All this is within our power to control. The laws and economic policies of every nation have a strong impact on the distribution of wealth and income. One may observe their effect by comparing one nation with another. During the mid-1980s, the poorest 20 percent of West German families received 13 percent of household income. In the United States, the poorest 20 percent received 6 percent of household income.21
In a dynamic economy, a more equitable distribution of income and wealth might be achieved not by confiscation or direct transfer, but by more subtle and less intrusive means. It is not necessary to make the rich poorer, so that the poor may grow richer. There are better ways. Expanded educational investment would help people to acquire more marketable skills and higher-paying jobs. Enlarged housing programs might help more people own their homes. Revised health and social security programs might shift our primary reliance from income-subsidies at the end of life to capital-accumulation early in the life cycle. Enlightened tax policies might halt the shift toward regressive taxes that are now falling increasingly on the poor. Inventive employment policies could protect the right to work and promote job security within a free labor market. With a little imagination, all this can be done by mixed public and private effort within the frame of capitalist, free-market economics—if we have the political will to make the effort.
Everything hinges on our political will. That in turn requires a shared sense of collective responsibility for our economic and social condition. We are all in this together. Our prevailing ideology stresses individual freedom and a tradition of minimal government. This way of thinking is central to our culture, and should be, but it represents only one side of our American heritage. The founders of our republic often wrote of the “liberty of America” and tried to manage its affairs by collective effort. Their idea of freedom was better balanced than ours. Our ancestors clearly understood the vital role of collective action in the cause of freedom. It is time that we remembered too.
APPENDIX A
Price Revolutions in the Ancient World
This inquiry centered on modern Western history from the twelfth century to the present, primarily because the sources are still very thin for other cultures and earlier periods. Only scattered data survive from the more distant past. These materials, however limited, clearly show that price-revolutions occurred repeatedly in ancient and early medieval history.
In the valleys of the Tigris and Euphrates, price-records survive abundantly from the civilizations of ancient Mesopotamia. “The vast majority of excavated cuneiform tables deal with economic activities,” writes historian Howard Farber. These sources supply much information about prices, wages, and money through a period much longer than the span of modern history. Farber himself studied Babylonian price movements from 1894 to 1595 B.C. He found evidence of a price-revolution, circa 1750–1684 B.C., which closely resembled similar events in the modern world. Price-relatives and price-wage movements were much the same as in the four great waves that we have studied. The reign of Hammurapi (circa 1793–1750 B.C.) coincided with the later stages of price-equilibrium, which showed the same combination of stable or declining prices and rising wages as in the equilibria of the modern era (Howard Farber, “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).
Figure 5.01 shows evidence of a price-revolution in Mesopotamia circa 1740-1680 B.C., when commodity prices rose sharply and wages lagged behind. This period was preceded by an era of price-equilibrium (1840-1750 B.C.), when prices were stable or falling and real wages rose. The last years of this equilibrium coincided with the reign of Hammurapi (1793-1750 B.C.), with its great cultural and legal achievements. The price-index used here is composed of prices for slaves, oil, barley, oxen, cattle, land, and house rentals. The wage index is for wages in silver. Both indices are converted to the common base of 1750-40 B.C.=100. The source is Howard Farber, “A Price and Wage Study in Northern Babylonia during the Old Babylonian Period,” Journal of the Social and Economic History of the Orient 21 (1978) 1-51.
In ancient Egypt, scholars have found evidence of great waves in population movements, fluctuations of the Nile, the dynastic rhythm of Egyptian history, and the careers of individual leaders. All of these patterns interlocked. See Angelo Segré, Circolazione monetaria e prèzzi nel mondo antico ed in particolare Egitto (Rome, 1922); Karl Butzer, Early Hydraulic Civilization in Egypt (Chicago, 1976).
Other studies have been made of price movements and money in Greece. Here again historians have found evidence of recurrent price-revolutions, punctuated by periods of price-decline and comparative price equilibrium. Greek prices appear to have been comparatively stable during the fifth century before the birth of Christ. The troubled fourth century experienced a price revolution. (Lydia Spaventa de Novellis, I prèzzi in Grecia e a Roma nell’ antichità (Rome, 1934), 101–2.
Figure 5.02 reports the results of two studies, both of which find evidence of a price revolution in the ancient world during the fourth and third centuries before the birth of Christ. These data for Greece are from Angelo Segré, Circolazione monetaria e prèzzi nel mondo antico ed in particolare Egitto (Rome, 1922), 164-173; and Lydia Spaventa de Novellis, I prèzzi in Grècia e a Ròma nell’antichità (Rome, 1934), 49–53
The people of ancient Rome experienced repeated price-revolutions, which closely coincided with the rhythm of Roman political history. One great wave reached its climax in a major time of troubles for the early republic, circa 240–210 B.C. Another coincided with the collapse of the republican institutions. In between, there was an intervening period of comparative price stability.
The Roman empire experienced a great wave of inflation in the second and third centuries A.D., when the price of wheat in some parts of the empire rose more than fifty-fold in less than a century. A study by Richard Duncan-Jones found that maximum wheat prices in Lower Egypt rose from II drachmas in private transactions before 100 A.D., to 200 drachmas, circa 201-300 A.D. Median prices increased more moderately from 8 to 16 drachmas in the same period. The rate of increase declined at the end of the third century. It rose again in yet another price revolution during the fourth century, from Constantine to Julian, circa 324-360 A.D., then fell and rose once more in the fifth century.
Figure 5.03 summarizes evidence of three price revolutions in Roman history. The first happened in the Roman Republic, and coincided with similar events in ancient Greece, circa 300 B.C. (see figure 5.02). The second came at the end of the republic. The third occurred in the Empire during the third century A.D., a time of political and economic collapse. Sources are Lydia Spaventa de Novellis, I prèzzi in Grècia e a Ròma nell’ antichità (Rome, 1934) 101-102; Jacobs, “Preis,” 464.
Among many studies of Roman price movements is A. H. M. Jones, “Inflation in the Roman Empire,” Economic History Review 2d ser. 5 (1953) 293-318; revised and corrected in P. A. Brunt, ed., The Roman Economy: Studies in Ancient Economic and Administrative History (Oxford, 1974), 187–229. More data are collected in Richard Duncan-Jones, The Economy of the Roman Empire: Quantitative Studies (Cambridge, 1974); idem, “The Price of Wheat in Lower Egypt,” in Structure and Scale in the Roman Economy (Cambridge, 1990), 143–56; idem, “The Price of Wheat in Roman Egypt under the Principate,” Chiron 8 (1978) 541–60. Also helpful are F. M. Heichelheim, “New Light on Currency and Inflation in Hellenistic-Roman Times, from Inscriptions and Papyri,” Economic History 10 (1935) I–II; Daniel Sperber, Roman Palestine, 200–400: Money and Prices (Ramat-gan, 1974); J. A. Straus, “Le prix des esclaves dans les papyrus d’époque romaine trouvée dans l’Egypte,” ZPE 11 (1973) 289–95; G. Rickman, The Corn Supply of Ancient Rome (Oxford, 1980); S. Bolin, State and Currency in the Roman Empire up to A.D. 300 (Stockholm, 1958). Much price data appear in Tenney Frank, ed., An Economic Survey of Ancient Rome (Baltimore, 1933–40; J. Kolendo, “L’arrêt de l’afflux des monnaies romaines dans le ‘Barbaricum’ sous Septime-S�
�vère,” Les Dévaluations à Rome (Rome, n.d.) II, 169–72.
After the fall of Rome, price-movements became more difficult to follow Scattered data show a long wave of rising prices during the tenth century. Livestock prices in Portugal appear to have doubled from A.D. 940 to 1000, and then to have stabilized in the eleventh century. If this evidence is reliable, there was an early medieval price-revolution in the tenth century, and a period of price-equilibrium in the eleventh century. One study finds supporting evidence in England of the emergence of a market economy during the period between the accession of King Alfred (871) and the death of Edgar (975). Thereafter, the quantity of silver coinage increased very rapidly from 975 to 1010.
Figure 5.04 shows evidence that the price revolution in the third century A.D. was felt in Roman Egypt. Other inquiries have yielded similar results. The source is H.-J. Drexhage, “Eselpreise im römischen Ägypten: ein Beitrag zum Binnenhandel,” Münsterische Beiträge zur antiken Handelsgeschichte 5 (1986), 34-48.
See Claudio Sanchez-Albornez, El precio de la vida en el reino Astur-Leones hace mil años (Buenos Aires, 1945), 40–41; S.R.H. Jones, “Transaction Costs, Institutional Change, and the Emergence of a Market Economy in Later Anglo-Saxon England,” Economic History Review 2d ser. 46 (1993) 658–78; P. Grierson and M. Blackburn, Medieval European Coinage (Cambridge, 1986); P. Grierson, “Commerce in the Dark Ages, A Critique of the Evidence,” Royal Historical Society Transactions 5th ser. 9 (1959) 123–40.
Islamic prices also appear to have moved in great waves from the founding of Islam to the eleventh century. See Eliyahu Ashtor, Histoire des prix et des salaires dans l’ Orient medieval (Paris, 1969); M. de Bouard, “Problèmes des subsistence dans un état médiévale; le marché et les prix descéréales au royaume angevin de Sicile,” Annales E.S.C. 10 (1938) 483; Robert Latouche, Les origines de l’économie occidentale (Paris, 1956); A. Blanchet, Les trésors de monnaies romaines et les invasions germaniques (Paris, 1910); Claudio Sanchez-Albornez, El precio de la vida en el reino Astur-Leones hace mil años (Buenos Aires, 1945); Marc Bloch, “Le prob-leme de l’or au Moyen Age,” Annales 5 (1933) 1–34.
Figure 5.05 follows the movement of prices through the most obscure period of Western history. A price list (not a price series) for the early Middle Ages shows evidence of a price revolution in the tenth and early eleventh centuries. The source is Claudio Sànchez-Albornez, Elprecio de la vida en el reino Astur-Leone’s hace mil ano (Buenos Aires, 1945), 40-41. A copy of this rare and charming work is in the New York Public Library. It shows similar trends in Galicia, Castille, and Asturia.
Definitive conclusions require further study, but it is clear that price revolutions occurred repeatedly through the past four thousand years. Their timing correlates with population growth, cultural movements, and dynastic rhythms in ancient and early medieval history.
APPENDIX B
The Crisis of the Fourteenth Century: A World Event?
Was the medieval price-revolution limited to Western civilization, or was it a world movement? Learned opinion is divided on this problem, and the price-records that might settle the question are very difficult to find outside Europe for the thirteenth century. But much empirical evidence is now available for the crisis of the fourteenth century. It suggests that Europe was not unique in its experiences. Parallel trends with similar timing appeared in many parts of the world.
In China, the great Sung dynasty collapsed in a prolonged time of troubles during the late thirteenth and fourteenth centuries. From 1279 to 1367, that country was ruled by Mongols from the steppes of Asia. China had seven emperors in thirty-eight years (1295–33). Most ruled by terror and died by violence. This time of troubles was merely a prelude to one of the darkest and most disastrous periods in China’s history (1333–68), when a great empire collapsed into anarchy.
The population of China fell sharply during the fourteenth century, in a decline that coincided with the crisis in the medieval West. The leading causes of death in Asia appear to have been different in detail from those in Europe. China experienced its own distinctive combination of social violence, economic collapse, political chaos, massive famine, and catastrophic floods.
Perhaps the leading cause of suffering were the depredations of the Mongols. Their great leader Genghis Khan once remarked, “The greatest joy is to conquer one’s enemies, to pursue them, to seize their property, to see their daughters in tears, to ride their horses, to possess their daughters and wives.” A Mongol minister named Bayan proposed to restore order by killing all people named Chang, Wang, Liu, Li and Chao—the most common names in China. This intended holocaust was beyond the capacity even of the Mongols, but large numbers were slaughtered.
The crisis of this era was a pivot point in the history of China. Historian Mark Elvin calls it the great “turning point in the fourteenth century.” This was an era of sweeping transformation in Chinese culture. It was also a moment of deep change that began a long process of isolation and decline, which continued into the twentieth century. Through that period, price-movements showed a rhythm of long waves that were similar, though not identical, to those in the West.
Similar rhythms also appeared in other civilizations. In Africa, the great empire of Mali collapsed during the late fourteenth century. Its trading center at Sigilmassa was destroyed by Taureg warriors in 1362, and commerce with Europe was interrupted.
Figure 5.06 finds evidence of great waves in the demographic history of China. Sharp declines occurred in the fourteenth and seventeenth centuries. The timing was much the same as in Europe. Sources include Ping-ti Ho, Studies on the Population of China, 1368-1953 (Cambridge, 1959).
In India, the Delhi Sultanate of Turko-Afghan rulers had grown from the eleventh century to its maximum under Sultan Muhammad bin Tughluq (1325-51), when it ruled nearly all the Indian subcontinent except the extreme south. After 1334, it rapidly disintegrated; by 1344, its revenues had fallen by 90 percent, and the Delhi Sultanate disintegrated.
The fourteenth century was also a period of major discontinuity in American history. In the Valley of Mexico, the classic Toltec culture collapsed in this period. The Aztecs, who like the Mongols and the Taureg were violent barbarians from the north, took possession of Lake Texcoco circa 1345. In South America, the pre-Inca states disintegrated in the fourteenth century and gave the Incas their opportunity to begin to create their great empire in the late fourteenth and early fifteenth centuries.
In the Pacific, the fourteenth century was also an important pivot-point for the history of oceanic cultures. The expansion of Polynesia, which had begun as early as the ninth century, came to a sudden end in the fourteenth century. The great Polynesian navigators had advanced as far as New Zealand, but they were unable to go farther, and failed to reach Tasmania and Australia.
There was no Black Death or Mongol horde in Polynesia. The research of New Zealand scientist A. T. Wilson yields evidence that the cause may have been a change in climate. His analysis of isotope ratios in calcium carbonate deposits shows evidence of an onset of an unusually cold period, with increased Pacific storms of such a magnitude as to deter even ocean voyagers as skilled as the Polynesians.
These global events tell us that their ætiology was not specific to a single culture, or to a particular agent such as the Black Death. They must have developed from a larger cause that affected virtually every part of the inhabited world.
Some historians find evidence of a change in world climate during the fourteenth century. During the preceding three hundred years—the tenth, eleventh and twelfth centuries—the weather had become increasingly warm. The growing season grew longer, crops became larger, and the carrying capacity of the environment increased. In the later years of the thirteenth century, these climatic trends reversed. The climate turned unusually cold, wet, windy and unstable.
The fact that these trends appeared as far apart as northern Europe, eastern Asia, western Africa and the south Pacific is evidence that the cause is unlikely to hav
e been merely a change in meteorological circulation patterns, as some have suspected. Others believe that it rose from a change in the relationship between the earth and the sun—a decline in solar radiation, or perhaps a thickening of the earth’s atmosphere, or possibly a cloud of cosmic dust that passed through the galaxy and blocked the passage of energy from the sun to the earth.
Some cultures suffered more than others in this era of crisis and catastrophe. The Christian West may have suffered worst of all. Here we find evidence that climate-events may be part of the explanation, but not the whole of it. Other causal factors, perhaps of greater power, were internal to the western culture, and important to the rhythm of its history.
Further, some cultures emerged stronger from the catastrophe of the fourteenth century while others were fatally weakened. During the fourteenth century, Islamic world-civilization entered a long decline from which it did not begin to recover until the twentieth century, nearly six hundred years later. The West was unique in its response to the crisis of the fourteenth century, though not in the crisis itself. Its open institutions made it more vulnerable, but also more resilient. The sources of its vulnerability in the fourteenth century were also the foundation of its future strength.
For relevant materials in the history of China, see Ping-ti Ho, Studies on the Population of China, 1368–1953 (Cambridge, 1959, 1967); Mark Elvin, The Pattern of the Chinese Past: A Social and Economic Interpretation (Stanford, 1973); R. Hartwell, “A Cycle of Economic Change in Imperial China: Coal and Iron in North-east China, 750–1350,” Journal of the Economic and Social History of the Orient 10 (1967); M. Cartier, “Notes sur l’histoire des prix en Chine du XIVe au XVIIe siècle,” Annales E.S.C. 24 (1969) 1876–89; idem, “Les importations de métaux monetaires en Chine: Essai sur la conjoncture chinoise,” ibid., 36 (1981) 454-66; P. Liu and K. Huang, “Population Change and Economic Development in Mainland China since 1400,” in C. Hou and T. Yu, eds., Modern Chinese Economic History (Taipei, 1977), 61–81; C. P. Fitzgerald, China, A Short Cultural History (New York, 1935, 1972), 432; Ch’uan Han-sheng, “Sung-Ming chien pai-yin kou-mai-li ti pientung chi ch’i yuan-yin” [“Fluctuations in the purchasing power of silver at their cause from the Sung to the Ming dynasties”], Hsin-ya-hseuh-pao [New Asian Journal] 8 (1967) 157–86, with a summary in English; M. Cartier, “Notes sur l’histoire des prix en Chine du XIVe au XVIIe siècle,” [1368-1644] Annales E.S.C. 24(1969) 1876-89; idem, “Lesimportationsde métaux monetaires en Chine: Essai sur la conjoncture Chinoise,” ibid., 36 (1981) 454-66; W. S. Atwell, “Notes on Silver, Foreign Trade, and the Late Ming Economy,” Ch’ing shih wen-ti 3 (1977) 1–33; idem “International Bullion Flows and the Chinese Economy, circa 1530–1650,” Past & Present 95 (1982) 68–90; P. Liu and K. Huang, “Population Change and Economic Development in Mainland China since 1400,” in C. Hou and T. Yu, eds., Modern Chinese Economic History (Taipei, 1977), 61-81; Yeh–chien Wang, “The Secular Trend of Prices during the Ch’ing Period,” Journal of the Institute of Chinese Studies of the Chinese University of Hong Kong, 5 (1972) 364.
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