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Inflation vs. humanity over the eons


FOOD AND energy costs are rising again, zooming past prices for industrial goods and other components of "core" inflation.

Real incomes fall, as workers' wages fail to keep up with the cost of living.

The rich get richer. Returns on capital attain once-unimaginable heights, helped in part by the increasing relative cheapness of sweat labor.

Income and wealth distribution become dangerously unbalanced, and miseries multiply for the lower classes. Out-of-wedlock births soar. So do drug use, murders, petty wars and property crimes. Inter-class ties stretch ominously.

This is David Hackett Fischer's portrait of a society on the verge.

He paints it in meticulous detail, the fine lines rendered with charts, trends and analysis of demographic and economic data. But, aside from the lacework, Fischer's version of 1990s Earth looks pretty much like the planet you read about in the newspaper.

It is his intelligence, however, to venture further, to tread where newspaper writers and even most professional economists do not. In his new book, "The Great Wave," Fischer travels back through the centuries and finds economies that look uncannily -- and disturbingly -- like the one described above.

Four times in the millennium, consumer prices have expanded, then swollen, then ballooned, then burst, Fischer shows. In each instance, he argues, the consequences for humans have been terrible.

And you thought Alan Greenspan didn't like inflation.

Fischer's inflation perches malevolently in the background of disasters across the ages, like a combination of Woody Allen's Zelig and Mick Jagger's Satan. It's in the background, barely seen until now, but it is directing the action.

From the Black Death of the 14th century, to the French Revolution of the 18th, to the Bosnian atrocities of the 20th, Fischer picks up a common thread of rising prices causing similar dire effects.

His thesis, focused only on the West, is audacious and sweeping enough to attract challenges galore.

Critics will argue that price movements are side effects of the grander forces of history, not causes. Fischer tends to belittle social trauma that occurs when prices are stable; the miseries and atrocities that coincide with inflation he describes with greater verve.

But he is careful not to make too many claims for his pattern. It is not as regular as the Kondratieff "supercycle" that adherents expect to spell economic doom any day now. It is not as deterministic as the progressions Marxists detect. Free will exists, and policy decisions make a difference.

And Fischer's model of how inflation wreaks societal disorder is powerful and persuasive. It doesn't come until page 247, but it's worth the wait.

Inflation starts slowly, he says, after long periods of social and economic stability. It awoke in 1180, in 1490, in 1730 and in 1897. Each time, the preceding stability prompted people to marry earlier, women to bear more children, business people to raise their ambitions. But greater expectations boosted demand, which cranked up prices, especially for life's staples of energy and food.

Rising prices enriched capitalists, the people who were selling the energy and the food. Rising prices made everybody else poorer, as wages failed to stay abreast. Class conflicts got worse. Power enabled the powerful to stay so. Social pathologies bloomed, and the resulting unrest sometimes rocked the capital markets.

In the end, a "triggering event" caused upheaval, revolution, disaster. The result in the 1300s was plague and harvest failures. The result in the 1600s was more plague, famine, wars. In the 1700s: the French Revolution.

In the 21st century: Fischer doesn't say.

Our choices will determine the outcome, he says, and he urges us to pay special attention to monetary policy, wealth inequities, education of the poor and long-range economic statistics.

Consumer prices have risen 16-fold since the last great inflation wave began to gather force 100 years ago. Last month, a thug shot little James Smith III as he waited for his first haircut in Baltimore's Fresh Cuttz barbershop.

Are the two related? Fischer makes a good case that they are.

Pub Date: 2/03/97

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