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Forty Centuries of Wage and Price Controls: How Not to Fight Inflation
By special arrangement with the authors, the Mises Institute is thrilled to bring back this popular guide to ridiculous economic policy from the ancient world to modern times. This outstanding history illustrates the utter futility of fighting the market process through legislation, which always uses despotic measures to yield socially catastrophic results.
The book covers the ancient world, the Roman Republic and Empire, Medieval Europe, the first centuries of the United States and Canada, the French Revolution, the 19th century, World Wars I and II, the Nazis, the Soviets, postwar rent control, and the 1970s. It also includes a very helpful conclusion spelling out the theory of wage and price controls.
This book is a treasure, and super entertaining!
To search for Mises Institute titles, enter a keyword and LvMI (short for Ludwig von Mises Institute); e.g., Depression LvMI
The book covers the ancient world, the Roman Republic and Empire, Medieval Europe, the first centuries of the United States and Canada, the French Revolution, the 19th century, World Wars I and II, the Nazis, the Soviets, postwar rent control, and the 1970s. It also includes a very helpful conclusion spelling out the theory of wage and price controls.
This book is a treasure, and super entertaining!
To search for Mises Institute titles, enter a keyword and LvMI (short for Ludwig von Mises Institute); e.g., Depression LvMI
194 pages, Kindle Edition
First published December 1, 1979
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Displaying 1 - 23 of 23 reviews
May 31, 2021
This book should be mandatory reading in schools, specially in Argentina.
October 24, 2016
Although it has its flaws, it ought to be required reading in this era of "free stuff." Schuettinger's historical chapters show both the failures of controls where and when attempted, as well as success stories from their collapse or repeal. While a good portion of the book draws from such historical examples, it is definitely a take from the discipline of economics vice history. The author mainly draws from secondary sources, which suits his purpose fine. Where he does venture into primary sources, he shows his inexperience (or perhaps just personal biases, or both). For instance, he questions a contemporary Christian's account of Diocletian's policies owing to the assumed hostility of Christians to Diocletian, while just little further along, Schuettinger quotes a 1916 British account of German economic policies, with no mention of the fact that those two nations were in the heat of battle against one another. Schuettinger does make use of reasonably good footnotes and provides a select bibliography, making his work a good starting point for further research if one really wishes to delve deeper into the historical side. As for the economics in the book, it is written at the popular level, one need not have any background in the topic to grasp his point.
Despite the book's age, contemporary examples such as Venezuela continue to validate the very simple lesson of the book:
Centralized planning regularly appears in every generation and is just as readily discarded after several years of fruitless experimentation, only to rise again on a subsequent occasion. (p 9)
the major cause of inflation is government over-spending and that all the regulations of wages and prices in the world will not bring about economic health until the government sets its own house in order. (p 116)
Wage-price controls are shown by economic theory, and demonstrated by an enormous wealth of factual evidence, to have no permanent effect on the price level. (p 118)
Perhaps most distressingly:
If an historian were to sum up what we have learned from the long history of wage and price controls in this country and in many others around the world, he would have to conclude that the only thing we learn from history is that we do not learn from history. (p 150)
In terms of the moral impact of the attempt to control wages and prices contrary to market forces, Schuettinger makes a number of points, the first from a contemporary account from the Spectator: "The Spectator pointed out that the dangers of government controls are double in character: they are both political and economic. Politically, too much power is concentrated in the hands of the government and the people become accustomed to relying upon government to accomplish goals which can best be done by the workings of individual initiative and the free market...Economically speaking, The Specatator and other journals observed that in times of increasing demands and decreasing supplies, high prices are necessary. They act as a rationing system, checking consumption and channeling goods into areas where they can be most productively used." (p 53)
Also not to be neglected along these lines are the following points:
the enforcement of price regulations needs an ever-increasing bureaucracy, administering an ever-increasing set of regulations and enforcing ever-increasing penalties. (p 61)
Two morals here: First, a country can't maintain price controls unless it is also prepared to curb exports, which in turn damages foreign markets and violates trade agreements. Second, controls create shortages. (p 112)
So in fact I would insist this ought to be required reading, especially for anyone intending to run for office or even to vote in an election. That said, the sad conclusions of the author and the writer of the forward, David Meiselman, tend to indicate that even widespread reading of this work might accomplish nothing. Meiselman's remarks are worth quoting at length:
First-hand experience of most of us with wage and price controls in our own lifetimes in addition to the lessons of history and of validated propositions in economics so skillfully catalogued in this book would seem to be more than sufficient to convince the public and government officials that price and wage controls simply do not work. However, the unpleasant reality is that, despite all the evidence and analyses, many of us still look to price controls to solve or to temper the problem of inflation. Repeated public opinion polls show that a majority of U.S. citizens would prefer to have mandatory controls. If the polls are correct, and I have no reason to doubt them, it must mean that many of us have not yet found out what forty centuries of history tell us about wage and price controls. Alternatively, it raises the unpleasant question, not why price controls do not work, but why, in spite of repeated failures, governments, with the apparent support of many of their citizens, keep trying. (p 4)
Despite the book's age, contemporary examples such as Venezuela continue to validate the very simple lesson of the book:
Centralized planning regularly appears in every generation and is just as readily discarded after several years of fruitless experimentation, only to rise again on a subsequent occasion. (p 9)
the major cause of inflation is government over-spending and that all the regulations of wages and prices in the world will not bring about economic health until the government sets its own house in order. (p 116)
Wage-price controls are shown by economic theory, and demonstrated by an enormous wealth of factual evidence, to have no permanent effect on the price level. (p 118)
Perhaps most distressingly:
If an historian were to sum up what we have learned from the long history of wage and price controls in this country and in many others around the world, he would have to conclude that the only thing we learn from history is that we do not learn from history. (p 150)
In terms of the moral impact of the attempt to control wages and prices contrary to market forces, Schuettinger makes a number of points, the first from a contemporary account from the Spectator: "The Spectator pointed out that the dangers of government controls are double in character: they are both political and economic. Politically, too much power is concentrated in the hands of the government and the people become accustomed to relying upon government to accomplish goals which can best be done by the workings of individual initiative and the free market...Economically speaking, The Specatator and other journals observed that in times of increasing demands and decreasing supplies, high prices are necessary. They act as a rationing system, checking consumption and channeling goods into areas where they can be most productively used." (p 53)
Also not to be neglected along these lines are the following points:
the enforcement of price regulations needs an ever-increasing bureaucracy, administering an ever-increasing set of regulations and enforcing ever-increasing penalties. (p 61)
Two morals here: First, a country can't maintain price controls unless it is also prepared to curb exports, which in turn damages foreign markets and violates trade agreements. Second, controls create shortages. (p 112)
So in fact I would insist this ought to be required reading, especially for anyone intending to run for office or even to vote in an election. That said, the sad conclusions of the author and the writer of the forward, David Meiselman, tend to indicate that even widespread reading of this work might accomplish nothing. Meiselman's remarks are worth quoting at length:
First-hand experience of most of us with wage and price controls in our own lifetimes in addition to the lessons of history and of validated propositions in economics so skillfully catalogued in this book would seem to be more than sufficient to convince the public and government officials that price and wage controls simply do not work. However, the unpleasant reality is that, despite all the evidence and analyses, many of us still look to price controls to solve or to temper the problem of inflation. Repeated public opinion polls show that a majority of U.S. citizens would prefer to have mandatory controls. If the polls are correct, and I have no reason to doubt them, it must mean that many of us have not yet found out what forty centuries of history tell us about wage and price controls. Alternatively, it raises the unpleasant question, not why price controls do not work, but why, in spite of repeated failures, governments, with the apparent support of many of their citizens, keep trying. (p 4)
January 6, 2014
Interesting Quotes:
"Egyptian workers during [the third century BC] suffered badly from the abuses of the state intervention of the economy, especially from the 'bronze law,' an economic theory which maintained that wages could never go above the bare necessities for keeping workers alive. The controls on wages set by the government reflected the prevailing economic doctrine."
-Robert Schuettinger & Eamonn Butler, Forty Centuries of Wage and Price Controls: How Not to Fight Inflation
Egypt had to enforce the Iron Law of Wages by law because it's outside the normal order of things.
----------------------------
"[A] king of Sumeria, Urakagina of Lagash, whose reign began about 2350 B.C. . . . began his rule by ending the burdens of excessive government regulations over the economy, including controls on wages and prices.
"An historian of this period tells us that from Urakagina 'we have one of the most precious and revealing documents in the history of man and his perennial and unrelenting struggle for freedom from tyranny and oppression. This document records a sweeping reform of a whole series of prevalent abuses, most of which could be traced to a ubiquitous and obnoxious bureaucracy ... it is in this document that we find the word 'freedom' used for the first time in man's recorded history; the word is *amargi*, which ... means literally 'return to the mother' . . . we still do not know why this figure of speech came to be used for freedom.'"
-Robert Schuettinger & Eamonn Butler, Forty Centuries of Wage and Price Controls: How Not to Fight Inflation
-------------------------------------
"In Pennsylvania, where the main force of Washington's army was quartered in 1777, . . . [t]he legislature of that commonwealth decided to try a period of price control limited to those commodities needed for use by the army. The theory was that this policy would reduce the expense of supplying the army and lighten the burden of the war upon the population . . . The prices of uncontrolled goods, mostly imported, rose to record heights. Most farmers kept back their produce, refusing to sell at what they regarded as an unfair price. Some who had large families to take care of even secretly sold their food to the British who paid in gold."
"After the disastrous winter at Valley Forge when Washington's army nearly starved to death (thanks largely to these well-intentioned but misdirected laws), the ill-fated experiment in price controls was finally ended . . . By the fall of 1778 the army was fairly well provided for as a direct result of this change in policy."
-Robert Schuettinger & Eamonn Butler, Forty Centuries of Wage and Price Controls: How Not to Fight Inflation
----------------------
"A similar but even worse disaster, made more costly still by government bungling, occurred in the Indian province of Bengal in the eighteenth century. The rice crop in 1770 failed completely and fully a third of the population died. A number of scholars attribute this disaster primarily to the rigid policy of the government which was determined to keep the price of grains down rather than allow it to rise to its natural level. A price rise, of course, would have been a natural rationing system permitting the available food to be stretched out until the next harvest. Without this rationing system, the reserve supplies were quickly consumed and millions died of hunger as a direct result.
"For at least once in human history, however, government did learn by experience. Ninety-six years later, the province of Bengal was again on the verge famine. This time the procedure was completely different, as William Hunter relates:
" 'Far from trying to check speculation, as in 1770, the Government did all in its power to stimulate it . . . In the earlier famine one could hardly engage in the grain trade without becoming amenable to the law. In 1866 respectable men in vast numbers went into the trade; for the Government, by publishing weekly returns of the rates in every district, rendered the traffic both easy and safe. Everyone knew where to buy grain cheapest and where to sell it dearest and food was accordingly bought from the districts which could best spare it and carried to those which most urgently needed it.'
"The experience of Bengal, which had two failed harvests of major proportions within a century, provided a laboratory for testing the two policies. In the earlier case, price-fixing was enforced and a third of the people perished; in the latter case, the free market was allowed to function and the shortage was kept under control."
-Robert Schuettinger & Eamonn Butler, Forty Centuries of Wage and Price Controls: How Not to Fight Inflation
"Egyptian workers during [the third century BC] suffered badly from the abuses of the state intervention of the economy, especially from the 'bronze law,' an economic theory which maintained that wages could never go above the bare necessities for keeping workers alive. The controls on wages set by the government reflected the prevailing economic doctrine."
-Robert Schuettinger & Eamonn Butler, Forty Centuries of Wage and Price Controls: How Not to Fight Inflation
Egypt had to enforce the Iron Law of Wages by law because it's outside the normal order of things.
----------------------------
"[A] king of Sumeria, Urakagina of Lagash, whose reign began about 2350 B.C. . . . began his rule by ending the burdens of excessive government regulations over the economy, including controls on wages and prices.
"An historian of this period tells us that from Urakagina 'we have one of the most precious and revealing documents in the history of man and his perennial and unrelenting struggle for freedom from tyranny and oppression. This document records a sweeping reform of a whole series of prevalent abuses, most of which could be traced to a ubiquitous and obnoxious bureaucracy ... it is in this document that we find the word 'freedom' used for the first time in man's recorded history; the word is *amargi*, which ... means literally 'return to the mother' . . . we still do not know why this figure of speech came to be used for freedom.'"
-Robert Schuettinger & Eamonn Butler, Forty Centuries of Wage and Price Controls: How Not to Fight Inflation
-------------------------------------
"In Pennsylvania, where the main force of Washington's army was quartered in 1777, . . . [t]he legislature of that commonwealth decided to try a period of price control limited to those commodities needed for use by the army. The theory was that this policy would reduce the expense of supplying the army and lighten the burden of the war upon the population . . . The prices of uncontrolled goods, mostly imported, rose to record heights. Most farmers kept back their produce, refusing to sell at what they regarded as an unfair price. Some who had large families to take care of even secretly sold their food to the British who paid in gold."
"After the disastrous winter at Valley Forge when Washington's army nearly starved to death (thanks largely to these well-intentioned but misdirected laws), the ill-fated experiment in price controls was finally ended . . . By the fall of 1778 the army was fairly well provided for as a direct result of this change in policy."
-Robert Schuettinger & Eamonn Butler, Forty Centuries of Wage and Price Controls: How Not to Fight Inflation
----------------------
"A similar but even worse disaster, made more costly still by government bungling, occurred in the Indian province of Bengal in the eighteenth century. The rice crop in 1770 failed completely and fully a third of the population died. A number of scholars attribute this disaster primarily to the rigid policy of the government which was determined to keep the price of grains down rather than allow it to rise to its natural level. A price rise, of course, would have been a natural rationing system permitting the available food to be stretched out until the next harvest. Without this rationing system, the reserve supplies were quickly consumed and millions died of hunger as a direct result.
"For at least once in human history, however, government did learn by experience. Ninety-six years later, the province of Bengal was again on the verge famine. This time the procedure was completely different, as William Hunter relates:
" 'Far from trying to check speculation, as in 1770, the Government did all in its power to stimulate it . . . In the earlier famine one could hardly engage in the grain trade without becoming amenable to the law. In 1866 respectable men in vast numbers went into the trade; for the Government, by publishing weekly returns of the rates in every district, rendered the traffic both easy and safe. Everyone knew where to buy grain cheapest and where to sell it dearest and food was accordingly bought from the districts which could best spare it and carried to those which most urgently needed it.'
"The experience of Bengal, which had two failed harvests of major proportions within a century, provided a laboratory for testing the two policies. In the earlier case, price-fixing was enforced and a third of the people perished; in the latter case, the free market was allowed to function and the shortage was kept under control."
-Robert Schuettinger & Eamonn Butler, Forty Centuries of Wage and Price Controls: How Not to Fight Inflation
June 26, 2020
Buen libro. Muestra cómo desde el antiguo Egipto hasta la actualidad muchos pueblos han tratado de controlar los precios y salarios establecidos por el libre mercado, principalmente para contener la inflación. El libro demuestra que estás medidas han siempre fallado en su objetivo de terminar con la subida generalizada de los precios. Los autores expresan que controlar o congelar los precios y los salarios de manera artificial lo único que lograran es contener la inflación en un muy corto período de tiempo. Si los controles logran efectivamente detener la inflación sus consecuencias se verán reflejadas en otros como la calidad o la cantidad de productos. Tarde o temprano los controles producirán escasez o una baja en su calidad, perjudicando a los consumidores principalmente, quienes era los que supuestamente se beneficiaban con estás medidas. También, los autores afirman que la inflación contenida durante el período de controles resurgirá con más fuerza al momento de la finalización de los controles. En resumen, el libro transmite la idea de que "la inflación es siempre y en todo lugar un fenómeno monetario" y que los controles de precios y salarios nunca serán una medida efectiva para frenarla. Recomiendo el libro para todo aquel interesado en al ámbito económico, y especialmente para los economistas argentinos que siguen insistiendo en aplicar estás medidas, aún despues de 4000 años de fracaso globalmente.
January 15, 2020
Increíble leer un libro así con tantos argumentos (y sobre todo, experiencias!) contra el control de precios y salarios en una época donde aún siguen vigentes, en mayor o menor medida, en muchos países. Si bien está lleno de fuentes, en algunos casos me costó verificar algunas anécdotas mencionadas, por lo cual le asigno una estrella menos (por puro escepticismo).
En general, super entretenido y a la vez desmotivador, dado que luego de miles de años las sociedades mayoritariamente siguen prefiriendo medidas de este tipo (a costa de perjudicar su propio futuro) en lugar de resolver los problemas de raíz. La cantidad de ejemplos es abrumadora, y en especial la cercanía del siglo XX y el modo en el que se aplicaron en él dichas medidas deberían ser más que suficiente para entender que no es el camino, pero parece que aún estamos lejos de esa conclusión.
En general, super entretenido y a la vez desmotivador, dado que luego de miles de años las sociedades mayoritariamente siguen prefiriendo medidas de este tipo (a costa de perjudicar su propio futuro) en lugar de resolver los problemas de raíz. La cantidad de ejemplos es abrumadora, y en especial la cercanía del siglo XX y el modo en el que se aplicaron en él dichas medidas deberían ser más que suficiente para entender que no es el camino, pero parece que aún estamos lejos de esa conclusión.
April 30, 2020
Muy buen libro con cantidad de información y referencias bibliográficas. Como punto negativo diría que fue escrito hace unas décadas, sería interesante una actualización del mismo incluyendo a países que han implantado estas medidas en los últimos años, obteniendo los desastrosos resultados ya descritos en el libro
December 27, 2021
Libro de obligatoria lectura para un estudiante de economía o apasionado del tema. Detallado al extremo que puede ser duro para un lector poco entendido en la materia. Recomendación absoluta que trasciende años, aunque su final de se ubica hace algunas décadas es fácil extrapolar los conceptos a los años venideros.
February 13, 2022
For some reason I was expecting this to have a bit of a more light-hearted style... why? Because it has somewhat whimsical cover art? Because one of the authors is named Eamonn? I expect humor from an Eamonn.
So, it's written in a fairly dry style, and the spoiler is right in the title, but it's short and gives a nice crisp reinforcement of the idea.
So, it's written in a fairly dry style, and the spoiler is right in the title, but it's short and gives a nice crisp reinforcement of the idea.
April 5, 2020
Buena obra que recolecta varios momentos de la historia de la humanidad en donde se ha intentado implementar controles de precios que llevan al fracaso de la medida y las desastrosas consecuencias a nivel económico.
May 10, 2021
Great book for contemporary economists who are indoctrinated
This book carries a powerful message, with a great research on historical matters, it explains how price controls never worked in any society, regardless of political regimes.
This book carries a powerful message, with a great research on historical matters, it explains how price controls never worked in any society, regardless of political regimes.
August 11, 2019
Very well researched, wish it was written in a more readable tone
January 1, 2021
Link a mi reseña en Actualidad Económica: https://chesnutstreet.wordpress.com/2...
November 1, 2022
Very useful references; this was a very enjoyable book.
April 24, 2023
Un buen estudio, de divulgación popular, que tiene tanta mayor fuerza, cuanto son indesmentibles sus cifras y conclusiones. Deja también al descubierto que ante las cifras no valen los argumentos.
June 18, 2023
It's somewhat dated and sometimes gets repetitive but overall it's a good introduction to the topic
August 11, 2023
No está mal. El libro en sí no trata tanto de cuestiones teóricas sino más bien demostraciones empíricas de cómo los controles de precios y salarios no han resultado exitosos
September 10, 2022
It's a fast, pleasant read, but you have to be interested in that particular subject. It's really just what the title says: lists of historic price controls. No analysis or perspective. I mostly read it to give me ammunition against the claim that markets are or were free, but it's very old history.
(I skipped aroind and read the most interesting chunks.)
(I skipped aroind and read the most interesting chunks.)
August 2, 2015
Economics taught through history. A lesson no country is interested in learning. There must be a reason, a very powerful reason, why countries with so diverse types of government spanning from totalitarian to democratic have always and everywhere refused to accommodate to economic reality, preferring instead to accommodate -manipulate- economics into their utopian desires.This, rather philosophical aspect of the issue, is what interests me most. The book, though, does not delve into the philosophical, nor does it look into the obtuseness or stubbornness of the human psyque. It stays within the realm of economics. There are plenty of examples to pick from all over the world till today to show how futile our governments' attempts to control prices and fight inflation have been. The stories picked from the older times are, to me, the most interesting and easy ones to follow, from a layman's perspective.
Funny and ironic that the moral from this many thousand year story was best summed up by Nazi Goering himself during his interrogations by American officials, warning America not to follow the same futile and counter-productive economic path they had tried, and foreseeing -correctly- that his advice would be lost.
The day we can choose which country (and system of government) we want to live in, that day, perhaps, there will be a chance for the people to take "control", for good or bad, over their own lives and be free.
Funny and ironic that the moral from this many thousand year story was best summed up by Nazi Goering himself during his interrogations by American officials, warning America not to follow the same futile and counter-productive economic path they had tried, and foreseeing -correctly- that his advice would be lost.
The day we can choose which country (and system of government) we want to live in, that day, perhaps, there will be a chance for the people to take "control", for good or bad, over their own lives and be free.
December 27, 2015
This is just a very amazing book. This book contains a very detailed analysis of both, past and relatively present, events which were dealt with the traditional price fixing, and its inevitable outcome: inflation.
If you live in a country where this kinds of controls are taking place, I would recommend you this book, so that you have an idea of the kind of the outcomes that are likely to take place. This book serves as well as a magnificent way to unmask populist whose idea of economics is to try to control these sorts of things without a prior knowledge on the subject.
A big plus is the length of the book. If you're not an avid reader, or you're just starting in this very beautiful world, and want to start by knowing a widely known event in economics: then this is a good book to start with.
The detailed record of places where these measures were taken should serve as enough proof as why they are not likely to work in a near future.
If you live in a country where this kinds of controls are taking place, I would recommend you this book, so that you have an idea of the kind of the outcomes that are likely to take place. This book serves as well as a magnificent way to unmask populist whose idea of economics is to try to control these sorts of things without a prior knowledge on the subject.
A big plus is the length of the book. If you're not an avid reader, or you're just starting in this very beautiful world, and want to start by knowing a widely known event in economics: then this is a good book to start with.
The detailed record of places where these measures were taken should serve as enough proof as why they are not likely to work in a near future.
February 19, 2024
"Historic" view on inflation, however by page 90 of 180 you have already reached 1945. The title gives the expectation of a more pre-20th century look at this issue.
Other than the misleading title, it is one incredible, and revealing book on how inflation is ignorantly popular for citizens, tyrannically precious for every politician, and unquestionably destructive for humans.
Other than the misleading title, it is one incredible, and revealing book on how inflation is ignorantly popular for citizens, tyrannically precious for every politician, and unquestionably destructive for humans.
September 19, 2020
Con un gran tema a tratar esta obra se pierde en temas difusos y de poca relevancia. Difícil seguir el hilo del ensayo, problema en parte por la multitud de autores asunto que no acaba de amoldar la experiencia de la lectura.
July 13, 2010
I wish this was more widely read. The historic record is just so clear.
April 3, 2016
Some excellent points made but the structure of the book was confusing and hard to follow.
Displaying 1 - 23 of 23 reviews