Overregulation Was a Significant Cause for the Fall of the Roman Empire

I. Prologue - The Julio Claudian Emperors After Augustus defeated Mark Antony at the Battle of Actium in 31 BCE, the world celebrated. Late in the Hellinistic period, the most of the various empires controlling the Mediterranean had stifling taxes that snuffed any chance of growth. In addition, constant wars had made land trade almost impossible, and sea trade non-existant. The world was in a severe period of stagnation. However, once Augustus ruled the Mediterranean, while political freedom decreased (at least in Rome) to a degree, economic freedom increased. The constant warfaring stopped, taxes were lowered, tax codes made more simple (for example, the practice of "tax farming" and the bad system of taxation were ended in favor of a more slimmed and refined system), trade encouraged, and growth took off. This continued from Augustus, through Tiberius, and eventually to Claudius. The situation was described by Michael Rostovtzeff as, almost complete freedom for trade and of splendid opportunities for private initiative. " This allowed the economy to grow, prosper, and allowed the Pax Romana to set in. In general, affairs were good for the empire. [1][2][3]II. Debasement, Inflation, and Taxation Unfortunately, plunder was fast drying up as the last major territory, Britian was conquered. However, there was still a huge demand for revenue across the empire. Nero introduced the process of debaseing the currency (lowering the amount of precious metals (i. e. gold, silver, etc. .. ) in currency). By the reign of Claudius II Gothicus, the amount of silver in the denarius was only 0.02%. Here is a graph showing the history of the denarius's debasement: [4]This made the intrinsic value of the coin drop, making it more worthless. Prices in this period rose in most parts of the empire by nearly 1,000 percent. The only people who were getting paid in gold were the barbarian troops hired by the emperors. The barbarians were so barbarous that they would only accept gold in payment for their services. Interestingly, the continual debasements did not improve the Empire’s fiscal position. This is because of Gresham’s Law ("bad money drives out good"). People would hoard older, high silver content coins and pay their taxes in those with the least silver. Thus the government’s "real" revenues may have actually fallen. [1][5][6]This led to higher taxes. Taxes on the rich were sharply increased. This had much wider consequences thaan it would today because the rich people were the only ones doing any high amount of commerce that contributed to the economy. As the private wealth of the Empire was gradually confiscated or taxed away, driven away or hidden, economic growth slowed to a virtual standstill. [1]As the wealthy were no longer able to supply the necessary taxes to support the ever-increasing military demands from the borders where barbarians were invading, taxes on the lower and middle cases were raised. "The heavier the pressure of the state on the upper classes, the more intolerable became the condition of the lower. "[1][2]This virtually collasped the entire Roman Economy. This led to the taking of property, such as cattle and food to the still-increasing demands of the army. Eventually, the Empire passed laws tying people and their descendents to the jobs they currently possessed. Despite laws passed to prevent migration from the cities to the countryside, urban areas gradually became depopulated and many Roman citizens abandoned their specialized trades to practice subsistence agriculture. This, coupled with increasingly oppressive and arbitrary taxation, led to a severe net decrease in trade, technical innovation, and the overall wealth of the Empire. [7][8]III. Disloyalty, Migration, and FeudalismWidespread taxation and the practice of tying people to their occupations greatly disheartened the population. The result was increasing feudalization of the economy and a total breakdown of the division of labor. People fled to the countryside and took up subsistence farming or attached themselves to the estates of the wealthy, which operated as much as possible as closed systems, providing for all their own needs and not engaging in trade at all. Meanwhile, much land was abandoned and remained fallow or fell into the hands of the state,whose mismanagement generally led to a decline in production. Trade ceased almost entirely. [1][2]This fast dried up the Empire's tax base. The Empire tried to respond by raising more taxes, but the more that happened, the more people deserted the Empire and the less amount of money was going to the Empire. In short, taxpayers evaded taxation by withdrawing from society altogether. Large, powerful landowners, able to avoid taxation through legal or illegal means, began to organize small communities around them. [1][9] In the end, there was no money left to pay the army, build forts or ships, or protect the frontier. The barbarian invasions, which were the final blow to the Roman state in the fifth century, were simply the culmination of three centuries of deterioration in the fiscal capacity of the state to defend itself. Indeed, many Romans welcomed the barbarians as saviors from the onerous tax burden. Eventually, the Roman Empire had to inevitably fall from this disloyalty, and so they did. [1][10]Conclusion The fall of Rome was fundamentally due to economic deterioration resulting from excessive taxation, inflation, and overregulation. Higher and higher taxes failed to raise additional revenues because wealthier taxpayers could evade such taxes while the middle class—and its taxpaying capacity—were exterminated. Although the final demise of the Roman Empire in the West (its Eastern half continued on as the Byzantine Empire) was an event of great historical importance, for most Romans it was a relief. Sources [1]: . http://www.cato.org...[2]: Rostovtzeff, M. (1957). The Social and Economic History of the Roman Empire, 2nd ed. , 2 vols. London: Oxford University Press. [3]: Oertel, F. (1934). "The Economic Unification of the Mediterranean Region: Industry, Trade, and Commerce. " Cambridge Ancient History 10: pp. 382—424. London: Cambridge University Press. [4]: . http://lewrockwell.com...[5]: . http://mises.org...[6]: Rostovtzeff, M. (1926). "The Problem of the Origin of Serfdom in the Roman Empire. " Journal of Land and Public Utility Economics 2(2): pp. 198—207.2(2): 198—207. [7]: . http://en.wikipedia.org...[8]: Mises, Ludwig von. "The Rise and Fall of Civilization. "[9]: Bernardi, A. (1970) "The Economic Problems of the Roman Empire at the Time of Its Decline. " In Cipolla, C. (ed. ) The Economic Decline of Empires, pp. 16—83. London: Methuen. [10]: . http://www.businessinsider.com...