Although the terminology is different, the Roman emperor Diocletian’s 301 CE decree on maximum prices captures a sentiment that many people have: why is everything so pricey these days?
Diocletian’s decree demonstrates how deeply outraged he and his fellow imperial officials were by the widespread inflation that had gripped the Roman Empire for the majority of the third century.
The troops’ allegiance served as the foundation for the emperors’ power, but inflation reduced their pay. What caused the Roman Empire to become involved in this quagmire, and how did it escape it?
The Roman Empire endured unheard-of difficulties during a large portion of the third century, including war with several Germanic tribes, particularly the Goths, and foreign invasions by the Persian Sasanians.
In addition, there were food shortages, disease outbreaks, plagues, and civil conflicts. Today, this time frame is referred to as the Crisis of the Third Century.
As these issues worsened, hundreds of short-lived emperors were installed and overthrown, making political stability a thing of the past.
Rome’s army expanded in size in the third century as a result of the magnitude of its military issues. During Diocletian’s rule (284-305), it had about 600,000 men, compared to the first century’s tally of 250,000.
In order to pay the soldiers, Roman mints had to create more silver coins due to the growing army, which demanded ever-higher salaries and bonuses. Coins were used for political propaganda as well, supporting the legitimacy of a new emperor. Coins with the portrait of the next emperor were issued each time. The fact that there were so many emperors in power during the third century added to the rise in coin manufacture.
Roman currency, AR Maximinus, Denarius, Rome mint, 236-238 AD, an ancient Roman coin with an emperor’s face alone on a black background, or the next emperor? New coins with his picture on them. Also, to boost economic activity, modern authorities occasionally employ “quantitative easing,” which is sometimes (and perhaps incorrectly) defined as “printing more money.” There may be some parallels to the enormous rise in coin manufacturing and the resulting inflation in third-century Rome.
The value of each coin declined during this period as the Roman Empire’s coin supply increased. Silver became more difficult to obtain in the third century as the empire started to decline. Debasement, the term for this process, caused a sharp decline in the amount of precious metal that was truly present in the silver coins.
In other words, their worth decreased, and people (particularly soldiers) requested more coins because they had less faith in these devalued coins’ ability to hold their value. The emperor was frequently sent away quickly if they didn’t accept them. Anyone who experienced the COVID-19 limits will also recognise supply chain constraints as a contributing reason to inflation.
Instability was fuelled by sickness and war, especially the Plague of Cyprian, an outbreak that resulted in a scarcity of labour. This resulted in issues with the supply chain, which contributed to the increase in product prices.
Reforming the currency
To help control inflation, the Romans lacked knowledge of contemporary economic theories. They also lacked the central banks and other institutions needed to control the highs and lows of inflationary cycles.
The manufacturing of coins, however, was under Roman supervision. During the third century, they tried to address the lack of trust in silver coins by implementing monetary reforms, which included a modest increase in the amount of silver under Emperor Aurelian (270-275).
But none of them were effective. Trust in the silver money was irreparably tarnished. When he took power at the end of the third century, Emperor Diocletian was disheartened by the political and economic turmoil he had inherited.
He established a cap on prices of almost 1,200 items for the entire empire when he issued his decree on maximum prices in 301 CE. He emphasised the effect of inflation on the soldiers in this law. The army was a crucial component that supported his imperial power. But the edict didn’t work.
In addition to being unenforceable throughout the Roman Empire’s enormous area, official price limitations invariably led to the emergence of a black market. During his rule, he provided Rome with some political stability, but after failing to stop the hyperinflation, Diocletian resigned and turned to growing cabbages.
A new gold unit called the solidus was added when the emperor Constantine (306-337) restructured the currency in the fourth century.
Because of its prestige (mostly used by troops and the wealthy), high precious metal content, and better-regulated output, this unit enjoyed greater faith. Inflationary pressures seem to have decreased as a result.
In contrast to Diocletian’s tense system of co-emperors, called the Tetrarchy, Constantine also restored political stability and the single rule of the empire. This stability reduced inflation. Across the empire, currency minting became more uniform and supply bottlenecks were lessened.
The dilemma of today’s cost-of-living
There are valid grounds for criticism of the way governments and central banks have handled the current inflation issues. However, we can at least be grateful that high inflationary eras in contemporary economies have been and will probably be brief in comparison to the Roman Empire.
Our sophisticated ability to analyse economic data and develop ideas to curb inflation before it becomes unmanageable is largely responsible for this. Inflation weakens the social, political, and economic stability we so frequently take for granted.
While leaders like Diocletian sought to control prices through legislative decrees, these measures failed due to a lack of enforcement and trust. Eventually, Constantine’s reforms, including the introduction of the solidus and a return to political stability, offered a more sustainable solution.
Modern economies, though far more complex, share some parallels with these ancient challenges. Issues such as supply chain constraints, currency valuation, and public trust remain central to addressing inflation.
However, advancements in economic theory, data analysis, and institutional structures, like central banks, allow contemporary societies to respond more effectively to inflationary pressures. Unlike Rome, where solutions often took decades, today’s economies benefit from tools that enable faster and more precise interventions.
By reflecting on the Roman experience, we can appreciate the importance of economic stability as a foundation for societal well-being, as historical parallels offer clarity in times of uncertainty. The Empire’s struggles with inflation highlight the dangers of reactive policy and fractured governance, reminding us that although such forces can disrupt lives, strategic reforms and strong institutions, supported by better tools and data, are essential to preserving public trust, ensuring resilience, and securing long-term prosperity.