I’d never banish them from voting….. I simply recognize their weakness.

with the “non thinkers” voting we are saved and we are lost. They are
stupid enough to vote for communism.

The question is, are we smart enough to convince them to NOT voting for
communism.

]]> http://outsourcenews.net/ng/2012/05/07/the-both-parties-are-the-sameits-a-vibrant-democracy-contradiction-more-nonsense-put-out-by-the-ms-media-2/feed/ 0 http://outsourcenews.net/ng/2012/05/07/how-excessive-government-killed-ancient-rome-2/ http://outsourcenews.net/ng/2012/05/07/how-excessive-government-killed-ancient-rome-2/#comments Mon, 07 May 2012 14:45:21 +0000 admin http://outsourcenews.net/ng/?p=31500 HOW EXCESSIVE GOVERNMENT KILLED ANCIENT ROME “Bruce Bartlett”

Volume 14 Number 2, Fall 1994

HOW EXCESSIVE GOVERNMENT KILLED ANCIENT ROME

Bruce Bartlett

Beginning with the third century B.C. Roman economic policy started to
contrast more and more sharply with that in the Hellenistic world,
especially Egypt. *In Greece and Egypt economic policy* had gradually
become highly regimented, depriving individuals of the freedom to pursue
personal profit in production or trade, *crushing them under* a heavy
burden of *oppressive taxation*, and *forcing workers into* vast
*collectives* where they were little better than bees in a great hive.
The later Hellenistic period was also one of almost constant warfare,
which, together with rampant piracy, closed the seas to trade.
*The result, predictably, was stagnation*

*Stagnation bred weakness* in the states of the Mediterranean, which
partially explains the ease with which Rome was able to steadily expand
its reach beginning in the 3rd century B.C. By the first century B.C.,
Rome was the undisputed master of the Mediterranean. However, peace did
not follow Rome’s victory, for civil wars sapped its strength.

["DOES THIS ALL SOUND FAMILIAR"]

Free-Market Policies under Augustus

Following the murder of Caesar in 44 B.C., his adopted son Octavian
finally brought an end to internal strife with his defeat of Mark Antony
in the battle of Actium in 31 B.C. Octavian’s victory was due in no
small part to his championing of Roman economic freedom against the
Oriental despotism of Egypt represented by Antony, who had fled to Egypt
and married Cleopatra in 36 B.C. As Oertel (1934: 386) put it, “The
victory of Augustus and of the West meant . . . a repulse of the
tendencies towards State capitalism and State socialism which might have
come to fruition . . . had Antony and Cleopatra been victorious.”

The long years of war, however, had taken a heavy toll on the Roman
economy. Steep taxes and requisitions of supplies by the army, as well
as rampant inflation and the closing of trade routes, severely depressed
economic growth. Above all, businessmen and traders craved peace and
stability in order to rebuild their wealth. Increasingly, they came to
believe that peace and stability could only be maintained if political
power were centralized in one man. This man was Octavian, who took the
name Augustus and became the first emperor of Rome in 27 B.C., serving
until 14 A.D.

Although the establishment of the Roman principate represented a
diminution of political freedom, it led to an expansion of economic
freedom. [1] Augustus clearly favored private enterprise, private
property, and free trade (Oertel 1934: 386; Walbank 1969: 23). The
burden of taxation was significantly lifted by the abolition of tax
farming and the regularization of taxation (Rostovtzeff 1957: 48). Peace
brought a revival of trade and commerce, further encouraged by Roman
investments in good roads and harbors. Except for modest customs duties
(estimated at 5 percent), free trade ruled throughout the Empire. It
was, in Michael Rostovtzeff’s words, a period of “almost complete
freedom for trade and of splendid opportunities for private initiative”
(Rostovtzeff 1957: 54).

Tiberius, Rome’s second emperor (14-37 A.D.), extended the policies of
Augustus well into the first century A.D. It was his strong desire to
encourage growth and establish a solid middle class (bourgeoisie), which
he saw as the backbone of the Empire. Oertel (1939: 232) describes the
situation:

The first century of our era witnessed a definitely high level of
economic prosperity, made possible by exceptionally favorable
conditions. Within the framework of the Empire, embracing vast
territories in which peace was established and communications were
secure, it was possible for a bourgeoisie to come into being whose chief
interests were economic, which maintained a form of economy resting on
the old city culture and characterized by individualism and private
enterprise, and which reaped all the benefits inherent in such a system.
The State deliberately encouraged this activity of the bourgeoisie, both
directly through government protection and its liberal economic policy,
which guaranteed freedom of action and an organic growth on the lines of
“laissez faire, laissez aller,” and directly through measures
encouraging economic activity.

Of course, economic freedom was not universal. Egypt, which was the
personal property of the Roman emperor, largely retained its socialist
economic system (Rostovtzeff 1929, Milne 1927). However, even here some
liberalization did occur. Banking was deregulated, leading to the
creation of many private banks (Westermann 1930: 52). Some land was
privatized and the state monopolies were weakened, thus giving
encouragement to private enterprise even though the economy remained
largely nationalized. [2]

Food Subsidies

The reason why Egypt retained its special economic system and was not
allowed to share in the general economic freedom of the Roman Empire is
that it was the main source of Rome’s grain supply. Maintenance of this
supply was critical to Rome’s survival, especially due to the policy of
distributing free grain (later bread) to all Rome’s citizens which began
in 58 B.C. By the time of Augustus, this dole was providing free food
for some 200,000 Romans. The emperor paid the cost of this dole out of
his own pocket, as well as the cost of games for entertainment,
principally from his personal holdings in Egypt. The preservation of
uninterrupted grain flows from Egypt to Rome was, therefore, a major
task for all Roman emperors and an important base of their power
(Rostovtzeff 1957: 145).

The free grain policy evolved gradually over a long period of time and
went through periodic adjustment. [3] The genesis of this practice dates
from Gaius Gracchus, who in 123 B.C. established the policy that all
citizens of Rome were entitled to buy a monthly ration of corn at a
fixed price. The purpose was not so much to provide a subsidy as to
smooth out the seasonal fluctuations in the price of corn by allowing
people to pay the same price throughout the year.

Under the dictatorship of Sulla, the grain distributions were ended in
approximately 90 B.C. By 73 B.C., however, the state was once again
providing corn to the citizens of Rome at the same price. In 58 B.C.,
Clodius abolished the charge and began distributing the grain for free.
The result was a sharp increase in the influx of rural poor into Rome,
as well as the freeing of many slaves so that they too would qualify for
the dole. By the time of Julius Caesar, some 320,000 people were
receiving free grain, a number Caesar cut down to about 150,000,
probably by being more careful about checking proof of citizenship
rather than by restricting traditional eligibility. [4]

Under Augustus, the number of people eligible for free grain increased
again to 320,000. In 5 B.C., however, Augustus began restricting the
distribution. Eventually the number of people receiving grain stabilized
at about 200,000. Apparently, this was an absolute limit and corn
distribution was henceforth limited to those with a ticket entitling
them to grain. Although subsequent emperors would occasionally extend
eligibility for grain to particular groups, such as Nero’s inclusion of
the Praetorian guard in 65 A.D., the overall number of people receiving
grain remained basically fixed.

The distribution of free grain in Rome remained in effect until the end
of the Empire, although baked bread replaced corn in the 3rd century.
Under Septimius Severus (193-211 A.D.) free oil was also distributed.
Subsequent emperors added, on occasion, free pork and wine. Eventually,
other cities of the Empire also began providing similar benefits,
including Constantinople, Alexandria, and Antioch (Jones 1986: 696-97).

Nevertheless, despite the free grain policy, the vast bulk of Rome’s
grain supply was distributed through the free market. There are two main
reasons for this. First, the allotment of free grain was insufficient to
live on. Second, grain was available only to adult male Roman citizens,
thus excluding the large number of women, children, slaves, foreigners,
and other non-citizens living in Rome. Government officials were also
excluded from the dole for the most part. Consequently, there remained a
large private market for grain which was supplied by independent traders
(Casson 1980).

Taxation in the Republic and Early Empire

The expansion of the dole is an important reason for the rise of Roman
taxes. In the earliest days of the Republic Rome’s taxes were quite
modest, consisting mainly of a wealth tax on all forms of property,
including land, houses, slaves, animals, money and personal effects. The
basic rate was just .01 percent, although occasionally rising to .03
percent. It was assessed principally to pay the army during war. In
fact, afterwards the tax was often rebated (Jones 1974: 161). It was
levied directly on individuals, who were counted at periodic censuses.

As Rome expanded after the unification of Italy in 272 B.C., so did
Roman taxes. In the provinces, however, the main form of tax was a tithe
levied on communities, rather than directly on individuals. [5] This was
partly because censuses were seldom conducted, thus making direct
taxation impossible, and also because it was easier to administer. Local
communities would decide for themselves how to divide up the tax burden
among their citizens (Goffart 1974: 11).

Tax farmers were often utilized to collect provincial taxes. They would
pay in advance for the right to collect taxes in particular areas. Every
few years these rights were put out to bid, thus capturing for the Roman
treasury any increase in taxable capacity. In effect, tax farmers were
loaning money to the state in advance of tax collections. They also had
the responsibility of converting provincial taxes, which were often
collected in-kind, into hard cash. [6] Thus the collections by tax
farmers had to provide sufficient revenues to repay their advance to the
state plus enough to cover the opportunity cost of the funds (i.e.,
interest), the transactions cost of converting collections into cash,
and a profit as well. In fact, tax farming was quite profitable and was
a major investment vehicle for wealthy citizens of Rome (Levi 1988: 71-94).

Augustus ended tax farming, however, due to complaints from the
provinces. Interestingly, their protests not only had to do with
excessive assessments by the tax farmers, as one would expect, but were
also due to the fact that the provinces were becoming deeply indebted.
A.H.M. Jones (1968: 11) describes the problems with tax farmers:

Oppression and extortion began very early in the provinces and
reached fantastic proportions in the later republic. Most governors were
primarily interested in acquiring military glory and in making money
during their year in office, and the companies which farmed the taxes
expected to make ample profits. There was usually collusion between the
governor and the tax contractors and the senate was too far away to
exercise any effective control over either. The other great abuse of the
provinces was extensive moneylending at exorbitant rates of interest to
the provincial communities, which could not raise enough ready cash to
satisfy both the exorbitant demands of the tax contractors and the
blackmail levied by the governors.

As a result of such abuses, tax farming was replaced by direct taxation
early in the Empire (Hammond 1946: 85). The provinces now paid a wealth
tax of about 1 percent and a flat poll or head tax on each adult. This
obviously required regular censuses in order to count the taxable
population and assess taxable property. It also led to a major shift in
the basis of taxation (Jones 1974: 164-66). Under the tax farmers,
taxation was largely based on current income. Consequently, the yield
varied according to economic and climactic conditions. Since tax farmers
had only a limited time to collect the revenue to which they were
entitled, they obviously had to concentrate on collecting such revenue
where it was most easily available. Because assets such as land were
difficult to convert into cash, this meant that income necessarily was
the basic base of taxation. And since tax farmers were essentially
bidding against a community’s income potential, this meant that a large
portion of any increase in income accrued to the tax farmers.

By contrast, the Augustinian system was far less progressive. The shift
to flat assessments based on wealth and population both regularized the
yield of the tax system and greatly reduced its “progressivity.” This is
because any growth in taxable capacity led to higher taxes under the tax
farming system, while under the Augustinian system communities were only
liable for a fixed payment. Thus any increase in income accrued entirely
to the people and did not have to be shared with Rome. Individuals knew
in advance the exact amount of their tax bill and that any income over
and above that amount was entirely theirs. This was obviously a great
incentive to produce, since the marginal tax rate above the tax
assessment was zero. In economic terms, one can say that there was
virtually no excess burden (Musgrave 1959: 140-59). Of course, to the
extent that higher incomes increased wealth, some of this gain would be
captured through reassessments. But in the short run, the tax system was
very pro-growth.

The Rise and Fall of Economic Growth

Rome’s pro-growth policies, including the creation of a large common
market encompassing the entire Mediterranean, a stable currency, and
moderate taxes, had a positive impact on trade. Keith Hopkins finds
empirical support for this proposition by noting the sharp increase in
the number of known shipwrecks dating from the late Republic and early
Empire as compared to earlier periods (Hopkins 1980: 105-06). The
increase in trade led to an increase in shipping, thus increasing the
likelihood that any surviving wrecks would date from this period.
Rostovtzeff (1957: 172) indicates that “commerce, and especially foreign
and inter-provincial maritime commerce, provided the main sources of
wealth in the Roman Empire.”

Hopkins (1980: 106-12) also notes that there was a sharp increase in the
Roman money supply which accompanied the expansion of trade. He further
notes that this expansion of the money supply did not lead to higher
prices. Interest rates also fell to the lowest levels in Roman history
in the early part of Augustus’s reign (Homer 1977: 53). This strongly
suggests that the supply of goods and services grew roughly in line with
the increase in the money supply. There was probably also an increase in
the demand for cash balances to pay taxes and rents, which would further
explain why the increased money supply was non-inflationary.

During the early Empire revenues were so abundant that the state was
able to undertake a massive public works program. Augustus repaired all
the roads of Italy and Rome, restored the temples and built many new
ones, and built many aqueducts, baths and other public buildings.
Tiberius, however, cut back on the building program and hoarded large
sums of cash. This led to a financial crisis in 33 A.D. in which there
was a severe shortage of money. This shortage may have been triggered by
a usury law which had not been applied for some years but was again
enforced by the courts at this time (Frank 1935). The shortage of money
and the curtailment of state expenditures led to a sharp downturn in
economic activity which was only relieved when the state made large
loans at zero interest in order to provide liquidity (Thornton and
Thornton 1990). [7]

Under Claudius (41-54 A.D.) the Roman Empire added its last major
territory with the conquest of Britain. Not long thereafter, under
Trajan (98-117 A.D.), the Empire achieved its greatest geographic
expansion. Consequently, the state would no longer receive additional
revenue from provincial tribute and any increase in revenues would now
have to come from within the Empire itself. Although Rostovtzeff (1957:
91) credits the Julio-Claudian emperors with maintaining the Augustinian
policy of laissez faire, the demand for revenue was already beginning to
undermine the strength of the Roman economy. An example of this from the
time of Caligula (37-41 A.D.) is recorded by Philo (20 B.C-50 A.D.):

Not long ago a certain man who had been appointed a collector of
taxes in our country, when some of those who appeared to owe such
tribute fled out of poverty, from a fear of intolerable punishment if
they remained without paying, carried off their wives, and their
children, and their parents, and their whole families by force, beating
and insulting them, and heaping every kind of contumely and ill
treatment upon them, to make them either give information as to where
the fugitives had concealed themselves, or pay the money instead of
them, though they could not do either the one thing or the other; in the
first place, because they did not know where they were, and secondly,
because they were in still greater poverty than the men who had fled
[Yonge 1993: 610].

Inflation and Taxation

As early as the rule of Nero (54-68 A.D.) there is evidence that the
demand for revenue led to debasement of the coinage. Revenue was needed
to pay the increasing costs of defense and a growing bureaucracy.
However, rather than raise taxes, Nero and subsequent emperors preferred
to debase the currency by reducing the precious metal content of coins.
This was, of course, a form of taxation; in this case, a tax on cash
balances (Bailey 1956).

Throughout most of the Empire, the basic units of Roman coinage were the
gold aureus, the silver denarius, and the copper or bronze sesterce. [8]
The aureus was minted at 40-42 to the pound, the denarius at 84 to the
pound, and a sesterce was equivalent to one-quarter of a denarius.
Twenty-five denarii equaled one aureus and the denarius was considered
the basic coin and unit of account.

The aureus did not circulate widely. Consequently, debasement was mainly
limited to the denarius. Nero reduced the silver content of the denarius
to 90 percent and slightly reduced the size of the aureus in order to
maintain the 25 to 1 ratio. Trajan (98-117 A.D.) reduced the silver
content to 85 percent, but was able to maintain the ratio because of a
large influx of gold. In fact, some historians suggest that he
deliberately devalued the denarius precisely in order to maintain the
historic ratio. Debasement continued under the reign of Marcus Aurelius
(161-180 A.D.), who reduced the silver content of the denarius to 75
percent, further reduced by Septimius Severus to 50 percent. By the
middle of the third century A.D., the denarius had a silver content of
just 5 percent.

Interestingly, the continual debasements did not improve the Empire’s
fiscal position. This is because of Gresham’s Law (“bad money drives out
good”). People would hoard older, high silver content coins and pay
their taxes in those with the least silver. Thus the government’s “real”
revenues may have actually fallen. As Aurelio Bernardi explains:

At the beginning the debasement proved undoubtedly profitable for
the state. Nevertheless, in the course of years, this expedient was
abused and the [fn2]century of inflation which had been thus brought
about was greatly to the disadvantage of the State’s finances. Prices
were rising too rapidly and it became impossible to count on an
immediate proportional increase in the fiscal revenue, because of the
rigidity of the apparatus of tax collection. [9]

At first, the government could raise additional revenue from the sale of
state property. Later, more unscrupulous emperors like Domitian (81-96
A.D.) would use trumped-up charges to confiscate the assets of the
wealthy. They would also invent excuses to demand tribute from the
provinces and the wealthy. Such tribute, called the aurum corinarium,
was nominally voluntary and paid in gold to commemorate special
occasions, such as the accession of a new emperor or a great military
victory. Caracalla (198-217 A.D.) often reported such dubious
“victories” as a way of raising revenue. Rostovtzeff (1957: 417) calls
these levies “pure robbery.”

Although taxes on ordinary Romans were not raised, citizenship was
greatly expanded in order to bring more people into the tax net. Taxes
on the wealthy, however, were sharply increased, especially those on
inheritances and manumissions (freeing of slaves).

Occasionally, the tax burden would be moderated by a cancellation of
back taxes or other measures. One such occasion occurred under the brief
reign of Pertinax (193 A.D.), who replaced the rapacious Commodus (A.D.
176-192). As Edward Gibbon (1932: 88) tells us:

Though every measure of injustice and extortion had been adopted,
which could collect the property of the subject into the coffers of the
prince; the rapaciousness of Commodus had been so very inadequate to his
extravagance, that, upon his death, no more than eight thousand pounds
were found in the exhausted treasury, to defray the current expenses of
government, and to discharge the pressing demand of a liberal donative,
which the new emperor had been obliged to promise to the Praetorian
guards. Yet under these distressed circumstances, Pertinax had the
generous firmness to remit all the oppressive taxes invented by
Commodus, and to cancel all the unjust claims of the treasury; declaring
in a decree to the senate, “that he was better satisfied to administer a
poor republic with innocence, than to acquire riches by the ways of
tyranny and dishonor.”

State Socialism

Unfortunately, Pertinax was an exception. Most emperors continued the
policies of debasement and increasingly heavy taxes, levied mainly on
the wealthy. The war against wealth was not simply due to purely fiscal
requirements, but was also part of a conscious policy of exterminating
the Senatorial class, which had ruled Rome since ancient times, in order
to eliminate any potential rivals to the emperor. Increasingly, emperors
came to believe that the army was the sole source of power and they
concentrated their efforts on sustaining the army at all cost.

As the private wealth of the Empire was gradually confiscated or taxed
away, driven away or hidden, economic growth slowed to a virtual
standstill. Moreover, once the wealthy were no longer able to pay the
state’s bills, the burden inexorably fell onto the lower classes, so
that average people suffered as well from the deteriorating economic
conditions. In Rostovtzeff’s words, “The heavier the pressure of the
state on the upper classes, the more intolerable became the condition of
the lower” (Rostovtzeff 1957: 430).

At this point, in the third century A.D., the money economy completely
broke down. Yet the military demands of the state remained high. Rome’s
borders were under continual pressure from Germanic tribes in the North
and from the Persians in the East. Moreover, it was now explicitly
understood by everyone that the emperor’s power and position depended
entirely on the support of the army. Thus, the army’s needs required
satisfaction above all else, regardless of the consequences to the
private economy.

With the collapse of the money economy, the normal system of taxation
also broke down. This forced the state to directly appropriate whatever
resources it needed wherever they could be found. Food and cattle, for
example, were requisitioned directly from farmers. Other producers were
similarly liable for whatever the army might need. The result, of
course, was chaos, dubbed “permanent terrorism” by Rostovtzeff (1957:
449). Eventually, the state was forced to compel individuals to continue
working and producing.

The result was a system in which individuals were forced to work at
their given place of employment and remain in the same occupation, with
little freedom to move or change jobs. Farmers were tied to the land, as
were their children, and similar demands were made on all other workers,
producers, and artisans as well. Even soldiers were required to remain
soldiers for life, and their sons compelled to follow them. The
remaining members of the upper classes were pressed into providing
municipal services, such as tax collection, without pay. And should tax
collections fall short of the state’s demands, they were required to
make up the difference themselves. This led to further efforts to hide
whatever wealth remained in the Empire, especially among those who still
found ways of becoming rich. Ordinarily, they would have celebrated
their new-found wealth; now they made every effort to appear as poor as
everyone else, lest they become responsible for providing municipal
services out of their own pocket.

The steady encroachment of the state into the intimate workings of the
economy also eroded growth. The result was increasing feudalization of
the economy and a total breakdown of the division of labor. People fled
to the countryside and took up subsistence farming or attached
themselves to the estates of the wealthy, which operated as much as
possible as closed systems, providing for all their own needs and not
engaging in trade at all. Meanwhile, much land was abandoned and
remained fallow or fell into the hands of the state, whose mismanagement
generally led to a decline in production.

Emperor Diocletian’s Reforms

By the end of the third century, Rome had clearly reached a crisis. The
state could no longer obtain sufficient resources even through
compulsion and was forced to rely ever more heavily on debasement of the
currency to raise revenue. By the reign of Claudius II Gothicus (268-270
A.D.) the silver content of the denarius was down to just .02 percent
(Michell 1947: 2). As a consequence, prices skyrocketed. A measure of
Egyptian wheat, for example, which sold for seven to eight drachmaes in
the second century now cost 120,000 drachmaes. This suggests an
inflation of 15,000 percent during the third century (Rostovtzeff 1957:
471).

Finally, the very survival of the state was at stake. At this point, the
Emperor Diocletian (284-305 A.D.) took action. He attempted to stop the
inflation with a far-reaching system of price controls on all services
and commodities. [10] These controls were justified by Diocletian’s
belief that the inflation was due mainly to speculation and hoarding,
rather than debasement of the currency. As he stated in the preamble to
his edict of 301 A.D.:

For who is so hard and so devoid of human feeling that he cannot, or
rather has not perceived, that in the commerce carried on in the markets
or involved in the daily life of cities immoderate prices are so
widespread that the unbridled passion for gain is lessened neither by
abundant supplies nor by fruitful years; so that without a doubt men who
are busied in these affairs constantly plan to control the very winds
and weather from the movements of the stars, and, evil that they are,
they cannot endure the watering of the fertile fields by the rains from
above which bring the hope of future harvests, since they reckon it
their own loss if abundance comes through the moderation of the weather
[Jones 1970: 310].

Despite the fact that the death penalty applied to violations of the
price controls, they were a total failure. Lactantius (1984: 11), a
contemporary of Diocletian’s, tells us that much blood was shed over
“small and cheap items” and that goods disappeared from sale. Yet, “the
rise in price got much worse.” Finally, “after many had met their
deaths, sheer necessity led to the repeal of the law.”

Diocletian’s other reforms, however, were more successful. The
cornerstone of Diocletian’s economic policy was to turn the existing ad
hoc policy of requisitions to obtain resources for the state into a
regular system. [11] Since money was worthless, the new system was based
on collecting taxes in the form of actual goods and services, but
regularized into a budget so that the state knew exactly what it needed
and taxpayers knew exactly how much they had to pay.

Careful calculations were made of precisely how much grain, cloth, oil,
weapons or other goods were necessary to sustain a single Roman soldier.
Thus, working backwards from the state’s military requirements, a
calculation was made for the total amount of goods and services the
state would need in a given year. On the other side of the coin, it was
also necessary to calculate what the taxpayers were able to provide in
terms of the necessary goods and services. This required a massive
census, not only of people but of resources, especially cultivated land.
Land was graded according to its productivity. As Lactantius (1984: 37)
put it, “Fields were measured out clod by clod, vines and trees were
counted, every kind of animal was registered, and note taken of every
member of the population.”

Taxable capacity was measured in terms of the caput, which stood for a
single man, his family, his land and what they could produce. [12] The
state’s needs were measured in terms of the annona, which represented
the cost of maintaining a single soldier for a year. With these two
measures calculated in precision, it was now possible to have a real
budget and tax system based entirely on actual goods and services.
Assessments were made and resources collected, transported and stored
for state use.

Although an army on the move might still requisition goods or services
when needed, the overall result of Diocletian’s reform was generally
positive. Taxpayers at least knew in advance what they were required to
pay, rather than suffer from ad hoc confiscations. Also, the tax burden
was spread more widely, instead of simply falling on the unlucky, thus
lowering the burden for many Romans. At the same time, with the improved
availability of resources, the state could now better plan and conduct
its military operations.

In order to maintain this system where people were tied to their land,
home, jobs, and places of employment, Diocletian transformed the
previous ad hoc practice. Workers were organized into guilds and
businesses into corporations called collegia. Both became de facto
organs of the state, controlling and directing their members to work and
produce for the state.

The Fall of Rome

Constantine (308-37 A.D.) continued Diocletian’s policies of regimenting
the economy, by tying workers and their descendants even more tightly to
the land or their place of employment (Jones 1958). For example, in 332
he issued the following order:

Any person in whose possession a tenant that belongs to another is
found not only shall restore the aforesaid tenant to his place of origin
but also shall assume the capitation tax for this man for the time that
he was with him. Tenants also who meditate flight may be bound with
chains and reduced to a servile condition, so that by virtue of a
servile condemnation they shall be compelled to fulfill the duties that
befit free men [Jones 1970: 312].

Despite such efforts, land continued to be abandoned and trade, for the
most part, ceased (Rostovtzeff 1926). Industry moved to the provinces,
basically leaving Rome as an economic empty shell; still in receipt of
taxes, grain and other goods produced in the provinces, but producing
nothing itself. The mob of Rome and the palace favorites produced
nothing, yet continually demanded more, leading to an intolerable tax
burden on the productive classes. [13]

In the fifty years after Diocletian the Roman tax burden roughly
doubled, making it impossible for small farmers to live on their
production (Bernardi 1970: 55). [14] This is what led to the final
breakdown of the economy (Jones 1959). As Lactantius (1984: 13) put it:

The number of recipients began to exceed the number of contributors
by so much that, with farmers’ resources exhausted by the enormous size
of the requisitions, fields became deserted and cultivated land was
turned into forest.

Although Constantine made an effort to restore the currency, subsequent
emperors resumed the debasement, resulting in renewed price inflation
(West 1951). Apparently, Emperor Julian (360-63 A.D.) also refused to
believe that the inflation was due to debasement, but rather was caused
by merchants hoarding their stores. To prove his point, he sent his own
grain reserves into the market at Antioch. According to Gibbon (1932: 801),

The consequences might have been foreseen, and were soon felt. The
Imperial wheat was purchased by the rich merchants; the proprietors of
land or of corn withheld from the city the accustomed supply; and the
small quantities that appeared in the market were secretly sold at an
advanced and illegal price.

Although he had been warned that his policies would not lower prices,
but rather would exacerbate the shortage, Julian nevertheless continued
to believe that his policy worked, and blamed complaints of its failure
on the ingratitude of the people (Downey 1951).

In other respects, however, Julian was more enlightened. In the area of
tax policy, he showed sensitivity and perception. He understood that the
main reason for the state’s fiscal problem was the excessive burden of
taxation, which fell unequally on the population. The wealthy
effectively were able to evade taxation through legal and illegal
measures, such as bribery. By contrast, the ordinary citizen was
helpless against the demands of the increasingly brutal tax collectors.

Previous measures to ease the tax burden, however, were ineffective
because they only relieved the wealthy. Constantine, for example, had
sought to ease the burden by reducing the number of tax
units–caputs–for which a given district was responsible. In practice,
this meant that only the wealthy had any reduction in their taxes.
Julian, however, by cutting the tax rate, ensured that his tax reduction
was realized by all the people. He also sought to broaden the tax base
by abolishing some of the tax exemptions which many groups, especially
the wealthy, had been granted by previous emperors (Bernardi 1970: 59, 66).

Nevertheless, the revenues of the state remained inadequate to maintain
the national defense. This led to further tax increases, such as the
increase in the sales tax from 1 percent to 4.5 percent in 444 A.D.
(Bernardi 1970: 75). However, state revenues continued to shrink, as
taxpayers invested increasing amounts of time, effort and money in tax
evasion schemes. Thus even as tax rates rose, tax revenues fell,
hastening the decline of the Roman state (Bernardi 1970: 81-3). In
short, taxpayers evaded taxation by withdrawing from society altogether.
Large, powerful landowners, able to avoid taxation through legal or
illegal means, began to organize small communities around them. Small
landowners, crushed into bankruptcy by the heavy burden of taxation,
threw themselves at the mercy of the large landowners, signing on as
tenants or even as slaves. (Slaves, of course, paid no taxes.) The
latter phenomenon was so widespread and so injurious to the state’s
revenues, in fact, that in 368 A.D. Emperor Valens declared it illegal
to renounce one’s liberty in order to place oneself under the protection
of a great landlord (Bernardi 1970: 49).

In the end, there was no money left to pay the army, build forts or
ships, or protect the frontier. The barbarian invasions, which were the
final blow to the Roman state in the fifth century, were simply the
culmination of three centuries of deterioration in the fiscal capacity
of the state to defend itself. Indeed, many Romans welcomed the
barbarians as saviors from the onerous tax burden. [15]

Although the fall of Rome appears as a cataclysmic event in history, for
the bulk of Roman citizens it had little impact on their way of life. As
Henri Pirenne (1939: 33-62) has pointed out, once the invaders
effectively had displaced the Roman government they settled into
governing themselves. At this point, they no longer had any incentive to
pillage, but rather sought to provide peace and stability in the areas
they controlled. After all, the wealthier their subjects the greater
their taxpaying capacity.

In conclusion, the fall of Rome was fundamentally due to economic
deterioration resulting from excessive taxation, inflation, and
over-regulation. Higher and higher taxes failed to raise additional
revenues because wealthier taxpayers could evade such taxes while the
middle class–and its taxpaying capacity–were exterminated. Although
the final demise of the Roman Empire in the West (its Eastern half
continued on as the Byzantine Empire) was an event of great historical
importance, for most Romans it was a relief.

__________________________________
The author is a Senior Fellow with the National Center for Policy Analysis.

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