One of the many post-PhD research projects I’ve got lined up is to look at economic Golden Ages other than the British Industrial Revolution. It’s worth looking at other periods of economic growth in order to better understand how Britain in the 18th Century was different - why was the IR sustained when previous Golden Ages had tailed off into stagnation or decline.

So last night I attended an event at the Legatum Institute with Dr Philip Kay, the author of “Rome’s Economic Revolution”.

Kay estimates that the Roman Republic in the 2nd Century BC achieved about 0.5% GDP growth year on year. This is pretty astonishing, but it is, of course, worth taking with a pinch of salt. As he repeatedly mentioned, the sources from the period are extremely sparse.

So where was all this economic development coming from? Mostly, it appears to have been the result of expansion, but with a few interesting knock-on effects.

Sources of the Roman Republic’s Development

Firstly, there were the stupendous amounts of bullion entering the economy as a result of booty from conquered territories, indemnities from subdued border states, and from taxes paid by newly acquired provinces. However, this vast increase (from around 5,000 talents over the whole 3rd Century BC to over 45,000 talents in merely the first half of the 2nd Century BC) does not appear to have caused any inflation (except perhaps among some luxury items). Secondly, there was even more bullion from Spanish silver mines acquired as a result of the 2nd Carthaginian War. Like the other sources of bullion, it’s worth noting that these also passed through political hands first, with the mines essentially being contracted-out state-owned enterprises. There was also an increased level of trade from essentially having a pan-Mediterranean free trading zone. Ports like Delos in particular appear to have become major economic hubs. Around the middle of the 2nd Century BC the Romans also started using the bilge pump, allowing for even larger ships and boosting trade further. At the same time, the evidence from shipwrecks suggests that Italy became an increasingly specialised exporter of oil and wine to the rest of the Empire. At the same time, conquest was bringing in vast numbers of slaves. From the time of Hannibal (c.200 BC) to that of Julius Caesar (c.50 BC) the Italian population’s proportion of slaves expanded from around just 6% to a whopping 21%. Compared to freemen, slaves could be worked hard or given technical skills with no corresponding increases in wages. So this boost in the relative number of slaves would have also boosted overall labour productivity. With all this bullion sloshing around, and with new opportunities for trade and production, a banking sector emerged to put that bullion to good use. This all goes some way to explaining why there was little-to-no inflation: the number of opportunities for economic expansion far outstripped the amount of money and credit.

So what went wrong?

Banking was really the focus of Kay’s talk. In 88 BC Mithridates of Pontus invaded the province of Asia (i.e. modern-day Turkey) and destroyed that major commercial hub I mentioned earlier: Delos. This shock was seemingly too much for the Mediterranean banking system, with a financial crisis back in Rome as repayments stopped and credit dried up. In fact, the banking system appears to have never recovered. Instead, with their hands already on the sources of bullion, generals and wealthy aristocrats started engaging in lending and borrowing vast amounts themselves. This may be part of the reason the half-century after 88 BC saw the rise of generals who threatened and eventually ended the Republic; such as Sulla and Marius, then Pompey and Julius Caesar, and finally Marc Anthony and Octavian. Thus, a decentralised banking system that funded commercial expansion was replaced by a highly centralised patronage system aimed at consolidating political power instead. That’s not to say that bullion wasn’t already sticking to the hands of generals and senators on its way down to the merchants and craftsmen before 88 BC, but that afterwards things got a whole lot worse. The evidence from the number of Mediterranean shipwrecks at first glance suggests a halving of trade after 0 AD. This would appear to confirm the effects of the banking collapse. However, most shipwrecks are identified by the vast mounds of clay amphorae on the seabed. But after around this time barrels started to be used instead - these would have decomposed, making later shipwrecks harder to identify. Thus, the decline in identified shipwrecks may not actually suggest any decline at all. At the same time, there’s also the possibility that industrial patterns in Italy shifted away from things stored in amphorae (i.e. wine and olive oil). After the talk, I asked Kay about innovation and inventions of the Roman period. For me, this is the clincher. After all, the gains to the economy from opening up Mediterranean sea routes are a one-off “level effect”. You can’t open them up again to boost the economy even further once productive and commercial opportunities have been fully exploited. If Ancient Rome was to have sustained growth, it would need innovations. Might it have been that the end of the Republic simply coincided with the full exploitation of initial increases in capacity from trade and slaves, while also heralding the start of technological stagnation?



The answer seems to be ‘no’. Kay mentioned various impressive inventions from the 2nd Century BC (pumps, watermills, metallurgy, etc.) but also that the post-27 BC Empire also saw vast factories, with huge machines for mass-production. Judging by this, it seems as though there wasn’t really any economic decline at all.

In fact, it’s not entirely clear how / when there was a decline

The last point in particular suggests that the origins of Roman economic decline aren’t particularly well-understood. The evidence from shipwrecks can’t quite be trusted, and the scale of industrial production and innovation seems to have actually expanded during the 1st Century AD. So what exactly went wrong? And precisely when? 88 BC’s financial turmoils may have led to radical political changes, but it doesn’t look like they heralded the end of Rome’s economic Golden Age.

Hopefully, some post-PhD research will yield some answers.