Plagues Make Us More Equal

Over the last few years, interest in the long-term trends of economic inequality has grown tremendously, thanks in part to Thomas Piketty's work, which presents new evidence about income and wealth inequalities over the last two centuries. We still know little about levels of inequality and their dynamics in earlier periods. The EINITE project, titled "Economic Inequality across Italy and Europe, 1300-1800", hosted by Bocconi's Dondena Research Center, intends to remedy to this lack of knowledge.

EINITE has reconstructed the dynamics of wealth inequality in various Italian and European regions. Early results point to a clear conclusion: between the late Middle Ages and the late 18th century inequality grew pretty much everywhere. It is an interesting and unexpected finding. The process was unaffected by periods of economic stagnation, such as Italy in the 1600s and 1700s. Traditionally, economic historiography has emphasized economic growth as the main driver of inequality. Since the data do not support this, it means that historical interpretation needs a major revision.

To this end, the EINITE project is considering various causal factors, such as
demographic, socio-economic, and politico-institutional effects, testing the idea that inequality growth in the pre-industrial age was the result of a changing combination of factors, depending on place and period. With respect to the political and institutional aspects, it is very likely that in certain cases, such as Piedmont under the House of Savoy, growth in inequality during phases of economic slowdown was due to the development of a more efficient system of taxation, capable of extracting more fiscal resources while widening inequality. It is an original perspective, insofar as it reminds us that taxation, and the redistribution it entails, is not automatically equalizing, but can actually increase differences in wealth and income, especially if, as in the case of 17th century Piedmont, higher tax revenues are used to pay for war.

The growth in inequality recorded in the early modern age is in continuity with what occurred, according to Piketty, after the Industrial Revolution. In fact, during the historical period of five centuries considered by EINITE, there was only one period of marked decline in inequality: the period triggered by the rapid diffusion of the bubonic plague in 1348, whose ravages continued well into the 1400s. The Black Death halved Italy's and Europe's population. After the plague, as real wages grew due to the contraction in labor supply, a larger segment of the population was able to own land. It is interesting to note that in the 20th century another huge catastrophe, namely the Second World War, was at the root of the most recent historical period (1950-1980) that saw a reduction in income and wealth disparities. Let us hope that in the future there will be less extreme ways to halt the growth of inequality.