How the Black Death made the rich richer

But another less often remarked consequence of the Black Death was the rise of wealthy entrepreneurs and business-government links. Although the Black Death caused short-term losses for Europe’s largest companies, in the long term, they concentrated their assets and gained a greater share of the market and influence with governments. This has strong parallels with the current situation in many countries across the world. While small companies rely upon government support to prevent them collapsing, many others – mainly the much larger ones involved in home delivery – are profiting handsomely from the new trading conditions.

The mid-14th Century economy is too removed from the size, speed, and interconnectedness of the modern market to give exact comparisons. But we can certainly see parallels with the way that the Black Death strengthened the power of the state and accelerated the domination of key markets by a handful of mega-corporations.

Black Death business

The sudden loss of at least a third of Europe’s population didn’t lead to an even redistribution of wealth for everyone else. Instead, people responded to the devastation by keeping money within the family. Wills became highly specific and wealthy businessmen, in particular, went to great lengths to ensure that their patrimony was no longer divided up after death, replacing the previous tendency to leave a third of all their resources to charity. Their descendants benefited from a continued concentration of capital into a smaller and smaller number of hands.

At the same time, the decline of feudalism and the rise of a wage-based economy following peasant demands for better labour conditions benefited urban elites. Being paid in cash, rather than in kind (in the granting of privileges such as the right to collect firewood), meant that peasants had more money to spend in towns.

This concentration of wealth greatly accelerated a pre-existing trend: the emergence of merchant entrepreneurs who combined trade in goods with their production on a scale only available to those with significant sums of capital. For example, silk, once imported from Asia and Byzantium, was now being produced in Europe. Wealthy Italian merchants began to open silk and cloth workshops.

These entrepreneurs were uniquely positioned to respond to the sudden labour shortage caused by the Black Death. Unlike independent weavers, who lacked the capital, and unlike aristocrats, whose wealth was locked up in land, urban entrepreneurs were able to use their liquid capital to invest in new technologies, compensating for the loss of workers with machines.

In southern Germany, which became one of Europe’s most commercialised areas in the late 14th and 15th Centuries, companies such as the Welser (which later ran Venezuela as a private colony) combined growing flax with owning the looms on which workers span that flax into linen cloth, which the Welser then sold. The trend of the post-Black Death 14th and 15th Centuries was a concentration of resources – capital, skills, and infrastructure – into the hands of a small number of corporations.

The age of Amazon

Rolling forward to the present, there are some clear similarities. Certain large organisations have stepped up to the opportunities provided by Covid-19. In many countries across the world, entire ecologies of small restaurants, pubs and shops have suddenly been closed down. The market for food, general retail and entertainment has gone online, and cash has pretty much disappeared.

The percentage of calories that restaurants provided has had to be rerouted through supermarkets, and much of this supply has now been taken up by supermarket chains. They have plenty of large properties and lots of staff, with the HR capacity to recruit more rapidly, and there are many underemployed people who now want jobs. They also have warehouses, trucks and complex logistics capacity.

The other big winner has been the giants of online retail – such as Amazon, who run a “Prime Pantry” service in the US, India and many European countries. High street shops have been suffering from price and convenience competition from the internet for years, and bankruptcies are regular news. Now, much “non-essential” retail space is closed, and our desires have been re-rerouted through Amazon, eBay, Argos, Screwfix and others. There has been a clear spike in online shopping, and retail analysts are wondering whether this is a decisive move into the virtual world, and the further dominance of big corporations.

from Hacker News https://ift.tt/2BYLXr2