The price revolution was a period of rapid inflation in Europe between the 15th and 17th centuries. Theories include increased supply of precious metals, population pressures, and demographic changes. New theories periodically emerge, but a unique combination of factors likely caused the inflation and social changes.
The price revolution was a period of rapid inflation that occurred in Europe between the 15th and 17th centuries. Over the course of 15 years, commodity prices have increased six-fold, and in some cases inflation has been even more extreme. Numerous theories have been advanced to explain the origins of the price revolution and the topic is hotly debated among historians specializing in this period.
One of the older explanations is that the supply of precious metals exploded due to increased exploitation of European silver deposits, as well as the influx of gold and silver from the Americas. This theory argues that the increased availability of metals created a situation where many people had large amounts of money and drove up prices by being willing to pay a premium for some goods. However, some critics of this theory have argued that the dates of the price revolution don’t exactly match the dates when precious metals started flooding European markets.
Population pressures have also been cited as a cause. Europe’s population increased during this period as people recovered from the Black Death and this would lead to more competition for products and services. The cost of living may have risen in response, contributing to the development of rapid inflation. As inflation persisted, living standards would fall for many Europeans, but those who could pay higher prices would support the market.
Other historians have theorized that demographic changes may have been involved. This period marked a transition from heavily agricultural life to ever larger cities. As people left farmland, fewer crops were produced. When the supply of a commodity decreases and the demand remains the same, high prices can occur as people compete on the open market. The price revolution also occurred at a time when the practice of holding common lands for the public good was starting to decline and people were unable to meet their needs with common pastures and agricultural areas, instead they were forced to pay rents to access agriculture.
As historians study the price revolution, new theories to explain it periodically emerge. The integration of economic models into historical analysis has provided particularly valuable insights into the origins of this period of runaway inflation. As with other historical events, it is likely that a unique combination of factors, rather than a single cause, was involved in the development of the price revolution and the radical social changes that accompanied it.
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