Professional Documents
Culture Documents
INDEX
1. Economy and Fiscal Policy in the Roman Empire6
2. The Fall of the Roman Empires Economy10
3. Comparison with the United States14
4. Conclusion.18
Introduction
Much has been written about the fall of the Roman Empire, and about the
reasons that led to the disaster. Even with the huge amount of literature about the topic,
scholars and members of the academic world do not agree on what were the actions
that drove the Empire to its end, being out there different opinions that go from simple
military reasons or sociological explanations to alleged environmental causes, like
defended by Steve Hallett and others. Roman experts and writers are divided and
fighting all time about this issue, maybe because as Charles Philip Issawi said, "In any
dispute the intensity of feeling is inversely proportional to the value of the issues at
stake. But does this topic actually not matte at all?
Historians identify different empires over history who hold supremacy and stay
superior to their rivals. The Roman Empire, the Ottoman Empire, the British Empire, the
Soviet Union, etc. All of them have common characteristics that make them belong to
the same category of empires, but one of them stands alone: they are all gone. The
British Crown may, today, have nominal dominion over some countries like Canada, but
it is undeniable that its glorious days remain in the past, and it is likely that they will not
come back. One empire still stands today, having de facto power over most of the other
nations in the world. The United States of America, as described by Bruce Fein, is the
only superpower left after the Cold War, and has the shared traits of an Empire.
America is still young and powerful, and her military is deployed all over the
world. With no doubt, the United States are the police of the world and a major force in
every conflict, discussion, negotiation or relation between sovereign nations on Earth.
But, is the path of this country leading to a predictable fall and destruction, just like the
Romans had to follow more than 1,000 years ago? Is there anything in common
between the States and Rome? Is the concept of bad money and the inflation that it
caused in any way related to the Fed and its policies?
This paper tries to analyze the end of the Roman Empire, attaching it to the idea
that inflation and bad fiscal policies were the causes of its fall, in order to follow any
relationship between what happened then and what is happening today. Lots of sources
are available, which makes this work easier, and wise, formed men have written about
this topic in some way. Because of that, rather than bring anything new to the world of
academics, this text tries to put together concepts, ideas, and studies, taken from other
people interested in this very interesting and deep field of knowledge.
But, even with that corruption, the standard of living of citizens living in the
Empire at 100AD was much superior to the one enjoyed in many european citizens in
the early XIX century. The evidence for that is not massive, but a study carried on by
Keith Hopkins estimated that the Italian peninsula was about 30% urbanized in the Early
Roman Empire. Since urbanization rates can be used as an index of per capita income
(done in economic history by many famous historians; David 1967, Craig and Fisher
2002, etc.), we can estimate that GDP per capita in Roman Italy was similar to the one
in Spain or France in 1700, when those two nations were among the most powerful on
Earth (Temin, 2006). However, outside Italy and the capital, only 10% was urbanized.
This disparity shows a huge gap
between regions that can be also
supported by this graph:
An important characteristic of
the Roman economy is the decisive
role of the Mediterranean Sea, the
Mare Nostrum, or Our Sea, that
was used for commerce and
transportation. One of the best
examples that can be found for this
is the grain supply in Rome. The
capital of the Empire, Rome, had
about one million inhabitants in the
Early Roman Empire. Accepting that number, calculations show that about
150,000-300,000 tons of grain would be needed every year, plus olive oil and wine.
Because it was cheaper to send this goods by sea rather than by land, the
Mediterranean was critical. All this supplies were sent from Africa, Spain and other
colonies around the sea, and it is calculated that a 30% of the grain received in the city
was given for free through a kind of social program named Annona (Hopkins, 1980).
Although theres not consensus on whether the Roman economy was local or
based on global commerce, most of todays experts on roman history believe that
commerce was a huge part of roman macroeconomics and it contributed to the GDP
almost as much as agriculture. Here is a map with the basic goods exported in each
part of the empire and the routes that those goods followed in the mid-Roman Empire.
Internal commerce among Provinces was the most common, but to some degree there
were commercial relationships with the barbarians.
The analysis of the Roman economic structure and institutions presented here is,
anyway, based on the idea that we can understand those with our current ideas of what
human behavior is. Moses Finley (1973), Karl Bcher (1911) and others have argued
that because the social and cultural institutions of the ancient economies were not
market oriented we cannot understand them. This paper follows the studies done by
Eduard Meyer, who in 1910 demonstrated that the ancient economy was modern and
capitalist in nature, only restricted by the technological conditions available at that time.
M. Rostovtzeff (1926) also worked on that idea, and his book The Social and Economic
History of the Roman Empire was predominant in the academic world.
As the military became a weaker force (it is funny, though, that it became a
weaker institution because the useless effort of the emperors that wanted a strong
army) the commerce in the Mediterranean Sea, one of the greatest contributions of the
Roman Empire, also started to fall down. Pirates, from Sicily and other places, started to
dominate the waves and to take the merchants goods (Omerod, 1974). This kind of
pillage, added to the high taxes, made it less attractive for people to invest in
commerce. Economy started getting more and more local in a process that many
historians believe led to the starting point of the Middle Age economy.
Eventually, price controls were instructed in the Roman Empire. Lactantius
(1984), that lived by that time, tells that blood was shed over small and cheap items
and that goods disappeared from sale. Yet, the rise in price got much worse. After
many had met their deaths, sheer necessity led to the repeal of the law. As always,
price control and socialist measures do not work.
In conclusion, the fall of Rome was essentially due to economic deterioration
resulting from excessive taxation, inflation and over-regulation. Higher taxes did not
create the needed revenue and the process of debasement made it impossible to save,
thus stopping investments and commerce.
seldom however do these officials look below the surface: the roots of our economic ills can be
traced to central banking and our present monetary system.
These words can be repeated today with the same strength, conviction and
truthfulness. Whos to blame for the desperation of the middle-class, the failure of Social
Security and other Big Government programs and the loss of jobs and economic
freedom? The Federal Reserve, created in 1913 to stabilize the dollar, is the culmination
of 50 years of Government intervention in the monetary system. Before 1862, private
banks issued their own money under the guidance of the House of Representatives,
and many economists believe that that system created less inflation and crisis
(Rothbard, 2002).
Since the creation of the Federal Reserve in 1913, the U.S Dollar has lost most
of its value. A dollar owned in the first decade of the XX century would equal less than
five cents today and Americas currency is no longer based on anything but trust in the
Government. Or not even this, since the Federal Reserve has almost no checks at all.
Looking at todays system it is easy to say that Congress, the House of
Representatives, has lost all of its power to create money as specified in the
Constitution of the United States of America.
The idea of the Federal Reserve of printing more money, infinitely, without
backing it with anything whatsoever is the cause of the graph above. If you cross the
Value of a $1 Federal Reserve Note data (since 1971, when the United States official
left the Gold Standard System) and the amount of money printed, you get an almost
perfect correlation:
And not only the Feds policies have destroyed any value that the US dollar used
to have. It has allowed the US Government to get a debt that is virtually impossible itll
ever get paid. If the Federal Reserve had never been created, and the U.S. government
had been issuing debt-free currency all this time, it is entirely conceivable that we would
have absolutely no federal government debt at this point (Snyder, 2013).
As said before, the Roman Empire had no debt at all at the beginning. But as
wars started to become common and Government spending went up, so did debt with
private companies. Many economists believe that this debt that Rome got into was one
of the main causes of its eventual destruction (Hudson, 2013), and some economists,
scholars and politicians are today saying that America is following the example settled
by the Empire.
4. Conclusion
The Republic of the United States of America looks like the Roman Empire in
many ways. Fiscally, its high taxes, regulations, and restrictions to commerce, are killing
what once was the paradigm of free market capitalism. In monetary policy, the
destructive policies of the Federal Reserve, headed by Janet Yellen, are doing to the
U.S dollar what the emperors did to the denarius during the third century. And yet,
theres a huge difference between those two empires.
The Western Roman Empire has been gone for about 1,500 years, while the
United States have been around only for about 240 years. The time to change is still
there, and the opportunities to rethink and reconsider the current path of the nation are
available. Looking at the evidence presented in the third part of this chapter, the reader
may feel overhaul by the numbers that appear in there. However, modern investigation
reveals that citizens implication in Government is the most powerful way of lobbying,
and so nothing is impossible for a compromised and decided group of citizens (Miller,
1994).
Because of that, while the citizens of Rome may not be able to decide anymore
what they want to do with their countrys situation, americans do have the opportunity to
do so. Thus, the future is open to any kind of ending. One possibility, as presented in
this paper, is that the United States of America will end up falling under the enemy that
destroyed Rome: the Empire itself.
Bibliography
Hallet, Steve. Life Without Oil. 2011.
Temin, Peter. 2006. "The Economy of the Early Roman Empire." Journal of
Economic Perspectives, 20(1): 133-151.
Sabin, Philip et al. The Cambridge History of Greek and Roman Warfare Vol. 2.
2007.
Boot, Max (2002). The Savage Wars of Peace: Small Wars and the Rise of
American Power. Basic Books.
Johnson, Chalmers (2004). The Sorrows of Empire: Militarism, Secrecy, and the
End of the Republic. New York: Metropolitan Books
Todd, Emmanuel (2004). After the Empire: The Breakdown of the American
Order. New York: Columbia University Press. ISBN 978-0-231-13103-2.
The Real Crash: America's Coming Bankruptcy How to Save Yourself and Your
Country, 2012, Peter Schiff
Going for Broke: Deficits, Debt, and the Entitlement Crisis Hardcover June 7,
2015
by Michael D. Tanner