The Last Centuries of the Roman World

The economic life of the ancient world began to decline relatively early. The first signs of this were already visible at the end of the 2nd century AD, though more perceptive contemporaries had noticed them even earlier.

In the following centuries, decisive changes took place in the structure of the economy. Despite technical progress, the decline of agriculture became increasingly alarming. The number of cities grew, but they became centers of consumption rather than production. Their inhabitants proudly claimed that they used their hands not for breaking new ground, but for applauding theatrical and circus performances.

The day was approaching when uncultivated lands would turn into vast wastelands, and due to the depopulation of the countryside and the shrinking number of slaves, agriculture had to face a severe labor shortage.

Imports faltered because of external attacks and internal anarchy. The situation was made even worse by the fact that neither military service nor farming was attractive. These dual burdens would eventually be taken off the Empire's shoulders by incoming foreigners (above all the Germans).

All these phenomena manifested most clearly in the 3rd century. The transformation began with Diocletian (284–305), and it is undeniable that the emperors of the 4th century created the conditions that would later characterize the early Middle Ages.

The most visible change occurred in the appearance of cities. Since the Empire's defense was based on the frontier fortifications, the limes, the cities themselves were left without protection, and in the absence of control they were able to expand freely. These sprawling cities, however, had to undergo drastic changes during the first barbarian invasion in the 3rd century, when genuine panic broke out among their inhabitants.

Most Gallic and Italian cities were fortified at the end of the 3rd and in the first half of the 4th century. The building of the walls was probably inspired by Rome itself, where Aurelian began to erect a second wall in 271. The residents of the cities felt safe only behind walls. Their outer appearance changed: to meet defensive requirements the cities were "pressed into a stone corset," which drastically reduced their area. Public buildings were left outside the walls.

Most cities of the Empire had been created artificially through conquest—as coloniae—and had never truly become industrial or commercial centers, at least not in the West. Agricultural work was performed only by slaves; free people considered it beneath their dignity. This extreme aversion to physical labor had tragic long-term consequences. Those who fled agricultural work flocked to the major cities, where the proletariatus grew ever larger, made up of the useless plebs, freed slaves, and impoverished free citizens. These free citizens lived exclusively from state distributions (annona).

The imbalance between supply and demand reached tragic proportions precisely when the first barbarian attacks began.

In Diocletian's time, frontier defense was carried out by 400,000 soldiers instead of the previous 300,000. Supplying such a large military force and such a large proletariatus placed an enormous burden on the state, especially since agricultural yields had been steadily decreasing since the 2nd century. They tried to ease the labor shortage by using slaves, but sources were dwindling. Skilled agricultural experts and innovations were lacking, so the most obvious solution seemed to be imposing more and more taxes. Diocletian introduced measures for this in the early 4th century. The new system taxed both the inhabitants of the provinces and Roman citizens, who had previously been exempt (the iugatio–capitatio, the land and head tax).

The financial crisis had already begun under the Severans, as the weight and precious metal content of coins steadily decreased. The currency stabilization Diocletian initiated in 301 was completed by Constantine. He introduced two new types of currency: the gold solidus and the silver siliqua.

The stability of the solidus was ensured through strict regulations. After the fall of the Empire, it retained its original weight and value as Byzantine currency until the 11th century. It remains the most stable currency in the history of money!

Finally, one more decree of Diocletian was issued: the edict on maximum prices and wages. Its aim was to establish a uniform maximum price level within the unified Empire. Clearly, the goal of Diocletian's economic policy was state control, direction, and ultimately the direct takeover of production and distribution.

Robert Latovche, The Birth of Western Economy, London, 1961 (translated by Éva László)