Ancient Rome, a civilisation and giant of history that continues to influence present day society. Living in the year 2024, we may think that an ancient, classical civilisation that existed in a period which seems to be forever ago has very few parallels with our world today.
In recent years, we have witnessed a stagnation and fall of real wages, a disruption of global supply chains unseen since the 1970s, the price of everyday goods steadily increasing, a pandemic that swept across the globe, and new military conflicts arising in different parts of the world: Eastern Europe, the Middle East, the Sahel Region, and South-East Asia.
All of those crises have precedent in Ancient Rome, which saw its own versions of such events.
Ancient Rome experienced currency debasement and severe inflation which crippled its bimetallic monetary system. In the early years of the Principate (27 BC - 284), the denarius had a precious metal content of above ninety-five percent. Towards the end of the Principate, during the Crisis of the Third Century (235 - 284), the denarius’ precious metal content percentage had fallen to a single digit number. During the reign of the Emperor Augustus (27 BC - 14), legionaries were paid 225 denarii each year in wages, by the time of the Emperor Caracalla (198/211 - 217), the annual wage had risen to 600 denarii. The purchasing power of 225 denarii at the former’s time, however, was greater than that of 600 denarii at the latter’s reign.
Likewise, in a more recent era, similar events are also taking place.
A few decades ago, it was possible for one to work one job to support a nuclear family and acquire real property, now this phenomenon is becoming increasingly rare.
In 1960, the average house in the US cost $12,000 and the average rent was $100 a month. Today, this is unimaginable. When the United States abandoned the gold standard by unilaterally leaving the Bretton Woods system in 1971, the world was permanently changed. The Federal Reverse constantly increases the money supply as the currency has since been fiat, and the US has not had a balanced budget since 2001. US National Debt has seen rapid growth within our times. It reached the milestone of $1 trillion in 1981, and as of current writing has surpassed $35.95 trillion.
The genie cannot be put back into the bottle. It is extremely unlikely if not borderline impossible that the world returns to the gold standard and embraces metallism, a relic of the past (barring Zimbabwe, which returned to the standard in April this year).
Inflation, though not rampant in the majority of countries, erodes purchasing power and increases the cost of living. Real wages (wages adjusted for inflation) in the UK have been stagnant or falling for over a decade, due to factors such as the global financial crisis, the austerity programmes, and the COVID-19 pandemic.
Inflation (and other factors) eventually led to the ongoing cost-of-living crisis.
This situation could technically be described as stagflation. Politicians and economists alike are terrified of this. A modern example of stagflation would be in Japan. According to the World Bank, in 1995, Japan’s Gross Domestic Product was $5.55 trillion. With the Plaza Accord and the Lost Decades, Japan’s GDP in 2023 was $4.21 trillion.
The US experienced stagflation in the 1970s, but overcame it. This involved reforms and changes in both fiscal and monetary policy. In this period, the US gradually sided with Milton Friedman’s Chicago School Monetarism over the more traditional Keynesian school of economics. Said period of stagflation was directly related to, and caused by the 1973 oil crisis, where multiple petroleum producing Arab countries embargoed the UK, the US and other Western states due to their support of Israel. This reminds us of the ongoing Red Sea Crisis, where ships of different countries were attacked by drones and missiles at the Gulf of Aden and the Red Sea. This crisis disrupted the global supply chain and forced many ships to instead circle Africa and pass the Cape of Good Hope.
This has precedent in Ancient Rome, such as when Sextus Pompey used his navy to blockade grain shipments to Rome in 43 and 42 BC, or when the Carthagians disrupted Rome’s maritime supply chains during the First and Second Punic Wars (264 - 241 BC, 218 - 201 BC). Both of these cases resulted in severe disruptions towards the Roman economy.
A further parallel that can be drawn between our world and that of the Romans would be the parallel between the pandemic of our age and that of theirs: the Antonine Plague (165 - 180) and the Plague of Cyprian (249 - 262), both of which claimed millions of lives.
Ancient Rome cannot be mentioned without the mention of war. An extremely capable and adaptable war machine, they expanded from what was once a small city on the River Tiber to dominating the entire Mediterranean, then going as far to make war in the far-away Scottish Highlands, Mesopotamia (modern day Iraq) and the Caucasus Mountains.
Aside from the wars it launched, Rome also had a great magnitude of civil war and turmoil. The Year of Four Emperors (69), the Year of the Five Emperors (193) and the aforementioned Crisis of the Third Century all saw civil war and political instability cause tremendous damage towards its economy and significantly fueled its currency debasement.
Recent examples of economies being devastated by war include the USSR due to the Soviet-Afghan War (1979 - 1989), Iraq due to the Gulf War (1990 - 1991) and the 2003 Invasion, and Yugoslavia during its breakup (1991 - 1999).
On the topic of government intervention, Rome was by no means a laissez-faire economy. For most of its time, the state actively regulated and intervened in the economy. The emperor Diocletian even went as far as setting a maximum price for goods in 301.
Though our science is superior, and that we have a significantly greater understanding of sociology and macroeconomics than our ancient counterparts did two millennia ago, there is still much we could learn from them. By looking at the paths they underwent we should avoid making the same mistakes as they did.
