If one is writing popular economic commentary and stray into Roman history, one needs to address the popular idea that inflation caused the collapse of the Roman Empire. Since my previous article had no mention of inflation, I obviously disagree. I will explain my disagreement in this article, finally returning to EU5 in the next article.
Origins of the Theory?
The idea that inflation caused the fall of the Roman Empire is popular with internet Austrian economists, and they largely keep repeating what other internet Austrians have said about the topic.
The “proof” of this theory is typically built around a chart of the silver content in Roman coins. The chart in the article I link to below shows it for 64 AD until around 300 AD. (Remembering that centuries do not start with a “zero-eth century,” this means the chart ends in the third century — a century I discussed in the previous article). The article does not give a source, but it is fairly standard. I will now offer some guesswork about the academic origins of this theory.
From a very high level perspective, historical analysis started as mainly text-based — you looked at the documents that survived. But as the study of history got more intense due to the expansion of university systems, pressure grew to add archaeological work to the analysis.
The analysis of coin hoards was one popular topic. People who buried coins in a vain attempt to have monetary resources after some disaster (since the hoards were uncovered by archaeologists, it did not work for the original owners) provided a good snapshot of the coins in circulation in an area in a certain date. Since coins typically have inscriptions from the person minting them, we can date the latest coins and from where the coins came from. So it was possible to see how far commerce extended.
The decline in silver content in Roman coins was easily documented. Given that a lot of this work was done in the Gold Standard era, my guess is that the people doing the documentation were likely to apply a hard money interpretation to the data — the decline in the gold/silver content was a sign of a decadent, failing society.
Visual Capitalist Version
One example of the popular “inflation caused the collapse of the Roman Empire” was by Jeff Desjardins at The Visual Capitalist (the article is 10 years old, but new versions of the story will always pop up).
Although the most interesting parts of the article are the data visualisations, the explanatory text needs to be examined.
During the crisis of the 3rd century (235-284 A.D), there may have been more than 50 emperors. Most of these were murdered, assassinated, or killed in battle.
The empire was in a free-for-all, and it split into three separate states.
Constant civil wars meant the Empire’s borders were vulnerable. Trade networks were disintegrated and such activities became too dangerous.
Barbarian invasions came in from every direction. Plague was rampant.
And so the Western Roman Empire would cease to exist by 476 A.D.
I do not have much of a background in history, but I think it is a safe bet that this version of Roman history would not get an “A” in a history course. I want to review some dates (mainly from my previous article).
44 BC. Demise of the Roman Republic.
31 BC - 285 AD. The era of the principate. Note that this dating (as per Bret Devereaux) includes the Crisis of the Third Century (235-284 AD as per the Visual Capitalist dating).
285-475 AD. Dominate. Roman Empire is partitioned into the West and East (“Byzantine Empire”), and imperial rule restored.
439 AD. Occupation of Carthage, breaking the “Carthage-Roman tax spine.”
471-475 AD. Visigothic King Euric runs amok. The beginning of autonomous politics within the Western Empire.
476 AD. Fall of Rome.
518 AD. The first (known) written statement that the Western Roman Empire fell in 476, by Constantinople-based Marcellinus comes.
639-642 AD. Loss of Egypt.
1337 AD. Start date of EU5.
1444 AD. Start date of EU4.
1453 AD. Fall of Constantinople to the Ottomans (who claimed to be the heirs of the Roman Empire).
The Eastern Roman Empire was the richest, most important part of the Roman Empire. It only finally ceased to exist in 1453 (or after World War I, if you believe the Ottomans). A chart showing a decline in silver content that ends during the Crisis of the Third Century is missing a whole lot of history (more than an entire millenium’s worth, in fact).
About the Inflation
All that the chart shows is that there was a sustained policy of inflation during the principate era. It got worse during the Crisis of the Third Century — but that is a completely unremarkable observation during a civil war.
This was most likely different than what happened in the Roman Republic — and my previous article explained why. The Romans switch from an obligation-based military in the Republic to a professional military, and this greatly increased the monetary burden on the state. A steady debasement of the coinage was the path of least resistance.
The Desjardins article is written with the implied subtext that the Roman elites thought like modern libertarians.
This [limited precious metal supply] made financing the pet-projects of emperors challenging. How was the newest war, thermae, palace, or circus to be paid for?
The inflation was undoubtedly linked to military spending, and the Roman elites were perfectly happy to be in a state of continuous war with competing powers, even in the Republic. Their wealth was in land — extremely large estates, possibly built up from skimming profits from managing a province on the behalf of the Senate. It is not too far-fetched that they preferred lower silver content in coins to the state extracting more taxes from rich people.
Hyperinflation
There is (of course) a reference to hyperinflation. A hyperinflation is a period of sustained 50% monthly inflation, the chart would need to be logarithmic if one actually happened.
Trade
The discussion of trade is somewhat misleading for the situation of the Western Empire. Trade did not fall because the Emperor was posting tariff increases on social media. Instead, we need to look at what trade was happening in the West. If you look at a map of the Roman Empire, the western part had almost nobody external to trade with — the Picts in Scotland, and whoever was occupying the East bank of the Rhine. Long distance trade was water-borne goods across the Mediterranean (a Roman lake) and rivers. (The Eastern Empire had the possibility of caravan trade with foreigners.)
This long-distance commerce collapsed during civil wars and finally when the southern shore of the Mediterranean was occupied by unfriendly powers (and pirates). That is, the military collapse of the Empire led to the fall in trade, not the other way around.
Barter
Another assertion of the Desjardins article is:
By the end of the 3rd century, any trade that was left was mostly local, using inefficient barter methods instead of any meaningful medium of exchange.
This passage is almost certainly stretching the definition of barter (and there is the previously noted problem that trade of course collapsed during civil wars, only to bounce back). Hypothetical barter economies are were people are “trading fish for grain” or similar, which are a popular feature of economist writings, but do not actually show up in reliable historical records (other than in isolated cases where people from monetary economies are deprived of money, such as in prison).
Although some barter dealings probably happened during the crisis, but the better way of seeing it is that the Western Empire moved towards “feudal” obligations instead of monetary exchange. (I put feudal in quotes since I believe that misuse of “feudal” gets historians mad.) Subsistence farmers were always only loosely tied to monetary economies, and the switch to obligations for military service also led peasants to offering labour to lords of the manor. (That system evolved during the period of 400-1000 AD covered in the Wickham book, it did not happen immediately.) The economy de-monetised (other than for the trade for luxury products for the elites), but describing the system as “barter” makes the word “barter” so broad as to be meaningless.
The Fall of Rome?
The problem with the “Fall of Rome” in popular discussion is that most people are not familiar with Roman history. All they know is the distorted theory that the Romans at some point peaked, and then went into some kind of long downward spiral for some reason or another.
However, there are multiple “falls” we can point to.
The demise of the Roman Republic. Given that the Empire paid homage to Republican sentiments, one can view the Empire as a decline from a more pure Republican Rome.
The Crisis of the Third Century was pretty bad, and if you are not careful, basically say that it represents the end of the Roman empire if we skip over a minor interval of about two hundred years.
The fall of the Western Empire is what most people in the West think about. The problem with dating this fall is that the elites who actually lived in the Western Empire wanted to dissolve it into the successor states — which is what happened.
Then, Constantinople fell to the Ottomans (who might also be Romans).
Any simple story about “the” fall of the Roman Empire needs to take into account the spread of dates involved. Furthermore, the more we look at the history, it is arguable that those “falls” could have been prevented by better decisions at some point. This is an argument of the book The Inheritance of Rome by Chris Wickham that I referenced in the previous article. When we look at the Roman Republic, it faced structural issues (the decline of the small landholders, as I noted in the previous article). But as argued by Josiah Osgood in his book Uncommon Wrath : How Caesar and Cato’s deadly rivalry destroyed the Roman Republic, the Republic had survived similar crises in the past, but it did not survive the conflict between Caesar and Cato. Just because something happened does not mean it was inevitable.
Even a glance at the history of the period shows that simplistic “Rome was doomed to decline” stories runs into problems, whether it is inflation or some other ill.
The demise of the Republican system was largely driven by the personal choices of the people involved. The Republic had survived previous crises, but this time, too many powerful people decided that being a king would not be bad.
The Crisis of the Third Century was a story of generals seizing the title of Emperor. Although it was clear that “the system” was at fault, reforms of some sort could possibly have defused these problems.
It can be argued that the fall of the Western half of the Empire was the result of bad decisions, particularly allowing the North African provinces to fall. Furthermore, the elites in power were perfectly content to take over as the heads of the successor states.
The fall of Constantinople is a straight question of geopolitics — they got run over by superior forces.
Next Steps: Video Game Economies
With my rant about Roman inflation out of the way, I can finally get back to what triggered these articles: the economic simulation in Europa Universalis 5.
No comments:
Post a Comment
Note: Posts are manually moderated, with a varying delay. Some disappear.
The comment section here is largely dead. My Substack or Twitter are better places to have a conversation.
Given that this is largely a backup way to reach me, I am going to reject posts that annoy me. Please post lengthy essays elsewhere.