American Empire VS Roman Empire : monetary history repeats itself
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Uploaded on Sep 27, 2009
this is a short montage of a one hour and twenty minutes lecture
by Joseph Peden at the The Ludwig von Mises Institute.
Inflation and the Fall of the Roman Empire
Professor Joseph Peden's lecture Inflation and the Fall of the Roman Empire given at the Seminar on Money and Government in Houston, Texas, on October 27, 1984.
The original audio recording is available as a free MP3 download.
la vérité sur la bureaucratie romaine:
now I've been asked to speak on the theme of Roman history, particularly the problem of inflation and it's impact. My analysis is based on the premise that monetary policy cannot be studied, or understood, in isolation from the overall policies of the state.
Monetary, fiscal, military, political, economic issues are all very much intertwined. And the reason they are all so intertwined is in part due to the fact that the state, any state, normally seeks to monopolize the supply of money within its own territory.
Monetary policy therefore always serves, even if it serves badly, the perceived needs of the rulers of the state. If it also happens to enhance the prosperity and progress of the masses of the people, that is a secondary benefit; but its first aim is to serve the needs of the rulers, not the ruled. and This point is central, I believe, to an understanding of the course of monetary policy in the late Roman Empire.
historians of prices in the Roman Empire have come to the conclusion that despite all of this inflation, the price of gold, in terms of it's purchasing power, remained stable from the first through the fourth century. In other words, gold remained, in terms of it's purchasing power, a stable value whereas all this coinage just became increasingly worthless.
What were the causes of this inflation?
The size of the army, I think I indicated already, had increased, doubled from the time of Augustus to Diocletian, and the size of the civil service I indicated also. Now, all these events strained the fiscal resources of the state beyond it's ability to sustain itself; and the debasement and the taxation were both used to keep the ship of state going, frequently by debasing, then by taxation and then often simply by accusing people of treason and confiscating their estates.
One of the odd things about inflation is, in the Roman Empire, that while the roman state survived — the Roman state was not destroyed by inflation — what was destroyed by inflation was the freedom of the Roman people, and particularly, the first victim was their economic freedom.
Rome had basically a laissez-faire concept of state/economy relations. Except in emergencies, which were usually related to war, the Roman government generally followed a policy of free trade and minimal restriction on the economic activities of its population. But now under the pressure of this need to pay the troops and under the pressure of inflation, the liberty of the people began to be seriously eroded — and very rapidly.
We could start with the class known as the decuriones, the decurions. This was your prosperous, small and middle-landowning class who were the dominant elements of the cities of the Roman Empire.
This class, in the mid-3rd century, was assigned the task of collecting the taxes in the municipality that were being assest by the central government. The central government could no longer collect its taxes effectively, so they made the decurion class collectively responsible for getting revenues and passing them on to the imperial government.
The decurions, of course, had as much difficulty as anyone else in doing this, and the returns were, again, frequently inadequate. So the government solved that problem by simply passing a law that any taxes that decurions could not collect from others, they would have to pay out of their own pocket. That's known as the incentive method for the tax collector. [laughter]
As you can well imagine, as the crises became greater and the economy was disrupted by civil conflicts and invasions and the effects of inflation, the decurions, strangely enough, no longer wanted to be decurions. And they began to abandon their lands, abandon their cities, and escape to wherever they could find refuge in other larger cities or other provinces. But they were not to be allowed to do that with impunity, and the law was then passed that any decurion discovered somewhere else was to be arrested, bound like a slave, and carted back to his hometown where he was restored to his dignity as a decurion. [laughter]
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