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The Price of Ignoring History

Friday, October 7, 2016 18:42
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(Don Boudreaux)


Here’s a post from ten years ago; it features some important history from ancient Rome – history that’s important because of the relevant warning that it offers to us today – namely, government-mandated price controls are barbarous.

Feudalism Sparked by Rome’s Regulations

On pages 642-643 of Will Durant’s remarkable book Caesar and Christ (1944) he discusses Diocletian‘s economic policies. (Diocletian reigned from 282 to 305 A.D.)

In years of peace Diocletian, with his aides, faced the problems of economic decay. To overcome depression and prevent revolution he substituted a managed economy for the law of supply and demand…. To ensure the supply of necessaries for the cities and the armies, he brought many branches of industry under complete state control, beginning with the import of grain; he persuaded the shipowners, merchants, and crews engaged in this trade to accept such control in return for government guarantee of security in employment and returns…. In 301 Diocletian and his colleagues [joint rulers of an administratively divided empire] issued an Edictum de pretiis, dictating maximum legal prices or wages for all important articles or services in the Empire…. The Edict was until our time the most famous example of an attempt to replace economic laws by governmental decrees. Its failure was rapid and complete.

Durant goes on to explain how these economic regulations, combined with higher taxes, caused people to engage in unprecedented levels of hiding their productive activities from the state and in to fleeing Rome. Medieval feudalism, Durant argues, finds its chief root in the restrictions that Diocletian and his successors imposed as they attempted to tie people to the land in order to prevent them from fleeing:

It was probably to check this costly mobility, to ensure a proper flow of food to armies and cities, and of taxes to the state, that Diocletian resorted to measures that in effect established serfdom in fields, factories, and guilds [p. 644].

Durant concludes this discussion with the sorrowful observation that relatively few Romans protested, as they apparently were hoodwinked into believing that in exchange for their freedom they were gaining greater security.

A telling tale.


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