Arnold Kling  

On Economic History

Personality and Ability... Yet More Economic History...

Mark Koyama writes,

in the great agrarian empires such as Rome, there was a large volume of trade in ordinary goods. Grain, wine, olive oil, ceramics, were traded on a tremenous scale. They were not plundered and then redistributed as Kling supposed - rather, they were in many cases produced for the market.

Second, according to Peter Temin's recent article the Roman empire had a functioning labour market. Robert Allen has done a rough calculation of real wages in the Roman empire in 301 based upon the price edits of the Emperor Diocletian here which indicates that Roman living standards were comparable to those Southern and Eastern Europe in the eighteenth century. Since the Rome empire in 301 had just undergone the crisis of the third century this estimate puts a lower bound on Roman living standards in the early empire.

Temin also provides convincing evidence that merchants had access to sophisticated financial instruments in another article. In plunder based economies there is no need for financial instruments of any kind since goods are acquired through coercion and labour is typically bonded or enslaved.

I disagree with the last point. You need all sorts of sophisticated accounting and financial instruments in order to fund an army or to operate a regime of stationary bandits. Based on my reading of Peter Leeson on pirates I would say that sophisticated political and financial contracts can very well arise in a plunder-based society.

My instinct is to be skeptical of the estimates of large cities in Classical times. One of Gregory Clark's more interesting tidbits in A Farewell to Alms is how innumerate people were.

Think of the necessary conditions for a large volume of voluntary trade in non-luxury goods. On the one hand, you need large differences in productivity in different products in different places, in order for comparative advantage to be strong. In an age where most economic activity is agricultural, this means you need differences in climate and soil. On the other hand, you need transportation costs to be low, which means that trading partners are not going to be hundreds of miles apart. So you need large differences in climate and soil in locations that are close by.

Koyama speaks of "Rome - a city of about 1 million in 50 AD entirely dependent on grain imported from Egypt..."

Why would Egypt have better grain-growing capacity than central Italy? What did Romans have that Egyptians valued in return for grain?

I am open to argument, but I would like to know what the smoking-gun evidence is for (a) the view that Rome really achieved a population of one million and (b) that Rome obtained its grain from Egypt as part of voluntary trade.

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CATEGORIES: Economic History

COMMENTS (13 to date)
Lord writes:

One needn't have large differences in climate and soil. Differences in weather are more significant. A shortage or surplus of rainfall in one area often leads to famine in the absence of trade. Egypt was particularly well suited to grain production due to steady water supply, irrigation, and ample sun and warmth, though. It is also no coincidence the empire circled the Mediterranean as this provided the least expensive transport. The Romans invented the census, so I wouldn't say they were too innumerate. The number and size of aqueducts should should be a clear indication of population. I don't know if they traded for grain though, or merely taxed them for it.

Dan Weber writes:

When it says that items "were produced for trade on a massive scale," does it necessarily mean cross-city trade? Or merely trade within the city?

Going back to inter-city trade, I can see that if, say, the city a few miles over has a huge ceramics industry, that it wouldn't be worth it for my city to try and recreate such an industry. Plus, raising food could've been seen as low-risk. I don't know how risk-averse people were back then, but "raising" ceramics and then trying to sell them could be very risky. One cart-crash and months of labor is gone.

David N. Welton writes:

"Why would Egypt have better grain-growing capacity than central Italy?"

Because *central* Italy is mountainous, or at best hilly, and largely forested even now. The best grain growing areas in Italy in that day and age were, if I recall correctly, Sicily, and Puglia (the heel of the boot). Egypt probably offered even better conditions in terms of being able to produce a big crop because growing areas were wide, flat, and close to the river, making transport easy.

razib writes:

Why would Egypt have better grain-growing capacity than central Italy? What did Romans have that Egyptians valued in return for grain?

isn't it a matter of transport? most of egypt was accessible via water. the hinterlands of campagnia not so much.

Emi Per. writes:

Archeology has advanced a bit from the Indiana Jones era.

It is possible to approximate the size of a city: use build area and the type of buildings. The number of soldiers recruited from an area give even better approximations, and for that there is quite a lot of information.

Yes, there was long distance trade in non-luxury goods even during the bronze age: wood, minerals, salt, grains etc.

The Roman state guarded over a quite intense trade that linked the North of Africa with contemporary Belgium and Britannia with Dacia. There is enough evidence on it, and if you have access to a good database of archeology journals you can check it out for yourself. The Roman subjects were also very mobile: you can find Arab inscriptions in the Palmyrean script all over the empire, for example.

Egypt provided a predictable supply of wheat: that was the main advantage.

The argument about the sophistication of pirate arrangements is quite weak: those pirates did not practice subsistence piracy. Their occupation was profitable only because there was a mercantile society that they could plunder and to whom they could sell the spoils.

On the one hand, you need large differences in productivity in different products in different places, in order for comparative advantage to be strong. [...] On the other hand, you need transportation costs to be low, which means that trading partners are not going to be hundreds of miles apart.
checked: the Mediteranean, the Nile, the Rhine, the Rhone, the Danube etc. provided inexpensive transportation, so the differences in productivity did not need to be that great. Still, there were and still are important differences in productivity between various areas that were controlled by the Roman empire, even in areas that are close: just take a look at a map and you might have an epiphany. It's not like the whole Roman empire looked like the Russian plains or the US Midwest.
the view that Rome really achieved a population of one million
First, ancient cities were quite different form modern ones: a citizen had his house in the city and his farm outside the walls, which makes deciding who was a city dweller and who was a peasant quite difficult. Moreover, around the year 1EC Rome had some 5000 to 6000 policemen (urban cohorts) and about the same number of night watchmen, traffic and zoning rules, traffic bans for vehicles during daylight etc. Even some two hundred years before they managed to compensate for the loss of some 70000 men during the first years of the Second Punic war, which would put the minimum number of Romans at 700000. Smoking gun enough ?

(b) that Rome obtained its grain from Egypt as part of voluntary trade.

Well, the Roman state came to control Egypt by the time Rome was quite large, and there is information that they paid for for the grain they got from Sicily or Egypt before they got in charge there, and later their own elite owned the farms.

What did Romans have that Egyptians valued in return for grain?
Tax money they took from Egypt or other places.
Troy Camplin writes:

One could argue that England had the same relationship with India as Rome had with Egypt. Does that ague, then, that England in fact was a plunder-based economy?

The innmeracy in Rome was probably the same as it is in the U.S. at the present time. There were plenty of people who were very sophisticated mathematicians, but the majority of people were not. Further, the Roman Empire kept extremely good records. In fact, they conducted a periodic census for the purposes of taxation. You might want to consult the New Testament of the Bible for a quick and easily-accessed reference. SPecifically, check out why it was that Jesus was born in Bethlehem rather than Nazareth.

James A. Donald writes:

The Roman empire was a market economy in the following sense and only the following sense.

1. The Egyptian peasants sell grain for gold.

2. The ruler of Egypt shakes down the peasants, lines his palace with gold.

3. The legions of Caesar burn the library of Alexandria and rape the Egyptian women. Caesar strips the gold off the palace walls.

4. Caesar coins the gold into coins with his face on them.

5. Caesar's get out the vote bagmen toss the gold to adoring crowds in Rome, resulting in Hitler^H^H^H^H^H Caesar winning election to every office.

6. Romans buy bread, made from Egyptian grain.

Arnold Kling writes:

Depending on what time period you are talking about, the England-India relationship might plausibly be described as plunder-based. Or maybe I have been too heavily steeped in After Tamerlane.

Horatio writes:

Greece and Italy are better suited for growing olives and grapes than grain. Comparative advantage.

back40 writes:

Plato, in one of his dialogues, has Critias proclaim: "what now remains of the formerly rich land is like the skeleton of a sick man, with all the fat and soft earth having wasted away and only the bare framework remaining. Formerly, many of the mountains were arable. The plains that were full of rich soil are now marshes. Hills that were once covered with forests and produced abundant pasture now produce only food for bees. Once the land was enriched by yearly rains, which were not lost, as they are now, by flowing from the bare land into the sea. The soil was deep, it absorbed and kept the water in the loamy soil, and the water that soaked into the hills fed springs and running streams everywhere. Now the abandoned shrines at spots where formerly there were springs attest that our description of the land is true."

The Nile delta, OTOH, was ever fertile due to the spring floods which brought organic and mineral sediments from the heart of Africa to fertilize the exhausted fields. That pattern is repeated, with variation, around the world. It is no surprise at all that Rome coveted Egypt's grain. So did Napoleon centuries later.

Ryan Kelly writes:

I wanted to talk about the free market economists Milton Friedman. I learned a lot from an economist named Dr. Lee’s presentation. I had heard about Milton Friedman in other economics classes but I had never really understood what he was about or just how much he meant to the economists way of thinking today. He contested a theory that had stood up and was believed by most high level and respected economists. He stood up for what he believed in and when he argued on a point he had enough intellect to change many peoples way of thinking, which in turn changed the economy. Dr. Lee put it in perfect words, “Milton Friedman took the road less traveled on.”
Milton Freidman contested Keynsian theory after starting out his career as Keynsian supporter. It takes a lot for a person to go against something that he has grown up through school and through life learning and agreeing with. In order to do this you must be a master of the subject you are stating your opinion about and have an argument for every question that somebody asks you. If you are stumped about something that the other theories may be able to explain then what you are arguing for would probably go out he window. In my opinion Milton Freidman changed more about ecomics in the world today the Franklin Roosevelt ever could have done as president. Being President of the United States you have a lot of power over the economy but Milton Friedman was a normal person and influenced more people his time than FDR did in his term as president.

Troy Camplin writes:

That was my point regarding England and India. Here you have a very sophisticated economy that is in great part plunder-based in the way you accuse the ancient world of primarily being. Or, you could look at either as "strong encouragement" to trade. I do believe there were setbacks throughout history on the development of markets, but I do believe there is extremely strong evidence for markets in most places. People specialized and grew crops and traded their food for pots, etc. that were made by artisans.

Mark Koyama writes:

I have responded to Arnold's post on my blog

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