Warfare and Economic Inequality: Evidence from Preindustrial Germany (c. 1400-1800)

Abstract: What was the impact of military conflict on economic inequality? This paper presents new evidence about the relationship between military conflicts and economic inequality in preindustrial Germany, between 1400 and 1800. I argue that ordinary military conflicts increased economic inequality. Warfare raised the financial needs of towns in preindustrial times, leading to more resource extraction from the population. This resource extraction happened via inequality-promoting channels, such as regressive taxation. Only in truly major wars destruction might outweigh extraction, and reduce inequality. To test this argument a novel panel dataset is constructed combining information about economic inequality in 75 localities and more than 700 conflicts over four centuries. The analysis finds that the many ordinary conflicts – paradigmatic of life in the preindustrial world – were continuous reinforcers of economic inequality. The findings suggests that there existed two countervailing effects of conflicts on inequality: destruction and extraction. I confirm that the Thirty Years’ War was indeed a great equaliser, but this was an exception and not the rule.