The Economics of the Roman Empire

• 3 minute read •

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The whole story of ‘Obelix and Co.’ (the 27th edition of the Asterix comic book series) is a parody of capitalism. Obelix, who makes menhirs (large tear-drop shaped stone structures) comes across Preposterus, a graduate from the Latin School of Economics (haha), who devises a scheme to keep the Gauls busy so that Caesar could capture the village they lived in. The comic references several economic concepts such as production, labour, efficiency, competition and marketing. While it is quite a stretch to imagine that the Romans would hold menhirs at such high esteem, the Roman economy isn’t actually too different from most modern economies.

 

The Roman Empire, one of the largest and most powerful empires over history, at its peak covered almost 5 million square kilometres governing people of varying ethnicities and cultures. From 27BCE to 476CE, wars were fought, trade flourished, the empires expanded and the stories of legends were born. Ruled by various people the economy grew with twists and turns.

 

The economy ran on mainly agrarian trading practices with wares such as wine and grain.  Markets came about to trade in these goods, and as one would expect, these markets expanded to include sales of trinkets, memorabilia, silk, cotton and jewellery. Institutions from where people lent money and credit were established through the wealth of families together. As agriculture held such a big role in the economy, it is obvious that there may have been times of crisis. In response to these scenarios, Roman officials responded by minting money. Over time, the whole empire began to run on this monetary system with coins of the era having been unearthed as far east as India.

 

Trade routes criss-crossed the Roman Empire. They consisted of sea routes that traversed the Black and Mediterranean Seas and a great many land routes were built, as they say ‘all roads lead to Rome’. The universal currency system made trade easy and it boomed.  Commodities included olives, fish, meat, leather and hide, gold, silver and of course, slaves. Apart from being used in manual labour, they were tasked with many other jobs such as domestic services, and highly skilled jobs such as a physician. Unskilled slaves were normally made to engage in work related to farms and mills.

 

While sea routes were preferred for trade, the road network was mainly used (and, in most cases, built) by the Army. The Roman Army was a force to be reckoned with. Conquering area after area, looting them and bringing back slaves, they were one of the strongest elements the Roman Empire had in their arsenal. The economic gains made by the empire by the annexation of various states motivated the soldiers for successful warfare.

 

Believe it or not, the Roman people were taxed as well. The responsibility of tax collection of provinces was auctioned to Tax Farmers who paid the state in advance; on this amount, the state paid them interest for a period of time. They converted the goods (aka the tax) they collected into coins and gave this to the state. Whatever was left over went into their own pockets. This was a major source of income in the Roman Republic, and clearly, this system was rife with corruption. Augustus, the first ruler of the Roman Empire, did away with Tax Farming and introduced a system where each province was told to pay wealth tax of around 1% and each individual had to pay a tax based on their income or wealth status – very similar to the Progressive Tax System in place in modern times. However, as time went on, the costs and prices of administration rose and many emperors struggled with economic policies to govern the state. By the late 3rd Century, large inflation rates coupled with debased coinage values forced the Emperor Diocletion to make very dramatic reforms. He capped high prices, levied a tax on Italian landowners and instigated multiple other taxes in order to bump up the amount in tax collected.

 

As with any society, entertainment played a huge role in their lives. What cricket and films are to us Indians, the shows in the Colosseum and other smaller amphitheatres were to the Romans. The stories we have of the shows are infamous. Romans enjoyed watching gladiatorial fights and fights between people and animals. Roman emperors were known for putting up free shows for the public. In fact, the rich would even have vials of their favourite gladiators’ sweat and use it as face cream!

 

When one thinks about the Roman Empire we think about it as an empire completely different from modern economies, which in some ways it was, but it also was similar, they too faced economic challenges and it is interesting to see what policies they implemented to overcome them.

 

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