Note by Sean Gabb: I would be most reluctant to cross swords with von Mises on economics. I have far less regard for his history. We can reject the Polanyi/Finley claim that market behaviour is a modern and transitory development, and that ancient economies were so fundamentally different that they cannot be subjected to economic analysis in our own terms. Human nature is the same in all times and places, and only the objects of superficial desire are different.
This being said, the ancient world was institutionally different from ours. We have, during the past four hundred years, grown used to living with centralised, bureaucratic states, able to impose their will for all reasonable and many unreasonable purposes. The Roman State was able to collect enough taxes to pay an army to defend its frontiers most of the time. For all other purposes, it was vastly less competent than the English or French States of the seventeenth century. Its early effort to suppress Christianity was a miserable failure. Its late efforts to suppress heresy were barely less miserable. Its civil courts had no means to compel the attendance of witnesses, and little to enforce their judgments. Its criminal courts were powerless to prosecute offenders who had any degree of local support.
The Empire was an agglomeration of communities which were illiterate to an extent unknown in Western Europe since about 1450. Even most officers in the bureaucracy were at best semi-literate. There was no printing press. Writing materials were very expensive – one sheet of papyrus cost about £100 in today’s money. Cheaper materials were still expensive and were of little use for other than ephemeral use. Central control was usually notional, and the more effective Emperors – Hadrian, Diocletian, et al – were those who spent much of their time touring the Empire to supervise in person.
The economic legislation of the Emperors was largely unenforceable. Some effort was made to enforce the Edict of Maximum Prices. But this appears to have been sporadic, and it lasted only between 301 and 305, when Diocletian abdicated. The Edict’s main effect was to leave a listing of relative prices for economic historians to study 1,500 years later.
As for inflation, it can be doubted how far outside the cities a monetary economy existed. This is not to doubt whether the laws of supply and demand operated, only whether most transactions were not by barter at more or less customary ratios of exchange. This being so, the debasement of the silver coinage would have had less disruptive effect than the silver inflation in Europe of the sixteenth century. Also, the gold coinage was stabilised over a hundred years before the Western military collapse of the fifth century. And the military crisis of the late third century was overcome while the inflation continued.
Nor is there any evidence that people left the cities in large numbers for the countryside. The truth seems to be that the Roman Empire was afflicted, from the middle of the second century, by a series of epidemic plagues, possibly brought on by global cooling, that sent populations into a decline that continued until about the eighth century. The cities shrank not because their inhabitants left them, but because they died. So far as they were enforced, the Imperial responses to population decline made things worse, but were not the ultimate cause of decline. Where population decline was less severe, there was no economic decline. Whenever the decline went into temporary reverse – as it may have in the fifth century in the East – economic activity recovered.
Von Mises is right that the barbarian invasions were not catastrophic floods that destroyed everything in their path. They were incursions by small bands. What made them irreversible was that they took place in the West into a demographic vacuum that would have existed regardless of what laws the Emperors made. SIG
Observations on the Causes of the Decline of Ancient Civilization
by Ludwig von Mises
Special to L. Neil Smith’s The Libertarian Enterprise
Knowledge of the effects of government interference with market prices makes us comprehend the economic causes of a momentous historical event, the decline of ancient civilization.
It may be left undecided whether or not it is correct to call the economic organization of the Roman Empire capitalism. At any rate it is certain that the Roman Empire in the second century, the age of the Antonines, the “good” emperors, had reached a high stage of the social division of labor and of interregional commerce. Several metropolitan centers, a considerable number of middle-sized towns, and many small towns were the seats of a refined civilization. The inhabitants of these urban agglomerations were supplied with food and raw materials not only from the neighboring rural districts, but also from distant provinces. A part of these provisions flowed into the cities as revenue of their wealthy residents who owned landed property. But a considerable part was bought in exchange for the rural population’s purchases of the products of the city-dwellers’ processing activities. There was an extensive trade between the various regions of the vast empire. Not only in the processing industries, but also in agriculture there was a tendency toward further specialization. The various parts of the empire were no longer economically self-sufficient. They were
What brought about the decline of the empire and the decay of its civilization was the disintegration of this economic interconnectedness, not the barbarian invasions. The alien aggressors merely took advantage of an opportunity which the internal weakness of the empire offered to them. From a military point of view the tribes which invaded the empire in the fourth and fifth centuries were not more formidable than the armies which the legions had easily defeated in earlier times. But the empire had changed. Its economic and social structure was already medieval.
The freedom that Rome granted to commerce and trade had always been restricted. With regard to the marketing of cereals and other vital necessities it was even more restricted than with regard to other commodities. It was deemed unfair and immoral to ask for grain, oil, and wine, the staples of these ages, more than the customary prices, and the municipal authorities were quick to check what they considered profiteering. Thus the evolution of an efficient wholesale trade in these commodities was prevented. The policy of the annona, which was tantamount to a nationalization or municipalization of the grain trade, aimed at filling the gaps. But its effects were rather unsatisfactory. Grain was scarce in the urban agglomerations, and the agriculturists complained about the unremunerativeness of grain growing.3 The interference of the authorities upset the adjustment of supply to the rising demand. The showdown came when in the political troubles of the third and fourth centuries the emperors resorted to currency debasement. With the system of maximum prices the practice of debasement completely paralyzed both the production and the marketing of the vital foodstuffs and disintegrated society’s economic organization. The more eagerness the authorities displayed in enforcing the maximum prices, the more desperate became the conditions of the urban masses dependent on the purchase of food. Commerce in grain and other necessities vanished altogether. To avoid starving, people deserted the cities, settled on the countryside, and tried to grow grain, oil, wine, and other necessities for themselves. On the other hand, the owners of the big estates restricted their excess production of cereals and began to produce in their farmhouses — the villae — the products of handicraft which they needed. For their big-scale farming, which was already seriously jeopardized because of the inefficiency of slave labor, lost its rationality completely when the opportunity to sell at remunerative prices disappeared. As the owner of the estate could no longer sell in the cities, he could no longer patronize the urban artisans either. He was forced to look for a substitute to meet his needs by employing handicraftsmen on his own account in his villa. He discontinued big-scale farming and became a landlord receiving rents from tenants or sharecroppers. These coloni were either freed slaves or urban proletarians who settled in the villages and turned to tilling the soil. A tendency toward the establishment of autarky of each landlord’s estate emerged. The economic function of the cities, of commerce, trade, and urban handicrafts, shrank. Italy and the provinces of the empire returned to a less advanced state of the social  division of labor. The highly developed economic structure of ancient civilization retrograded to what is now known as the manorial organization of the Middle Ages.
The emperors were alarmed with that outcome which undermined the financial and military power of their government. But their counteraction was futile as it did not affect the root of the evil. The compulsion and coercion to which they resorted could not reverse the trend toward social disintegration which, on the contrary, was caused precisely by too much compulsion and coercion. No Roman was aware of the fact that the process was induced by the government’s interference with prices and by currency debasement. It was vain for the emperors to promulgate laws against the city-dweller who relicta civitate rus habitare maluerit [deserted the cities, preferring to live in the
country].4 The system of the leiturgia, the public services to be rendered by the wealthy citizens, only accelerated the retrogression of the division of labor. The laws concerning the special obligations of the shipowners, the navicularii, were no more successful in checking the decline of navigation than the laws concerning grain dealing in checking the shrinkage in the cities’ supply of agricultural products.
The marvelous civilization of antiquity perished because it did not adjust its moral code and its legal system to the requirements of the market economy. A social order is doomed if the actions which its normal functioning requires are rejected by the standards of morality, are declared illegal by the laws of the country, and are prosecuted as criminal by the courts and the police. The Roman Empire crumbled to dust because it lacked the spirit of liberalism and free enterprise. The policy of interventionism and its political corollary, the Führer principle, decomposed the mighty empire as they will by necessity always disintegrate and destroy any social entity.
From: Ludwig von Mises, Human Action: A Treatise on Economics, vol. 3 (LF ed.) , Chapter 30. Online at http://oll.libertyfund.org/titles/1895#lf3843-03_head_036, the Online Library of Liberty, A collection of scholarly works about individual liberty and free markets.
The Roman economy, at least in the West, was in decline long before the successful barbarian invasions of the 5th century – indeed the increasing weakness of the Empire, economically, was the reason that that the Romans could not turn the tables on the invaders (as they had previous invasions – which had also gone as far as Italy).
Roman cities in the West and, to some extent, the East, had greatly declined in size – and trade was breaking down. Even the military equipment gets crude – rubbish oval shields (flat and crudely made), helmets that appear to have been made for people with square heads (no wonder wearing a leather cap underneath became the fashion), swords migrating from the short sword worn on the right to a longer sword worn on the left (that screams a breakdown in discipline – in formation fighting), body armour becoming rarer (and cruder) and on and on.
The question is why?
The Civil Wars can not have helped – but there had always been Civil Wars.
The currency does seem to have gone to pot, massive debasement (once silver coins just having a silver wash – and so on), but Constantine is supposed to have restored a reliable coinage (by looting the old pagan temples – or many of them) and the big collapse comes after Constantine not before.
Diocletian did a lot more than try and fix prices (I agree with Dr Gabb – that was a farce, it always is). He also massively increased government spending to expand the size of the army – ironically that may, in the end, have helped the collapse the size of the army (because his army was too big to sustain) and he carried on the division of the Empire into castes.
India and Persia (not old Parthia) already had this – if you were peasant you were tired to to the soil, if your father had done X job you had to do X job and so on, But in general (there were some exceptions) that was not the Roman way till the time of Diocletian – he even introduced Persian style robes and rituals and practices (such as prostration) to the Imperial court (in spite of being a jumped up peasant who had gone up the ranks via backstairs cunning rather than military skill) – the rituals of Byzantium really begin with Diocletian (long before Constantine).
The economy had been going down hill before Diocletian – but it went down a lot further after him, and I have already described the stuff his centralised state arms factories ended up producing (not at first, new brooms always sweep clean, but eventually.
The big counter argument has always been “what about the East?”
The East was just as statist as the West – so why did not the East collapse (well it did – but not till the time of Islam).
Well there (as Dr Gabb rightly points out – in various places) military factors must be noted.
The East faced Persia (not the Germanic tribes) and the Persians were not migrating peoples – they were a army (in a way this is less of a threat).
Also Constantinople was a much harder nut to crack than Rome.
Rome did not even have a proper military force there – Constantine abolished it.
Constantine also divided the army – into frontier troops (who became more rubbish over time) and a centralised force under the Emperor.
Clever-clever historians call this “defence in depth” – as Dr Gabb knows well this is nonsense.
There was no way that marching men hundreds of miles away from the front are any use – they move a few miles a day, and by the time they get the message to even start to march (by horse message or whatever) the cities have burned.
Constantine centralised the army round himself not as some profound military vision – but to prevent another general doing what he had done (organising a military coup – by using a frontier army, make the frontier forces weaker than the army in the centre and frontier generals can not do that……).
There was supposed to be a centralised army in the West – even after the division of the Empire.
But the commander of the Western army (interestingly the commander of the army was not the Emperor by this period – making a mockery of the Latin origins of the word) could not hold or restore the frontier and when the Emperor had him murdered, the mostly German troops went over to the enemy. Not a surprise really – as it was not just the commander who was killed, the Romans killed the wives and children of the German troops as well.
If you going to slaughter a group – slaughter them, do not kill their wives and children (living in the cities) and then expect the men out at the front to just vanish. The Emperor Honorius of the West should have stuck to feeding his chickens – it was all he was fit for.
The East was more fortunate in Emperors in this period – Emperors such as Theodosius II (the founder of the university of Constantinople – if I may use the Latin word, I know it does not really fit)and Leo I and Zeno at least had some staying power, And the Emperor Marcian showed real talent in cutting government spending (in spite of the threats of the mob in Constantinople) and the Emperor Anastasius was a truly great man.
Justinian gets the attention – because of his legal publications and his efforts to recapture the West.
However, it was Anastasius who really built up East Roman strength.
He made Constantinople almost untakable (no where is totally untakable – there is always some weakness to be found, but almost) – the natural position (connected to two different seas) make it almost impossible to cut off from supplies, and no barbarian mass would have much luck trying to attack the defences.
Outer long walls. double line of defensive walls (with water filled defences) and many towers – I love the defensive system (it shows real thought), even before the invention of Greek fire (it appears very late in the 7th century – just in time to save the capital from the Muslims then vanishes a couple of centuries later (it is not available in the savage revenge attack by the Westerners in the early 1200s – pushed by the Republic of Venice to avenge the massacre of the Latins a few years before, the chief executive of Venice led the attack in person inspite of being 80 and blind – he did not need eyes, he could see with his HATE).
Still no wonder weapons or well designed defences to save the West in the Fifth century – the economy was indeed weakened by centuries of statism.
But if the military situation can be (somehow) held, an economy can recover – even de facto serfdom can be abolished (the Byzantines got rid of the de facto serfdom established by Diocletian the idea of trying to keep most of the population as semi slaves when the Empire was fighting for its very life against the Muslims was insane, and the “farmers law” scrapped the whole system built up by the various Emperors after Diocletian).
In the West there was no large area that could be held – the only large (ish) area that never fell to the barbarians was Wales – and that was not really a centre of Roman civilisation (no offence meant to the Welsh).
Yes one could “take to the hills” (and create the tiny Republic of S.M.) or take to the marshes and create the (eventually) wonderful Republic of Venice.
But there was no one place where you could say the following…..
“You Persians can not advance into Greece without taking this place”.
And to the barbarian tribes.
“You barbarians can not advance into Asia Minor without taking this place”.
And to both of them.
YOU SHALL NOT PASS.
Even if it took the Virgin Mary (somehow transformed into Pallas Athena) to personally hold the walls of Constantinople, to hold the place in one siege.
Constantine had done much harm – but his choice of capital was inspired.
A major reason why the West fell and the East did not (at least not for a long time) was that the West had nothing like Constantinople.
It had no “choke point” which an enemy force had to pass in order to plunder more provinces.
And it had no place that was so hard to take as Constantinople – no place connected to two different seas, and with such well thought out defences.
The economic folly was common to both West and East – but the East had the chance to recover (to change policy).
The West had no such chance – its military position was too weak.
Once the armies had been undermined (because the economy was too weak to pay for them) they could not be restored – because there were no real natural defences to fall back on. Nothing to provide military “breathing space” to give time for economic reform.
Byran Ward Perkins (“The Fall of Rome”) agues that the East was as economically strong as it had ever been at the turn of the 7th century (the early 600s before Maurice is overthrown), I doubt that.
The Strategikon (written about this time) does not read that way – some of the book is about what to do with a shoestring budget. If you do not have the money for everyone to have armour so and so on should get it, if you do not have enough helmets these people should have them, if you are short of shields do……
That does not sound like the Roman army (or the economy that supplied it) in the time of say Trajan. And, by the way, please classical writers do not say that soldiers do not want armour so they may be “lighter for battle” (some of the gentleman historians of the late empire seem really to have not questioned this) – what this is really about is the “armour” not fitting, or being useless. The old “we in the state arms factory have fulfilled the plan Sir – here are the one thousand helmets, all nice and square…..” Still back to the early 7th century.
And, of course, Maurice was overthrown by a military mutiny provoked (in part) by lack of resources for the troops. So I am prepared to believe that the economy had recovered to a great extent by the time of Maurice – but not to the point it had once been.
One on other point about the Strategikon.
I have always been surprised about how little of the book is about scouting and avoiding ambushes (there is a bit on spies – but not really on the avoidance of ambushes).
But then I am reading with the benefit of one and half thousand years of hide sight – knowledge of how many times the Byzantine army marched into ambushes – partly because the core of the army was based in the capital (an idea of Constantine) and had only a sketchy knowledge of frontier areas.
Still a vastly more impressive army (in its field artillery and so on) than anything Western Europe had for centuries – even the disaster of 1071 does not prevent the eventual recovery of the army, although the defeat of 1176 basically does undermine it. It also dooms the Crusader States by cutting overland supply routes, confining them to supply by sea, and allows the Muslims to concentrate on the Crusader states as the Byzantines were collapsing – although if the Western German Emperor Frederick had not drowned…….
But that would lead us to the story of the Western “Holy Roman Empire” and its endless war with Islam (neglected by British historians – who think of the Hapsburgs and so on in relation to France, not understanding that the real war for these people was the “forever war” with Islam which was still carrying on in the 20th century, the Balkan Wars, and may well break out again).
A north German may think of France or the Slavs as “the enemy” – but a south German or an Austrian (apart from a few misguided souls) knows who THE enemy is.