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The Great Wave

The Great Wave

David Hackett Fischer
1996
T4 544 pages · about 9h 4m to read OL26739Wgoodreads

Eight centuries of price revolutions and what ended each one.

Summary

Fischer, a historian, assembles price series across eight centuries of European and American history and argues that they show a recurring pattern of four great waves: the medieval price revolution of the thirteenth century, the sixteenth-century price revolution, the eighteenth-century revolution, and the twentieth-century one.

Each wave, in his account, follows the same sequence. A long period of price stability and prosperity is followed by rising prices, initially driven by population growth pressing on resources. The inflation accelerates, real wages fall, returns to land and capital rise relative to labour, inequality widens, social unrest increases, and governments debase currency or expand money supply in response. The wave ends in a crisis of some kind, followed by a long period of price equilibrium and rising real wages. He documents the sequence for each wave with wage, price, rent and demographic series.

The argument connects economic and social history in a way most price histories do not, and Fischer draws explicit consequences: inequality tracks the wave, family formation and crime rates move with it, and political instability follows real wage decline. The book is long and the data appendix is substantial.

Economic historians have criticised it heavily. The waves are identified partly by inspection rather than by formal test, the causal mechanism shifts between demographic and monetary explanations depending on the period, and the twentieth-century wave is fitted to a pattern the earlier ones may not share. Fischer's forecast of a crisis at the end of the twentieth century did not occur as described. Read it for the assembled data and the pattern hypothesis, not as established history.

Key takeaways 7

  1. European and American price history shows four long waves of roughly a century each, separated by extended periods of price equilibrium.
  2. Each wave begins with population growth pressing against resources and ends in a crisis followed by a long equilibrium.
  3. Real wages fall through the inflationary phase of each wave while returns to land and capital rise, which widens inequality systematically.
  4. Governments respond to the later stages of each wave by debasing or expanding money, which accelerates rather than causes the inflation.
  5. Social indicators including crime, family formation and political unrest move with the wave rather than independently of it.
  6. Periods of price equilibrium, not periods of growth, are when real wages rise and social conditions improve most.
  7. The inflation of the twentieth century fits the same pattern as earlier waves in its price behaviour, though its monetary causes differ.

Who should read it

Macro investors interested in very long-run price and inequality patterns, read with awareness that the wave thesis is contested by economic historians.

Where it sits in the reference 2

Philosophy
Secular themes

Who recommended it 2

Book recommendations listed on their Good Books profile · aggregator only
Book recommendations listed on their Good Books profile · aggregator only

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