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The Plague and a Free Market

Chatting with a friend earlier, and I can’t remember how I got there, but the subject of 14th century England and some wage controls came up. As a side note, as much as I’m unimpressed by math and science performance, I’m more irked by how history is taught, or really, not taught. Consider for a moment that science doesn’t change, if something happened and our scientific knowledge collapsed to where it was after the fall of the Roman Empire (western) given enough time it’s likely we could get back to where we are eventually. It just isn’t so with history. When it’s gone, it’s gone and no epiphany will bring it back.

In the first half of the 14th century, England was in quite the pickle. Somewhere between 30% and 40% of the population was gone. I do mean gone. Imagine 4 out of every 10 people you know dying in a period of only a few years. But, forget about the emotional and social toll this would have taken, think about the economic toll.

Even an complete economic layman should be able to imagine what happened. First, the amount of land and the tactics that were sustaining 10, were now sustaining 6, so there was a huge surplus of food. So much so, that a great deal simply rotted in the fields. Furthermore, the price went in the toilet, simple economics my friends, when demand goes down and supply stays the same, or drops by a smaller amount, the price will go down as well.

The next issue is wages, serfs were bound to the land and their lord, but if they can escape for a year and a day and live in a town, they become “free men” and may work and live where they please. That’s what happened, the decline in the supply of labor, resulted in different market pressures, forcing the price of a days work up, up, up.

Many serfs left, went to towns run by monasteries or more prosperous overlords and took up to a 300% increase in their wages.

The next event was predictable, you may already have guessed what happened. Not content to let this impossibly complex thing called an economy run it’s course, the government intervened with the Ordinance of Labourers in 1349.

Among other things, this act required everyone under 60 (that’s almost everyone) to work and not only that, it required them to work for pay at no more pre-plague rates (it also bound employers to pay no more than those rates). Food prices were also returned to the levels before the plague, or to use the term in the ordinance “priced reasonably”, which was most likely intentionally made very subjective.

Consider these effects:

  1. Whether you needed to or not, you had to work. Free, serf, villain, slave, whatever. This in itself is a form of price control, because the people who deemed their labor to be more valuable than employers were allowed to pay, still had to sell it at the legislated rate.
  2. By lowering wages, in some cases by as much as 66% of the new levels labor, which was scarce, was extremely undervalued.
  3. By overvaluing food, undue waste was legislated into existence.

This act didn’t work at all. The clerics did as they pleased, since they had the Benefit of Clergy and continued to pay higher wages and charge less for food and anything else that popped into their heads. More than this, the people still did what they pleased. Obviously if the Abbot of ______ or the Bishop of ______ is paying a lot more you and I and any other person of sound mind would pack up and move, the government be damned.

In 1351, they took another stab at it with the Statute of Labourers. More of the same really, no wage increases, no moving on to greener pastures, no regard for the complexity of the thing they are meddling with, none whatsoever.

As you can imagine, the peasants didn’t like any of this. In fact all of this benefited very few people and it is typical of what happens when there is a crisis. People fail to have any regard for the complexities of organic systems, and feel they can fix almost anything by direct intervention, and the pages of history are littered with the results of well intentioned actions that only made things worse, and at best simply didn’t help anything.

Lastly, I’m not going to give away the farm, but there are some similarities to the stimulus here. Think about what the intended effects of these interventionist measures. Really, think.

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