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The examples of rebalancing the fortunes linked to a pandemic are borrowed from precapitalist periods. The most beautiful example is that of the black plague of 1347-1348. In his work The Great Leveler - Violence and the History of Inequality, published in 2017 in Princeton University Editions (and not translated), the conservative historian Walter Scheidel describes the phenomenon.
This terrible epidemic was caused by a bacterium, Yersinia pestis, which, originating from the confines of the Gobi desert, spread via rat fleas throughout Asia. It was transported to Europe in 1347 by Genoese ships traffic between Italy and the Crimea. In two years, the epidemic will kill between 25 and 45% of the European population. The bleeding will be so strong that a country like England, within its borders at the time, will not find its level of population before the black plague until the beginning of the 450th century, XNUMX years later, therefore…
The effect of this bloodletting on the economy and inequality was considerable. To realize this, we must remember that the economy of the time was very largely dominated by agriculture. The capital of the time was primarily the property of the land, and labor was also largely that of the land. During the XNUMXth and XNUMXth centuries, what Jean Gimpel called "the industrial revolution of the Middle Ages" (better access to energy, improvement of the draft horse coupling, new sowing and harvesting techniques) allowed improve agricultural techniques and increase the productivity of land capital. The population increased sharply since the earth was then able to feed more men.
At the beginning of the XNUMXth century, there was therefore a favorable situation for capital-land: labor was abundant and less necessary, therefore very cheap while the land offered generous returns. Inequalities are therefore naturally high. In reality, the situation has already started to deteriorate with a change in the climate which affects yields and a slowdown in productivity. But it is the work that adjusts by its cost. In the first half of the XNUMXth century, the situation of the working masses deteriorated and inequalities widened further in favor of the owner nobility. The black plague will profoundly change this situation.
The sharp decline in the population creates an immediate imbalance in favor of work. The plague did not affect the capital, the land. On the other hand, there is less work to develop it. Too much capital, not enough labor: the return on land falls and the cost of labor increases. Wages are exploding. To the point that in 1349, the English Crown must in its Ordinance of the Ploughmen order the fixing of wages at its level of 1346. A freezing of the wages which will have little effect. Economists' calculations point to a sharp rise in wages across Europe until the mid-XNUMXth century.
This phenomenon has reduced inequality. The cost of maintaining the land becomes heavier, the surpluses captured by the owners lower. In England, Walter Scheidel describes a phenomenon of downgrading of the owner classes after the black plague, while the yield of the land was reduced from 30% to 50%. The works of Guido Alfani concerning a Gini index (index measuring the difference between the highest and the lowest incomes, 1 being the maximum level of inequality) reconstructed in Piedmont shows a drop in the index by 0,45 at 0,31 between 1300 and 1450, then a rise with a return to 1650 at 0,45. The phenomenon is also seen in other Italian cities.
This movement is not a smooth one. The ruling classes will use all of their extra-economic powers to counter the phenomenon. We mentioned the wage freeze decided in England, but we could add an increase in labor taxes used to finance wars and therefore additional income to the nobility. This anti-redistributive policy will lead to unrest: the revolt of Etienne Marcel in France in 1356, the revolt of the English peasants in 1381, the Hussite movement in Bohemia and in Germany in the early XNUMXth century with an egalitarian social discourse. Gradually, however, the elites will regain control, imposing either a counter-redistribution thanks to a strengthened absolutist state, as in France, or thanks to the development of the commodification of the land as in England.
The other examples put forward by Walter Scheidel, from the XNUMXnd century Antonine plague to the epidemics which decimated the natives of the New World in the XNUMXth century, follow the same pattern: the ravages on the workforce of epidemics unbalance capital in favor work. Capital is weakening and inequality is narrowing until new forms of labor control can give owners back the advantage. Walter Scheidel uses these cases to impose his idea: peace and prosperity are periods of inequality, war and epidemics, moments of contraction of the latter. But in reality, the reaction of the elites is not always peaceful, far from it. Rather, it seems that the aftermath of tragedy gives rise to intense struggles between social groups and ideologies. And it is these struggles that then determine the return of inequalities.
The last word in politics
But then, how could the current pandemic act on inequalities? The current economic system is very different from that of the black plague: capital is more diversified, less tangible and labor more mobile. The engine of the economy is the circulation of capital, not just land rent. Consequently, in a capitalist system, the abundance of capital is not in itself an obstacle to its valuation, it can be reinvested or circulate on the financial markets. Conversely, the era preceding the emergence of the coronavirus showed that low unemployment rates could be accompanied by low wage growth and growing inequality. This has been the case in the United States, the United Kingdom and Germany.
As already mentioned, economic studies have shown that the Spanish flu of 1918-1919 reduced income from capital, but had no decisive effect on that of labor. Moreover, the example is difficult to use inasmuch as this pandemic was embedded in the consequences of the First World War which led, for political reasons, to both a financial repression by inflation and d enlargement of labor rights. That said, we still see that the direct effect of pandemics on inequality is often dissolved in the policies that follow.
Trying to see clearly in the effects of the current pandemic on inequality is very difficult for one essential reason: we still do not know the overall impact of Covid-19 on the working population. But this effect, as in 1919, may not be enough. Overall, the widening of inequalities since the 1970s can be explained, as Thomas Piketty or, more recently, Emmanuel Saez and Gabriel Zucman underlines, by a policy very favorable to the holders of capital. The lower taxation of the wealthy, the mobility of capital, the “structural reforms” giving more power to capital over work and, from 2008-2009, the direct support of central banks to the financial and real estate markets , are the key elements of this imbalance that has led to the current situation.
This pandemic certainly brutally weakens capital and therefore reduces inequality by the same amount. Financial markets are slipping and international value chains are disrupted. Above all, the demand shock will reduce corporate profitability. But the world of work is also adjusting in stride with layoffs and cut wages. The shock on capital is therefore transmitted to the world of work, which partly compensates for the decline in inequalities, but the phenomenon is more diffuse.
Once this crisis phenomenon has passed, everything remains to be done. One could thus imagine that the public authorities decided to support household demand by a more favorable environment for work and social safety nets which would reduce the rebalancing that we have just described. We could then enter into a system of reduction of inequalities where the State could organize the investments necessary to compensate for the deterioration of private capital.
But the precedent of the 2008 crisis calls for caution. If the intellectual framework does not change, in other words if the domination of the idea according to which capital alone creates activity and jobs is not called into question, then public policies will have, as after the subprime crisis , for ambition to repair the losses of capital, even at the expense of labor. This is how inequality started to rise again after 2008, despite the severe blow of the crisis. Fiscal policies, austerity and structural reforms have played this role of counterweight.
Because, unlike the time of the black plague, capital is also degraded by the economic consequences of the pandemic. Where once the land remained intact and therefore abundant, industrial capital and, above all, fictitious, financial capital, are very strongly affected. Therefore, the imbalance is not the same. Work therefore does not necessarily become scarce today and political action can focus on defending the interests of capital, the famous "supply policy" which is at the heart of emergency responses. At the same time, structural reforms, which weaken work, are not called into question precisely in the name of this supply policy. In short, the unequal policies described above are hardly questioned, but on the contrary can emerge strengthened from the crisis.
The difference with the medieval period lies in the means used. In a feudal system, the land rent must be protected by the political power of the game of the market favorable to work. Hence the English “maximum wage” of 1349. Under the capitalist regime, institutions must promote commodification to weaken labor. In both cases, the states play in favor of an unequal regime. Thomas Piketty would say that the supporting narratives are different, but so are the modes of production. The result is the same: to prevent external shock from becoming a "big leveler". And the contemporary method seems faster and more efficient from this point of view than the medieval method.
And this is the real novelty here: the pandemic is no longer a determining factor in changing the regime of inequalities over time. Neoliberal capitalism knows how to face such shocks to justify the continued widening of inequalities. The situation should therefore not lead to renouncing, in the name of the urgency of the moment, the need for social redistribution and the fight against inequality. Especially since the health crisis highlights the need for public investment in health and a robust social safety net to deal with this type of radical uncertainty. This presupposes a policy of redistribution or, at the very least, independence of the public authorities from the interests of capital. But the capital camp, which demands public support, will not disarm.
On Thursday March 12, Medef already called for measures to "make the production tool more competitive". During the pandemic, the social war became more discreet, but it remains more relevant than ever.https://www.mediapart.fr/journal/intern ... inegalites
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