F.A. Farm

A friend of mine suggested I read The Great Wave: Price Revolutions and the Rhythm of History (1996) by David Hackett Fischer, a historian who teaches at Brandeis University. Fischer has done quite a good job of parsing out demographic waves (hence the title) using price data and he is comfortable with the anthropological view of culture. A couple of years ago, I made the comment at a meeting that "Culture trumps economics - look at the growth of the organic movement in the last 40 years," and the three economics professors on the panel and in the audience became quite irate. Besides being thin-skinned, these highly-paid professionals didn't seem to understand that I was talking about household economics rather than slamming their discipline. Fischer, on the other hand, has no ox to gore and is quite abstemious in presenting his own theory of causal explanation for the price waves he describes.

In a nutshell, Fischer describes four great demographic waves using deep change in price movements over the last 800 years. By necessity, the data is more readily available for Europe and the western world, but there is a certain Eurocentrism prevalent in this type of exercise. I don't see it as much of a problem, however, since the expansion of colonization into the New World was driven by European naval powers and Fischer does bring in some of the Asian influences whenever he can. The first wave started with harvest fluctuations and famine in the 13th century, which put quite a bit of stress on individuals and societies even before the Black Death hit in the mid-14th century. This resulted in a crash in population and a later equilibrium which resulted in the Renaissance. The second wave was the crisis of the 17th century, which began with population increase and price instability in the late 15th century. The second crash in population paved the way for the second equilibrium of the Enlightenment. It should be noted that by the time of this second wave, the New World was now producing staple commodities for Europe, so this served as a buffer, of sorts, against demographic volatility in Europe. However, this "buffer" also engendered its own problems, especially as the American colonies acted upon Enlightenment ideals. Nevertheless the third wave started again with the demographics of overpopulation and high grain prices. The inevitable revolutionary crisis of the mid-to-late 18th century in America, France and the rest of Europe reached its culmination in the Napoleonic Wars and ended at Waterloo. This time, however, the nations of Europe were more savvy in preventing social violence through standing armies, state police forces and some social welfare. This provided enough sustenance to keep the poor hungry, but not riotous. The next equilibrium was the Victorian, named after Queen Victoria and roughly coincident with her reign.

The Victorian Equilibrium saw the rise, once again, of population and prices, and this led to our own fourth wave. Now we have a huge population that is at a crisis point. Fischer does not hazard a guess as to the new equilibrium or even whether it is inevitable, but he does provide some models for understanding the four great waves. He describes seven causal models extant in the historical literature - monetarist, Malthusian, Marxist, agrarian, neoclassical, environmental, and historicist - and proceeds to demolish each one. Fischer then goes on to suggest a model of autogenous change. This model builds on culture as a complex web of causal relationships and history as a sequence of contingencies. Contingency and choice are vital elements - people make choices based on what is available. To be blunt, "Culture trumps economics." Optimization and optimal foraging concepts (I am hunting rabbits but if I see a deer, I will always go for the deer.) do not apply. People decide to have more children and they change the way they make economic decisions. The result is that aggregate demand grows faster than supply, thus increasing prices. This is a valid model, but Fischer has missed something important.

Fischer's book was published in 1996, before peak oil and climate change had reached a wide audience. Nowhere in his book does he talk about the impact of coal or petroleum as providing new energy "slaves" that increased production and allowed humans to increase their population. Nowhere does he talk about population overshoot as a lagging effect on demand. One can certainly factor in the role of coal in the Industrial Revolution and the surplus energy of cheap oil in allowing populations to continue to increase after a wave "breaks." If you do so, one causal model of Fischer's seven models rises to the top once again - the Malthusian model. This model, from Thomas Malthus' An Essay on the Principle of Population (1798), states that societal improvement results in population growth, which then results in population crashes, since "The power of population is indefinitely greater than the power in the earth to produce subsistence for man." Fischer's criticism of the Malthusian model is that it works fine for the first two waves, but not the third and fourth. However, if you factor in the rise of coal as an energy slave that powers the Industrial Revolution from 1750 to 1850, we can postulate that increasing productivity mitigated the effects of the crash of the third wave in the early 1800's. In other words, a cheap energy source allowed more population and a continuation of the underlying population increase between the crash of the third wave and the Victorian Equilibrium. In the fourth wave, petroleum has allowed populations to increase beyond all former limits and even beyond the carrying capacity of the earth. The upshot is that Malthus' model would have worked with the third wave, if not for the intercession of the energy slave of coal keeping productivity up high enough so European populations had enough to eat. The same holds for the fourth wave, but the energy slave is cheap oil and this has allowed even higher levels of population in a time of increasing prices. Thus, the Malthusian model is just "put on hold" until the coal was replaced by oil (third wave) and until the cheap oil runs out (fourth wave). Notice that coal didn't run out, but was replaced by cheap oil. Nor will cheap oil run out, as some so blithely suggest. Peak oil is based on energy return on investment (EROI), which simply means that it costs energy to extract energy. Right now, cheap oil is still returning at a rate of at least 5:1 calories returned for calories to get it out of the ground, refined, and to market. I say at least because some sources still use a ratio of 20:1, but 5:1 is still economical to power modern societies. The end of oil as a fuel will come when it is uneconomical to use it, in a real thermal energy sense, not just by price.

The bottom line is that Fischer's book provides a theoretical model for describing some of the demographic events of the past 800 years, but it is dated. The concept of autogenous change is quite good and deserves further analysis. I recommend this book highly, and it is not as dry as you might think. You should note that the book is only 258 pages itself, but also features another 250 pages of notes and appendices. I rather liked that.