This article is the first of a projected three-part series gives a very high level overview of the issues around the transition to and from monetary economies, and the issues faced by the Roman Empire. One reason is why this is interesting in the economic commentary context is that there is a fair amount of reductionist analysis of the period by hard money types as well as moralisers trying to draw lessons from the demise of the (Western) Roman Empire and the (so-called) Dark Ages.
The Roman Republic
We have to start our history more than a millennium before 1337 — the era of the Roman Republic, which I will date as ending with the demise of Julius Caesar in 44 BC. I have long been interested in late Republican period, and I am much less familiar with the eras afterward. (Since I am not a subject matter expert, I probably have mangled some key terminology.)
Providing a military is a key requirement for countries, and is often a key focus in government finance. The Roman Republic relied on a military “levy,” and at a high level was similar to other pre-modern societies: the rich elites provided cavalry, but the bulk of combat effectiveness of the Roman legions was heavy infantry that were more heavily armoured than peers and were provided by small land holders. (The military historian Bret Devereaux has many discussions of the Roman military on his excellent blog — I link it below. My comments here are based on my general knowledge and my hazy memory of his writings.) By the time of the late Republic, the Romans were typically augmented by Italian auxiliaries that were probably equipped in the same way, as well as more exotic auxiliaries that provided better cavalry or other specialities.
From the perspective of government finance, the key point is that these soldiers were enlisted in the army as a result of societal obligations, and they were not professional soldiers. Although the Roman state would have had monetary expenses associated with logistics, there was not the cash drain of salaries.
The Republican legions were effective — they carved out borders that formed the core of the Roman Empire. Taxes were imposed on conquered provinces, and the provincial governors generated extreme fortunes as part of this process. The demise of the Republic coincided with the rise of Julius Caesar, who conquered Gaul.
The elites followed a complicated path that involved winning elections for posts that followed a standard sequence. The first steps normally required military service in a legion, then civilian posts would follow. The elites needed to be literate and with a good education to take part in lawsuits and political debates. As such, the leadership was both civilian and military.
The Principate
After the civil war precipitated by the shenanigans of Julius Caesar, we enter in the first era of the Empire, which is called the principate (31 BC to 285 AD), which then leads into the dominate after the Crisis of the Third Century.
Bret Devereaux summarises this era in the article Collections: The Afterlife of the Roman Republic. (There’s a great deal of other articles on the Romans elsewhere on his blog.) By way of background, the Republican Romans were quite allergic to the notion of having a king, and Caesar’s flirting with the idea of being king led to his unscheduled unelective surgery. The first emperor Octavian dealt with this problem by appearing to govern within Republican norms. The name of this period comes from the title he took: princeps Senatus, which meant that he spoke first in the Senate — he was “first among equals.” (Fans of regime consolidation would note that Octavian would have shied away from posting pictures with a crown on his head on social media.) Although others were not completely fooled by his appearance of not acting like a king, he brought an end to an extremely bloody period of civil wars, so objections were naturally muted.
This is a key passage from Devereaux article:
I think we can understand Octavian’s choices here if we view them in the context of a dilemma. Octavian had just taken power by dint of military force, having defeated the other alternatives (Sextus Pompey, Lepidus and Antony) and absorbed their armies. However, he needed the machinery of Roman provincial governance in order to extract the revenue necessary to pay those armies as he converted them into a long-standing, full-time professional force. [emphasis mine] Running that machinery requires administrators. This often comes as a surprise to folks in our modern high-literacy, high-education societies, but administrators are often in short supply for pre-modern states: you need literate, educated men with experience running large organizations and these societies do not produce a lot of those fellows.
The highlighted passage is of interest for government finance fanciers. The government needed a lot of money to pay professional soldiers since they were no longer “conscripts.” As such, the government needed to be at the apex of a monetary economy. This makes the governance problems intelligible to a modern reader, and fit with video games — the larger your army, the more “gold” you need to pay it, which competes with other uses of your “gold” (the formula for strategy games going back to Civilization).
The demise of the Republican military system can be traced to economic factors — but you do not hear about them in most potted histories. The small farms were under economic pressure, and their numbers dropped — damaging the manpower base of the legions. The rich elites had large, economically efficient farms worked by slaves which probably was one of the factors putting pressure on small land holders (they certainly benefited by being able to buy land as distressed prices). The Roman elites were aware of the issue, but were unable to deal with the problem in an effective manner.
Crisis of the Third Century And Thereafter
The structural political problem with the structure of the Principate was that the real power holders were the generals who controlled the legions on the border of the Empire. Instead of going through the sequence of appointments in Rome, you just march your legions into the capital. The system broke down in the third century, and after a long period of civil wars (“the Crisis of the Third Century”), a new imperial form of governance took shape (the dominate). The difficulties of governance were such that it was voluntarily split in two, with the eastern capital in Constantinople. The Eastern Roman Empire is often referred to as the Byzantine Empire, but that it is an anachronism — the term was applied by later historians. Popular discussions of the Roman Empire in the West often ignore the existence of Constantinople, which was in existence until 1453 (just after the start date of EU4).
My comments here are based largely on the text The Inheritance of Rome: A History of Europe from 400 to 1000 by Chris Wickham. The economic system had one important characteristic — the capitals of the two halves of the Empire relied on tax and food inflows across the Mediterranean — Egypt for Constantinople, and Vandal Africa for Rome. The importance of Egypt cannot be understated — it was the richest Roman province, and the centre of gravity of the Roman Empire was in the East. Rome itself had declined — it dropped to a population of half a million in 400 AD (from a million at its height), and the administrative capital had moved to Trier and then Ravenna in 402.
Both halves of the Roman Empire faced the same crisis: the loss of the key province across the Mediterranean. How the two halves managed the crisis differed, and created the great divergence in fortunes between the East and West.
The Eastern Empire had a difficult time when the Arabs conquered Egypt in 639-642 AD. However, they restructured their affairs and managed to hold on following traditional governance forms until 1453. The Western Empire reacted differently to the breakage of the “Carthage-Roman tax spine” (Wickham’s phrase), which happened when the Vandals occupied Carthage in 439.
Since the fiscal balance in the Western Empire was broken, the military was retained by tying land grants to military service. These military leaders would go on to found the ruling dynasties of the successor kingdoms. However, it was not really a story of barbarians overrunning Romans and replacing them, it was a slow process of evolution. The last Western Roman emperors were largely non-entities controlled by military strongmen who lacked the genealogical claim to emperor-hood, they instead ruled behind the scenes and intermarried with the Roman elites in the hope that their offspring could become emperor. The traditional date of fall of the Western Empire is 476 (the overthrow of the last emperor Romulus Augustulus), but Wickham argues that the Visigothic king Euric actions in Gaul (in 471-475) was the first time a ruler “having a fully autonomous political practice, uninfluenced by any residual Roman loyalties” (Chapter 4).
The problem with land-based militaries is that the differing levels of the hierarchy become attached to their local affairs, and so they cannot be easily controlled by the centre. This decentralising force is why aristocratic politics is quite distinct from modern nation-state politics.
For the people involved, they did not see the Western Empire as collapsing, rather they were coping with the new situation using tools that appeared to work. The ruling elites were concerned about their own holdings, and the idea of an “imperial interest” disappeared. Another reason why there was little introspection was that the governing elites were no longer civilian — they rose to power in the frontier militaries, and did not go through the sequence of posts that the Roman Republican elites did. (As an aside, any suggestion that the (Western) Roman Empire fell because they became “soft” runs into the fact the leaders had a military background, and were focussed on fighting and when not fighting, pursued what became the characteristic aristocratic pastimes: feasting in halls, wearing furs, and hunting.)
It should also be noted that the provinces conquered by the Arabs also showed greater institutional continuity than in Western Europe. They kept the same tax collection and local elite structure in place, while the military often lived apart from the urban population. Conversion to Islam changed the cultural landscape, but that took time. The Ottomans claimed to be the inheritor of the legacy of the Roman Empire, and they appear to have a point.
“The Dark Ages”
The era after the collapse of central control in the West is often called “The Dark Ages.” This term had a technical origin — there were almost no historical sources for this period. In cold, damp Western Europe, paper has a limited life span, and so books needed to be recopied. (This is very different that Egypt, where the climate preserved papyrus records.) In order for a historical record to survive, somebody had to decide to recopy it (by hand). The era was not particularly edifying, so records were not recopied. It took detailed archaeological work to fill in that period of history.
However, “The Dark Ages” took on a popular meaning of being a period of uniform stupidity, religious reaction, and general backwardness. This is probably not correct, although it was a period of decline in economic complexity (which is clear from archaeological evidence). Long distance trade collapsed, and so the ability to have large-scale production of sophisticated goods largely disappeared. Although money use did not completely disappear, the importance of money in the domestic economy dropped. Exchange was not in the form of “barter” as conventionally understood (“I will trade you this grain for that fish”) but rather obligations to provide labour and/or reciprocal favour arrangements.
Back to Government Finance (and EU5)
We now want to consider the situation of a ruler of a Western European polity in 1337. Here is the starting screen for EU5 to see what a small section of the map of Western Europe looked like.
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| Europa Universalis V: Some starting countries |
The political situation in this region is a lot more complicated than it was 1000 years earlier. (In order to be merciful to the reader’s eyes, I cropped off most of the Holy Roman Empire (famously not Holy, nor Roman, nor an Empire).) Although merchant republics exist, in general your rule is dependent upon having a web of nobles that owe you military service, and they in turn can call on troops based on their obligations. Mercenaries exist, but power revolved around having mounted knights following your banner.
In order to do well in the game, you need to follow the path history took: polities centralising power and absorbing weak neighbours. The part that is hard to model in a video game is that you need to move away from providing armies by land holdings towards the use of monetary pay. (That is, reversing the innovations introduced by the failing Western Roman Empire.) Although having to manage feudal obligations might make a decent role-playing game (the Crusader Kings franchise by the same developer has more role-playing elements), most players of Europa Universalis just want to get armies that move around on the map of the globe which just get paid out of your “ducat supply.” (The early stages of the game relies on levy units, but you mercifully do not have to negotiate with them before you call them up, you just press the “raise levies” button.)
Although one could attempt to understand how the economies evolved starting in 1337 without going back in time, I believe that it is necessary to start with the Romans to see why things evolved the way they did, and how provisioning of an army affected the structure of society.
Next Steps
I plan on having two follow up articles. The first is aimed at a version of history that is popular in hard money circles: that the Roman Empire fell because of inflation. (The complete absence of inflation in my very brief summary above provides a hint about what I think about that theory.) The third part will be a discussion of the economic modelling problems that the EU5 developer faced.
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