Seeking The Rule Of The Waves

Books that propound theories of history -- that is, that claim to find common patterns in events widely separated in time and space -- have a deservedly dicey reputation among the professionals. When such books are good they can be very good: a classic like William McNeill's Plagues and Peoples can permanently change the way you look at human affairs. Most big-think books about history, however, turn out to offer little more than strained analogies mixed with pretentious restatements of the obvious. A few have been downright pernicious.

Still, the public has an understandably hearty appetite for theories that seem to explain it all, and so they keep on coming. The Great Wave: Price Revolutions and the Rhythm of History, by David Hackett Fischer, a professor of history at Brandeis University, has already generated considerable buzz. Remarkably for a book that spends most of its 500-plus pages dwelling on events centuries (and occasionally millennia) in the past, a good deal of the buzz comes from the business community, not usually noted for its interest in history. Indeed, Fischer is getting favorable mention from people who tell us in the next breath that we live in a "new economy" to which old rules no longer apply.

There is a reason for this peculiar affinity between a historian with an eighth-century perspective and business commentators obsessed with the new; what these pundits really want, it turns out, is to use his account of alleged patterns in the distant past as an excuse to ignore the lessons of more recent history.

On its face, Fischer's book looks promising. Inflation is a plausible candidate for a wide-ranging search for parallels and common principles. And the book starts well, with an eloquent and stirring defense of the role of quantification in history (although my favorite along these lines is still Colin McEvedy's introduction to The Penguin Atlas of Ancient History, which contains this immortal sentence: "History being a branch of the biological sciences, its ultimate expression must be mathematical"). I plan to keep The Great Wave on my shelf both as a useful source of facts and figures and as a guide to data sources; the author did do a lot of homework.

It is therefore a shame that the book turns out to be quite wrong-headed. But let that not be too harsh a judgment: it is wrong-headed in interesting ways, and much can be learned by examining how and where Fischer went astray.

UNCONVENTIONAL WISDOM?

Fischer starts with an empirical observation: the history of prices in the Western world since the twelfth century can be broadly divided into alternating periods of generally rising prices and of rough price stability. Everyone knows that the twentieth century has been an era of inflation, and the prolonged price rise from 1500 to 1700 is also well known. Fischer makes a good case, however, that there were also reasonably well-defined eras of rising prices in medieval Europe before the Black Death and again in the eighteenth century.

What does conventional economic history have to say about these "price revolutions," as Fischer describes them? Well, the two familiar ones are generally attributed to increases in the supply of money, but with those increases themselves driven by very different factors. The long inflation from 1500 to 1700 is mainly attributed to the flood of silver from Spain's New World conquests; in the modern world governments can print money instead of mining it, and have done so repeatedly both to pay their bills and, more creditably, in an attempt to trade off higher prices for lower unemployment.

Fischer regards such explanations as inadequate. He insists both that inflation is only one symptom of a deeper process -- a process that also produces growing population, rising inequality, declining real wages, and ultimately a crisis -- and that this process is repetitive, that in a qualitative sense all price revolutions are alike. In particular, the travails of the West in recent decades are typical of the endgame of a price revolution -- and we can take comfort in the fact that such difficult periods are inevitably followed by a prolonged "equilibrium."

This thesis is fun to contemplate and comforting in its implication that the worst may already be behind us. So what is wrong with it? One problem with The Great Wave is that Fischer displays a shortcoming common among historians writing on economic matters: he would clearly rather spend a year hunting down facts than a day mastering a theory, even if only to learn enough to reject it. As a result, his accounts of what he imagines to be the conventional theories of inflation -- theories that he claims to refute with his evidence -- are wildly off base, sometimes ludicrously so.

For example, at the very beginning of the book Fischer unwittingly reveals his unfamiliarity with even the most basic monetary economics when he attributes to Princeton's Alan Blinder the dictum that inflation is "always and everywhere a monetary phenomenon" -- not realizing that when Blinder used the phrase in a newspaper article he was quoting Milton Friedman. Now Friedman's dictum, love it or hate it, is one of the three or four most famous tag lines in economics, right up there with "The division of labor is limited by the extent of the market" and "In the long run we are all dead." It is as if the author of a seemingly authoritative book about epistemology were to attribute the line "I think, therefore I am" to a modern philosopher who used it in an op-ed piece.