Home > Uncategorized > Inequality: the very long run

Inequality: the very long run

natureIn Nature Branko Milanovic published an interesting article about (very) long run cycles in inequality, using among other metrics the wage-rent quotiënt as an indicator of inequality (wage income relative to income of landowners). See the first graph. I can actually add a little to this. I’ve extended the Dutch (Frisian) wage/rent series published earlier on this blog backward to 1697 and forward to 1862 (below). Up to about 1800, developments in Friesland and Spain seem to be pretty comparable. After 1800, however, population growth, increasing prices for Agricultural products in general and for livestock products in particular and (after 1813) soaring butter exports from Friesland to London caused Frisian land prices inrease relative to wages while they plummeted in Spain. As far as can be estimated, total factor productivity of agriculture did not increase in this period. Which indicates a fast increase in capital income in the Netherlands during this period (which is consistent with other sources). And which of course shows the detrimental consequences of wars, not just in the short run (in the Netherlands, the French period was less disastrous than in Spain, though 1812/1813 was abysmal). Returning to MIlanovic: in Knibbe, 2014, I show that after about 1900 incomes from land declined again due to lower agricultural prices and (after WW I) higher wages, which underscores his idea of very long inequality cycles. No links, as this function does not seem to work at this moment, I’ll try to insert them later, at this moment they are below the graph.





  1. September 28, 2016 at 12:37 pm

    An interesting article. An ahistorical historical study. The world of the 1300s in Europe was different than the world of classical/neoclassical theories, from which the assumptions buried in this study derive. In the 1300s the Roman Catholic Church was the most important institution in Europe. The Protestant Reformation was still 300 years away. And the same can be said for the 1400s, 1500s, etc. Feudalism organized the lives of most Europeans. Under the watchful eyes of Churchmen and the local sovereign lord (Baron, etc.). The kind of economics you use as the basis for the article would mean nothing to most people of the period. The peasants would not consider themselves underpaid or poor. They might feel oppressed and over taxed, depending on the local lord and his boss the king. But in many feudal manors/villages a feeling of community and common purposed existed that difficult to translate to today or today’s economics. And even the great international trading empire that Venice established during the period bears little resemblance to the kinds of trading and markets that exist today. As do the later trading structures put in place by Spain, Portugal, England, and France. And these differences where more than technological. They included differences in how trading companies were set up and operated, and in the responsibilities of owners and investors of these trading companies. And the companies were tightly connected to the ruling monarchies, taking and giving support. I’m generally suspect of the value of such comparisons as this.

  2. merijntknibbe
    September 28, 2016 at 12:57 pm

    Agree. One example: we do have consistent rent series for Friesland which stretch back to 1505. these rents were clearly ‘capitalist’ rents and the land market was quite competitive and (though contemporaries did not care) quite ‘modern’. Which makes these rents comparable with those of the 17th and 18th century. However – in this period wage labour was not non-existent but pretty rare in Friesland, only after about 1535 it became more common while another 40 years later is was very common. Comparing the post 1535 rent/wage ratio with the post 1550 ratio is tricky!

  3. robert locke
    September 28, 2016 at 2:50 pm

    When I studied Medieval History, I read the Virgin and the
    Dynamo, Life and Work in the Middle Ages. and other works that clarified the difference between a civilization rooted in Christianity and one in the Market Place. The Cistercian monks who cleared the fields and forests in the 13th century, an astonishing achievement in it scale and scope, had other values than the traders of the 18th century or the protestants of the 16th.

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