Diocletian

[M. Porcius Cato]

So, to combat inflation, Diocletian: issued a low-species (i.e., low value) currency, a high-species (i.e., high value) currency, wage controls, and price controls. Wow, that man needed an economist! I don't know whether to refer him to Gresham's Law, the Quantity Theory of Money, or something really radical. In any case, he seems to have operated under several conflicting intuitions about the causes of inflation, and he just tried everything.

 

Do we know which reform came first and lasted longest?

[Gaius Octavius]

[EDIT] let's stick to Rome here guys

 

I guess that I am off base - once again, but I can't help using examples to make a point about the then Roman economy.

[M. Porcius Cato]

[i guess that I am off base - once again, but I can't help using examples to make a point about the then Roman economy.

 

But unless they're virtually uncontroversial, modern examples don't help your point. More importantly, if you force yourself to argue the same points strictly with Roman examples, we'll all learn something interesting even if we disagree with your conclusions.

[Favonius Cornelius]

[i guess that I am off base - once again, but I can't help using examples to make a point about the then Roman economy.

 

But unless they're virtually uncontroversial, modern examples don't help your point. More importantly, if you force yourself to argue the same points strictly with Roman examples, we'll all learn something interesting even if we disagree with your conclusions.

 

Then you cannot use Gresham's Law, the Quantity Theory of Money, or any other modern concepts when judging his efforts...

[M. Porcius Cato]

Then you cannot use Gresham's Law, the Quantity Theory of Money, or any other modern concepts when judging his efforts...

 

Can I use the law of gravity to judge whether they knew that tossing people over the Tarpeian Rock would prove fatal?

[Primus Pilus]

Do we know which reform came first and lasted longest?

 

The coinage introductions and reforms came first and were a miserable failure. The new Aureus was introduced in about AD 290 and was followed by the Argenteus and Follis in about 294. The idea was a miserable failure due to the lack of actual metal supply to support the coins (actually causing inflation rather than curbing it) and was followed by the equally ineffective and oft ignored price reforms starting in about 301.

[Horatius]

 

I have a hard time believing in the good intentions of anyone with such a cavalier attitude toward foreseeable consequences. "[EDIT] let's stick to Rome here guys" ROFL not sure that is possible really in this topic.Cato's right and this link while a bit superficial shows that Romans SHOULD have been aware of it too http://www.mises.org/story/1962 . From what I gather he flooded the Empire with new money then imposed wage and price controls. Really don't hear to much in this forum about Roman Economists unfortunatly but there must have been some historians that understood how this stuff works. Unless he really thought that by the threat of death for violations he could force it to work. I don't understand how he expected to enforce such a thing though.

[M. Porcius Cato]

Thanks for the pointer Horatius.

 

The coinage reform of Diocletian is a bit puzzling. If the old currency contained metal and was not acceptable as legal tender, the old coins ought to have been melted down to provide for the new ones. Did this not happen? If not, then the new coinage would simply have increased the money supply, which is the opposite of what you'd want.

[Favonius Cornelius]

I have a hard time believing in the good intentions of anyone with such a cavalier attitude toward foreseeable consequences. "[EDIT] let's stick to Rome here guys" ROFL not sure that is possible really in this topic.Cato's right and this link while a bit superficial shows that Romans SHOULD have been aware of it too http://www.mises.org/story/1962 . From what I gather he flooded the Empire with new money then imposed wage and price controls. Really don't hear to much in this forum about Roman Economists unfortunatly but there must have been some historians that understood how this stuff works. Unless he really thought that by the threat of death for violations he could force it to work. I don't understand how he expected to enforce such a thing though.

 

 

It takes more than a few instances in ancient history to form an economic science, certainty and consensis. With regard to judging Diocletian on this, I'm only saying that you cannot say he necessairly should have known this or that or was a fool for trying. It would be like blaming Caesar for not developing gun powder and conquering more of the world. It isn't proper history to judge the past in such a form.

 

In order to really bash Diocletian, you would have to provide ancient examples of inflation being beaten. I know of none, and I figure they just didn't have enough of a grasp of the flow of economics to understand why things were the way they were.

Edited September 11, 2006 by Favonius Cornelius

[M. Porcius Cato]

It takes more than a few instances in ancient history to form an economic science, certainty and consensis. With regard to judging Diocletian on this, I'm only saying that you cannot say he necessairly should have known this or that or was a fool for trying. It would be like blaming Caesar for not developing gun powder and conquering more of the world. It isn't proper history to judge the past in such a form.

 

I'm sympathetic to this concern, but only so far. I don't fault Diocletian for attempting to combat inflation, but I do fault him for not going about it in a more conservative fashion--trying out new approaches on a small scale and examining what does and doesn't work. The wage and price controls were very difficult to enforce, which he must have known to have instituted such draconian punishments.

 

 

In order to really bash Diocletian, you would have to provide ancient examples of inflation being beaten. I know of none, and I figure they just didn't have enough of a grasp of the flow of economics to understand why things were the way they were.

 

I agree that this is would be the smoking gun, and I've been racking my brain to come up with examples of inflationary periods that had been dealt with successfully in the past, but to no avail.

[Gaius Octavius]

H., the author of your citation is a propagandist and assumes perfect competition - which never has existed, doesn't and most likely never will exist.

 

Price fixing did occur - on the part of the oligarchs. Claudius had to deal with it. Any problem with that? D. was well aware of this.

 

MPC, was D. going to send out 'coin collectors'? See my earlier post. Not everyone following this thread knows what Gresham's Law is.

[Horatius]

H., the author of your citation is a propagandist and assumes perfect competition - which never has existed, doesn't and most likely never will exist.

 

True and I agree. The point though is that it had been tried before so there should have been some awareness of the consequences. This was a major societal change. That the death penalty was the punishment for disobeying his economic policy shows me that he didn't think it would be followed because of it's merits. I guess the problem was just so bad at this point that it called for desperate measures,any measures.

Edited September 11, 2006 by Horatius

[M. Porcius Cato]

was D. going to send out 'coin collectors'? See my earlier post. Not everyone following this thread knows what Gresham's Law is.

 

If there were a law declaring that old coins would not be accepted for tax payments and the new coins were made available at an official exchange rate, there would be no need for coin collectors. Currency changes obviously don't require a vast bureaucracy of "coin collectors." Or didn't you know that?

 

Also, I included a link to an article on Gresham's Law when I introduced the topic. That's what the underlining is there for.

[Gaius Octavius]

was D. going to send out 'coin collectors'? See my earlier post. Not everyone following this thread knows what Gresham's Law is.

 

If there were a law declaring that old coins would not be accepted for tax payments and the new coins were made available at an official exchange rate, there would be no need for coin collectors. Currency changes obviously don't require a vast bureaucracy of "coin collectors." Or didn't you know that?

 

Also, I included a link to an article on Gresham's Law when I introduced the topic. That's what the underlining is there for.

 

Agreed, but maybe a vast bureaucracy of coin exchangers would be needed. Maybe D. was thinking of the vast number of 'morons' holding the 'bad'. Didn't you once point out to me that the 'velocity' of money was a now discarded theory? Which side should D. have taken?

Edited September 12, 2006 by Gaius Octavius

[Primus Pilus]

As far as we can tell the coin standards prior to Diocletian were not removed from circulation. Though the argenteus was heavily produced it was never widely circulated and the 'old money' remained the common form. Additionally, in this instance, the silver purity of the argenteus was so much higher than the predecessing antoninianus and denarius that its intrisic value was far higher than face value. This, coupled with the additional currency in circulation, (as has been suggested) further added to the hyper inflation problem. Had Diocletian been able or even made a widespread effort to remove old coinage, perhaps his reforms may have had a more positive effect.