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

Abstract

What was the impact of military conflict on economic inequality? I argue that ordinary military conflicts increased local economic inequality. Warfare raised the financial needs of communities 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 might inequality-reducing destruction outweigh inequality-promoting extraction and reduce inequality. To test this argument I construct a novel panel dataset combining information about economic inequality in 75 localities, and more than 700 conflicts over four centuries. I find that the many ordinary conflicts — paradigmatic of life in the preindustrial world — were continuous reinforcers of economic inequality. I confirm that the Thirty Years’ War was indeed a great equaliser, but this was an exception and not the rule. Rising inequality is an underappreciated negative externality in times of conflict.