History tells us coronavirus’ economic effect will be short and sharp

The coronavirus is far from the first pandemic to spread its miasma across the world, infecting humans and the economy with microbes and fear.

Spanish flu, the Black Death, waves of bubonic plague – the globe has long suffered severe bouts of pestilence, though Covid-19 may be the first to spread so far so fast.

But what do the outbreaks of history tell us about the economic impact of ruin on such a scale?

The Black Death

The Black Death might be the most famous plague in history.

It spread from the east, travelling the trade routes to Europe in the 14th century where it killed more than one-third of the population.

But one of its most well-known repercussions was to empower workers, as a scarcity of labour meant wages increased. The devastation contributed to the end of serfdom in countries such as England, as peasants’ bargaining power increased.

For those lucky enough to survive, it was a time of relative economic plenty. As Harvard academic Paul Schmelzing notes, in a working paper published by the Bank of England earlier this year: “The Black Death created not just the means for wider parts of the population for excessive consumption – but the traumatising experience of sudden decimation in the earthly life also triggered the impetus to enjoy it to the fullest, while still able to”.

He cites this evidence from Florentine chronicler Matteo Villani, who wrote: “Men gave themselves over to the most disordered and sordid behaviour… As they wallowed in idleness, their dissolution led them into the sin of gluttony, into banquets, taverns, delicate foods and gambling. They rushed headlong into lust.”

Sadly not all plagues have such beneficial effects for the survivors and their descendants. Just ask the Romans.

The Plague of Justinian

A series of plagues over the centuries weakened Roman rule, making an empire reliant on martial force increasingly vulnerable to lack of manpower in its armies.

Less able to fend off barbarians, some of whom were migrating to flee other enemies like the Huns, the western Empire crumbled and ushered in the Dark Ages.

In the east the remaining empire based around Constantinople endured. But it too was hit with pandemics, most notably the Plague of Justinian in the sixth century AD which recurred for centuries and killed tens of millions.

Economically the result was a decline in agriculture and trade, resulting in spiraling inflation, a much-diminished state with smaller tax revenues and hence weaker armed forces.

It was key in the decline of the remains of the Roman state and the rise of the Byzantines in its stead.

The Great Plague of London

This local flaring up of bubonic plague took its toll on the capital in 1665, carrying away one-quarter of London’s population.

The immediate result was a trade crackdown, with calamitous effects given the value of the Thames as a crucial trading route.

Samuel Pepys was one of the great chroniclers of the age and his writings tell us about the Great Plague Credit: John Robertson

Yet it had little effect on the economic development of the nation and the city. It may be that the Great Fire the following year provided a stimulus to growth – with swathes of the city to rebuild, the impact could be compared to the post-war recovery of Germany as the economy rose rapidly from the ashes.

None of this is enormously reassuring in the short term. Coronavirus is a serious and spreading disease.

But it might help to know that the economic pain of pandemics can be followed by the quick recovery we are all hoping for, with livelihoods and daily lives back on track in a matter of months.