Even the most devastating plague in human history   had many positive longer-term consequences. Is Black Death any guide to brighter post-Covid future?

It might seem controversial given the scale of the human tragedy unfolding this year. However, history shows that many large crises had unexpected positive repercussions. There is no better example than the Black Death from the XIV century. Without the tragedy which cut Europe’s population by almost half within two years, there would be neither the Renaissance Age nor the prosperity that followed.

Black Death

The Black Death was by far much more deadly than the Covid-19 pandemic. It was much more lethal, it spread quickly, and humanity had almost no tools to fight it. The state of medicine was elementary. The hygiene standards were abysmal. People could not isolate themselves. All human connections were made a face to face.
That was why some European cities even saw over 60% of their population die. A shocking number!
So how could you view that tragedy optimistically?

Foundation of the Renaissance

Because of the massive amount of deaths, societies and economies had to go through a massive adjustment - social, political, economic and ideological.

Within a concise period of time, most countries experienced shortages of labour. There was roughly the same amount of capital and goods, but there was no one to work. As a result, the working-class gained massive bargaining power when negotiating with owners of capital (and land). Not only did it bring higher wages and higher living standards for the masses, but it also enabled the scraping of feudalist societal structure.

After the plague, aristocrats had to share power with the middle class that started to grow in numbers and importance. Peasants also achieved much more rights.

Of course, these changes were not smooth. The period following the Black Death was full of rebellions and wars. However, the new social model that emerged was based on more equality and greater opportunities for masses. And it allowed for further progress in Western Europe.

Alternative path

Something quite different happened in Eastern Europe where the Black Death was not that severe. There was also a drop in population but not as dramatic as in the West. As a result, the social changes seen in the West didn’t come through. The powerful landowners tightened their grip on peasants and within the next century introduced a quasi slavery model in agriculture.

The result of those changes was a dramatic divergence in economic growth. Whereas Western Europe saw its prosperity boom, the East moved in the other direction. I wrote more about it here: https://www.fintaste.com/what-makes-some-countries-rich/

The experience of the Black Death not only led to higher emancipation of the working class in Western Europe. It also allowed science and education to grow. Medicine which did not see much progress in medieval times got the green light to move forward. The same was with other scientific discoveries. Universities saw a large growth in numbers. Societies which were previously very religious started to question their faith given how much tragedy they experienced. It opened up prospects for the introduction of theories and inventions that would be previously seen as revolutionary.

Is Black Death any guide to brighter post-Covid future?

We know even small shocks can cause enormous consequences - something that chaos theory calls the “butterfly effect”. It seems to me almost unthinkable that the current shock will not bring long-lasting changes. Even after we return to “normal” (whatever that means), it’s not going to be the same. One thing I am pretty sure about - the economic structure will never go back to times before Covid-19

Over the last 2 decades, there was no shortage of new inventions. However, it has not led to breakthroughs allowing for higher productivity. The reason behind it could be that inventions have not led to innovations yet. Many new scientific discoveries did not find the way to implementation by the business. Usually, those processes take a very long time. Even longer to reflect those changes in official economic statistics (a phenomenon which Erik Brynjolfsson and Daniel Rock, of MIT, call “productivity J-curve”).

Remote work as a harbinger of change

In 2020, some changes which we thought would take years to implement, took a few weeks in the midst of pandemic lockdowns. We saw a great push for digitization in all possible industries. Remote work - previously seen as a very abstract concept - became a norm in many countries and industries. A survey of global firms conducted by the World Economic Forum this year found that more than 80% of employers intend to accelerate plans to digitise their processes and provide more opportunities for remote work, while 50% plan to accelerate the automation of production tasks.

Even spheres which we regarded as very backward and rigid, made great advances. Just look at how administration in many countries embraced online services. Same with healthcare. The hospitals were burdened with looking after Covid patients, and there was a need to keep other patients away. The solution was found in remote care, whether in the form of online consultations or remote monitoring of patients health.

Over the last few decades, most productivity gains were observed in the manufacturing sector. With cloud computing and remote working, which allows employees to contribute their work from much more affordable locations, we can see global improvement in areas which were so far resistant to productivity-boosting measures.

New Golden Age?

As with every crisis - the urgency pushes people to find new and better ways of doing things. It also forces lots of people to look for another job. What is very encouraging this time and what might prove my point is the number of new business applications in the US. In the 3rd quarter this year, the number jumped to the highest number since the statistics began in 2004. Who knows how many new Microsofts, Apples or Googles would have their starting date in 2020?

Can all this lead to a new “Golden Age” (or at least a decade) for humanity in the years that will follow? Time will tell. But there are reasons to be optimistic once we deal with the current pandemic.

Related article: https://www.economist.com/finance-and-economics/2020/12/08/the-pandemic-could-give-way-to-an-era-of-rapid-productivity-growth