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Hungary

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

Hungary appears in the book as an example of how Eastern Europe’s institutions diverged from those of the West after the Black Death. Landlords there tightened their control over land and labor, turning peasants into a largely coerced rural workforce even as Western demand for agricultural goods grew.

Hungary and the Second Serfdom

After 1500, Western Europe increasingly demanded grain and livestock from the east. In Hungary, landlords’ growing power over land was reflected in escalating obligations for unpaid labor: in 1514, they legislated one day of service a week for each worker; by 1550, the requirement had risen to two days, and by the end of the century to three. Serfs subject to these rules constituted 90 percent of the rural population by that time.

This intensification formed part of the Second Serfdom, in which landlords expanded labor obligations and extracted a greater share of what peasants produced. It connected Hungary’s rural economy to the wider market, but on terms that restricted workers’ freedom and economic opportunity. The distinction matters: market participation did not necessarily mean inclusion or autonomy.

A Measure of East–West Divergence

By 1346, Western and Eastern Europe had relatively small institutional differences. England and Hungary were even ruled by members of the same family, the Angevins. In the aftermath of the Black Death, however, differences in political and economic arrangements became more consequential. Western workers increasingly escaped feudal dues, fines, and regulations and became part of a booming market economy; in the East, workers also supplied that economy, but as coerced serfs.

Hungary thus helps make visible a divergence that was neither immediate nor inevitable. The book emphasizes the initially modest contrasts behind it: eastern landlords were somewhat better organized and held more consolidated land, while towns were weaker and peasants less organized. As Western demand for eastern agricultural products expanded, these conditions enabled landlords to tighten control over labor. By 1600, the two regions had become institutionally far more distinct.

Historical Significance

Hungary’s changing labor obligations exemplify how small institutional differences could acquire lasting consequences when the feudal order was shaken by the Black Death. Its trajectory shows that economic growth and market exchange could coexist with entrenched coercion: eastern peasants produced goods sought in the West, but their participation did not carry the freedoms increasingly associated with Western labor.

The contrast also places Hungary within a broader account of institutional divergence. Rather than treating the later divide between East and West as an ancient or fixed condition, the book traces it to changes that gathered force over centuries. Hungary’s stepwise rise in weekly labor service—from one day to two and then three—gives that transformation a concrete measure.