How the ‘Black Death’ Pandemic Reshaped Europe’s Feudal Economy

(Bloomberg) -- The introduction of an effective Covid-19 vaccine means the light at the end of the tunnel may be in sight. But it's hard to know what the post-crisis period has in store. What will it mean for the economy? How will society have changed? Nobody knows. Still, we can talk about history.

On a recent episode of the “Odd Lots” podcast, we talked with Patrick Wyman, the host of the “Tides of History” podcast, to discuss the Black Death in the 1300s, and the ramifications seen in its aftermath. Of course, the Covid-19 pandemic is nowhere near as deadly as the Black Death, which killed millions of people across Europe. Nonetheless, it was a historic disruption to everyday life, the likes of which we haven't seen in most of our lifetimes.

So what did the plague bring about? For one thing, a massive shortage of labor and the collapse of the feudal economy, which was already in decline. Below are a few partially edited quotes from Wyman from our discussion:

“The idea, the basic narrative of the Black Death, is that it makes that system less tenable because these formerly enserfed, formerly semi-free people now do not have to do that labor service. They can just run off; they can go somewhere else. They can go to a town, they can get a job working in a trade, something like that. So that's kind of the broad long-term shifts that people talk about with the Black Death and its impact on the European economy. The Black Death comes at the end of what we call the commercial revolution. So the couple of century period leading up to the Black Death season, enormous expansion of the European economy.”
“It's the period in which most of the tools that we're familiar with that kind of define an advanced economy. Things like widespread access to credit. High levels of international trade... Merchants who are capable of doing business over long distances. The key, it's the time when these things all across Europe are coming into play. Now, the reason for that is fundamentally demographic, that this is a period when the climate is really good, crop yields are good. So there's a population boom, there's new land cleared. New land comes under cultivation. These Lords are able to extract lots of labor dues and rents from their tenants because there are a lot of tenants and there's not that much land. So if you control the land, you can get a lot from it.”

“Now, by the time the Black Death rolls around in the middle of the 14th century, that expansion is over. The economy has peaked. It's already in a little bit of decline by the time the plague hits. So the largest firms in Europe, prior to the Black Death, what are called the super companies, these which are mostly based in Florence and are involved in a whole host of activities all over the continent, the super companies have already gone bankrupt by the time the Black Death hits. So the economy is already in trouble when the Black Death hits, and then you get this enormous wave of mass death.”
“In addition to redefining the relationship between lords and labor, the post-plague period also catalyzed a number of modern technologies.”
“I think the labor shortage that comes out of that, the kind of additional freedom that laborers have. It spurs things like an increased emphasis on labor-saving technologies. So I don't think that there's a world in which you have the printing press without the Black Death, because that's a labor-saving technology. Not just in the sense that that you have the attempt to save labor on that, but also the financial mechanisms that make it possible for you to fund the development of a printing press.”
“Not only did technology and the labor-capital relationship change, but we also saw a burst of consumption, as people were freed after multiple years of terror.”
“There was a huge kind of burst of consumption after the black death, an enormous burst of it. So there's a lot of anxiety, especially among church men in the second half of the 14th century about all the conspicuous consumption that people are doing. So part of it is pent-up demand, but part of it is also lots of people died. There are lots of inheritances, so there's lots of money coming to people who may not have had as much money to spend before who are suddenly like, ‘If I could die in the plague next week...I'm going to pay for this amazing piece of art.' Like there's good reason to think that kind of the flourishing of early Renaissance art, the demand for that came from pent-up demand. It came from people who were like, ‘OK, we have all these resources, let's spend them on something. The way to do that is now we're going to compete with our fellow, you know, rich Florentine merchants by paying for art.”

For the whole discussion, listen here.