Arnold Kling  

History of Markets

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Brad DeLong posts the syllabus for his economic history course. Included is this paper by Peter Temin. He claims that in the Roman Empire,


the prices represent extensive market exchanges typical of a market economy, not reciprocal exchanges typical of an economy based on reciprocity.
It seems likely that almost all farmers were aware of these prices. We do not have records from the most humble of farms, but even they do not seem to have been isolated householding cocoons. They were not fully autarchic, whatever their aims may have been. They paid taxes, they sold produce and bought items even though most of their
consumption was of home-grown food.
...ancient Rome had an economic system that was an enormous conglomeration of interdependent markets.

Temin is attacking the view of Karl Polanyi and others, which is that markets are a more modern phenomenon. For example, Rosenberg and Birdzell, in How the West Grew Rich, paint a picture of the medieval economy as one in which prices were set largely by custom, and trade accounts for very little economic activity.

I think that Temin goes too far in suggesting that we should view Rome as a conglomeration of interdependent markets. Most of his evidence appears to be records of prices. But it could be that prices were established largely for tax purposes, rather than for trading.

Land might have been freely traded. However, not enough surplus was produced above subsistence for trade in goods and services to have been a major economic activity.

For Discussion. What other evidence exists that supports or contradicts Temin's thesis?


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CATEGORIES: Economic History



COMMENTS (8 to date)
William Woodruff writes:

Information. The problem I have with his theory is the barrier of the defusion of information in Roman times was probably quite high.

Prices (were) are determined and conveyed through the transfer of information. The relative efficency of the vehicle of this information determines market clearing (pricing).

Boonton writes:

Logically it is pretty hard to believe Rome could have had a command driven economy without a serious governmental organizations...ones that would leave behind a lot of documentary evidence.

Temin does a good job in showing not only did prices exist in the Roman Empire but sophisticated financial contracts the incorporated insurance against loss, assignment of rights, underwriting of joint ventures and so on. Not bad for a society that didn't even have a base-10 number system or decimals!

It demonstrates that markets are created from the bottom up and do not require much sophistication on the part of its members.

Lawrance George Lux writes:

One of my areas in getting my Masters was in Roman history. The Government was there and quite extensive. Trade volume was also immense, considering the Time, and the methods of transport. The real curtailment of the Roman economy was the Tax Farming system, where Senators bid on the rights to a Region, promising to supply the Tax revenue bid.

The Transport system of Roman involved a major Merchat fleet, and Roman roads along some routes resembled the Convenient Inn system in Colonial America between Boston and Philidelpia. Pack trains and wagons plied these roads daily in Spain, Italy, southern France, and Egypt. lgl

Oystein Sjolie writes:

It is a quite commonly held view that the ancient Greeks had sort of an forward market for grains (PDF). It should not come as a surprise, actually. It is the lack of information is creating the market for insurance against future price movements, for farmers and grocers alike.

Neel Krishnaswami writes:

It's hard to believe, but it's true. Take a look at the Code of Diocletian -- it set prices for nearly everything the Romans produced. As a set of price controls, it was naturally a disaster, but what I find really valuable in it is getting a sense of relative prices in a preindustrial economy. You can find a translation of parts of it in Jo-Anne Shelton's As the Romans Did.

Larry Jones writes:

Just FYI, the random capitalization shtick is really, really tired. You know who you are.

-LJ

Boonton writes:
It's hard to believe, but it's true. Take a look at the Code of Diocletian -- it set prices for nearly everything the Romans produced. As a set of price controls, it was naturally a disaster, but what I find really valuable in it is getting a sense of relative prices in a preindustrial economy. You can find a translation of parts of it in Jo-Anne Shelton's As the Romans Did.

Perhaps but did it really represent a command economy or simply a law passed on a market economy that may or may not have been heavily enforced?

JT writes:

This is off-topic but is anyone here familiar with FW Walbanks' "The Awful Revolution," a history proposing an economic explanation of the decline of the Roman Empire? If so, what is the scholarly community's view of this book?

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