Shadows of Economics in Ancient Rome

I’ve been on an Ancient Roman history bender lately, which is motivated heavily by my desire to understand modern Western civilization in context of all Western civilization. This seems to be a trend among some economics blogs under my watchful eye. So I will just highlight a few interesting tidbits about ancient Roman economy from my favorite blogs.

From a recent article indicating American Inequality Twice As Bad As In Ancient Rome:

Indeed, the widening gap between rich and poor and the disappearance of a middle class is widely accepted as one of the prime explanations for the fall of the Roman Empire.

From Per Square Mile Income inequality in the Roman Empire:

To determine the size of the Roman economy and the distribution of income, historians Walter Schiedel and Steven Friesen pored over papyri ledgers, previous scholarly estimates, imperial edicts, and Biblical passages. Their target was the state of the economy when the empire was at its population zenith, around 150 C.E. Schiedel and Friesen estimate that the top 1 percent of Roman society controlled 16 percent of the wealth, less than half of what America’s top 1 percent control.

From a research paper Faeneratores, negotiatores and financial intermediation
in the Roman world

By Cicero’s time moneylending at interest had become a common form of investment, practised generally by all those having surplus cash. Tacitus contrasts land holding and moneylending as respectable forms of money making, with the instrumenta vitiorum typical of the rapacious and forlorn. Quintilian chides nobles who spent their time passively enjoyingtheir wealth, letting procuratores manage their staff of slaves, hardly visiting their estates, and practising faeneratio through their dispensatores. Commendable wealth in Seneca’s time typically consisted of a beautiful house, a handsome staff of servants, large landed estates and much money put out at interest. According to Persius money could easily and with little risk be invested at 5%.

From the historical echoes series of the Liberty Street Economics blog:

How much money was going through a faenerator’s hands? Well, we know that one fellow, Q. Considius, probably a senator, held 15 million sesterces worth of debt claims. How much is that? The annual pay of a soldier in those days was about 9 aurei (see M.E.K. Thornton), and 1 aureus was worth 100 sesterces. With that money, Q. Considius could therefore have raised an army about the size of Slovakia’s. What happened if the lenders needed their money right away? Basically, there was something like a secondary market for debt: “He [the creditor] would sell on his debt-claims either to the intermediary who had ceded them to him or to some other intermediary, and the intermediary would then cede them to someone else. The mechanism seized up as soon as a liquidity crisis or a debt crisis developed” (Andreau, p. 18). But this—liquidity crises in the Roman world—is a topic for a future post.

The presence of two economies: the rich and the poor, doesn’t seem to have changed much in over 2000 years. I imagine there is yet much to learn from the history books!

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