Ancient Rome: a Macroeconomic Perspective
Updated: Nov 12, 2021
Ancient Rome is the Roman civilization that spanned from the founding of the Roman Republic in 509 B.C. to the fall of the Empire in 476 A.D. The economic needs of each time period differentiated from each other, as the civilization contained multiple governments spanning different eras. Although early economic policies yielded great success, the economy of Ancient Rome should be considered a failure for the exploitation of the lower classes by the elite rulers and the inefficient means of obtaining wealth.
During the initial stage of Ancient Rome, the Roman Republic was largely focused one specific sector: agriculture. Since the world economy was not as connected or advanced as it is today, efficient methods of trade were not utilized. Many different roles in society were utilized in the incredibly important agriculture trade. Farmers played a major role and gained leverage in society as main producers of key products such as grain and wine. In turn, financial markets were established through agricultural trade which created stability in the Roman economy for the first time. This unprecedented, secure economy allowed for extensions of society through institutions that extended credit and allowed for the accumulation of wealth for people from all classes, except slaves. The early successes of Ancient Roman economy could have heavily relied on the absence of wars and corruption, which would allow for little times of inconsistent economic change and uncertainty about the future. With the arrival of the Roman Empire came a new interregional market, containing societies from across Europe, Asia, Africa, and the Middle East that attempted to interfere with their successes.
The transition from Republic to Empire is marked by the great power grab by Julius Caesar; this initial act by Caesar is the first of many more acts of corruption by the government that in turn negatively affect the well-being of Roman society and economic prospects. The economy of the empire was nearly completely monetized, solely relying on money to express prices and debts, versus the barter/trade system that had little use for monetization of coins. Although this seemed to be a leap in the technology utilized in economic-related fields, the reality of the monetization had harsh consequences on society. Stamping emperor's portraits on coins, the government attempted to spread propaganda by showing the ruler's in a positive light. These attempts were crucial to pulling a blind eye over the citizens who failed to see the root cause of the unstable Roman Empire economy: the rulers. The Roman Imperial economy was unstable due to the Emperors who issued money to fund expensive projects such as public infrastructure builds or wars that offered little material gain. Since there was no central bank during the time of the Empire, there were no regulations of the banking system, allowing for an extreme uptick in corruption by the wealthy elite who only became wealthier. Under the rule of Aurelian, bankers lost confidence in government-issued coins and led to increased inefficiency in the relationship between the financial and societal sectors of society. Increased distrust only contributed to the downfall of the Empire, which resulted in the final defeat for Ancient Rome.
In conclusion, Ancient Rome initially featured an economy solely dependent on agriculture trade without coinage, allowing for stability in the government and society. However, the development of the Empire along with the corrupt Emperors drained the civilization's economy and led to a massive amount of distrust of the government from the people. In order for a government to truly be efficient in its execution, it must properly set up an economy that supports the people and is fair for all.