Mark Koyama review of the Roman economy

by on April 4, 2017 at 12:47 am in Books, Economics, History, Uncategorized | Permalink

Observe that Roman history leaves no traces of great mercantile companies like the Bardi, the Peruzzi or the Medici. There are no records of commercial manuals of the sort that are abundant from Renaissance Italy; no evidence of “class-struggle” as we have from late medieval Europe; and no political economy or “economics”, that is, no attempts to systematize one’s thoughts and insights concerning the commercial world. The ancient world, in this view, only superficially resembled that of early modern Europe. Seen from this perspective, the latter contained the potential for sustained growth; the former did not. Why is this?

The most obvious institutional difference between the ancient world and the modern was slavery. Recently historians have tried to elevate slavery and labor coercion as crucial causal mechanism in explaining the industrial revolution. These attempts are unconvincing (see this post) but slavery certainly did dominate the ancient economy.

In its attempt to draw together the various strands through which slavery permeated the ancient economy, Schiavone’s chapter “Slaves, Nature, Machines” is a tour de force. At once he captures the ubiquity of slavery in the ancient economy, its unremitting brutality—for instance, private firms that specialized in branding, retrieving, and punishing runaway slaves — and, at the same time, touches the central economic questions raised by ancient slavery: to what extent was slavery crucial to the economic expansion of period between 200 BCE and 150 AD? And did the prevalence of slavery impede innovation?

Here is the full piece, Mark is reviewing Aldo Schiavone’s The End of the Past.

1 Anon April 4, 2017 at 12:52 am

Missing Link.


2 Alex April 4, 2017 at 1:12 am
3 prior_test2 April 4, 2017 at 1:42 am

Thanks – since Prof. Cowen only occasionally reads the comments, such minor mistakes are only very rarely corrected.


4 ChrisA April 4, 2017 at 12:54 am

Doesn’t the sentence “private firms that specialized in branding, retrieving, and punishing runaway slaves” suggest that  there was the potential for modern economic systems with people creating corporate entities to deal with unmet needs? So the question as to why the Romans didn’t have an Industrial Revolution can’t be that they didn’t understand how to create corporations.


5 Unanimous April 4, 2017 at 3:27 am

I don’t think these firms were corporations in the modern sense. From what I’ve read, the closest thing to a firm was made up of slaves. Slaves could act as agents for masters and enter masters into legally binding agreements. Masters had legal control over slaves and therefore ultimate responsibility for their acts. Because everybody knew that slaves faced extreme punishment for not acting in the interest of their masters any representations by slaves were taken to be legitimate, including by the law.

Owners of large numbers of slaves could run large businesses particularly if they had some educated slaves, but I don’t think there was any limited liability, joint ownership of much, any concept of corporate personhood as distinct from individuals, boards of directors, or most of what we associate with firms.


6 Alex April 4, 2017 at 1:03 am

Added to pile


7 Chip April 4, 2017 at 1:23 am

The cost of acquiring and securing slaves must have been high, and perhaps as much as simply hiring cheap labor. The Haida, for example, spent a great deal of their time and resources on long-distance slaving raids. But with a total population that was one-third slaves it’s unclear how necessary they were in a society that didn’t have labor-intensive farming or construction.

As for Rome and slavery, while it was undoubtedly brutal and cruel, the Romans themselves considered themselves enlightened compared with other civilizations. The Carthaginians for example were criticized by Rome for their practise of sacrificing infants.


8 cowboydroid April 4, 2017 at 9:43 am

On the other hand, the Carthaginians never had the class division of Plebians/Patricians, and therefore avoided the worst of those social ills.


9 Chuck April 4, 2017 at 3:46 pm

Oddly, the Carthaginian elite sacrificed their own children, rather than slaves or peasants.


10 Roy LC April 5, 2017 at 4:08 pm

I think you are assuming far more knowledge of Carthaginian society than anyone can vouch for.

Events such as the Mercenary War after the first Punic War suggest you may be very wrong.

The sources are Polybius, Diodorus Siculus, Plutarch, and Justin’s epitome of Pompeus Trogus’s history of the Macedonian Empire. The only Carthaginian source is a manual of agriculture and set of navigation instructions, think a Triptick.


11 Anon7 April 4, 2017 at 8:37 pm

What if Carthage destroyed Rome rather than vice-versa? Carthage was a commercial republic, but it too relied on slaves.


12 Hmmm April 4, 2017 at 1:38 am

No class struggle? Not sure he’s talking about the same Roman Republic as the one I’ve read about.


13 Box Mosier April 4, 2017 at 3:21 am

Tiberius Sempronius Gracchus was only a minor footnote in Roman History, no need to bother thinking about him. Also Gaius Marius, who cares about him?


14 Ray Lopez April 4, 2017 at 7:50 am

Right on, besides the fact that Romans and Greeks looked down on commerce, so you can’t expect them to write about it on papyrus, which anyway disintegrates in humid weather. It’s a miracle we even have the small output of work we do for famous authors, and only a tiny fraction of everything they wrote.


15 Scott Mauldin April 4, 2017 at 10:48 am

I agree fully, and I was wondering the same thing. The entire decline of the Roman Republic from the end of the 3rd Punic War to the rise of Caesar can be read as an authoritarian reaction to growing wealth inequality. The Gracchi, the rise of Marius, and the eventual rise of Caesar were the result of discontent on the part of the populares against the growing latifundia, growing use of slaves displacing yeoman, and general usurpation of all wealth by the Patrician class.


16 jonfraz April 4, 2017 at 3:33 pm

Not just Patricians. There were wealthy Plebes too, generally members of the Knight (equites) class, since they could afford horses.


17 Scott Mauldin April 4, 2017 at 11:25 pm

Fair enough, point taken, but the rise of Marius and the ensuing social war (I mean there was a war called the “Social War”, come on) with Sulla was a *direct* result of the class-based Manipular legions not having enough land-owning yeomen to fill the ranks to fight the Cimbrian and Jugurthine wars, which was in turn a direct result of the wealthy – be they Patricians, Equites or Plebs – amassing slaves and displacing the landowners, who in turn flocked to the cities demanding social support and becoming amenable to populist radicalization.


18 prior_test2 April 4, 2017 at 2:15 am

‘Observe that Roman history leaves no traces of great mercantile companies like the Bardi, the Peruzzi or the Medici. There are no records of commercial manuals of the sort that are abundant from Renaissance Italy; no evidence of “class-struggle” as we have from late medieval Europe; and no political economy or “economics”, that is, no attempts to systematize one’s thoughts and insights concerning the commercial world.’

Almost as if an economist is utterly unable to recognize that the Roman system, 200 BCE to 150 CE, had completely different priorities and interests and frameworks. It is amazing to read a review of Rome’s economy being compared to later European states without essentially any mention (city size and one panegyric excepted) of the immense reach of the Roman world as a single political unit that recognized no boundaries to its growth. Economics was not the reason for that singular reach, nor Roman rhetoric.

To put it in terms that even an economist might grasp, the Romans were able to use power to achieve their goals – behavioral economics would have been laughed at by a legionnaire. Who would have been familiar, along with all of his fellows throughout that time period, with the results of res militaris – the Romans discovered the advantages of mass equipping its military with standardized equipment, and thus created their extensive realm, regardless of the objections of those they conquered. Rome was not expanded through any economic principle of the sort that a devoted defender of capitalism would ever accept. And yet the Roman Empire had a longer sway over more of Europe than any political unit until the creation of the EU. Which in a certain sense is a mirror image of the Roman Empire, as both share a singular focus on creating s state that can be described as Pax.


19 Melmoth April 4, 2017 at 9:58 am

Surely that only holds when Rome was expanding up until the early 2nd C AD? Then Hadrian started fixing those boundaries and it was all about bounded territory and defense for the next 300 years.


20 Steve Sailer April 4, 2017 at 3:01 am

Judging by its ruins, the Roman Empire had a fairly sophisticated economy — e.g., I doubt if any society devoted more of its wealth to professional sports and secular entertainment again until the 20th Century.

Perhaps Rome’s commercial manuals simply weren’t recopied by subsequent scribes as assiduously as some of its other books?


21 Mort Dubois April 4, 2017 at 8:58 pm

Exactly. Hard to really know what was going on when very little of reality made it to the page, and very few pages made it to the present. How many Yellow Pages will survive to the 29th century? And yet they were a very important part of commercial life during the 20th century.


22 Mark Thorson April 4, 2017 at 9:33 pm

What was the literacy rate? Maybe the business class couldn’t read, so they transmitted their knowledge of business methods orally.


23 Nicholas Marsh April 4, 2017 at 4:05 am

The Roman Empire struggled with inflation. The emperors favourite way to pay for wars and public works was to mint more coins – either from new gold or silver or by debasing the existing coinage.

They tried to prevent inflation by introducing price controls and later restrictions on business – e.g. a town could have two wheelwrights and three bakers.

In addition, in the later period taxes were raised from tariffs on internal commerce, which reduced trade.

I expect that the heavy hand of regulation prevented the development of large commercial companies. Instead what developed in the later period were large mostly self sufficient landed estates. Similar to the aristocratic estates of the medieval period.



24 asdf April 4, 2017 at 9:45 am

Of course these things didn’t come out of thin air.

As both its German and Persian opponents became more formidable Rome’s borders became more expensive to maintain. In addition there were no rich urbanized foreign lands to conquer and pillage. People balked at the extra military expense until there was a crisis. Then you had a lot of civil wars until the entire Roman military apparatus had been devastated and the currency debased.

It’s not like some communist took over and decided to make sweeping economic changes for the lols. Nor were the people who debased the currency unaware of the pitfalls. It’s simply what you did when not paying the ascension donative meant getting your head chopped off.

Rome won an empire because of effective military and politics. It lost an empire when the same broke down.


25 A Definite Beta Guy April 4, 2017 at 10:23 am

My understanding is that the Roman Empire in general had extremely weak bureaucracy. Even budgets were something Romans didn’t really do, and on the military front they never put in the funds to raise a permanent proper navy (which I guess is why Julius Caesar was kidnapped by pirates, which these days would result in a Navy SEAL raid followed by a Tom Hanks movie).

Apparently, also a reason why the Church became so powerful. It served as a parallel state, a sort of exaggerated way the Mormon Church is in Utah.

Definitely much less advanced and much more poorly governed than early modern states by my eye. I’m not even sure if I want to say Imperial governance was superior to the High Middle Ages, even if they had a longer reach. Who would you pick, the Normans, or the 3rd Century Emperors? I dunno…


26 jonfraz April 4, 2017 at 3:44 pm

Public budgets existed no where, at in Europe, until fairly modern times. The first was Jacques Necker’s Comte Rendue in France in the 1780s it was full of bad numbers but Necker is usually given an A for effort because he made the effort at all


27 Aretino April 4, 2017 at 5:59 pm

The Anglo-Norman state had innovative government institutions, such as the jury, the inquest, and circuit-riding judges. It also had established due process and the rule of law. A famous quote about the period is that “in England, law rules, not the king.”


28 Albigensian April 4, 2017 at 10:34 am

There’s also the shift from indirect rule (cheap) to direct rule (more expensive) when the client rulers displeased the Roman government.

And, the vast waste of resources in internal warfare that resulted from Empire’s inability to achieve an alternative succession principle to determine the next emperor.

Romans’ military advantage over its foes was never all that great. Romans had better weapons and better organization, but its foes often had larger numbers and far lower costs as their societies expected every able-bodied young man to fight, and to supply his own training and weapons with which to do so.

Perhaps there was no good solution to the crisis of the third century? For as Rome’s enemies began to raid in much larger numbers and with better organization, the former methods of border control (maintaining a vast but thinly defended border) inevitably collapsed, and what replaced it was both less effective and more expensive.

Even when Roman armies were actually available for border defense, instead of being diverted into internal warfare, of course.


29 Harun April 4, 2017 at 11:32 am

You need to keep in mind the German tribes also served Rome, and thus they learned a lot culturally and militarily from that service. Exchange of ideas and all.

Its like teaching Japan about firearms.


30 rayward April 4, 2017 at 7:22 am

Of course, the same explanation applies to the antebellum south: cheap (save) labor was the disincentive to investment in productive capital. Southern planters were content to produce raw materials (cotton, sugar cane, etc.) to be shipped elsewhere (the north, England, etc.) for use in producing finished goods. We have seen something similar today: owners of capital are content to invest in speculative assets (financial assets and real estate) rather than in productive capital because the returns from rising asset prices exceeds the return from productive capital. Cowen’s Great Reset, like the War Between the States, will provide the necessary adjustment.


31 rayward April 4, 2017 at 7:27 am

(slave) labor not (save) labor. It’s early.


32 So Much For Subtlety April 4, 2017 at 7:33 am

cheap (save) labor was the disincentive to investment in productive capital.

So, please correct me if I am wrong, but what you are saying is that Trump really needs to build that wall?

Welcome to the Alt-Right Ray.


33 FUBAR007 April 4, 2017 at 10:30 am

The compounding factor you’re leaving out is the substitution of capital for labor thanks to technology.


34 jonfraz April 4, 2017 at 3:48 pm

In the case of the Romans they just didn’t have the technology to replace human labor. Even the rigid horse collar still lay in the future


35 Epictetus April 4, 2017 at 8:31 am

We have slave labour today. It’s called income tax. But all high earners are enslaved for roughly 60% or more of their working lives, and most folks are in denial about it. (I’m not saying here that it’s either a good or bad system).


36 Ed April 4, 2017 at 9:28 am

“We have slave labour today. It’s called income tax.”

I usually don’t correct these talking points, but this is ridiculous. Slavery is people enjoying property rights over other people. You can avoid the income tax completely. You are not compelled to have income. You can even have income and not have it subject to the income tax, which is designed to mostly capture wage income. Many people with lots of money do exactly this. The income tax isn’t even serfdom, let alone slavery.

The only tax would be close would be a head tax, that is payable regardless of whether you have the money or not.


37 N.K Anton April 4, 2017 at 9:34 am

Not even close.

Thanks for laying bare how silly ‘dont tread on me’ libertarianism is, though.


38 N.K Anton April 4, 2017 at 9:35 am

woops, meant for #17.


39 cowboydroid April 4, 2017 at 9:53 am

Sort of like saying a slave is free to not be a slave by just not working. Sure, he may die by some means or other – probably at the Masters hand – but hey, he is not compelled to be productive.

The only way to justify the government’s claim to a portion of what you produce (I.e. serfdom) is to claim that the government has some property right in the product of your labor.

And since your labor is yours by virtue of being your body being yours, any claim upon your labor is a claim upon you.

Which is what most people call slavery.


40 jonfraz April 4, 2017 at 3:53 pm

You receive services from the government and hence are morally obligated to pay for them. Ergo, taxes.


41 cowboydroid April 4, 2017 at 5:22 pm

Is that tongue in cheek? Any mafia can use the same logic.

42 jonfraz April 5, 2017 at 3:07 pm

And your morality is that of a thief

43 cowboydroid April 5, 2017 at 10:15 pm

It’s still unclear whether you’re being cheeky. The entity that attempts to moralize unjust taking – or theft – is the state. Same as the mafia, they call it “protection money.”

Just because I receive services doesn’t mean I’m morally obligated to pay for them, just as I am not morally obligated to pay the mafia. I’m only morally obligated to pay those with whom I have a *contractual* agreement.

44 sort_of_knowledgable April 4, 2017 at 4:18 pm

Most people distinguish between having a claim on a portion of a persons labor, and requiring the person to perform specific acts of labor often in harsh and dangerous conditions and only the later is called slavery. When the best hunter of a tribe turns over the best cut to the tribal elder he is generally not regarded as enslaved, but when a couple of members of a neighboring tribe are taken and one of them is staked out as bait for a tiger hunt and the other is required to mate with members of the capturing tribe they are regarded as enslaved.


45 cowboydroid April 4, 2017 at 5:27 pm

So using your logic, someone can claim 100% of your labor, but since they didn’t force you to do a specific task, you’re not a slave. I don’t buy it, and I don’t think most others do either.

Slavery is, in the most fundamental sense, any system in which principles of property law are applied to people. Exercising a non-contractual claim on the product of someone else’s labor is slavery.

46 Epictetus April 4, 2017 at 11:28 am

Ed, as I say, most people are in denial about it. But I’d really like to understand your view. I’m perfectly happy to be called ridiculous, but I’d really like to hear why you think it’s ridiculous; you make a few points but Cowboydroid has disposed of those completely, I think, and even in the points you make you don’t actually try to prove it’s ridiculous. The force behind my argument is the fear that perhaps civilization cannot exist without slavery, and our task then is to make slavery as bearable as possible. We are on the cusp of creating artificial intelligence, i.e. a human made variety of sentient beings, for the purpose of enslaving them. I’d really like to hear your reply to Cowboydroid’s point, and if it is any incentive for you, feel free to spray me with insults. It’s your argument I’m after, the blather is neither here nor there. But perhaps you might not mind too much me begging you to remember that I did mention that I am not saying income tax as slavery is either good or bad for present purposes. I’m certainly not arguing here against income tax, any more than I would argue against dark clouds, broccoli or screaming babies. As an aside, slavery, however terrible, has produced some great literature.


47 msgkings April 4, 2017 at 12:02 pm

This is the essential crux of anarchism (and Marxism). In theory it’s elegant and true, in practice it’s meaningless. Yes, there is a State, and the State requires us all to support it with our labor. In a perfect world there would be no State (even Marx said eventually the State would wither away), and we would all live together and coordinate in peace and harmony.

In reality this simply is impossible with a group of humans larger than a small tribe, say 100-150 people. It’s simple the price of being a human on this planet today, having a State. Sorry. Grow up and deal with it.

Epictetus seems ok with it. So yes, theoretically we are all partly enslaved to the State. But there is no alternative that works.


48 cowboydroid April 4, 2017 at 12:16 pm

Panglossian Fallacy. Can spot it a mile away.

All of your arguments were used centuries ago by monarchists, and they were no more valid then.

49 msgkings April 4, 2017 at 12:26 pm

How is it a fallacy when it describes the world correctly? Things have never been better overall. Have a look:

All your arguments were used centuries ago by pessimists, and they were no more valid then. And again, theory and reality are simple not the same thing. So you can keep ‘winning’ the pixel wars here and the world will keep ignoring your crankery.

50 jonfraz April 4, 2017 at 3:55 pm

Quibble but a significant one: You don’t have to support the state with labor. It will happily accept tax payments from non wage income

51 mpowell April 4, 2017 at 4:33 pm

Yeah, a philosopher named Nozick wrote a whole book trying to advance the claim you make. And then it gone torn to shreds by a lot of other philosophers. The trouble is that everything turns on being able to equate a claim on the product of your labor with a claim on your physical person. But Nozick didn’t have a real good argument for why we should accept that equality and I’ve never heard anyone else offer one either. Most of the time all you get is an assertion. But you really need an actual argument for equating these two things. What is it?


52 cowboydroid April 4, 2017 at 5:36 pm

Can you provide a logic for who has the best claim on the product of your labor?

John Locke already wrote a treatise on this. Hopefully you’ve heard of it.

Ownership is about control. If you don’t exercise control, then you don’t exercise ownership. If you don’t control your own body or aren’t able to control your own body, then you don’t have ownership over your own body.

Hopefully you can agree that each individual has self-ownership. But where does that self-ownership come from? It comes from having the best claim by being the first inhabitant of the body, i.e. homesteading. The homesteading principle applies to the rest of the physical world. Whoever claims an unclaimed resource first has the best claim, and from there, anyone who wants the thing must trade for it.

You have ownership in your labor because you have ownership in your body. No one else has a legitimate claim to your labor without your consent.

This is the reason many statists attempt to contrive a theory of consent to the state; they already implicitly admit that each individual has ownership in himself and his labor, and that the state has no legitimate prior claim.

53 Troll Me April 4, 2017 at 11:28 am

There is a system that allows you to earn in 8 hours what a labourer in an uncapitalized country can only earn in an entire year.

60% may be too low for the hard work involved in maintaining a system where you can earn in a day what a labourer in an uncapitalized country earns in a year.

Also, your whining makes me sick.


54 Harun April 4, 2017 at 11:29 am


Taxes were increased AFTER we became rich.


55 Epictetus April 4, 2017 at 11:35 am

Troll me — thank you for laying out one of the apparent advantages of income tax so well. But forgive my dimwittedness, who exactly was ‘whining” about it? I think you can relax and let go of your sickness, at least for now. No one was whining. It’s a debate or enquiry. More positively, what percentage would you say is the right level, if 60% is too low. The U.K. tried around 102% back in the 60s or 70s, at the top end of things, which led to a brain drain, but I’d love to hear your estimate and your supporting argument.


56 Troll Me April 4, 2017 at 12:39 pm

Comparing a 60% overall tax rate to “slavery” while being in a position where you make so much money that such a rate applies is laughable.

Saying that calling it “slavery” is whining is actually an insulting understatement both to those who have experienced slavery and those who would not mind at all to be in a position where their total tax rate were 60%. Because that’s only possible if you makes lot of money.


57 Epictetus April 4, 2017 at 2:40 pm

TrollMe — so you feel that the right to make comparisons depends on how rich one is? An alternative view is the making comparisons is fundamental to intellectual enquiry. And if you are saying that you know better than I do what my own personal experience of slavery is (there might be a clue in my name), I see little point in trying to suggest any possible flaws in your stance. Comparing both these differences of our opinions, if you will be so gracious as to indulge me your permission, conjures up the notion of slavery to trigger warnings. I thank you for this memorable idea. Now, as I am in a country where it is bedtime, I shall bid you goodnight. In this country where I am, there just happens to be a high degree of poverty and much real slavery.

58 Troll Me April 4, 2017 at 8:36 pm

You need a trigger warning if I suggest it would be better to stick with dictionary definitions of words instead of using them in exaggerations to absurdity well beyond logic?

If you live in a country with real slavery and pay 60%, I’d venture a guess you’ve got it better than 99% at least, so … again, I’m not sure what you’re complaining about.

59 Epictetus April 5, 2017 at 2:15 am

TrollMe – can you point to where I was complaining? By all means, fill your boots with arguments against a straw man, but nowhere have I complained against tax. I am in favour of income tax, as things stand. But your position is a curious one, if Inunderstand you correctly. You like the idea that x% of one’s productivity shall be transferred without recourse to the state if we label this state of affairs “taxation”, but you find exactly the same arrangement insulting if the label is changed to “slavery”. Help me here, is this your position?

60 Epictetus April 5, 2017 at 2:41 am

And, Troll Me, please forgive me if I decline your suggestion that I should “stick to to dictionary definitions”. (I note, en passant, that you chose not to actually quote any dictionary definition of slavery. No matter). I do this for two reasons. First, yes, they can be helpful, but progress, including human and societal progress, comes more often from challenging the dictionary definitions or refining and improving them. The abolition of slavery — and may I take it that you and I agree at least on this, that abolition was a Good Thing? — owed very little to dictionary definitions. Secondly, definitions found in dictionaries are the work of people like you and me, humans, and are often incomplete and sometimes wrong. That’s why we are not using 500 year old dictionaries. There are dictionaries in which homosexuality is defined as an illness and the world is taken to be flat. So no, I see no need in this debate for either of us to be a slave to dictionary definitions, and may I commend to you that you emancipate yourself from such intellectual shackles. I am no expert in the etymology of “slave”, and am very willing to be corrected by any superior knowledge that you happen to have, but my understanding is that the original definition of “slave” was simply a person from the Slavic lands, chiefly what for some time was known as Yugoslavia, because it produced so many Roman slaves — and emperors too. Would you allow me to suggest that we try to keep this debate somewhat above the level of seeing who can find a dictionary definition somewhere that just happens to support their own preconceptions? Such activities are rather too close for comfort (mine, at least), to a fundamentalist looking up passages in some holy book to justify this, that or the other. You mention logic in your post, which if I may suggest, might be a more fruitful mechanism to employ than dictionary definitions, provided that we also respect the quality of the premises to which logic is applied. I await your response with anticipation.

61 Troll Me April 5, 2017 at 5:34 am

Yes, my position is that being bonded and in chains is much worse, and deserving of its own word, compared to exceedingly wealthy people who are expected to chip in something for everyone doing them the huge favour and helping them get fantastically rich.

I you want to get into this issue of the slavery existing in your country, please do take the conversation there.

But in the meantime, it sounds like someone who “lived life on easy” and resents that he’s ever gotta chip in a little something.

62 cowboydroid April 4, 2017 at 12:18 pm

You’re crediting the state with designing a free market economy?

Do you realize the inherent contradiction of that claim?


63 Troll Me April 4, 2017 at 12:45 pm

Without state powers, markets go to monopoly.

For which reason libertarians are mostly as naive as leftist anarchists who think removing the state would result in the removal of oppression in a context where somehow communities will make things work.

Interesting point about the contradiction. I’m not sure how to answer that. But I think to have a free market in the sense idealized by many libertarians, there would most certainly be a need for a state of some sort to protect most of the things that basically define a free market.

Like, you can’t throw a tomato at someone every time they leave their house unless they (insert here). Preventing that would require a role for the state for any civilized or remotely efficient approach to dealing with that and many other situations.

Imagine trying to do a business contract without the state.


64 cowboydroid April 4, 2017 at 1:10 pm

“Without state powers, markets go to monopoly.”

…A common refrain from the Left, but which is not generally supported by evidence, economic history, or the economics profession.

Leave aside the odd claim that we need a monopolist (the state) to prevent monopoly in markets, there is simply no evidence for your assertion.

All markets require to maintain competitiveness is strong protection for property rights. And this is accomplished by having a robust system of dispute resolution. If the modern state relegated itself to simply supplying this, you’d have a much stronger argument. But it can be argued that this is probably one of the least priorities of the state. It chronically underfunds and undersupplies its court system, and passes numerous statutes that weaken property rights.

All the problems with monopoly that you recognize do not magically disappear with a state. It suffers from all the same inefficiencies.

Libertarians and anarchists don’t dispute the necessity of strong protection for property and persons. They dispute that we need a monopoly to provide it. The burden of proof lies with those claiming we need a monopoly. And the proof given thus far is decidedly unconvincing.

65 Harun April 4, 2017 at 1:35 pm

LOL. Show me a non-state monopoly in the ancient world.

Meanwhile, you can look at Somalia under “anarchy” and find thriving, competitive markets in some areas where one would not normally have expected it.

66 Troll Me April 4, 2017 at 2:12 pm

You could alternatively try to argue that firms will not try to maximize profits.

Shall we trash economics from top to bottom for a basic error in Chapter 3 of the introductory course, or can I get away with such an obvious claim without needing evidence.

How about this. There is such a thing as a competition bureau. It would not exist to prevent anti-competitive practices if markets would sort that out on their own.

In fact, this is a market solution of sorts. Via political free, the diffuse public manages to achieve some control on the excesses that we can only expect under the requirements of law for executives and CEOs to work towards maximization of profits of corporations under their responsibility.

67 Mike W April 4, 2017 at 9:27 am

“[E]conomic expansion and growth of the kind that took place between c. 200 BCE to 150 CE was not self-reinforcing. It generated a growth efflorescence that lasted several centuries, but it ultimately undermined itself because it was based on an intensification of the slave economy that, in turn, reinforced the cultural supremacy of the landowning aristocracy and this cultural supremacy in turn eroded the incentives responsible for driving growth.”

The rise of a complacent class.


68 Harun April 4, 2017 at 11:35 am

Analog to silicon valley outsourcing all the dirty production to China, and then voting for green policies in America?


69 msgkings April 4, 2017 at 12:03 pm

All societies get ‘greener’ as they grow rich.


70 Harun April 4, 2017 at 11:28 am

As you go back in time, the number of sources becomes smaller and smaller, especially for “mundane” documents that monks didn’t see fit to translate. Handful of sources means we really can’t be sure how much reality we’re getting.

Then, you hit clay tablets, and suddenly we see all the business correspondence and receipts.

Its highly likely there was “business” writing about great companies (Crassus?) but it just didn’t seem as vital as other works to re-copy by hand.

Look back at history, and what people see are stone monuments left by Kings who desired to be known for all eternity and lists of conquests, etc.

Probably slavery, and making your fortune by invading other lands and looting temples would put a damper on Steve Jobs like commercial empires to some extent, too. Also, that some business connections were patron-client made them a bit more political as well.


71 Epictetus April 4, 2017 at 11:41 am

Harun, v interesting point about “then you hit clay tablets”. You got me thinking, thank you. One think you prompted me to wonder about is the book _1001 Nights_. In a way it’s a manual of trading and business. Parts are c. 12 000 years old. But perhaps it was more an Indian, Arab, Turkic and Iranian gig rather than a Latin one.


72 Harun April 4, 2017 at 1:37 pm

There is more connections than you’d imagine between clay tablets and, say, Greek or German than you’d imagine.

They literally translated some clay tablets because its sounded German.

Bedrich Hrozny, 1879-1952, a Czech professor at the University of Vienna, in 1916 deciphered the Hittite language. The starting point was a phrase on an inscription in cuneiform: `Nu Ninda-An Ezzateni, Vatar-Ma Ekuteni’. Since many Babylonian words were included in Hittite texts, the clue was provided by the Babylonian word `ninda’, which means `food’ or `bread’. Hrozny asked himself a simple question: What does one do with food or bread? The answer, of course, was one eats it. So the word `ezzateni’ must be related to eating. Then the `-an’ suffix on `ninda’ must be a marker for a direct object. With these two propositions in hand, Hrozny looked at both the vocabulary and the grammar of Indo-European languages. He noted that the verb to eat is similar to the Hittite `ezza’ – not only in English, but also in Greek (edein), Latin (edere) and German (essen), and especially in medieval German (ezzan). If that was true, the second line of the inscription was not much of a problem, since it began with the word `vatar’, which could easily be translated as English `water’ or German `wasser’. Hrozny proposed the reading of the whole sentence as “Now Bread You Eat, Water You Drink” and this turned out to be right for the whole Hittite language. It was of Indo-European origin. ((1)


73 Epictetus April 4, 2017 at 2:25 pm

Wow! Must brush up on Hittite. Stuck on Sogdian at present. Many thanks, most interesting.


74 CMOT April 4, 2017 at 12:44 pm

‘Observe that Roman history leaves no traces of great mercantile companies like the Bardi, the Peruzzi or the Medici. There are no records of commercial manuals of the sort that are abundant from Renaissance Italy; no evidence of “class-struggle” as we have from late medieval Europe; and no political economy or “economics”, that is, no attempts to systematize one’s thoughts and insights concerning the commercial world.’

The absence of evidence is not evidence of absence. Koyama simply doesn’t seem to understand that. Much shorter essay if he did.

On a side note, the Islamic world practiced slavery on a scale even larger than the Romans but enjoyed a thriving commercial system and in many places a material standard of living that exceeded or at least rivaled the West right up until the industrial age.

So maybe not having an Industrial Revolution is the normal thing, and having one is what need special explanation.


75 Troll Me April 4, 2017 at 12:54 pm

I wonder if the 1500 years between the two are relevant.

I can understand copying out philosophical works, but centuries-old commercial statements? Not likely.


76 JWatts April 4, 2017 at 5:13 pm

“I wonder if the 1500 years between the two are relevant.”

If it is, then the slavery argument becomes irrelevant or at least less relevant.


77 Troll Me April 4, 2017 at 8:38 pm

There were also slave rebellions. Which leads me to believe that there were slaves.


78 Aretino April 4, 2017 at 6:02 pm

The thriving commercial system of the Islamic world owed a lot to Muhammed being a merchant; hence, Muslims could not look down on merchants the way Romans did.


79 CMOT April 4, 2017 at 7:25 pm

There’s tons of Islamic writers waxing rhapsodic about agriculture and disparaging commerce And the Ottoman Empire, the largest, longest lived, and most successful pre-industrial Islamic state strongly disdained commerce by the ruling class. Greek, Armenian, and Lebanese Christians, following conversion to Islam, more or less ran the commercial aspect economy, with help from Jews and lesser Christian tribes.


80 Ricky Tylor April 4, 2017 at 2:56 pm

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81 Brett April 4, 2017 at 3:33 pm

Observe that Roman history leaves no traces of great mercantile companies like the Bardi, the Peruzzi or the Medici. There are no records of commercial manuals of the sort that are abundant from Renaissance Italy;

That’s most likely because the records simply haven’t survived from an era more than 16 centuries ago that lacked printing presses and ubiquitous cheap paper. The stuff that we do have was either accidentally preserved and later discovered (like those Egyptian records of an estate found in a trash heap), or was preserved because later societies considered it valuable (which usually did not include commercial records).


82 Eric Rasmusen April 4, 2017 at 10:36 pm

I admire Temin generally, but it doesn’t sound right that the Roman Empire was as prosperous as Europe in 1700. Look at the population figures in Wikipedia. It seems that by even by 1000 Italy and France had populations about as high as in Roman times (Spain, much higher), and populations grew a lot up to the BLack Death around 1350. Medieval technology was better than Roman, too. and


83 Rafael R April 5, 2017 at 3:48 pm

In my impression the Greco-Roman world was enormously more prosperous than Europe in 1700. This is clear when you look at the archaeological evidence: houses in towns like Olynthus and Pompeii were enormously better than in any town in Europe in 1700: the typical Classical Greek house around 300 BC was larger than the average American house today. So, in some ways, the archaeological evidence points that living standards were superior to the UK in the mid 19th century in fact. Systems of sanitation, for instance, were certainly superior in the Roman case. While the vast archaeological remains of Greco-Roman entertainment systems such as the theaters and amphitheaters adds support to a very high level of per capita consumption above subsistence goods. Classical Greece and Roman Italy were also more urbanized than the UK in 1800. The depiction of the classical economy as primitive flies in the face of the obvious archaeological evidence.

Industrial revolution? You mean a sustained and consistent growth in per capita income? Well, in Greece from 800 BC to 300 BC had a massive growth in population density (by a factor of 10-15) combined with a massive growth in per capita consumption: typical archaeological remains per house increase by a factor of 5 to 10, while the value of houses increases by the same factor. So there was an “industrial revolution” in ancient times.

Slaves you mean? The typical Athenian citizen was much more free than the typical European in 1800, who were in their vast majority mostly unfree in many ways and hence closer to slaves than the vast majority of the population of Classical Greece. The same can be said about the massive amounts of taxes people pay in modern times (the income remaining from taxes is our modern concept of peculium). The Greeks had the concept of slavery because they had the concept of freedom, medieval europe had no concept of freedom and hence no concept of it’s absence: “slavery”.


84 Rafael R April 5, 2017 at 3:59 pm

For instance, in Classical Greek town of Priene, a town of about 4,000 people, one third of the houses had indoor toilets, when more than 1/3 of American houses had toilets? Around the 1910’s. While the per capita supply of water or Ancient Rome – about 1,000 liters a day, was 100 times higher than typical for 18th century cities.

Why the ancient world declined? Simple, because ancient prosperity was based on the institution of the city state: in the mediterranean world there were 2,000 city states, such as Athens, Rome, Carthage, Sparta, etc. Each city had a different set of institutions and competition between these states lead to institutional innovation. Rome, defeated and conquered all other city states. It follows: No more incentive for institutional innovation, improvement or even maintenance of current institutional efficiency. Hence the reason why the ancient world peaked during the so called Early Roman Period (150 BC to 100 AD), as the autonomy of individual cities was gradually eroded to be completely lost by late antiquity. In fact, this decline in autonomy began around the time of Alexander and Phillip back in the 330 BC’s, so the seeds for the demise of the ancient world were planted many centuries before it actually started to decline. It’s also true it’s economic dynamism was already lower after 330 BC than before.


85 Rafael R April 5, 2017 at 4:17 pm

By the way, a good book about the subject is: (The Making of the Ancient Greek Economy: Institutions, Markets, and Growth in the City-States, Alain Bresson)

He also makes the “Rome’s political centralization destroyed the ancient world” argument. I notice most people don’t know much about the institutions of the ancient world and the fact it was never a “Roman” world, but a multicultural world of thousands of individual polities in which the Hellenic culture was predominant, a world which was conquered by an Italic city state called Rome.


86 Toquam April 6, 2017 at 8:55 pm

“There but for the grace of God go I” was a material part of slavery in classical antiquity, from the Trojan women to the Sicilian tyrant who sold Plato as a slave for giving bad advice, to Claudius setting up a service to check claims that an ordinary citizen had been enslaved.

Except for the Jubilee in the Torah, there seems to have been close to zero abolitionism, except perhaps among Greeks who objected to Sparta making helots of Greeks or Alexander selling off Thebes.


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