I was just thinking about capital accumulation and the capital consumption by governments, and it dawned on me.
Could the rise of Rome and then the 500-600 of the dark ages be a giant depression? I mean all the silliness that occured during the end of the Western Roman Empire, could that have lead man to have to re-accumulate all of that capital lost to the empire?
I could be wrong and I assume I am, I was just thinking this may be interesting.
Ludwig von Mises argued exactly that - see Human Action pp. 761-763. The process of Roman economic decline as a result of interventionism begun in the 3rd Century.
Since a depression is by definition a lack of money, I’d say you’re absolutely right. The “Crisis of the 3rd Century” began the slow and painful downfall of Rome, where through taxation, military expansion, and especially inflation, 95% of the world’s wealth was destroyed. Only when all the centralized bureaucracy collapsed, and people could once again organize on a local level and protect their property, could the economy finally start to nurse itself back to health. This is a long process when starting from zero.
http://www.youtube.com/watch?v=S4KuDlCaWPA
In the four hundred years that Rome remained a free republic, and for about two hundred years following it, Rome had one of the freest economies the world had ever seen. Its political system of organized chaos usually left the politicians too busy competing with each other to oppress its citizens or pass ridiculous laws. During the time of the Caesars, a resident of the Empire worked an average of one day to pay his taxes. Rome’s citizenry was made up of peoples from all over the western world, all with a healthy distrust of foreigners-- yet all of those foreigners remained covetous of Roman citizenship. Her Army was the strongest and most feared in the world, yet per-capita, was one of the smallest. Rome’s currency was universally accepted everywhere and sought even beyond her borders. Any of this sound familiar? I’ll leave it to you to fill in the highly abbreviated ending.
When Rome’s currency finally collapsed, so did civilization. It had a brief rebirth in the Eastern Empire with the bezant, the second “world reserve currency”, before it too became debased and was forcibly reorganized during the 4th Crusade, when the Venice claimed most of Constantinople’s remaining gold for itself.
This led to one of the few times where good money was able to drive out bad. The Venetian ducat became the new universally accepted currency, and competition with the florin ensured a steady supply of sound money throughout the Renaissance.
In short, sound money = civilization. Lack thereof = tyranny, poverty, and chaos.
Wait, what?
Rome had one of the freest economies the world had ever seen
I guess slaves didn’t appreciate that freedom, did they?
One other thing: I, for one, am not about to argue in favor of sound money on the basis that it will “make our country strong”. I couldn’t care less about whether the arbitrarily-defined part of the world I live in happens to be “strong” or not. I don’t even know what “strong” is supposed to mean here. Why does any of it matter?
Most slaves came from Rome’s wars of conquest. I’d wager that this drastic increase in the number of slaves did terrible things to Rome’s economy, fundamentally. Actual jobs were done by slaves, so free subjects and citizens were compelled to join the military. Distributed as they were to powerful proconsuls and legates in the provinces, and with nothing better to do with their time, the huge legions enabled the permanent states of civil war and destruction that characterised much of Rome’s history.
Let’s see… I’ll do my best to answer everything, provided I can still post with this 3rd world internet.
Yes, a depression is a lack of money. In Rome’s case, it was inflated out of existence. During the Great Depression, paper fortunes disappeared, reducing the total quantity of money by 1/3. Different methods, same effect: less money.
On the issue of slavery, the point made about a free economy was obviously concerning those not in bondage. It is useless to try and judge the morality of ancient societies by current moral beliefs, especially when there is no society on earth that has not had that institution.
The issue of slaves taking jobs from freemen is an old argument from Caesar’s time, and was just as false then. It is like the belief by some that machines are taking labor from workers, or Obama declaring that getting rid of ATM’s would create jobs for bank tellers. This is a leftist political issue and nothing more (yes, Caesar was a leftist). SLavery is, of course, grossly inefficient in addition to its moral shortcomings. Slaves were put largely to unproductive use, just like resources are misallocated by governments today.
Rome’s armies grew at an out of control rate beginning in the third century. In the time of the Caesars, most of the legions were complaining that there were too few wars to fight. The quality of soldier that conquered half the known world was already ancient history by the 3rd century. War itself is not the health of the State; it is the ability to wage war-- i.e. money, and Rome had less and less of it. Just having a bigger army is no substitute for a well-trained one that can police a country’s territory effectively, or for sound economics that encourage trade instead of looting.
Lastly, there was once this magical, utopian society where everyone lived in perfect harmony with their fellow man. Then another tribe came along and killed the men, raped the women, enslaved the children, and stole all their stuff. The end. Any country needs to be able to defend itself. When war breaks out–because it always will-- the side that is most well-financed has a distinct advantage.
Please prove to me that a depression is a lack of money.
… You call that an argument? Try again. And mean it this time.
Not sure if this is directly related, but here is what my Art History teacher claimed:
In the old world way of things, an empire needed to expand to survive. If it did not, it withered. He pointed to Rome and the Ottoman Empire. He claimed that war causes innovation, and without innovation there is no competitive advantage.
When I asked him why in the current world we can have non-expanding countries be working well, he said that we still conquer others, just through markets and not war.
War results in innovation as it relates to war. Though this often spills into the private sector, the “research & development” costs would never be considered worth the effort under normal circumstances. The State must always turn to the private sector for innovations, as it did in WW2, when we needed to build an army from scratch. Bureaucrats know nothing of innovation or efficiency. Both the cellular phone and the internet were invented for military use, but without private sector innovation, we’d all still be typing over 10K modems, and cell phones would still be the size of bricks and cost thousands of dollars.
I don’t think expansion is a prerequisite for survival. Weaker states are there for the taking, and are easy targets for politicians out for personal glory. Superpowers, such as Rome and Carthage were, could (and often did) easily share their markets, but they instead chose to fight each other to the death.
Though military force often gets a country’s foot in the door, so to speak, one cannot conquer through markets. Products and services are sold through free exchange, and even the hated “corporations” have to produce a product that someone wants to buy in order to expand. The exception is a government monopoly or government-sanctioned monopoly, which can hardly be termed a market. Most actual “conquest” these days has resulted from trying to keep competing markets out.
A good book on the subject I’ve found is Rome, Inc. It’s a very interesting view of the State and markets, looking at a state as a marketplace.
I’ll thank you to check the attitude, and please direct all further questions to the ghost of Professor Friedman.
And I direct your inquiries to the living Hoppe:
There is never any need for more money since any amount will perform the same maximum extent of needed money work: that is, to provide a general medium of exchange and a means of economic calculation by entrepreneurs
Who agrees with the ghost of Rothbard:
“Goods are useful and scarce, and any increment in goods is a social benefit. But money is useful not directly, but only in exchanges…. When there is less money, the exchange-value of the monetary unit rises; when there is more money, the exchange-value of the monetary unit falls. We conclude that there is no such thing as ‘too little’ or ‘too much’ money, that, whatever the social money stock, the benefits of money are always utilized to the maximum extent”
Rothbard [1962] 1970: 670
Though do note that increasing money after a time point X decreases the value of the money in the hands of other people who had made their money before X.
Very true, but Rothbard is talking about inflation and deflation with a more or less sound monetary system. Markets and free civic life collapsed because there was no sound money left whatsoever. A few nobles and warlords still had hard cash (gold & silver), but just what would they buy? The western world was thrust back into a flat barter system. Those who were not already serfs paid taxes to local lords in the form of food and goods, not in coin. The average person rarely saw actual money. Anything like a marketplace could not be established again until there was a trustworthy monetary system.
I suggest you read the section titled “1.3 Funny Money, Real Growth”:
http://www.bellaire.org/summer_assignments/world_history/WorldthatTradeCreatedchapter12.pdf
Anything can be made into money if you’d like, and China proves it. “Not enough money” only makes sense when you use 1) exclusively one commodity and absolutely refuse to switch or 2) do not have paper money backed by a currency (as paper money can be printed to be a fraction of the commodity):
If there were only 10 pounds of gold in the world and Bill Gates owned all of them and everyone refused to accept anything but cash, then yeah, you’ve got a problem. However, we see that using alternative materials (“junk money” made of copper or pottery shards) for money is viable, and hence this is a non-problem.
If there were only 10 pounds and everyone had a tiny bit, this is not a problem if you print paper currency for minuscule amounts of gold. For example, if I have 1/999 of an ounce, I have money which I can use for trade. If production in the economy increases, I simply start using smaller denominations of paper money.
Again, I agree. However:
It would be hundreds of years before most of Europe had trustworthy systems of coinage. Money had to start again from scratch. Markets did re-establish themselves, but this took an incredibly long time. Added to this, free civic life was destroyed, travel was restricted and exceedingly dangerous, and most people were bound to their tiny plots of land in one way or another. Local markets were small and inefficient, and most people were lived strictly at the subsistence level, tithing to their local lords for the most basic security.
The first paper issues of money Middle Ages occurred in China under Kublai Khan, when he confiscated all gold and issued paper notes. Though there was originally more than enough gold in the treasury, the currency suffered massive inflation and became worthless. So thankfully, this was not tried in Europe. This was reported by Marco Polo, who reputedly reprimanded the Khan to his face and lived to tell about it.