No, The Black Death Was Not Good For The Economy

People love repeating counterintuitive factoids. People do not love conducting deep historical research to check whether clever-sounding factoids are actually true. A common one is that the Black Death supercharged Europe’s economy. This is false.

In the 1300s, the bubonic plague pandemic swept through Europe, and killed an enormous fraction of the population—perhaps a third, according to many estimates. Around this time, Europeans were also becoming wealthier, while urban artisans and guildmasters were gaining economic power at the expense of feudal lords. It’s a common myth that European wealth increased because of the plague. However, these economic and social changes had started a century before the bubonic plague reached Europe. Late medieval economic growth came from the rise of towns and burghers, and the Black Death just happened to come along in the middle of that. Other pandemics did not go along with rising prosperity, because they did not arrive in the middle of unrelated economic transformations.

One example of the common myth is presented by Noel Johnson, an economist at George Mason University, in an interview with Tyler Cowen:

“So 1350 is when the Black Death is occurring, around then. Europe loses about 40 percent of its population to this bacterial infection that spreads through. And as anybody who’s taken introductory economics might suggest, when the labor supply goes down by a lot, with 40 percent of Europe dying, then wages are going to start going up. This means the bargaining power of peasants, relative to landowners and so forth, are going to increase. … the main thing that’s going on with institutional change is going to be this shift in the bargaining power that’s letting peasants have more power relative to nobles.”

Of course, according to introductory economics, killing 40% of the population would affect demand for crops as well as supply, and so the first-order effect on labor prices is zero. For Johnson's explanation to make sense, there must be some second-order reason why mass death would have different effects on the demand for food versus the labor supply of farmers. The usual explanation here is that the survivors had access to more natural resources. Byrne Hobart covers this argument:

“[I]f your country is close to the Malthusian limit, it means the incremental farmer is not producing enough food to feed themselves — if the average person produces enough food for one person, and some people have good land, the more marginal land is necessarily producing less than that average. … Arguably, the event that set off the Renaissance, and thus the Industrial Revolution, was the Black Death. By killing a third of Europe, it pushed us to well below the Malthusian limit, raised workers’ wages, and limited governments’ ability to tax city-dwellers. Things really started to take off in Northern Italy, which is also where the plague first arrived. Of course, it could have happened anyway, and could have happened elsewhere — the reason it hit in the first place was that trade had globalized enough that rats and fleas from China found their way to Venice, which wasn’t happening as much beforehand. But certainly the Bubonic Plague accelerated things by eliminating a lot of people and raising the marginal productivity of the survivors.”

Scott Alexander gives the most concise summary of this argument I've seen:

“Some people argue Europe broke out of the Malthusian trap around 1300. This is not quite right. 1300s Europe achieved above-subsistence GDP, but only because the Black Plague killed so many people that the survivors got a windfall by taking their land.”

This paints a picture of Europe at the limit of its ecological carrying capacity, with incomes stagnating at the level of bare subsistence. Then the Black Death wipes out a huge swathe of the population, and that breathing room permits higher productivity and higher incomes. Laborers go from being a burden to being a resource worth competing over, enabling them to negotiate for better legal and customary privileges as well as a higher share of the wealth they produce. This helps establish the foundations of the technological explosion that would eventually let the West escape Malthusian dynamics, or at least raise the Malthusian limits so far as to be unrecognizable. It's a coherent and sensible story.

But of course a coherent and sensible story isn't worth much on its own. I can easily tell coherent and sensible stories for wildly different conclusions. Here's one: by causing people to abandon marginally-productive land, which was plentiful, in favor of especially fertile land, which was scarce, the Black Death made landownership more important, and reinforced the economic power of the landowning nobility. Here's another: the Black Death made it uneconomical to learn a specialized trade because you were so likely to die before earning enough to repay the investment, and so the shortage of skilled workers led to a collapse of productivity. These stories are both completely backwards and describe the exact opposite of the real history, but that's impossible to know just from thinking about the story abstractly. You have to check against the actual events.

So what do we find when we check the Malthusian story against the historical record? Superficially, it seems plausible. Countless farms and villages were abandoned after the Black Death. We have some individual accounts complaining about peasants trying to bargain for higher wages in the aftermath. The 1300s were indeed a period of economic growth and growing technological sophistication. However, on closer inspection, the timelines don't match up.

These trends had all been underway since at least the 1200s, and some from the 1100s. Over the centuries before the Black Death, surveys of population and economics like Wilhelm Abel's Agricultural Fluctuations In Europe From The Thirteenth To Twentieth Centuries show many small towns and market villages springing up, and a greater share of the population living in these towns. Real wages of tradesmen rise. A smaller fraction of labor went to the Malthusian struggle for subsistence, and relatively more labor went to luxury goods. Mechanical technology got better; most importantly, better looms and spinning wheels spread across the continent, while many watermills were built for industry like ironsmithing or papermaking. Peasant mobility increased as people were drawn to opportunities in the towns. We see some records of burghers and merchants with significant fortunes, whereas earlier in the Middle Ages, the richest people were nearly always nobles or clergy.

This transition, where the economic center of gravity moved away from agricultural estates run by nobility and towards towns run by burghers, was a centuries-long process which started long before the Black Death and continued long after. Attributing these changes in wealth, urbanization, and peasant mobility to an event which struck long after the trends began is like when people try to explain the modern decline in fertility, which has been dropping steadily for centuries, by pointing to much more recent changes like phones. When I look closely at late medieval economics, I don’t see much change in the long-term trends around the time of the Black Death.

If the Malthusian explanation were correct, the most basic historical observation we’d expect is that food should have become abundant after the plague. This did not happen. Thomas Malthus himself, who was a more careful historian than those who wield his name today, acknowledges that “after the great pestilence in the time of Edward III [o]ne should naturally have thought that the quantity of good land being abundant, compared with the population, corn would have been very cheap. It was, however, on the contrary, dear during the twenty-five subsequent years”.

We can also check the theory by comparing it to other mass die-offs. The mechanisms described should hold for any society based on subsistence farming that loses a notable fraction of its population. What do we see when we check similar examples?

On the Malthusian model, famines should be the clearest case of mass deaths raising living standards, since that's when you know for sure that a population is above the carrying capacity. Yet the Irish famine of 1845 reduced the island's population by about a quarter, through death and emigration, with no resulting economic boom. The Bengal famine of 1770 may have killed a third of the population and was also an unmitigated disaster. In fact, I've never heard anyone claim that a famine had an economic silver lining, even though in theory it ought to be a much stronger case for a Malthusian bonanza than a plague.

If we compare other pandemics which killed a similar fraction of the population, we see no economic boom. The Plague of Justinian (caused by the same bubonic plague as the Black Death) and the Antonine Plague are universally considered to be terrible blows to the might of the Roman Empire, with no indication that these plagues led to economic gains for society in general or for laborers in particular. Earlier, the Plague of Athens was much the same, and the only economic effects Thucydides mentions are people inheriting estates and spending their savings on luxuries. If we look at smaller plagues, like contemporary epidemics of cholera or ebola—which often strike in areas where subsistence farmers are still common—then those are clearly an economic burden rather than a windfall. If we look at plagues which killed a larger fraction than the Black Death... well, there aren't many. The only candidate I can think of is the wave of European diseases introduced into the Americas, which were definitely not an economic windfall, and was a major contributor to the complete disintegration of Incan civilization. I've never heard any proponent of the Malthusian theory explain why the Black Death would be economically different from these other plagues and catastrophes.

Malthusian theories do not give good descriptions of technological societies. The core Malthusian axiom is that the natural environment and the supply of resources are fixed. This might be a reasonably good approximation when modeling a population of rabbits. But for human societies which can gain or lose the organizational capacity to maintain large irrigation systems, which can invent better plows and crop rotation, where even Stone Age societies can use their labor to terraform the land and enrich the soil to increase yields, this theoretical assumption does not hold and the theory reliably gives the wrong answer. Changes in the economic circumstances of technological societies are almost always explained by social and technological causes, not by Malthusian ecological causes.

In the case of medieval Europe, the cause was the rise of towns and burghers, with social systems and physical technology capable of producing more goods. This transition predates the Black Death by at least a century, and continued for centuries after. The apparent connection is just a coincidence, and disappears like a mirage if you look at the history closely. Other mass deaths from plague or famine did not produce the greater living standards which Malthusian economics predicts, because Malthusian economics is completely wrong.