Economic Reasons for the Fall of Rome

A 2nd century bust of the Roman Emperor Commodus

 Mondadori / Getty Images

Whether you prefer to say Rome fell (in 410 when Rome was sacked, or in 476 when Odoacer deposed Romulus Augustulus), or simply morphed into the Byzantine Empire and medieval feudalism, economic policies of the emperors had a heavy impact on the lives of the citizens of Rome.

Primary Source Bias

Although they say history is written by the victors, sometimes it's just written by the elites. This is the case with Tacitus (ca. 56 to 120) and Suetonius (ca.71 to 135), our primary literary sources on the first dozen emperors. Historian Cassius Dio, a contemporary of Emperor Commodus (Emperor from 180 to 192), was also from a senatorial family (which, then as now, meant elite). Commodus was one of the emperors who, although despised by the senatorial classes, was loved by the military and lower classes. The reason is mainly financial. Commodus taxed the senators and was generous with the others. Likewise, Nero (Emperor from 54 to 68) was popular with the lower classes, who held him in the kind of reverence reserved in modern times for Elvis Presley—complete with Nero sightings after his suicide. 

Inflation

Nero and other emperors debased the currency in order to supply a demand for more coins. Debasing currency means that instead of a coin having its own intrinsic value, it was now the only representative of the silver or gold it had once contained. In 14 (the year of Emperor Augustus' death), the supply of Roman gold and silver amounted to $1,700,000,000. By 800, this had dwindled to $165,000.

Part of the problem was that the government would not permit the melting down of gold and silver for individuals. By the time of Claudius II Gothicus (Emperor from 268 to 270), the amount of silver in a supposedly solid silver denarius was only .02 percent. This was or led to severe inflation, depending on how you define inflation.

Especially luxurious emperors like Commodus, who marked the end of the period of the five good emperors, depleted the imperial coffers. By the time of his assassination, the Empire had almost no money left.

The 5 "Good" Emperors Leading to up Commodus

  • 96 to 98: Nerva 
  • 98 to 117: Trajan 
  • 117 to 138: Hadrian  
  • 138 to 161: Antoninus Pius 
  • 161 to 180: Marcus Aurelius
  • 177/180 to 192: ​Commodus

Land

The Roman Empire acquired money by taxation or by finding new sources of wealth, like land. However, it had reached its furthest limits by the time of the second good emperor, Trajan, during the period of the high empire (96 to 180), so land acquisition was no longer an option. As Rome lost territory, it also lost its revenue base.

Rome's wealth was originally in the land, but this gave way to wealth through taxation. During the expansion of Rome around the Mediterranean, tax-farming went hand-in-hand with provincial government since the provinces were taxed even when Romans proper were not. Tax farmers would bid for the chance to tax the province and would pay in advance. If they failed, they lost, with no recourse to Rome, but they generally made a profit at the hand of the peasants.

The diminishing importance of tax-farming at the end of the Principate was a sign of moral progress, but also meant the government couldn't tap private corporations in the event of an emergency. The means of acquiring crucial monetary funds included debasing the silver currency (seen as preferable to increasing the rate of taxation, and common), spending reserves (depleting the imperial coffers), increasing taxes (which was not done during the period of the high empire), and confiscating the estates of the wealthy elite. Taxation could be in kind, rather than coinage, which required local bureaucracies to make efficient use of perishables, and might be expected to produce reduced revenue for the seat of the Roman Empire.

Emperors deliberately overtaxed the senatorial (or ruling) class in order to render it powerless. To do this, the emperors needed a powerful set of enforcers—the imperial guard. Once the wealthy and powerful were no longer either rich or powerful, the poor had to pay the bills of the state. These bills included the payment of the imperial guard and the military troops at the empire's borders.

Feudalism

Since the military and the imperial guard were absolutely essential, taxpayers had to be compelled to produce their pay. Workers had to be tied to their land. To escape the burden of tax, some small landowners sold themselves into slavery, since slaves didn't have to pay tax and freedom from taxes was more desirable than personal liberty.

In the early days of the Roman Republic, debt-bondage (nexum) was acceptable. Nexum, Cornell argues, was better than being sold into foreign slavery or death. It is possible that centuries later, during the Empire, the same sentiments prevailed.

Since the Empire wasn't making money from the slaves, Emperor Valens (ca. 368) made it illegal to sell oneself into slavery. Small landowners becoming feudal serfs is one of the several economic conditions responsible for the fall of Rome.

Resources and Further Reading