Ó Gráda, Cormac (2005) “Market and famines in pre-industrial Europe”, Journal of Interdisciplinary History, 36/2, 143-166.
What caused famines during the premodern period? According to Adam Smith, the government involvement in the grain trade did. Today, many tend to blame the shortcomings of the market (poverty, speculation) for the pre-industrial dearths (p.143).
To address this issue, the author considers four famines:
- The 1693-4 famine in France that killed about 1.3 million people (6% of the total population).
- The 1708-9 “Big Winter” in France with a 0.6 million death toll.
- The Great Finnish Famine of 1868 with 0.1 million victims (5.5% of the population).
- The Great Potato Famine of 1846-1852 which killed 1 million Irish.
The former three of these events were initially caused by bad weather, the latter by a fungus.
Did the markets function?
Did the markets in these crises managed to “arbitrage away significant deviations from equilibrium prices” as posited by the Law of One Price? To answer this question, this study uses an Error Correction Model “to test whether the reaction to emerging disequilibria was slower during a crisis than in normal times” (p.148).
Evidence show that responses varied little between normal and crisis years. Co-movements of prices were even stronger during famine months (p.150). It seems that the hypothesis that markets for grain performed worse during famines than in normal times are not supported in France, Finland, nor Ireland (p.151). For instance in Ireland, it took only two weeks on average for Cork’s local market to react to a price change occurring in Dublin (p.155).
Famines as integration crises?
As in peacetime most of the price differences stem from transport cost, we could expect the coefficient of variation in prices to fall during famines. But on the other hand, bad weather and legislations disrupting trade may significantly segment integrated markets into small local markets (p.156). It is important to remark that even in normal conditions coefficient of variation were very high.
In the four cases coefficients of variation did grow (p.157) as well as in the case of the subsistence crisis in 1816-7 Western Germany. However, the disruption remained limited compared to those observed in numerous modern subsistence crises, thus market desintegration cannot be account for the bulk of the famines’ causes (p.161).
In any case, no evidence support the merchants’ hoarding as a significant cause of famine, even though in the Irish and Finnish examples it cannot be totally excluded either (p.163). The author concludes: “a restricted agriculture further hampered by inadequate policy response from authorities, rather than a failure of the markets for food staples, was mainly responsible for famine” in pre-industrial Europe (p.166).