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Eastern Europe

Why Nations Fail: The Origins of Power, Prosperity, and Poverty

Eastern Europe is central to the book’s account of how small initial differences can become large historical divides. In the wake of the Black Death, landlords in the East gained control over more land and tightened peasants’ obligations rather than accepting the more open labor market that emerged in England. When western European demand for eastern agricultural goods expanded, this system hardened into the Second Serfdom: Eastern Europe remained connected to a growing market economy, but its rural producers were bound to serve landlords rather than participate as free workers.

After the Black Death: Diverging Paths

The plague struck Eastern and Western Europe with comparable demographic force, and labor scarcity created pressure for higher wages and greater freedom in both regions. The difference lay in how political power and labor relations mediated that pressure. In England, workers had enough power to resist efforts to restore older labor conditions; in Eastern Europe, landlords were better organized, held larger estates, and faced towns that were weaker and less populous. They used this advantage to expand their holdings and encroach on the freedoms peasants already possessed.

The comparison is not presented as an inevitable consequence of geography or an ancient, fixed division. In 1346, political and economic institutions in the East and West were not yet far apart. England and Hungary were even ruled by members of the same family, the Angevins. The plague shook the existing order, and relatively modest differences in landholding, organization, and urban strength helped determine who could shape what followed. By 1600, these differences had produced sharply contrasting societies.

After 1500, demand from Western Europe gave Eastern landlords a strong incentive to increase agricultural production by intensifying control over labor. Eighty percent of Amsterdam’s rye imports came from the Elbe, Vistula, and Oder river valleys, and soon half of the Netherlands’ expanding trade was with Eastern Europe. Commercial integration therefore did not mean that eastern workers gained the freedom associated with a more inclusive market. It strengthened the leverage of those who controlled land and labor.

The Second Serfdom and Its Costs

The Second Serfdom was more intense than the earlier form of serfdom associated with the early Middle Ages. Landlords raised the taxes charged on tenants’ own plots and took half the gross output. In Korczyn, Poland, work for the lord was paid in 1533; by 1600, nearly half of it had become unpaid forced labor. The figures trace not a sudden change but a tightening series of obligations that steadily shifted the benefits of agricultural production toward landlords.

The demands also rose across the German lands. In Mecklenburg, workers owed only a few days of unpaid labor each year in 1500. By 1550, that obligation had become one day a week, and by 1600 it was three days a week. The lord’s claim extended to the next generation: workers’ children were required to work without pay for several years. In Hungary, landlords took complete control of the land in 1514 and imposed one day of unpaid labor a week on each worker; the requirement rose to two days in 1550 and three by the end of the century. By then, serfs subject to such rules made up 90 percent of the rural population.

The result was a distinctive combination of commercial connection and social coercion. Eastern European producers grew the grain and livestock that Western markets demanded, but they did so under arrangements that restricted movement, economic opportunity, and control over their work. The region was participating in a market economy, yet not an inclusive one. Its agricultural output helped meet western demand while the institutions governing production deprived much of its rural population of the freedom to benefit from that exchange.

Political Power and Regional Contrast

The institutional contrast extended beyond the landlord-peasant relationship. In Western Europe, strong centralized states such as England, France, and Spain had political institutions that could constrain rulers, including Parliament, the Estates-General, and the Cortes. Serfdom had also disappeared in the West. Eastern Europe developed different forms of concentrated power, including political orders in which elites held authority over rural populations and limited their economic opportunities.

In Poland-Lithuania, the Szlachta were powerful enough to introduce elections for kings. The presence of elections did not make the political order inclusive: rule by this elite remained extractive, while most people lived in rural communities and serfs had neither freedom of movement nor meaningful economic opportunities. Farther east, Peter the Great consolidated an even more intense absolutism. By 1800 the contrast was visible across Europe: Eastern Europe remained marked by serfdom, while Western Europe did not.

The book treats this divergence as a consequence of historical processes, not as proof that Eastern and Western Europe had always been fundamentally different. The Black Death supplied a critical juncture: an upheaval that disturbed the balance of power and opened the way for either more inclusive institutions or more extractive ones. In the East, landlords’ organizational advantages and control over land helped turn labor scarcity and rising western demand into a renewed system of servitude. Small differences became consequential because the shock gave powerful groups an opportunity to deepen them.

Revolution, Reform, and Industrialization

The later consequences of these institutional differences came into view during the spread of industrialization. In much of Eastern Europe, absolutist political systems and entrenched rural relations constrained the adoption of new economic opportunities. Austria-Hungary and Russia, along with the Ottoman Empire, fell further behind economically, while their absolutist monarchies remained in place until the First World War. The region’s earlier divergence after the plague formed part of the background to its difficulty in sharing in the gains of industrialization.

The French Revolution and the wars that followed offered a different route to institutional change. French revolutionary and Napoleonic forces entered territories where feudal obligations, serfdom, and guild restrictions remained powerful. In places such as Prussia and the Hungarian part of Austria-Hungary, serfs were still tied to the land; elsewhere, peasants owed feudal lords a range of dues, taxes, and labor obligations. In Nassau-Usingen, for example, peasants faced 230 different payments, dues, and services. Revolution and conquest disrupted such arrangements in some neighboring territories, but the broader eastern monarchies proved resilient. The contrast with western Europe was therefore not simply between regions that did and did not encounter reform; it was also between political systems with different capacities to preserve or dismantle extractive institutions.

The region’s significance in this history lies in how it connects domestic power to international commerce. Western demand for grain did not by itself determine Eastern Europe’s social order: landlords’ existing power shaped who controlled production and who bore its costs. Likewise, later exposure to industrialization did not automatically produce reform. The same critical juncture can lead toward greater inclusion in one setting and reinforce extraction in another. Eastern Europe’s trajectory makes that double possibility visible: it was drawn into expanding markets as a supplier, while institutions of land and labor limited the freedom and broader economic gains of its population.