Summer School 2: The golden ages of labor and looms

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0:24Welcome back, everyone, to Planet Money Summer School. Economic history of the world. Don't worry, you won't have to spend these sunny days in a dark basement studying a dusty tome. You can just relax as we hit the historical highlights. The big questions, the mysterious players, and, as we'll see today, the revolutions. Moments when the world order gets overturned. I'm Robert Smith, and this is Lesson 2, The Rise of the Worker. Every Wednesday till Labor Day, we are meeting here in your ears to explain the world of today with stories from the world of yore. Last week, we explained what money really is and where it comes from.

1:07Today, we look at power through the eyes of the workers and the bosses. Two stories today that show you how the balance between employer and employee, rich and poor, can change suddenly. And how we can all prepare for, and maybe even push for, changes happening today. Rejoining us as our guest professor for this lesson is Rebecca Spang from the University of Indiana, Bloomington. Thanks for coming back. Oh, of course. It's so much fun. So why study labor history now? Like, what challenges are we facing in the economy that make these stories particularly relevant? I think the question that everybody's asking is, is AI going to take my job?

1:48We know the machines have already taken manufacturing jobs. The United States is overwhelmingly a service economy, a creative economy. What if it turns out the machines can do that too? What are we going to do? One interesting thing when you start to look at the actual economics, there is this question, right? Who gets the value of the work? Who gets the value of the thing that gets sold? And classically over history, this has been this sort of struggle. Yes, that's right. I mean, that is a classic way to think about history is a struggle between those who do the work and those who own the so-called means of production.

2:31Karl Marx has entered the chat. And we should say that this balance is not a static thing. Sometimes dramatic things happen that do shift the power to the worker. How to put it? It's not all a tale of things getting worse or a tale of things always getting better. OK. After the break, we'll have the first of our historical case studies. It's about the wild, wild party after the end of the world.

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4:24Learn more about accelerating safe AI at scale at veem.com. Welcome back to Planet Money Summer School. The year is 1347. The location, a bustling port in Sicily. Ships are coming in from around the globe carrying spices and silk. They're also carrying stowaways, little rats. On the back of the rats are a different kind of stowaway, fleas. And in the belly of the fleas are bacteria. Bacteria that caused the bubonic plague. We will spare you the harrowing details of the pandemic known as the Black Death. It was a health disaster unequaled in human history. 30 to 50 percent of the population of Europe died.

5:12Horror beyond imagining remade European society in countless different ways. But the one we're going to zero in on is the silver lining, the economic shifts that followed the plague. We'll have Keith Romer and Alexei Horowitz-Ghazi pick up the story from here in this episode from 2020. The economic transformation that came about after the Black Death was only possible because of the very specific way the pandemic attacked the European economy. The plague destroys human capital. That is to say, it destroys human beings. But it does not destroy physical capital. That's Anne McCants, a historian from MIT.

5:53You know, good farmland, the crop may rot in the field for one or two years. But if the land was fertile before, it's going to be fertile again. So if you're a big landowner, the good news is you still have a bunch of land that can make you a bunch of money. The bad news? Half your serfs are dead. There's no one to till the soil. All the tools in the shoemaker's shop, those are still there. But if all the shoemakers were wiped out by the plague, how are shoes supposed to get made? From a strictly economic perspective, there is suddenly a huge shortage of labor. And that means the workers who are left have more power now.

6:28And this allows workers to negotiate effectively for higher wages. That's Guido Alfani, an economic historian at the University of Bocconi in Milan. Guido says that in Florence, between 1350 and the early 1400s, wages doubled. And you see versions of the same thing all over Europe. It wasn't just wages either. Workers were able to demand better working conditions too. Guido says you can actually see this in some of the employment contracts in Tuscany from the years right after the Black Death. People who were employed to work the land required to be given oxen as part of the contract. And oxen are very costly.

7:12So this is kind of a shift. So in Italy, workers were sort of saying, like, I'm only going to work here if you give me an ox to work the field otherwise. Yes, exactly. Because they had the knife in the hand and they used that power. They had the knife in the hand in the sense that they had all the negotiating power. Exactly. The people on the other side of that negotiation, the nobles and big landowners, they were not all that happy about this new state of affairs. Like a peasant is trying to tell me how much I'm going to pay him? There's almost immediate pushback. In England, to take just one example, they pass a law called the Ordinance of Laborers in 1349, still in the middle of the plague.

7:53This is a law that actually punishes both the laborer themselves for taking too high of a wage or, you know, in the language of the day, demanding too high a wage. and the landowner, let's say, or employer who overpays. Anne McCants says instead of a minimum wage law, medieval England had a maximum wage law. Their wages were capped. Parliament also passes a law forbidding the free movement of workers around the country in order to stop people from shopping for higher wages in, say, the neighboring shire. But for the most part, the English government just isn't able to enforce these laws. It's really clearly a failure.

8:34The workers were just too powerful. And, you know, sort of one of the nicknames for this period is the golden age of labor. It's hard to overstate what a big deal this was. And it didn't just stop at higher wages. There were these new forms of social mobility. Like, up until this moment, jobs were passed down from generation to generation within particular families. Whether that was a good job or a bad job. The job you had was almost certainly going to be the same job your father had and his father had as far back as anyone could remember. A lot of the good jobs, shoemaker, wheelwright, weaver, tanner, fletcher, scrivener, farrier, salter, chandler, girdler.

9:16The point is, cordweiner. The point is these jobs were controlled by guilds. If you weren't in the guild, you weren't allowed to do them. But suddenly, half of the guild members were dead. So the folks who ran the guilds had to start thinking about letting in some new members, people whose families had never been shoemakers before. Don't want to harvest barley anymore? Become a loriner. Make some stirrups and harnesses. Or you could become a poulter. That's a pulchy salesman. So for a moment, it's possible to move up. It's possible to change things. And to start accumulating wealth, which in medieval Europe means essentially one thing.

9:57In this society, the largest part of wealth is basically real estate. It's basically land. In the wake of the Black Death, some of the largest estates are broken apart when their owners die and the land gets split evenly among multiple descendants. Many of those plots are then put up for sale. For a period, you have kind of a buyer's market. And you have people who had little or no property who managed to acquire property. So there's like a little island of lower inequality for 100 or so years? Absolutely, absolutely. And this is quite exceptional because after that, the only other island would be that associated to the world wars.

10:40It was one of only three times that the rate of inequality has dropped in the past 700 years. And you could see that change in people's everyday lives and the stuff they owned. But this isn't happy news for everybody. All the nobles and landlords on the rich side of that medieval wealth gap see these former peasants eating mutton chops and trying on fancy silks from East Asia. And they're like, no, not OK. Because this is a moment in history where this economic change starts to feel like it's threatening the social order in this fundamental way. What's the point of being a noble if all the people who used to be peasants can now just buy their way into the noble lifestyle?

11:21So a new round of laws start getting passed. Sumptuary laws. Which put limits not just on how much workers can get paid, but even on how they're allowed to spend their money. The sumptuary laws say things like, peasants, you're not allowed to eat guinea fowl. Or wear the color purple. That's our color. You guys, you wear brown. And yes, this sounds kind of silly. A little bit petty, maybe. But Anne says this new peasant purchasing power was kind of without precedent. Poor people hadn't ever suddenly just stopped being poor before. For hundreds of years, people stationed in life had basically never changed.

12:01Kind of by design. So I think the post-plague moment has to be at least as much about that sort of sense that, you know, sort of everything is wrong in the world. And one of the ways you know that everything is wrong in the world is because, you know, your peasant is wearing a color they shouldn't be wearing. The world had changed. And Anne McCann says that if you're looking for a silver lining in these awful moments in human history, that is the silver lining. The chance to remake the world. The human toll of these things is staggering. But, you know, they're also an opportunity to think about things from a new angle.

12:44Why is it that only nobles should eat, you know, guinea fowl? And that seems trivial. But it's possible that that kind of open thinking leads to something else that's not trivial. The world can surprise us. So it's good for us to be prepared to be surprised. Global pandemics, these giant shocks to society, can represent these really rare opportunities to change how the economy works and who it serves.

13:21Alexi Horwitz-Gazi and Keith Romer from an episode published in the midst of our own pandemic in 2020. Let's bring back our professor today, Rebecca Spang, who wrote the book Stuff and Money in the Time of the French Revolution. I don't know which word is more exciting. Stuff, money, revolution. You miss time. Time is pretty exciting. Time is, because we're, of course, all learning to be economic historians here. Turning to our story of the day about the Black Death, we can really see how supply and demand, which we normally think about for the stuff we buy, also clearly applies to the labor force.

14:01You know, we're all selling ourselves, our hours every day. And when the supply of workers goes down, as we saw in the story, the price goes up. And we're seeing it after our own pandemic, right? Oh, yes, certainly. One industry I happen to know a little bit about is the restaurant industry. And in sort of the immediate aftermath of peak pandemic, restaurateurs could not hire staff. They ended up having to pay higher wages. And then they were also having to pay more for food. And so prices went up in restaurants. So it's definitely a factor. And we saw this to some extent in the whole economy.

14:40Unemployment hit the lowest level in like 54 years, meaning fewer people were out there looking for work, a smaller supply of labor. And wages went up. So when else in history have we seen these golden moments for workers, when workers sort of had all the power or a lot of power? I don't know if workers have ever had all the power or even a lot of the power, but there have been times in history when workers, people were in a somewhat more equal position. The period that comes to my mind immediately is the aftermath of World War II, what is known in France as the 30 Glorious Years. And that language is used in German as well.

15:22So from sort of 1945 to the OPEC oil crisis, there's really a time when labor, generally organized labor, is in a strong bargaining position. And also where there's a lot of productivity, a lot of economic growth, and also incidentally a pretty hefty tax on the highest income, which means reinvestment in public goods like roads and schools. So that does it for the moments when the workers of the world got more power, flexed their muscles. But the bosses were not taking all this sitting down. They were about to get something that could radically alter this supply and demand for workers. We call it the Industrial Revolution.

16:08Coming up after the break, what happens when men with very sharp scissors get pissed off about the machines coming to replace them? It's the story of the Luddites.

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17:55All that's left to take care of is your peace of mind. With ADT's professionally installed home security systems, you get protection that helps you feel safe. So you can focus on the pie you forgot to bake. When every second counts, count on ADT. Visit ADT.com. All right, class, welcome back to Planet Money Summer School. I'm Robert Smith. I think about this next historical episode all the time. Now that artificial intelligence can write and even host podcasts like this one, I do wonder what would happen if all of us audio workers got together in a pub somewhere and started to make a plan to fight back.

18:35That's what happened one Saturday night around 200 years ago in England. A bunch of large, angry men gathered for a pint of beer, and they brought weapons. Pikes, those long spears, and sledgehammers. They were the followers of a mysterious general named Ned Ludd. They were the Luddites. And around midnight, they set out, about 150 of them, to attack the factory where they worked, to smash the machines that were taking their jobs. Jacob Goldstein and David Kestenbaum produced this episode in 2015. The Luddite story is really the first time that lots and lots of jobs were replaced by machines. The machines were making cloth.

19:17Cloth was big. It was really expensive. Most people had one, maybe two sets of clothes. And England at this time was selling cloth to its colonies all around the world. It was big business and it required lots of workers. There were lots of jobs. Women would take raw wool and spin it into yarn. Then these guys would weave it into a fabric on these looms. And then there were these other guys, the, what are they called, croppers? Croppers. They had these giant, basically 50-pound scissors to cut the fuzz off these big bolts of cloth. They were shears. They were shears. But sure, let's call them giant scissors.

19:49The jobs they did, they required skill. These people had a, for the time, at least by the standards of the time, a good and fairly prosperous life. This is Joel Mokir, an economic historian. He says these cloth workers, these people who are going to become the Luddites, he says they had real skills. They were in demand. They had a lot of freedom. They really worked whenever they felt like it and didn't work when they didn't feel like it. They had an institution, for instance, called Saint Monday, or that's what it was called. And basically what happened was that at the weekend, particularly on Sunday, they celebrated and drank themselves into a stupor.

20:27and then on Monday they were all hungover and didn't work and that was known as Saint Monday. Why Saint Monday? I think there used to be all these different saints days, like religious holidays, you know? And so, like, it'd be Monday morning and go, oh, I'm so hungover. Is it a holiday today? I mean, let's call it Saint Monday, you know? Let's take the day off. It's a good job when you can invent your own holidays. It was a good job. Weaving, in particular, was a great job. The weavers at this time were famous for walking into the pub with five-pound notes stuck in their hats. It's showing off.

20:58Yeah, showing off, basically saying, like, look how much money I got. I can put a five-pound, you know, bill in my hat. These jobs were kind of like working in, say, I don't know, say in the auto industry in the U.S. in the 50s. You know, they were solid jobs, and they paid well. The fact that they paid well, that ended up being their undoing. Because if you're a worker getting paid a good wage, that's great. But if you're the person paying those weavers and the spinners and the guys with the big scissors, at some point you start thinking, there has got to be a better way to do this. There's got to be a cheaper way to do this, a way that does not require so many people.

21:33And this is a moment in England when people are building all these different machines that do all these different things. Somebody made a spinning machine that was Cartwright's weaving machine and somebody else made a machine that basically ran those giant 50-pound scissors. One inventor came up with a machine to make ribbed stockings and this big industrialist comes along and says, I'll buy that from you. And the deal is that he gives him a hat with a big feather and he pays his bar bill for the rest of his life. Wait, wait, wait. Yeah. So it's a hat and all the beer you can drink, basically?

22:08Forever. He gets a lifetime of free beer, yeah. And so he can go to the pub and wear the hat and have a drink every day. I assume that was a raw deal for the inventor. I am probably. I mean, unless the guy drank an incredible amount or it was a really nice hat. Yeah, it was a really nice hat. I mean, what we do know is for a lot of inventors, the machine age was a great time, you know, a great time to be inventing machines. It was also for a lot of workers a bad time. You know, this is the first time that you have this massive, massive change on such a big scale. I mean, this is the industrial revolution.

22:43And the cloth workers, they are right in the center of it. Today when some new technology comes along, we just assume like it's there. It's going to happen. There's no stopping it. But back then, it was not clear. These guys looked around and they saw these machines making cloth faster and cheaper than they could do it. And the workers think, you know, this is wrong. Maybe we can stop it. So they launched a kind of underground war against these machines. In 1811, these mysterious letters start appearing. You know, they get, like, posted on the wall at the village market. They get published in the local newspapers.

23:18I actually printed one of them out. Here, I printed us both copies. Okay, it says, to Mr. Smith, shearing frame holder at Hill End Yorkshire. Shearing frames, by the way, those are the machines that replace the guys with the shears, with the giant scissors. It says, Sir, you are a holder of those detestable shearing frames, and I was desired by my men to write to you and give you fair warning to pull them down. If they are not taken down by the end of next week, I will detach one of my lieutenants with at least 300 men to destroy them. If you shoot at us, quote, They have orders to murder you and burn all your housing.

23:54And then at the very bottom, the letter is signed by the general of the army of redressers, Ned Ludd. There he is! Finally, the mastermind, the founder of the Luddite movement. Turns out Ned Ludd, not a real guy. Sorry to disappoint you. Again, this is Joel Mokir. He never existed, apparently. There are some stories that there was a man like that in the 1780s who broke a few machines, but it's very poorly documented. And most people who specialize in the area think he was just about as historical a figure as Robin Hood. As Robin Hood. Yeah. And just like Robin Hood, the story goes, Ned Ludd was hanging out in Sherwood Forest and he had this army with him.

24:39Somehow, having this non-existent general in charge actually helped a lot. You know, people had been writing angry letters before. Sometimes they'd even been burning down factories before. But the invention of Ned Ludd made the whole thing seem, made it seem bigger. You know, it's not just like random workers here and there acting out. It's like there is this secret army, this secret army called the Luddites. And they were not like an anti-machine cult or anything. I mean, I think they were fine with steam engines. They just hated the machines that were taking their jobs. That's what they were attacking.