Rome and Maximum Prices

As the end of our class approaches, we have finally made it to Rome! Rome is a very popular place full of extremely significant architecture and history. So far, we have seen the Colosseum, Pantheon, Arch of Constantine and much more. Much of this fantastic display of culture would not have been possible without a successful economy. A stable and growing economy provides the resources like capital and labor that are necessary to build such massive works like the Colosseum.

Colosseum

Pantheon

                  However, we know that the 3^rd century was a very different story for the Romans. They faced anarchy, barbarian attacks, and their imperial treasury was robbed. This lead the Romans to tax, confiscate wealth, and debase the currency. Debasement of currency occurs when the percentage of precious mental content in a coin is reduced. The Romans were merely washing a bronze coin over with silver to make it look of value. Gold coins were practically out of circulation and the market was overwhelmed with the useless silver-bronze coins.

                  As a result of this wild running inflation, the middle class was nearly eradicated. It was clear that the administration costs of “ruling the world” and a lack of proper policy was leading the Romans to bankruptcy. In an attempt to save the economy, Diocletian presented what was called the “Edict of Diocletian” or what we have recently called it, the “Edict of Maximum Prices”. This attempted to stabilize inflation by setting a price for gold, various commodities, labor, and freight. Although, it was not successful for many reasons. The Edict did not provide a price for the bronze coin which was currently overwhelming the market. It was very rigid and did not allow for prices changes due to various seasons. Lastly, the mines for precious metals like silver and gold were depleted and did not allow the price setting to take affect.

The Arch of Constantine was dedicated in the early 3^rd century. Interestingly, it is more of a collection of works from existing art. Many decorative pieces on the arch had been “recycled.” In my own speculation, I wonder if this was done because of the economic instability of the 3^rd century. Though it is important to note that Constantine ruled after Diocletian.

Arch of Constantine

                  It is very important to study economies of the past in order to reflect on current policy and learn how to best tackle problems we will face in the future. Many other countries have experienced runaway inflation in more recent years. Some examples include Greece, Russia, and Argentina. We should be careful not to solely credit these beautiful sights to unsurpassed artisans, because without a flourishing economy, these amazing artisans would have been stuck working the soils.

                  Yesterday, we biked through Appia Antica and today we visited the Vatican. Tomorrow morning, we will fly home. It has been an amazing trip!

1. H. Michell. The Edict of Diocletian: A Study of Price Fixing in the Roman Empire. Published The Canadian Journal of Economics and Political Science, Vol. 13, No. 1 (Feb. 1947)