What’s new is old: how economic discontent triggered unrest in the past

The French Revolution, a traumatic event that ultimately cost millions of lives and kickstarted modern Europe, was preceded by an estimated 55% rise in the cost of bread. That’s a smaller price hike than some countries have endured recently.

According to the World Economic Forum’s latest Chief Economists Outlook, economic discontent has been fuelling “febrile political dynamics” – and the difficulty people continue to have when it comes to buying bare essentials is ramping up the risk of social unrest.

That echoes similar warnings issued by the IMF and the UN in May. Since then, the inflation rate in the euro area has ticked up a further percentage point, and by nearly as much in the UK. That still pales in comparison to the cost-of-living increases that places like Argentina, Lebanon or Venezuela continue to face.

A recently-published index found that more than half of 198 countries surveyed were at increased risk of civil unrest tied to the cost of basic necessities. And Italy recently provided a demonstration of the political upheaval that can result from such economic frustration.

This is nothing new. The notion that privation stirs unrest goes back at least as far as Aristotle, who described poverty as “the parent of revolution and crime.”

In Moscow, anger over the price of salt sparked an uprising in 1648 that left hundreds of people dead (including advisers to the tsar). About 140 years later, many of the Parisians who triggered the French Revolution by storming the Bastille were on the hunt for ingredients to make increasingly precious bread.

By late 1923, buying a loaf of bread in Germany could cost 140 billion marks, which is just another way of saying that money had become virtually worthless. The role of hyperinflation in the rise of Nazism is now both closely studied and actively debated.

Historic examples of economic volatility preceding dramatic events abound. As the Nazis were being defeated, China was experiencing its own period of hyperinflation; people in Shanghai saw prices at their local shop increase multiple times per day. That arguably hastened the withdrawal of the Nationalist Party and the ascent of the Communist Party.

In the US, scarcity during the Great Depression helped spawn economic populism that veered into anti-Semitism and xenophobia, bolstering support for the 1940 founding of the “America First Committee” – which tried to keep the country out of a war waged to defeat of fascism.

More recently, violent protests over the rising cost of living in Chile that began in 2019 led to the proposal (and ultimate rejection) of a new constitution.

Now, due to the impacts of the pandemic and war, real wages – the amounts people earn relative to their costs regardless of the numbers on a paycheck – are in “freefall" in many places, according to the Chief Economists Outlook.

The good news is that “the gravity of the current moment is not lost on political leaders,” according to the outlook. Many have sought to shield people from the worst impacts of rising costs.

California, for example, is expected to issue “inflation relief” payments of as much as $1,050. France has already capped gas and electricity price increases for households at 4%, and will spend a significant amount to retain a 15% cap. Yet, thousands of workers in France have taken to the streets to demand pay hikes that help them cope with higher prices.

Across Europe, governments are feeling compelled to cushion the blow of inflation not just to avoid unrest, but also to maintain public support for helping Ukraine repel the ongoing Russian invasion.

In many places that may not be a simple task.

According to the results of a recent poll conducted in the UK, Germany, France, and Poland, more than 70% of respondents said they were “struggling or just coping” with rising prices.

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