: the medieval price revolution (1180 to 1350), the sixteenth century price revolution (which actually began in the fifteenth century and ended in the mid seventeenth century), the price revolution of the eighteenth century (that started about 1730 and ended at the time of the Napoleonic Wars), and the price revolution of the twentieth century (which began in 1896 to the present--though presently in its final stage) (7). One wave lasted as long as 175 years and another lasted 85 years. As Fischer writes, these price revolutions were waves not cycles. They followed variable wave like patterns not fixed cyclical movements.
While each of the four price waves that Fischer analyzes were different from each other, they shared a common structure.
They began at the end of periods of high prosperity when people did not recognize them as long term trends. After a few decades, prices rose beyond past price fluctuations. When people recognized these changes, they adjusted their behavior by rising rents and increasing interest rates. These adjustments caused prices to raise to higher levels. Next came a period of instability and price volatility. Commodity markets and financial markets experienced price shocks. Government spending exceeded revenue. Real wages fell, but interest rates rose; the poor became poorer and the richer became richer. During the last stages of each price revolution, a period of crisis set in with shattering force.
These price revolutions had social consequences. For example, during the crisis of the fourteenth century price revolution, the severe instability of prices led to rising rates of crime. Fischer maintains that "as price-movements became more volatile, every surge in the cost of living was accompanied by a sudden increase in criminal violence" (37).
Once a price wave crested and the crisis stage ended, a period of deflation set in, and prices eventually settled fluctuating along a stable plane. Historians refer to this stability in prices as a price equilibrium. Fischer identifies four periods of price equilibrium: the equilibrium of the twelfth century, (which coincided with the climax of Medieval civilization), the equilibrium of the Renaissance (1400 to 1480), the equilibrium of the Enlightenment (1660 to 1730), and the Victorian equilibrium (and as the label suggests, it coincided with the life of Queen Victoria).
Just like price revolutions, price equilibria had consequences for western society. As the equilibrium of the Renaissance began to appear in the European economy, Fischer asserts that "new political trends emerged as well" (56). The equilibrium of the Renaissance coincided with the era of nation building. Fischer cites a set of sovereigns and the nations that they helped to unify: "Poland's king Cassimir IV, who united his grand duchy and drove out foreign invaders. In Russia it was the time of Ivan the Great (1462), the first truly national ruler. It was also the era of Hungry's greatest king Mathias Corvinus (1458); of France's Louis XI (1461), who transformed a medieval kingdom into a great national monarchy; and of England's Henry VII (1485), who founded the Tudor dynasty" (ibid).
In The Great Wave, Fischer aims not only at description, but also at explanation. He summarizes seven causal models that historians have used to explain price waves. These seven models are the following: monetarist, Malthusian, Marxist, agrarian, neoclassical, environmental, and historicist. After assessing their strengths and weaknesses, Fischer offers his own paradigm. Fischer's causal model emphasizes two key concepts: choice and contingency (241). At every stage of price waves, humans made choices that were significant in their consequences. For instance, during inflationary periods that resulted from population growth, people responded by expanding the money supply. This type of choice resulted in more inflation. But the consequences of our actions, Fischer maintains, are not determined in one way or another. Events are contingent, that is, the past could have turned out differently. Fischer, then, places humanity at the center of historical processes in which we play a causal role.
David Hackett Fischer's new book, The Great Wave, has much to teach us about our present problems. To deal with the present, Fischer argues that we must deal with the long run, and thus he exhorts us to "learn to think of the present and future as part of an historical continuum" (10). This is to say that we must learn to think historically. History is not only a body of truths about the past, but it is also a way of thinking about the past. By seeing how present conditions fit into price waves, we gain an important way of understanding our times. Fischer's price wave approach to history is not a determinist model. It is grounded in the notions of agency and contingency. As Fischer writes: "what happens in the future is contingent on our choices in the present, which derive from our memory of the past." (Ibid) Thus Fischer conceptualizes humans as active agents of change. Our world is a contingent flux; there is no fate. And to make the wisest decisions that we can requires knowledge of the past.