Great Wave

by Fischer, David Hackett;

  Global inflation is explored in Michael R. Darby et al., The International Transmission of Inflation (Chicago, 1985), a monetarist approach; N. Kaldor, “Inflation and Recession in the World Economy,” Economic Journal 86 (1976) 703–14; D. I. Meiselman and A. B. Laffer, eds., The Phenomenon of Worldwide Inflation (Washington, 1975); A. J. Brown, The Great Inflation,1939–51 (London, 1955); idem, World Inflation since 1950 (Cambridge, 1985); Geoffrey Maynard and W. van Ryckegham, eds., A World of Inflation (New York, 1975); Gardner Ackley, Stemming World Inflation (Paris, 1971).

  The consequences of inflation are discussed in Gardner Ackley, “The Costs of Inflation,” American Economic Review 68 (1978) 149–54; James Tobin and Leonard Ross, “Living with Inflation,” New York Review of Books, 6 May 1971, 23–24; K. K. Kurihara, ed., Post-Keynesian Economics (Aldershot, 1955, 1993); George Terborgh, Essays on Inflation (Washington, 1971).

  On methods of controlling inflation, two leading works in a large literature are Arthur Okun and G. L. Perry, eds., Curing Chronic Inflation (Washington, 1978); Robert M. Solow and Paul M. Samuelson, “Analytical Aspects of Anti-Inflation Policy,” American Economic Review 50 (1960) 177–94; see also from a very different perspective Richard Portes, “The Control of Inflation: Lessons from East European Experience,” Economica 44 (1977) 109–29.

  The effect of price and wage controls is studied in Hugh Rockoff, “Price and Wage Controls in Four Wartime Periods,” Journal of Economic History 41 (1981) 381–401, which finds that controls worked better than many neoclassical economists believe; similar conclusions appear in Orley Ashenfelter and Robert S. Smith, “Compliance with the Minimum Wage Law,” Journal of Political Economy 87 (1979) 333–50; a study of variability in effectiveness is Charles C. Cox, “The Enforcement of Public Price Controls,” Journal of Politial Economy 88 (1980) 887–916.

  On the problem of price relatives and the classical problem of Ricardian distribution and Marshallian scissors, see L. Pasinetti, “A Mathematical Formulation of the Ricardian System,” Review of Economic Studies 27 (1960) 78–98; Ronald Findlay, “Relative Prices, Growth, and Trade in a Simple Ricardian System,” Economica 41 (1974) 1–13; Daniel R. Vining and Thomas C. Elwertowski, “The Relationship between Relative Prices and the General Price Level,” American Economic Review 66 (1976) 699–708; Mario I. Blejer and Leonardo Liederman, “On the Real Effects of Inflation and Relative-Price Variability: Some Empirical Evidence,” Review of Economics and Statistics 62 (1980) 539–44, which explores the consequences of relative price variability for production and employment; Richard W. Parks, “Inflation and Relative Price Variability,” Journal of Political Economy 86 (1978) 79–95; Michael D. Bordo, “The Effects of Monetary Change on Relative Commodity Prices and the Role of Long-Term Contracts,” Journal of Political Economy 88 (1980) 1088–1109; Paul H. Earl, Inflation and the Structure of Industrial Prices (Lexington, 1973).

  On inflation and wages, see A. A. Alchian and R. A. Kessel, “The Meaning and Validity of the Inflation-Induced Lag of Wages behind Prices,” American Economic Review 50 (1960) 43–66; T. Cargill, “An Empirical Investigation of the Wage-Lag Hypothesis,” ibid. 59 (1969) 806–16; Arnold H. Packer and Seong H. Park, “Distortions in Relative Wages and Shifts in the Phillips Curve,” Review of Economics and Statistics 56 (1973) 16–22.

  Barry Eichengreen, “Macroeconomics and History,” in Alexander J. Field, ed., The Future of Economic History (Boston, 1987) 43–90, observes (48) that “no one has as yet provided a satisfying macroEconomic explanation for sixteenth-century real wage and relative price trends.”

  On inflation and the distribution of income and wealth, see E. Budd and D. Seiders, “The Impact of Inflation on the Distribution of Income and Wealth,” American Economic Review 61 (1971) 128–38; G. L. Bach and A. Ando, “The Redistributional Effects of Inflation,” Review of Economics and Statistics 39 (1957) 1–13; G. L. Bach and James B. Stephenson, “Inflation and the Redistribution of Wealth,” Review of Economics and Statistics 66 (1974) 1–13; Andrew F. Brimmer, “Inflation and Income Distribution in the United States,” Review of Economics and Statistics 53 (1971) 37–48; R. G. Hollister and J. L. Palmer, “The Impact of Inflation on the Poor,” in K. E. Boulding and M. Pfaff, eds., Redistribution to the Rich and the Poor: The Grants Economics of Income Distribution (Belmont, Calif., 1972); J. Muellbauer, “Prices and Inequality: The United Kingdom Experience,” Economic Journal 84 (1974) 32–55; Paul Peretz, The Political Economy of Inflation, cited above; Edward N. Wolff, “The Distributional Effects of the 1969–1975 Inflation on Holdings of Household Wealth in the United States,” Review of Income and Wealth 25 (1979) 195–207; Lindert and Williamson, American Inequality: A Macroeconomic History, 136–38.

  Many economists believe that inflation is associated with egalitarian trends, but this refers mainly to evidence from 1939 to 1970, an anomalous period in the history of prices. Very different patterns appeared before 1920 and after 1970. Others argue that “the redistributional effects are more complex than isoften suggested” and that “simple conclusions that inflation is good for the rich and bad for the poor need to be viewed with considerable doubt” (Bach and Stephenson, 13), but these judgments also lack historical depth.

  On inflation and employment, the classic essay is A. W. Phillips, “The Relation between Unemployment and the Rate of Change in Money Wage Rates in the United Kingdom, 1861–1957,” Economica 25 (1958) 283–99. For further discussion, see John A. James, “The Stability of Nineteenth-Century Phillips Curve Relationship,” Explorations in Economic History 26 (1989) 117–34; Erik Aerts and Barry Eichengreen, eds., Unemployment and Underemployment in Historical Perspective (Leuven, 1990). Other contributions include Milton Friedman, “Nobel Lecture: Inflation and Unemployment,” Journal of Political Economy 85 (1977) 451–472; James Tobin, “Inflation and Unemployment,” presidential address, American Economic Review 62 (1972) 1–18; Charles C. Holt et al., The Unemployment-Inflation Dilemma: A Manpower Solution (Washington, 1971); George L. Perry, Unemployment, Money Wage Rates, and Inflation (Cambridge, 1966). Helpful bibliographical notes on inflation and unemployment appear in Maynard and van Ryckeghem, eds., A World of Inflation, 42–44 and Gerald W. Scully, “Static vs. Dynamic Phillips Curves,” Review of Economics and Statistics 56 (1974) 387–90.

  A thorn in monetarist flesh is the Gibson paradox: that is, the tendency for prices and interest rates to rise and fall together. Every monetarist of my acquaintance can explain it away, but it keeps coming back again. This problem has spawned a large literature. See Gerald P. Dwyer Jr., “An Explanation of the Gibson Paradox” (thesis, Chicago, 1979); Robert J. Shiller and Jeremy Siegel, “The Gibson Paradox and Historical Movements in Interest Rates,” Journal of Political Economy, 85 (1977) 891–907; C. Knick Harley, “The Interest Rate and Prices in Britain, 1873–1913: A Study of the Gibson Paradox,” Explorations in Economic History 14 (1977) 69–89.

  General Works on Price Movements: Social Theory

  Another body of theoretical writings has been produced by social scientists and social historians. This literature is divisible into three large groups that might be called Malthusian, Marxist, and Smithian.

  The first of these schools of thought follows in the footsteps of Malthus. Many scholars believe that price movements are driven mainly by endogenous demographic trends. Malthusians believe that population growth tends to force farm prices and rents up while sending industrial prices and wages down. Others hold that population movements are themselves constrained by social and cultural systems—an approach taken in this book. But the idea of endogenous demographic determinants is very strong in the literature of social science. British historians took the lead in developing this model, primarily with reference to medieval trends. Among the early general statements was M. M. Postan, “[Section 3, Histoire économique;] Moyen âge,” IXe Congrès internationale des sciences historiques, … Rapports (2 vols., Paris, 1950–51) vol. I; rpt. in M. M. Postan, Essays on Medieval Agriculture and General Problems of
the Medieval Economy (Cambridge, 1973), and many other writings cited below. A Malthusian model was also applied to modern history in H. J. Habbakuk, “The Economic History of Modern Britain,” Journal of Economic History 18 (1958) 488–501; rpt. in D. V. Glass and D. E. C. Eversley, Population in History (London, 1965), 147–58. Habbakuk asserted, “For those who care for the overmastering pattern, the elements are evidently there for a heroically simplified version of English history before the nineteenth century in which the long-term movements in prices, in income distribution, in investment, in real wages, and in migration are dominated by changes in the growth of population.”

  A similar approach was developed in the early modern period by the great French historian Emmanuel Le Roy Ladurie in his grand thèse, Les paysans de Languedoc (Paris, 1966), and his inaugural lecture at the College de France, “L’histoire immobile,” Annales E.S.C. 29 (1974) 675.

  Another Malthusian contribution of high importance has been made by the American Economic demographer Ronald Demos Lee, in Econometric Studies of Topics in Demographic History (New York, 1978), and “A Historical Perspective on Economic Aspects of the Population Explosion: The Case of Preindustrial England,” in Richard A. Easterlin, ed., Population and Economic Change in Developing Countries (National Bureau Comm. for Economic Research Conference Report no. 30 [1980]; rpt. Chicago, 1987), 517–66. Lee concludes from a cross-spectral analysis of the Cambridge group’s population estimates and the Phelps-Brown and Hopkins wage series that the English economy easily absorbed changes in rates of population growth of about 0.4 percent a year but that “deviations of population size above or below this trend line, however, had dramatic consequences.” He also believes that demographic changes were themselves autonomous—a conclusion not firmly grounded.

  Some American economists believe that the Malthusian model is fundamentally mistaken when it is developed into an argument that an increase in population causes the general price level to rise. Joel Mokyr, for example, insists that “other things equal, the effect of population growth is deflationary.” This hypothesis is developed in “Discussion,” Journal of Economic History 44 (1984) 341–3. On this issue opinion is divided among Malthusians themselves.

  A different critique of Malthusian theory comes from Marxist historians, who believe that the prime movers of price movements are changes in modes of production and class relations. Marxist models have enjoyed a revival among some historians in the Western world during the 1970s and 1980s, at a time when young scholars in eastern Europe, the Soviet Union, and China were turning away from them. Marxist explanations are specially popular among historians of the early modern era as a way of making sense of transformations in that period.

  One body of Marxist theory seeks to explain economic trends primarily in terms of the transition from one stage of production to another—and especially from feudalism to capitalism. This approach stimulated a lively theoretical debate in the 1950s, which centered on the conceptualization of feudal and capital systems and the causes of their transformation. The movement of prices and especially wages became an important issue in this debate. The central work was Maurice Dobb, Studies in the Development of Capitalism (London, 1943; rpt. 1963, 1972). After a critique was published by American Marxist Paul Sweezy in Science and Society in 1950, a controversy continued in various Marxist journals. Thirteen essays including Sweezy’s are reprinted in Rodney Hilton, ed., The Transition from Feudalism to Capitalism (London, 1976, 1978).

  Another body of theoretical literature centers on the relative merits of Marxist and Malthusian models. An important essay is Robert Brenner, “Agrarian Class Structure and Economic Development in Pre-Industrial Europe,” Past and Present 70 (1976), a Marxist attack on “demographic determinism” in general and on the work of Emmanuel Le Roy Ladurie in particular. Brenner insists that “it is the structure of class relations, of class power, which will determine the manner and degree to which particular demographic and commercial changes will effect long-term trends in the distribution of income and Economic growth—not vice versa.” This uncompromising thesis stimulated many articles by academic Marxists and Antimarxists in Past & Present, from which ten are reprinted in T. H. Aston and C. H. E. Philpin, eds., The Brenner Debate: Agrarian Class Structure and Economic Development in Pre-Industrial Europe (Cambridge, 1985).

  Yet another theoretical debate among Marxists has developed around Immanuel Wallerstein’s “world-systems” model, an ambitious and thoughtful attempt to combine Braudel’s problematique with a Marxist model of historical development and the epistemology of American sociology. The results are set forward in Immanuel Wallerstein, The Modern World-System (2 vols., New York, 1974, 1989); also idem, “Kondratieff Up or Kondratieff Down?” Review 2 (1979) 663–73; “Economic Cycles and Socialist Policies,” Futures 16 (1984) 579–85; “Long Waves as Capitalist Process,” Review 7 (1984) 559–75.

  A very different school of historical theory seeks to explain economic and social trends primarily in terms of systems of exchange and market relationships. It is stigmatized by Marxists as “Smithian,” or worse, “neoSmithian.” The leading work is by American economic historians Douglas North and Robert Thomas, The Rise of the West World (Cambridge, 1973); idem, “The Rise and Fall of the Manorial System: A Theoretical Model,” Journal of Economic History 31 (1971) 777–803.

  Critiques of this approach include Alexander James Field, “The Problem with Neoclassical Institutional Economics: A Critique with Special Reference to the North/Thomas Model of Pre-1500 Europe,” Explorations in Economic History 18 (1981) 174–98. See also R. Brenner, “The Origins of Capitalist Development: A Critique of Neo-Smithian Marxism,” New Left Review 104 (1977).

  Catastrophe Studies

  Of relevance to the study of the last stage of each price revolution is a growing literature on crisis and catastrophe. A pioneering work is Pitirim Sorokin, Man and Society in Calamity: The effects of War, revolution, Famine, pestilence upon Human Mind, Behavior, Social Organization … (New York, 1946). An interesting French journal has been devoted to this subject. It was founded as Materiaux pour l’Etude des Calamités in 1925, and became the Revue pour l’Étude des Calamités in 1938. Cultural and social approaches to the study of catastrophe are explored in Paul Hugger, “Elemente einer Ethnologie der Katastrophe in der Schweiz,” Zeitschrift für Volkskunde 86 (1990) 25–36; and Wieland Jäger, Katastrophe und Gesellschaft Grundlegung und Kritik von Modellen der Katastrophensoziologie. Other works include Kai T. Erikson, A New Species of Trouble: Explorations in Disaster, Trauma, and Community (New York, 1994); John I. Clarke, ed., Population and Disaster (Oxford, 1989).

  The Ancient World

  General works on money in the ancient world, with some attention to prices, include A. R. Burns, Money and Monetary Policy in Early Times (London, 1927); François Lenormant, La monnaie dans l’antiquité (3 vols., Paris, 1878–79); L. Incarnati, Moneta e scambio nell’antichitá a nell’ alto medioevo (Roma, 1953).

  A starting point for studies of the rhythm of ancient history is Rein Taagepera, “Size and Duration of Empires: Growth-Decline Curves, 3000 to 600 B.C.,” Social Science Research 7 (1978) 180–96; idem, “Size and Duration of Empires: Growth-Decline Curves, 600 B.C. to 600 A.D.,” Social Science History 3 (1979) 115–38.

  Price Movements in Mesopotamia

  Specialized studies on money and prices in Mesopotamia include Henry F. Lutz, “Price Fluctations in Ancient Babylonia,” Journal of Economic and Business History 4 (1931–32) 335–55; Howard Farber, “An Examination of Long-Term Fluctuations in Prices and Wages for North Babylonia during the Old Babylonian Period,” (thesis, Northern Illinois University, 1974); idem, “A Price and Wage Study for Northern Babylonia during the Old Babylonian Period,” Journal of the Economic and Social History of the Orient 21 (1978) 1–51; W. H. Dubberstein, “Comparative Prices in Later Babylonia (625–400),” American Journal of Semitic Languages and Literatures 56 (1938) 21–72; B. Meissner, Warenpreise in Babylonien (Berlin, 1936).


  Egyptian Prices

  Leading works include Angelo Segré, Circolazione monetaria e Prèzzi nel mondo antico ed in particolare Egitto (Rome, 1922); J. J. Janssen, Commodity Prices from the Ramessid Period: An Economic Study of the Village of Necropolis Workmen at Thebes (Leiden, 1975); Karl Butzer, Early Hydraulic Civilization in Egypt (Chicago, 1976); T. Reekmans, “The Ptolemaic Copper Inflation 220–173 B.C.,” Studia Hellenistica 7 (1951) 61; idem, “Economic and Social Repercussions of the Ptolemaic Copper Inflation,” Chronique d’Egypte 24 (1949) 324; and for Roman Egypt, J. A. Straus, “Le prix des esclaves dans les papyrus d’époque romaine trouvés dans, l’Egypte,” Zeitschrift für Papyrologie und Epigraphik 11 (1973) 289–95; A. K. Bowman, “The Economy of Egypt in the Earlier Fourth Century,” in C. E. King, ed., Imperial Revenue, Expenditure, and Monetary Policy in the Fourth Century A.D. (Oxford, 1980) 23–40; Roger S. Bagnall, Currency and Inflation in Fourth-Century Egypt (Chico, Calif., 1985).

  Prices in Ancient Greece

  Greek prices are discussed in Alfred Jacobs, “Preis (1) Preisgeschichte,” Handwörterbuch der Sozialwissenschaften (Gottingen, 1964), 8:459–76, an excellent short survey of price movements in classical Greece (600–169 B.C.) and Rome (456 B.C. to A.D. 301), with a bibliography. A pathbreaking attempt at a price history of ancient Greece is Lydia Spaventa de Novellis, I Prèzzi in Grecia e a Roma nell’antichita (Rome, 1934); a copy of this work is in the New York Public Library. Also helpful are Gustave Glotz, La travail dans la Grèce ancienne (Paris, 1920; Eng. tr., New York, 1926); M. I. Finley, Studies in Land and Credit in Ancient Athens, 500–200 B.C. (New Brunswick, 1952); Chester G. Starr, The Economic and Social Growth of Ancient Greece, 800–500 B.C. (New York, 1977); K. Christ, “Die Griechen und das Geld,” Saeculum 15 (1964) 214–29; M. J. Price et al., Essays in Greek Coinage Presented to Stanley Robinson (Oxford, 1968); L. Lacroix, “La monnaie grecque et les problèmes de la circulation monétaire,” Bulletin de la Classe des Lettres, Academie Royale Belgique 55 (1969) 169–80.