The Great Wave

This alternating rhythm of price-revolutions and price-equilibria was discovered as early as the eighteenth century.

Each of these approaches has taught us something useful about their common subject. All are flourishing today. The differences between them rise in large part from their assumptions about what prices are, and what the world is made of. They are theoretical constructions, but all of them also make strong empirical claims that can be tested against h

They have been documented in many studies, and are the most robust pattern of secular change in the history of prices—more so than Kondratieff cycles or any other cyclical rhythm, which must be derived by “detrending” the data.

The fourth wave commenced in the year 1896, and has continued since, with a short intermission in some nations during the 1920s and early 1930s. It is the price-revolution of the twentieth century.

of these periods of equilibrium were marked by fluctuations of high complexity. None experienced long-term price-inflation.

Cyclical rhythms are fixed and regular. Their periods are highly predictable. Great waves are more variable and less predictable. They differ in duration, magnitude, velocity, and momentum. One great price-wave lasted less than ninety years; another continued

The great waves are different in that respect. They appear on the surface of the evidence. To observe them no filtering or detrending of the data is required.

The second task is to explore the question of cause. Braudel himself believed that these great waves were the strongest secular pattern in modern economic history, but he thought that the task of explaining them was the “most neglected” problem in historiography, and “impossible” to solve.

Today, we are living in the late stages of the price revolution of the twentieth century. Disaster does not necessarily lie ahead for us. This book does not predict the apocalypse. It does not attempt to tell the future. To the contrary, it finds that uncertainty about the future is an inexorable fact of our condition.