Plagues to proseperity

The black death, bubonic plague, has been sited as a cause for the temporary increase in per capita (per person) wealth in Europe during the High Middle Ages.  There may have been less wealth after the devastation, but there were also a whole let less people to divide that wealth between.  The counter intuitive notion that epidemics have a silver lining is not unique to the High Medieval Europe.  One study notes that Young (A.Young, The Gift of the Dying, 2005 (pdf)) that the AIDS epidemic in Africa did reduce the fertility rate, increase the scarcity of labor, and  therefore boosted the consumption of the remaining population.

The problem with the simple model of "plague = prosperity" is that the timing is a little off, and that not all plagues lead to an equal amount of prosperity.  What the following study is trying to show is the mechanism and circumstances that lead to the Black Death being advantageous to Europe's eventual technological breakout.

“The Three Horsemen of Riches: Plague, War and Urbanization in Early Modern Europe”
N. Voigtlander & H.-J. Voth (2012) (pdf of entire document)  (hat tip Big Picture)

Malthus was, broadly, right in his description of the world before 1800. Almost all income was agricultural income, and agricultural income was dependent largely on a fixed factor of production, land. As production technology became better (which happened at a very slow rate), wages increased, lowering death rates and increasing birth rates, which led to growing population. As population increased, less fertile land was brought into production, lowering per capita income. Per capita income fell until the birth-death ratio was again in steady state, with society at a higher level of population than before the new technology, but no richer overall.

This story is only broadly true, however. We do see regions diverge slightly: Europe becomes twice as rich as China by the 1700s, for instance. In a Malthusian world, how is this possible? Voigtlander and Voth propose an interesting new mechanism – their model is much more complicated than what I present here, but the spirit is the same.

Take as given that increased wages led to greater urbanization (people above subsistence have a taste for goods that can only be produced in cities), and that the Malthusian mechanism above holds, returning us to the subsistence steady state after shocks. Europe is rather unique in the following way: higher levels of urbanization there were quite deadly by world standards. Voigtlander and Voth mention three particular reasons why. First, European cities tended to both be filthy and high density. Human waste was often just tossed onto the street in Europe, whereas in China it was much more common to carry the waste to the countryside for use as fertilizer; partly for this reason, China had relatively high rural mortality, and Europe relatively high urban mortality. Second, geography and political circumstances in the early modern era meant that warfare was much more common in Europe than in other parts of the world. Wars of this era generally just meant increased death by disease rather than mass destruction of capital. Third, urban centers traded more, and common disease resistance across regions in Europe was not as prevalent as in China.

So what you have is a variety of equilibrium.  Europe, through the agency of the Black Death, resets its population at a lower level and started an equilibrium that lead to greater demand for manufactured goods, and an increase in warfare.  Since both the increased urbanization needed for the manufacturing, and the increased warfare lead to even further disease derived casualties, this new equilibrium was self reinforcing.  Europe became leaner and meaner.

Within this new equilibrium the Europeans had a greater incentive to go abroad for wealth.  Since they were blocked by powerful enemies on the land routes, ao they went by sea.  Which lead the particularly highly diseases Europeans to come into contact with the particularly isolated immune-deficient Americans.  As had happened before, the early increases in technology lead to a higher equilibrium population overall.  With the introduction of the steam engine (if not earlier) and the practical use of fossil fuels for kinetic energy, the Malthusian lock was broken.