WAGES

WAGES. The history of wages in early modern Europe is a study of contrasts. To begin with, most people toiled on family farms or in family enterprises. Hence wages were a dominant part of income for only a small fraction of the population. Nevertheless, hiring workers for wages and working for someone else part of the time were extremely common. The tension between these two facts has informed the two key debates about wages in the early modern period. The first debate, accepting the ubiquity of paid labor, uses wages to infer standards of living and thus examine Malthusian cycles. The second debate involves both the extent of wage labor and the institutions that made it respond or not respond to the laws of supply and demand.

In 1798, the British social theorist Thomas Malthus (1766–1834) argued that in agrarian economies (agriculture absorbed two-thirds of all workers in nearly all European regions prior to 1800) incomes depended on the ratio of land to population. More land allowed higher output per person; more people drove down the output per person. Because land rents increase when land is scarce, wages are even more sensitive to scarcity than output per person. This narrative has been adopted, with slight variation, by many different scholars who believe that these iron laws held firm for millennia. For some, these shackles were eventually broken by the increased use of coal, for others by access to the agricultural output of the New World, or even by technical change broadly defined and dated to sometime in the mid-eighteenth century. From the time of the Black Death (mid-fourteenth century) to the 1750s, wage series did follow a broad Malthusian pattern. In England, for instance, wages started from a low in the mid-1300s, rose for nearly a century and a half in response to the epidemic's massive mortality rate, then fell for an equally long time, bottoming out in the seventeenth century. The rise of wages in the eighteenth century was not pronounced, but wage stability in the face of massive population growth was nonetheless an important achievement. Bits and pieces of this story can be seen in all European countries, though each in its fashion raises questions about the standard Malthusian model.

In recent years, Malthus has been under strong challenge. First, as Van Zanden states, wages are not income. At the individual level, nonwage compensation—from common rights, or home manufacture, for instance—was an important element of most families' income in the early modern period. At the national level, earnings from land, capital, skills, and entrepreneurship were of considerable value, even though their distribution was quite different from that of wages. As the recent historical record suggests, economies can experience massive growth without witnessing much real wage increase for the unskilled. In the past as in the present, one should investigate wages with some concern for inequality.

Second, and more problematic, is the evidence that comes from examining regional patterns in wages. Regional variation in wages at any point in time is of the same order of magnitude as the two-century variation in wages of a local Malthusian cycle. If we compare high wage regions to low wage regions Malthus's theory fails again. In fact, high population areas did not have low wages. On the contrary, economically leading areas were most often very densely populated relative to the European hinterland. Northern Italy, the Low Countries, and England all were or became densely populated in their period of economic leadership; and they were all also high wage economies. Economic historians now argue that Malthus's emphasis on endowments and demography explained in part the evolution of economies and wages. Political institutions and economic institutions have at least as much importance.

The second debate arrays two sides. On one side scholars argue that families in the early modern era preferred self-sufficiency to the uncertainty or unfairness of market interaction. Therefore they avoided labor markets. These scholars also argue that, unlike in modern society, workers and their employers were enmeshed in a web of social relations that only capitalism would break. In this view, labor exchange was relational rather than market-driven. In such a situation, one would prefer to employ an acquaintance at a higher wage rather than hire an outsider for less. In contrast, the argument continues, modern factory workers have no social relations either with management or with the distant shareholders of the corporation they work for; hence wages are free to reflect the iron law of supply and demand.

That view has come under repeated challenge. In part, this is because the arguments that seek to differentiate early modern from modern labor markets have been made on unsound quantitative evidence and are based on a very naive view of how labor markets operate. When scholars take into account that labor markets are always imperfect, differences between those of the preindustrial and contemporary eras cease to be differences in kind.

The market-avoidance argument fails for empirical reasons: only a small fraction of farms and enterprises were the right size to have an exact balance between their labor demand and their family labor supply. Imbalances arose for different reasons, including seasonal peaks in labor demand at harvest, the demographic cycle in crafts, and the difficulty of adjusting farm size to family size. Therefore many, probably most, families either bought or sold days of labor, earning or paying wages. These wages did reflect supply and demand, rising in summer as demand for labor increased, and falling when population growth was rapid and during bad harvests, when the amount of work was reduced, and so on.

There were some important exceptions. For instance, in eastern Europe the strengthening of serfdom stymied labor markets. But there were other areas, like the Low Countries, where wage labor was quite prevalent by the end of the Middle Ages. Overall, the extent of wage labor seems to have paralleled the extent of markets in general: where trade and commerce were more active, one could observe more active labor markets.

BIBLIOGRAPHY

Allen R. C. "The Great Divergence in European Wages and Prices from the Middle Ages to the First World War." Explorations in Economic History 38, no. 4 (October 2001): 411–448.

Brown, Henry Phelps, and Sheila V. Hopkins. A Perspective of Wage and Prices. London, 1981.

Campbell, B. "Agricultural Progress in Medieval England: Some Evidence from Eastern Norfolk." Economic History Review 36, no. 1 (February 1983): 26–46.

de Vries, J., and A. van der Woode. The First Modern Economy: Success, Failure and Perseverance of the Dutch Economy 1500–1815. Cambridge, U.K., 1997.

Epstein, S. "Craft Guilds, Apprenticeship, and Technological Change in Preindustrial Europe." Journal of Economic History 58, no. 3 (September 1998): 684–713.

Grantham, G. "Contra Ricardo: On the Macroeconomics of Pre-Industrial Economies." European Review of Economic History 3, no. 2 (August 1999): 199–232.

Hoffman, P. T. Growth in a Traditional Society. Princeton, 1998.

Hoffman, P. T., D. Jacks, and P. Lindert. "Real Inequality in Europe Since 1500." Journal of Economic History 62, no. 2 (June 2002): 322–355.

Jones, E. L. The European Miracle: Environments, Economies, and Geopolitics in the History of Europe and Asia. 2nd ed. Cambridge, U.K., 1987.

Malthus, T. R. An Essay on the Principle of Population. 1798.

Mokyr, J. The Lever of Riches: Technological Creativity and Economic Progress. New York, 1990.

North, D. C. Structure and Change in Economic History. New York, 1981.

Ozmucur, S., and S. Pamuck. "Real Wages and Standards of Living in the Ottoman Empire 1489–1914." Journal of Economic History 62, no. 2 (June 2002): 293–321.

Reddy, W. M. The Rise of Market Culture: The Textile Trade and French Society, 1750–1900. Cambridge, U.K., 1984.

Van Zanden, J. L. "Rich and Poor before the Industrial Revolution: A Comparison between Java and the Netherlands at the Beginning of the Nineteenth Century." Explorations in Economic History 40, no. 1 (January 2001): 1–23.

Wrigley, E. A. Continuity, Chance and Change: The Character of the Industrial Revolution in England. Cambridge, U.K., 1988.

Wrigley, E. A., and R. S. Schofield. The Population History of England 1541–1871: A Reconstruction. Cambridge, Mass., 1981.