Arnold Kling  

The Classical and Medieval Economy

It's Not Just Me: Further Back... Bailie Mae...

George Grantham writes

it appears likely that at its peak the classical economy was almost as large as that of Western Europe on the eve of the Industrial the more fertile districts of southern Britain and northern Gaul rural population density in the Late Iron Age and the Roman period was as high as in the late seventeenth-century...

The volume of and extent of clalssical trade at its peak in the first centuries AD is visible in a well-preserved ceramic record of mass-produced tableware and oil lamps, and in the dumps containing tens of thousands of amphorae that were discarded when theirir contents were decanted into other vessels for transshipment into the interior. The archaeological record, then, indicates a robust and specialized economy

...renewed analysis of the corpus of Merovingian and Carolingian documents bearing on the status of persons and property in Merovingian and Carolingian Gaul yield a far less catastrophic narrative of the early medieval transition than the one that scholars have constructed from late Roman and early medieval Christian polemics. In particular, the revisions indicate significant political, administrative and economic continuity from the fourth through ninth century, sustained by a surprisingly literate political and administrative elite...While the volume of trade contracted dramatically after 450 AD, the links were never severed.

Meir Kohn pointed me to the paper. Kohn views trade in Smithian rather than Ricardian terms. That is, take it as given that there were high transport costs, which were a barrier to long-distance exchange. Still, you do not necessarily need huge differences in relative factor productivities to generate trade. You can motivate trade with gains from division of labor and the extent of markets.

I seem to have a mental block against a story of a market economy in the Classical period. If Rome imported a lot of products from other parts of its empire, then those regions must have been productive. If, say, Egypt was very productive in grain, and if trade was voluntary, then either Egypt should have enjoyed a high standard of living (with Rome's comparative advantage coming from cheap labor, like China's today) or Rome had products to offer Egypt that the Egyptians really valued.

My instinct--and I seem to be wrong about everything on this topic--was that the flow of goods to Rome was mostly involuntary, consisting instead of plunder and taxes. I have a picture of a wealthy Roman center and an impoverished imperial periphery. Grantham's view is that the periphery also flourished.

Furthermore, Grantham sides with those who view the post-Roman period as a "transformation" rather than a collapse. If we put this all together, we have a picture of an economy that functioned reasonably well in the Classical period, followed by a decline but not a collapse in the Medieval period.

As Kohn put it in his email to me, "I'm afraid he doesn't support your position."

UPDATE: Speaking of medieval times, a reader pointed me to Peter Klein's post about medieval schools that included courses relevant to business.

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CATEGORIES: Economic History

COMMENTS (11 to date)
manuelg writes:

Maybe low levels of graft (and other misc. rent-seeking) along the whole of the supply chain can transform Ricardian pure plunder into something that well-resembles Smithian non-coerced trade and markets.

Once the geographic distance necessitates a supply chain, the demands of supply chain not breaking down, and rent-seeking along every step of the way, the tension of those two forces turns the whole into something that resembles Smithian non-coerced trade.

Troy Camplin writes:

You should watch the scene in Monty Python's "The Life of Brian" where the revolutionaries are trying to get everyone riled up by asking "And what have the Romans ever done for us?"

Xerxes: The aqueduct.

Reg: Oh yeah, yeah they gave us that. Yeah. That's true.

Masked Activist: And the sanitation!

Stan: Oh yes... sanitation, Reg, you remember what the city used to be like.

Reg: All right, I'll grant you that the aqueduct and the sanitation are two things that the Romans have done...

Matthias: And the roads...

Reg: Well yes obviously the roads... the roads go without saying. But apart from the aqueduct, the sanitation and the roads...

Another Masked Activist: Irrigation...

Other Masked Voices: Medicine... Education... Health...

Reg: Yes... all right, fair enough...

Activist Near Front: And the wine...

Omnes: Oh yes! True!

Francis: Yeah. That's something we'd really miss if the Romans left, Reg.

Masked Activist at Back: Public baths!

Stan: And it's safe to walk in the streets at night now.

Francis: Yes, they certainly know how to keep order... let's face it, they're the only ones who could in a place like this.

(more general murmurs of agreement)

Reg: All right... all right... but apart from better sanitation and medicine and education and irrigation and public health and roads and a freshwater system and baths and public order... what have the Romans done for us?

Xerxes: Brought peace!

Reg: What!? Oh... Peace, yes... shut up!

Alex J. writes:

You may be interested in:

How Excessive Government Killed Ancient Rome.

Bruce Bartlett
Cato Journal
Volume 14 Number 2, Fall 1994

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 to all Rome's citizens which began in 58 B.C. ...
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. 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. ...
Constantine 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. ... Despite such efforts, land continued to be abandoned and trade, for the most part, ceased. 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.

In the fifty years after Diocletian the Roman tax burden roughly doubled, making it impossible for small farmers to live on their production. ... 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.

Lord writes:

There was considerable long distance trade before Rome ever rose to an empire. Rome brought peace and suppressed pirates and extracted taxes to cover these expenses, but without an economy to tax, they wouldn't have been able to raise much money. While bureaucrats certainly used political position to amass fortunes, much wealth was owned by merchants since trade was considered beneath the dignity of patricians. Most enterprises as well as the state owned slaves, but this only makes sense if they create value for their owners, and their owners were not necessarily of the political class. Overall, there were many sources of power and a diversity of means to obtaining it. Rome was hardly the only place with aqueducts and amphitheaters.

Sudha Shenoy writes:

"...a market economy in the classical period..."

1. By definition, the American economy of the late 20th/early 21st century, & economic activity in the classical world, are two different, unique historical developments. They can never be perfect substitutes.

2. Have a look at the sophistication of Greek & Roman commercial law (plenty of books, articles.) The other side of the coin is substantial, complex trade, short-, medium-, long-distance.

David Tufte writes:

There's a surprising amount of legal and contract work going on Gaul/Frankia in the 5th through 7th centuries (see The Merovingian Kingdoms by Ian Wood).

And there's at least some speculation that similar stuff existed in what is now England through the invasions of Guthrum and others in the 860's.

Bisaal writes:

Hillare Belloc is very sound on the transformation of Late Roman period to early medieval and the continuity aspect. He stated the decline but not collapse hypothesis when it was unfashionable.

Snark writes:


Read MIT professor Peter Temin’s paper, A Market Economy in the Early Roman Empire. It may help you overcome your plunder-and-tax heuristic. He argues that early Rome’s economy was market-based and “one of the most advanced agricultural economies to have existed” in terms of productivity, urbanization, and development of capital markets. He even claims there was a market for insurance.

fun writes:

I side with Arnold on this one. There's no doubt that Rome had trade and markets. The question is how large was it? It seem to me that it was limited to luxury items for the most part.

The European economy must have declined as some point, because a leading Turkish economist has written that for most of the reign of the Ottoman Empire, Turks traded with Europeans very little, even though trade with India and China was extensive by the standards of the day. Turks didn't trade with Europeans because Europeans had nothing the Turks wanted, except a few raw materials. By Turkish standards of the 15th-18th centuries, Europeans were dirty, poor, savages. However, the Turks weren't much wealthier than the Romans had been.

Richard Pointer writes:

My understanding is that Rome was not the powerhouse that every 4th grade history teacher used to proclaim it to be. Let us not forget that when the Roman legions attempted invasions of Persia, they were slaughtered repeatedly. The view that Rome was surrounded by barbarians is also refuted by the archeological evidence being found in Greece. Highly advanced instrumentation was developed outside of Rome, for example, the Antikythera mechanism.

It wasn't the Romans that were highly advanced, it was the "Barbarians." So maybe invade and plunder was the reason why they gained wealth, but we probably remember them today because of all those roads built for invasion.

Jim Glass writes:

" economy that functioned reasonably well in the Classical period, followed by a decline but not a collapse in the Medieval period."

So ... 1,300 years of recession, but not depression?

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