Before and After the Black Death: Money, Prices, and Wages in Fourteenth-Century England

One of the most common myths in European economic history, and indeed in Economics itself, is that the Black Death of 1347-48, followed by other waves of bubonic plague, led to an abrupt rise in real wages, for both agricultural labourers and urban artisans – one that led to the so-called ‘Golden Age of the English Labourer’, lasting until the early 16th century. While there is no doubt that real-wages in mid- to late- 15th century England did reach a peak far higher than that ever achieved in past centuries, real wages in England did not, in fact, rise in the immediate aftermath of the Black Death. In southern England, real wages of building craftsmen (rural and urban), having plummeted with the natural disaster of the Great Famine (1315-21), thereafter rose to a new peak in 1336-40. But then their real wages fell during the 1340s, and continued their decline after the onslaught of the Black Death, indeed into the 1360s. Not until the later 1370s – almost thirty years after the Black Death – did real wages finally recover and then rapidly surpass the peak achieved in the late 1330s. Thereafter, the rise in real wages was more or less continuous, though at generally slower rates, during the 15th century, reaching a peak in 1476-80 – at a level not thereafter surpassed until 1886-90, by the usual methods of calculating real wages with index numbers: i.e., by NWI/CPI = RWI [nominal wage index divided by the consumer price index equals the real wage index]. Most of the textbooks that still perpetuate the myth about the role of the Black Death in raising real wages, as an almost immediate consequence, employ a demographic model based on Ricardian economics, which predicts (ceteris paribus) that depopulation will result in falling grain prices and thus in falling rents on grain-producing lands (on land in general) and in rising real wages. The fall in population – perhaps as much as 50 percent by the late 15th century (from the 1310 peak) – presumably altered the land:labour ratio sufficiently to increase the marginal productivity of labour and thus its real wage (though in economic theory the real wage is determined by the marginal revenue product of labour). The rise in real wages would also have been a product of the fall in the cost of living, chiefly determined by bread-grain prices, whose decline would have been the inevitable result of both the abandonment of high-cost marginal lands and the rise in the marginal productivity of agricultural labour. But the evidence produced in this study demonstrates that the Black Death was followed, in England, by almost thirty years of high grain prices – high in both nominal and real terms; and that was a principal reason for the post-Plague behaviour of real wages. This study differs from all traditional models by examining the role of monetary forces in producing deflation in the second and final quarters of the fourteenth century, but severe inflation in between those quarters (i.e., from the early 1340s to the mid 1370s). The analysis of the evidence on money, prices, and wages in this study concludes that monetary forces and the consequent behaviour of the price level – in terms of those deflations and intervening inflation – were the most powerful determinant of the level of real wages (i.e., in terms of the formula: NWI/CPI = RWI). Thus the undisputed rise in nominal or money wages following the Black Death was literally ‘swamped’ by the post-Plague inflation, so that real wages fell. Conversely, the rise of real wages in the second quarter of the fourteenth century was principally due to a deflation in which consumer prices fell much more than did nominal wages. In the final quarter of the century, the even stronger rise in real wages was principally due to another deflation in which consumer prices fell sharply, but one in which, for the first time in recorded English history, nominal wages did not fall: an era that inaugurated the predominance of wage-stickiness in English labour markets for the next six centuries. But that perplexing phenomenon of downward wage-stickiness must be left to other studies. The 14th century is the most violent one before the 20th; and violent disruptions from plague, war, and civil unrest undoubtedly produced severe supply shocks and high (relative) prices. Europe also experienced more severe oscillations in monetary changes and consequently in price levels – i.e., the aforesaid deflations and intervening inflation – during the 14th century than in any other before the 20th.