Chapter Two

Beg, Barter, or Steal

A Brief History of the Economy

What Defines an Economy?

Economics is the study of how we use our scarce resources. Every economy must answer three basic questions:

What will we produce?
How will we produce it?
Who will get it?

They may seem simple, but getting these three things just the way we want them has so far eluded humanity. Though, we are a lot closer now than we used to be!

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For almost all of human history, the typical person lived on about $3 per day in consumption, give or take a dollar or two. That is in today’s dollars, meaning that you can buy everything our not-so-distant ancestors lived on for an entire year – including their food, shelter, clothing, and the rest – for about $1100 these days. And if you look at the data, you’ll find that this is the case for people living in 10,000 B.C. right on through to around 1700 AD. There are some ups and downs where the average rises to perhaps 4 dollars a day or falls to 2 dollars a day, but the key takeaway is that despite scientific and technological progress over these millennia, average income, or GDP per capita as we sometimes call it, remained constant at the subsistence level. Then, starting in the late 1700s and then really taking off after 1850, per capita income started to rise exponentially. This economic boom is the first mystery we want to explain, and to begin, we need to understand what an economy is. --All we have – at least for now – is this blue marble of a planet. It’s packed full of resources which we can use to produce things with, but those resources are not infinite. That presents us with a problem, which we call the economic problem. Scarcity forces us to choose how we will use our resources. The unfortunate reality of our universe is that choices imply costs. One scarce resource is time, and because the amount of time we have is not infinite, we have to choose how to use it. And if you choose to use your time to study economics, it means you have less time available to do everything else. That is a cost. We usually associate costs with a payment of money, and so economists define the opportunity cost as the value of what we give up when we make a choice. Say what you want about virtue and the higher things, but binge-watching a show on Netflix is pretty fun, and therefore valuable. Not getting to binge-watch more shows on Netflix is an opportunity cost of watching this video instead. The hope is that you are getting more value from this, but that doesn’t erase what you give up. This is true of all our resources. If we use time and effort along with steel and electrical wiring and glass and rubber and whatever else you need to make an airplane, there is less of those things left over to make cars with. Making airplanes reduces the number of cars we can have, and so cars are an opportunity cost of airplanes, and vice versa. The economic problem forces us to make choices, and therefore endure costs. It forces us to answer the question: How should we allocate our resources? This is the fundamental question the study and practice of economics is trying to answer. --Economics is the study of how we use our scarce resources. That’s not just our material resources like iron and aluminum and silicon but also our land and our labor and our entrepreneurship. Throughout history and still today, different societies have found different ways to organize the use of their resources. But all of those different ways can be summarized by how they answer three basic questions. The first is: What will we produce? When we use our time or our physical resources to make something, it’s no longer available to us to use on something else. For example, should we use our steel and electrical wiring and all the rest to make more airplanes, or more automobiles? In other words, we face trade-offs, and we need our economic system to make the decision of what to produce. Second is: How will we produce it? There is more than one way to skin a cat, as the very weird and kind of creepy saying goes. If we decide we should use our steel and electrical wiring and labor to build cars, it remains an open question as to how we combine those ingredients. Is it better to use some of the steel and wiring to make robots that put the cars together, or should we use labor for that? Exactly how we go about producing the things we produce is an important question, and our economic system needs to help us figure that out, preferably in a way that minimizes the use of our resources. Third is: Who will get it? The goal of an economy is to use our resources in a way that improves our lives and satisfies our needs and wants. We make things to be consumed by people. But who gets to do the consuming? Who gets the car that we build? Our economic system needs to be able to distribute what we produce. Hopefully, you are already thinking about how the best-known economic systems, like capitalism and socialism, answer these questions. And next, you’ll explore three of the major systems that have been developed by looking at them through the lens of history.

Economic Life

People have a tendency to focus too much on one aspect of their lives while ignoring other aspects. This is called the focusing illusion, and it is important to correct it right at the start.

Ancient people were - by any measure - much poorer economically than the average person today. This is just one aspect of their lives. Of course, this being a course on economics, it is the aspect we are going to focus on, but keep in mind that people then and now are made of more than just their economic situation.

Traditional Economies

A traditional economy is based on customs, history and time-honored beliefs. It was the first economic system to develop among our hunter-gatherer ancestors, but it still has relevance in our economic systems today.

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We’ve looked at the average income worldwide and seen this spike in economic growth in the 19th century. But there is another graph which shows a similar sudden spike. --This is the cumulative total of human beings who have ever lived. From 190,000 B.C. through around 8000 B.C., a period of 182,000 years, only about 9 billion human beings ever lived, which meant there were only around 2-3 million humans at any given time. However, after 8000 B.C., the human population exploded. By 1 A.D., it is estimated that the global population was around 300 million people, more than 100 times bigger than the pre-historic era. So, what happened in history that allowed the human population to explode, but still prevented us from seeing our average income rise for many thousands of years afterwards? --Let’s start by thinking about the economies of pre-historic hunter-gatherers. These are what we would call traditional economies. Traditional economies are based on customs, history and time-honored beliefs. That is, people’s economic lives – the jobs they did, the leisure time they had, the types of goods and services available to them like food and shelter – was determined by the customs and beliefs of the group they were a part of. These groups were typically centered around an extended family or tribe. Evidence suggests that trade between neighboring tribes was common, and was dependent on barter, meaning that one tribe would offer a set of goods in exchange for some other goods from the other tribe. The people in these tribes generally only produced what they needed, and rarely had excesses, in part because many pre-historic humans were nomadic, meaning they were always moving from place to place. And since their livelihood was so dependent on the elements, their economic welfare was very vulnerable to weather and climate conditions, and sometimes to warfare and violence with other tribes.--These traditional economies developed gradually. The first humans started to appear around 190,000 years ago, but other hominins that date back to 3-4 million years ago show the basics of these traditional economies, along with the development of stone tools. Remember, the evolutionary process is constantly in action, so there is no cut-off between these categories, just slowly changing shades, but it is our first source of economic development. Our modern conception of humanity, and of the traditional economy, doesn’t really set in until around 20-60,000 years ago. In this time, anthropologist believe human’s finally developed language and a cognitive ability on par with modern humans. Rapidly increasing sophistication in tool-making and behavior is apparent from about 80,000 years ago, just before some humans left Africa and stretched across the Earth. Fully modern behavior, including figurative art, music, self-ornamentation, trade, and burial rites are evident as early as 30,000 years ago, suggesting active and vibrant economic life with skilled craftsmanship, trade, expanding diets, and a productive life.--In thinking about these early human economic lives, one invention that goes overlooked is the bag. Various receptacles for water and food date back a million years, but bags as we would recognize them today came about around 30,000 years ago. No other animals use carriers like we do, but bags are a development which shows foresight, and a recognition of the value something might provide in the future. Bags are one of the first inventions that provides a store of value, which facilitates and encourages capital investment, or in simpler terms, they create an opportunity for better, more complicated tools which are specific to certain tasks. That allowed humans to start producing a wider variety of goods, which undoubtably contributed to cultures, beliefs, and customs. --Capital accumulation is an important economic concept throughout human history, as it is the bedrock of economic growth. In economics, capital refers to the tools we use for production. We think of capital as a set of assets which are used to make things with. This is in contrast to financial capital, which is money used by entrepreneurs to buy the things they need to make their products or to provide their services. While the concepts are closely related, this difference is something you will want to remember. For us, capital always means the tools we use for production, not the money we buy them with. Capital is important to an economy because it increases our productivity. One person without tools can barely provide for themselves. But one person with tools can support many. Productivity refers to the differences in output derived from the same inputs. One person without tools might be able to collect 100 berries per hour. But give them a bag to store the berries in, and now they can get 500 berries per hour. That’s an increase in productivity. Over time, thanks to growing human minds, language to share ideas with, and great inventions like the bag, humans were able to put more and better tools to use in the effort to satisfy people’s needs and wants – the goal of every economy. --So, what were the economic lives of these ancient hunter-gatherers like? Well, some hunter-gatherer tribes are still around. Modern hunter-gatherers like the Bushmen of Botswana in Southern Africa spend most of their waking hours hunting and gathering food. In good months they are able to obtain plenty of calories to stay alive, but their diet would only cost them about $500 a year in grocery stores. In the pre-historic era, humanity spent (what scientists now believe to be) about 200,000 years in tribes like this. Spending most of our time just trying to stay alive. We operated on the Gift Economy, with members of the tribe sharing what they gathered with each other, guided by a robust set of social customs and traditions. It is important to note, though, that the Bushmen around today are not unhappy, and neither were our ancient ancestors – in fact they are a very happy people. They get plenty of sleep and have a fair bit of free time as well as vibrant social and family lives. What modern capitalism brings in not happiness, but more wealth, better health, and greater opportunities for life satisfaction. --Long before Capitalism though, the first big step towards modernity was of course the onset of human beings and the development of our minds. But the second big step is known as the Neolithic Revolution. This was a period of time in which different people around the world started to transition from a nomadic hunter-gatherer society to a sedentary farming society. Unlike what we will see with the Industrial Revolution, the shift to sedentary farming happened independently in different times and places around the world. So, the question is: Why? What was similar in each case that they became farmers, and why didn’t we become farmers sooner? --The transition to farming was likely spurred on by a number of factors. One candidate is fluctuations in population. If a larger number of children live into adulthood just by good fortune, it may have thrown tribes out of balance, with too little food available through hunting and gathering to support the population. This may have necessitated food storage, saving in times of excess in order to make it through more difficult times like the winter months. In order to store enough food, tribes may have had to settle in one place, and in doing so they may have then started to figure out how to grow the food themselves. --Another rather fun theory is that different peoples independently discovered the fermentation process through storage. Fermentation is the process by which alcohol is produced, and the discovery may have convinced humans to settle down in one place and farm in order to produce more alcohol. I suppose the idea there is that farming drunk is better than hunting sober. --However, the most likely candidate for this transition is climate change. Around 12,000 years ago, there were shifts in the Earth’s orbit which led to greater seasonality (a bigger difference between summer and winter temperatures). The degree of seasonality predicts the shift to farming pretty well because harsher winters led nomadic tribes to become sedentary for periods of time, and the tribe’s needs grew beyond what could be carried in bags. --The transition to farming radically changed almost every aspect of people’s lives. But it wasn’t all good. The geographer and historian Jared Diamond calls this the worst mistake humanity has ever made. Diets likely worsened, and communities became more prone to famine and disease, which for the early years of the Neolithic Revolution meant that life spans decreased. Farming also likely took a lot more time than hunting and gathering did until more advanced methods and tools were developed. Nevertheless, humanity was trapped in this new system, because farming made it possible to produce a lot more food, which meant that a much larger human population could be supported. Farming pushed the global population from 4-5 million to upwards of 500 million over the next few centuries. It also radically changed how human economies would operate, leaving the traditional economy behind.

Command Economies

A command economy, or planned economy, is one where all economic activity is controlled by a centralized government power. As humans transitioned to farming, populations grew rapidly, and empires started to form. With them came governments and political leaders who dictated almost every aspect of the economy.

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Welcome to Uruk, a city founded along the Euphrates river in modern-day Iraq in the 4th millennium BC (that’s the 3000s BC) which quickly became Earth’s first city. Around 3100 BC it is believed about 40,000 people lived within its walls, and another 90,000 lived in its environs or suburbs. Uruk became the capital of the Sumerian or Mesopotamian Empire, which united several nearby settlements together. The fabled Gilgamesh was likely based on a King who ruled in Uruk and was deified after his death. --Life in the Sumerian capital offered lots of different opportunities compared to the ancestral traditional economies. Stone tablets which have survived the ages show a standard list of professions, which included the leader of the city, cattle pen, and lambs, along with priests in the temple. Below them in the hierarchy are many specialized professions like gardeners, cooks, weavers, smiths, jewelers, potters, and brewers. Money as we know it today had not been invented yet. Instead, workers were likely paid with set amounts of grain and oil. Archeological digs have uncovered many uniform bowls, which were probably the unit of account used to pay workers. So, you can imagine being a Sumerian weaver, making whatever clothing and fabrics that are required by the city, and being paid for your days’ work with enough grain and oil to feed your family, warm your small home, and perhaps trade for a few other goods or services. Most Sumerians though were likely independent laborers working the fields, marshes, orchards, and hunting game outside the city. These independent laborers were probably only producing what they and their family consumed directly, without much trade.However, tablets do show an extensive trading network controlled by a merchant guild. The Sumerians imported gold from modern-day Turkey, Copper from Northern Iraq, Lapis Lazuli and Tin from Afghanistan, and Textiles from Southern Iraq. --After the Neolithic Revolution, humans became sedentary, which means the settled into camps and cities and didn’t move around much. Farming also allowed people to produce a lot more food. With hunter-gatherer societies, pretty much everyone had to hunt and gather food in order to get what they needed to survive. But with agriculture, farmers could produce enough food to feed more than just themselves, freeing people up to pursue other kinds of work. Large settlements made it possible for people to specialize. Farms produced enough food, that some people could devote all their time to developing specific skills like masonry or architecture or textiles and clothing or religious services. The great benefit of cities and of empires was that they could increase productivity through the division of labor, which builds expertise that can then lead to innovations. It also allowed societies to produce time-consuming manufactured goods, improving transportation methods, farming equipment, and the production of art and culture. --Among these Ancient civilizations, none are as famous as Ancient Egypt. Ordinary Egyptians lived in the most prosperous country in the ancient world and, thus, probably enjoyed a sense of security and predictability that was unlike the experience of those living in Mesopotamia and elsewhere. Whereas Mesopotamians were dependent on the weather, Egyptians were dependent on the Nile, which if it was controlled, guaranteed the harvest every year. No other ancient people were so fortunate in terms of the environment. But this meant that Egypt was an intensely conservative and traditional society, which meant that there wasn’t much opportunity for bettering oneself. The vast number of Egyptians had no chance whatsoever to better their lives. Government officials enjoyed the highest social class after the pharaoh. Many officials were nobles who inherited their jobs, but some rose to power from other high-born positions. Three key officials were the vizier, the chief treasurer, and the general of the armies. Below them were Priests, who were still powerful and respected. They advised the pharaoh, oversaw religious ceremonies, took care of temple gods, and prepared bodies for the afterlife. Scribes were Egypt’s official writers and record keepers, and formed a sort of middle class. They were well paid and respected. They trained for many years in special schools to learn hieroglyphs, Egypt’s writing symbols. Boys from several social classes could become scribes, and being educated as a scribe was only one of the few ways a person could improve their station, the only other really was being a soldier. Artisans were highly skilled laborers who created beautiful objects and manufactured goods, but got little respect. Stone carvers were among the most skilled and important artisans. But they worked on state directed projects in state-owned facilities. These artisans had little or no freedom to pursue their own interests or projects. What they produced, and how they produced it, were dictated by the state. Peasants were lowest and largest social class who mostly grew crops that supplied food, but were also conscripted to build monuments such as the pyramids. Peasants’ lives revolved around the three seasons of the Nile River, but all land was owned by the state, and farmers were assigned to work certain plots of land or relegated to state projects.Different goods could be traded for one another, but only according to fixed prices that were set by the government. Individuals were barred from making trades outside of this system of prices, even if both parties agreed. Social status was expressly displayed and deeply embedded into daily life through clothing, jewelry, religious practices, and celebration. --Today we would recognize Ancient Egypt as a command economy, or a planned economy, which is one where all economic activity is controlled by a centralized government power. A modern-day example would be North Korea, where the government decides how to use and distribute the nation’s resources. They do this by directly running businesses considered essential. For ancient Egypt, this was farming, religious services, record-keeping, and the work done by artisans. For North Korea, this is mostly manufacturing and food production. Because the government has such control over the economy, they also have control over people’s economic lives, dictating what jobs they will work and how they will do them. While this is very different from the liberalized industrial economies we live in today, this sort of economic structure was by far the most common in between the Neolithic and Industrial revolutions. Societies were rigidly structured from God down to Dog, and few if any had much economic opportunity. And while there was technological advancement, only the select few like pharaohs, kings, queens, and other high-born people were able to live above the subsistence level.

Market Economies

A market economy is one where decision-making is decentralized, and the means of production is privately owned and operated. While markets were common in the ancient world, market economies were not. For essentially all of human history up until a few hundred years ago, no society was willing to put their trust in markets as the primary institution organizing their economy.

https://youtu.be/7f-atlY_7W8

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In the ancient world, commodities like barley, wheat, oil, seeds, and other produce were used as a form of money. These commodities had to be weighed in order to determine if they were adequate payment, but token money like coins shift that measurement to a count, making exchange much easier. Token money is thought to have originated in China, where spades would be traded as money. Eventually, these developed into coins. But all modern coins are descended from the coins that appear to have been invented in the kingdom of Lydia in Asia Minor – or Modern Day Turkey - somewhere around 7th century BC, which then spread throughout Greece and other places in the subsequent centuries. They were disk-shaped, made of gold, silver, bronze or imitations thereof, with both sides bearing an image produced by stamping.Coins and other types of token currency increased the prevalence of markets. In Ancient Greece, regular trade in household goods was conducted in the public Agora, with prices set by bargaining between sellers and buyers. Payment was increasingly made in the silver coins specially minted for paying daily wages to laborers and for the payment of taxes. The usefulness of coined money in assuring foreign merchants of fair payment for their goods led to wider circulation and larger and more active systems of trade between different regions of the world. The role markets began to play in economies grew from there. --Rome was perhaps the most accepting of markets and merchants. Financial markets, banks, and credit became commonplace and Romans were intensely materialistic. Those who had the means to do so lived in flashy homes with expensive furnishings and objects. The empire was exploited so that Romans could enjoy products from all parts of it. Romans were among the most prosperous of ancient people, with GDP per Capita rising as high as $1,800 per year by some estimates, affording a large portion of the population a life slightly above the subsistence level.Not all shared in this wealth, however. Slaves were numerous in Ancient Rome, and their treatment was often barbaric. Unlike other ancient peoples, however, Romans offered slaves a path to freedom through service, though this was often used to dissuade them from rebellion without actually setting anyone free. Much of the Roman population lived in conditions that were unsanitary, uncomfortable, overcrowded, and hazardous. The economic gap between rich and poor was as extreme as in any society. The streets were filled with beggars, thieves, and prostitutes. There was so much traffic that it was decided that wheeled vehicles could move about only at night. Plague and other diseases were annual occurrences, and malnutrition was also common. At the same time, no matter what one’s social or economic status was, Rome offered unparalleled opportunities for advancement for those who were hardworking, enterprising, and ambitious. Through markets, and with some luck, a person could lift themselves out of absolute poverty. It also offered a wide variety of diversions and distractions at virtually no cost, such as the famous Colosseum. In ancient Rome, being poor, though, meant being despised. The poor often hired themselves out as unskilled workers, performing a variety of menial jobs. Decent Romans despised these workers, like the Greeks, because they believed that working for someone else was equivalent to being a slave. Those who couldn’t work were reduced to becoming beggars, of which there were tens of thousands in Rome. The lucky ones managed to attach themselves to wealthy houses, where household slaves would dish out scraps to them. Indeed, the Roman world was – like most of the ancient world – stratified into classes which did not think it was proper to co-mingle. In many ways, what Rome offered was the illusion of hope for a better life. Only a select few who excelled in the army or managed to receive an education that allowed them to climb the ranks could escape the position they were born into. --While there are not any strong examples of a market economy in the ancient world, some embraced markets as a way of organizing parts of their economies. A market economy is one where decision-making is decentralized, and the means of production is privately owned and operated. Through the enforcement of private property, people are incentivized to use what they own as productively as possible, allowing them to profit from that production without much fear of being stripped of those profits unjustly. In a market economy, prices are set by competitive markets and government intervention is limited. These prices incentivize production in the areas which are most profitable, and promote innovation by rewarding it with higher profits. --In the Ancient World however, as is still the case with some today, people were highly skeptical of markets. The merchant class who bought and sold goods in these markets were typically of very low status. In Greece, Rome, and China, most found the profession distasteful, and saw the profiting from mere trade - rather than from labor in agriculture and craftsmanship - as immoral. The Bazaars of the middle east though, are an exception, where merchants enjoyed more respect. Nevertheless, to get ahead in the ancient world, the surest path was through warfare. As cities grew wealthier, they attracted violence which came to steal that wealth away. Ordinary men could join these armies and join in the plundering of a foreign city, earning them wealth and often slaves. When we look to history, we see a variety of lives and lifestyles, and many opportunities for a rewarding life. But economically, life in these times and places was extremely limited. Most were still resigned to extreme poverty, and their economic choices were often made for them by the state. They did the work assigned to them by fiat or by custom, they ate the same foods every day, wore the same pair of clothing, and handed down their cookware and furniture and other goods from one generation to the next. And the only way the change your lot in life was to beg, barter, or steal.

Feudalism

When ancient empires collapsed, they often fractured into smaller political entities. In the 8th century, a new political order known as Feudalism began to take hold. Feudalism is a political system which is organized around Lords and Vassals. Lords held political power and effectively owned all of the land in their kingdom. They would grant the right to plots of land, called fiefs or fiefdoms, to Vassals who pledged their political and military support to the Lord. The Vassals in turn controlled the peasantry, controlling what kind of work they did and when.

This kind of organization was not uncommon throughout history. Romans like Julius Caesar would accumulate "clients" - people or families who turned to them for help - in exchange for favors and support in return. Caesar accumulated so many favors that he built an army large enough and loyal enough to drive out his opponents and have his friends elect him Dictator Perpetuo. By granting his clients land or access to trade routes or opportunities for public office, Caesar secured their unwavering support in the conquests which gave him the power to grant favors like those. It didn't end so well for Julius, but those favors were like property, and they were heritable. And so Julius' adopted son Augustus was able to leverage the favors owed to his father into a conquest that made him Rome's first Emperor, and he died of old age!

It's not unlike that scene from The Godfather, when Don Corleone says, "Someday, and that day may never come, I will call upon you to do a service for me." This sort of trading of political and military favors for economic power and access was how most economies of the past were organized, and the inheritance of this power and access was the only real path to wealth aside from taking it by force. It makes for great stories, but getting ahead was almost impossible for the average person, who was subjected to whims and will of the Vassal, Lord, Patrician, Pharaoh, King, Godfather, or whoever it might be that controlled their livelihood.

The Malthusian Trap

The lack of liberty and self-determination was certainly a reason that technological progress was slow in the ancient and medieval world. But it wasn't non-existent. As time went on, better farming techniques increased yields, scientific discoveries were made, and innovations spread. In many ways, economic life improved, but average income did not. Almost everyone was still living at the subsistence level. The economic pie was getting bigger (albeit very slowly) but the slice each person was getting stayed the same. This is called the Malthusian Trap, and it held humanity back for a long time!

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After the shift to agriculture and the growth in cities and empires, a lot of technological progress occurred. The Egyptians invented paper and medicines, the Romans invented concrete and aqueducts, the people of Ancient Mesoamerica like the Maya, Aztec and Toltec invented chocolate which was frankly an incredible feat, and the Chinese invented the compass, gunpowder, and printing. Nevertheless, in all of these places, income per head barely budged. The typical person in these times was living on just a few dollars per day by today’s standards. So why, with all of this progress, was humanity stuck in poverty? --The answer is the Malthusian trap. The subsistence level is a standard of living that provides only the bare necessities of life. That is, when it comes to the necessities, people are getting just what they need to keep on living. In the late 1700s, the English economist Thomas Malthus laid out a mathematical explanation for why we would never be able to escape mass poverty. Here is the gist of his theory: Pretty much everyone is living at the subsistence level. Then, technology improves. This better technology raises productivity and increases our total production, allowing some to live above the subsistence level. But these greater means lead to a greater population, because more humans will be able to survive with this greater level of total production. The excess wealth is consumed by a larger population, thus splitting the bigger pie more ways such that everyone gets a subsistence size piece. In simple terms, if we are able to increase our production of food, then that expands the capacity for our population. Without any population controls, that means pretty much everyone lives at the subsistence level. And should the population ever grow beyond the capacity of our economy to support it, the result will be a Malthusian catastrophe like war, famine, or plague, which kills people off until we are balanced again. --We can evaluate the Malthusian Trap mathematically with a graph. Essentially, what Malthus was saying is that population grows exponentially, but our technological progress, especially in food production, grows linearly. Where they cross is where we invite a Malthusian catastrophe, because a population beyond this point will be in excess of the amount of food available. --One piece of evidence in favor of Malthus and his conception of the economy was the plague of the 14th century. Many regions around the world, but especially in Europe, had a rough time farming through the little ice age, which brought a lot of famine. These difficulties brought about a lot of warfare and pillaging, and gave rise to the famous Mongol empire of Genghis Khan. But a disease started to spread in the mountainous regions of modern-day China which was picked up by the Mongols and spread around Eurasia, arriving in Europe in 1346. The plague was actually three different diseases. The Bubonic plague was the most common, and it killed about 50-60% of those who contracted it. The Pneumonic plague was less common but deadlier, killing about 90% of those who got it. And the Septicemic plague, which was rare, was a near certain death sentence. China lost one-half to two-thirds of its population to plague. In Paris in 1348, it killed 800 people per day. London lost about 40% of its population over the course of the plague. The Middle East lost about one-third of its population, and Egypt lost about 40%. Approximately one-third of the whole human population perished, and about half of the people of Eurasia died. The death toll is difficult to even estimate, and some sources put it as high as 200 million people. This turned the economy on its head, where once labor was cheap and land expensive, now land was cheap and labor was expensive. This broke the Feudal system, and restructured the economies of the world. --As Malthus would predict, wiping out half of the population meant an increase in living standards for a short time. In this way, we can think of Thanos in the Marvel movies as a Malthusian in his thinking. Prices fell and wages rose, increasing people’s real income. Many towns were abandoned, and less farmland was used compared to before the plague. Many peasants were able to increase their holdings, and there were fewer living in poverty. Meanwhile, elites seeking to protect their wealth promoted protectionist policies and formed powerful guilds. Most people of this time did not associate themselves with their kingdom, but rather their town. Towns would put these protective policies in place, charging a tax on goods coming into the town. However, as these policies became widespread, many began to see it as a detriment. Protectionist policies were relaxed to help the towns merchants abroad seek special trade agreements. The city of Antwerp, for example, liberalized their trade policies and opened themselves up to free trade. No one could know it at the time, but they were setting an example that would eventually come to dominate European cities, and change the world in a way that would be unrecognizable to Malthus, and would render his theory obsolete as an explanation for the world.

Quick Quiz

Now is the time to test yourself on these concepts! This quick quiz is a great way to see what has clicked and what needs more attention. It is also a good time to reach out to your instructor with questions.

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Example Question
In the Malthusian model, population grows exponentially while food production grows linearly. For the Rarotonga tribe, food production is enough to support 1,108 people at the subsistence level, and each year they are able to expand food production to accommodate another 84 people. Their population is only at 811 people, but it grows by 8% each year.

Assuming each member of the tribe is living at the subsistence level, what will the population of Rarotonga be after 46 years?

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