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Additional Our World Questions & Questions on Peter Temin’s Article
1. (Our World, page 219 ) What are the Alps? How did they protect the
Italian peninsula from invaders?
2. (Our World, page 219 ) What is the Tiber River? Besides being a source of
water, how might the river had helped the Roman economy?
3. (Our World, page 220) In Greece, each city-state’s acropolis was used
as a place to retreat to during invasions. How many hills does Rome
have that were used, also, for defensive purposes?
4. (Our World, page 238) Who built Rome’s roads, and what purpose would the
roads have had in trade and in military conquest?
5. (Our World, page 70, page 238 and 239) What is an aqueduct, and why
were aqueducts important in the expansion or enlargement of the
Roman Empire?
SEE ANNOTATIONS ON ACTUAL ESSAY.
6. What were the features of Rome in 100 A.D. that made it “more civilized”
than Europe in 1800? (Peter Temin’s “The Economy of…”)
They had better paved streets, sewage disposal, water supply, and fire
protection than the capitals of civilized Europe in 1800.
7. Throughout what overall region did Roman trade spread? (Peter Temin’s
“The Economy of…”)
They shipped grain across the Mediterranean to Rome from Sardinia,
Sicily, Egypt and Africa. Olive oil was exported to Rome from Spain and
Africa. As well as Iberia and as far east as Egypt and the Middle East.
8. Who had most of the wealth in Rome? (Peter Temin’s “The
Economy of…”)
A very small elite group at the top of society and the economy, composed
of several hundred “senators” and a several tens of thousands “knights”.
9. Who was in the Roman middle class? (Peter Temin’s “The Economy
of…”)
10.Who was at the bottom of the Roman “social ladder”? (Peter Temin’s
“The Economy of …”)
11. Where did Rome get its grain? (Peter Temin’s “The Economy of…” )
12.Where did Rome get its olive oil? (Peter Temin’s “The Economy…”)
13.How were people paid in Rome? (Peter Temin’s “The Economy of…”)
14.What did Roman soldiers do? (Peter Temin’s “The Economy of…”)
15.Name at least five technological improvements of the Romans (Peter
Temin’s “The Economy of…”)
16.How would Rome’s strong government have been helpful to promoting
wealth and business activity?
The Economy of the Early Roman Empire
Peter Temin (Elisha Gray II Professor of Economics, Massachusetts Institute of
Technology, Cambridge, Massachusetts)
from Journal of Economic Perspectives—Vol. 20, No. 1—Winter 2006-
[The following is an edited version of Professor Temin’s paper.]
6 & 15
Many inhabitants [residents] of ancient Rome lived well. Tourists
marvel at the temples, baths, roads and aqueduct that they built. Historians
write, “The Rome of 100 A. D. had better paved streets, sewage
disposal, water supply, and fire protection than the capitals of civilized
Europe in 1800” (Mokyr, 1990, p. 20).
Economists also want to understand the existence of a flourishing
and apparently prosperous [wealthy] economy two millennia [thousand
years] ago. Market institutions [ways of buying, selling, and borrowing,
etc.] and a stable government appear to have been the combination
that produced this remarkable result. … This essay provides an
economist’s view of the Roman economy that emphasizes the role of
markets.
…The standard of living in ancient Rome was similar to that of
early modern period of seventeenth- and eighteenth century Europe, an
extraordinary achievement for any economy in the ancient world.
…Ancient Rome managed to achieve this high standard of living
through the combined operation of moderately stable political
conditions [reliable government] and markets for goods, labor and
capital, which allowed specialization and efficiency…
…The Romans recorded most of their day-to-day transactions
[business dealings] by incising [carving upon] the wax covering of wooden
oblongs about the size of modern roof shingles. This… was highly
perishable, and we have almost no written records of such transactions….
We … are dependent on … casual remarks about the economy, ...
proclamations … chiseled into stone; archaeological evidence; and papyri
from Egypt. There is a lot of information, but hardly any of what
economists call data…. Direct evidence therefore is exceedingly valuable.
We find the occasional surviving economic document. The Muziris
papyrus, for example, records a maritime [relating to ships] loan of an
amazingly large size for a voyage starting out in the Red Sea…
Roman shipping was organized in shifting partnerships similar to
those in colonial American shipping, although the seventeenth-century
merchants never aspired [hoped to a partnership of anywhere close to 50
ships.
…Amphorae [large transport vases] that held olive oil and wine…
give evidence of [Roman] shipping that spread throughout the
Mediterranean, and even more common oil lamps indicate that many
similar lamps were produced ….The volume of Roman shipwrecks and
pollution levels in Greenland ice cores dated to the Roman period provide
independent evidence of economic activity in the early Roman Empire …
The Standard of Living in Ancient Rome
A prominent ancient historian estimated that the Italian peninsula
was about 30 percent urbanized [cities] in the early Roman Empire
(Hopkins, 1978, pp. 68–69). GDP [Gross Domestic Product] per capita [the
amount of profit produced on average per person] in Roman Italy was
between that in 1700 in the Netherlands and Italy or Spain, the most
advanced European economies a century before the Industrial
Revolution….. Provincial incomes in the early Roman Empire …may
have been in the range of European inland areas in the 1600s and
1700s.
8, 9, 10
Incomes and assets [wealth] were distributed highly unequally
[unfairly] in the early Roman Empire. A very small elite group at the
top of society and the economy, composed of several hundred
“senators” and a several tens of thousand “knights” in a population of
around 50 million, held great wealth—typically in the form of land
(Goldsmith, 1984).
At the other end of the distribution were farmers and farm
laborers [workers], both free and slave. In between, closer to the bottom
than the top, was a group of skilled and often literate [could read and
write] tradesmen and service workers who provided varied goods and
services for senators and knights.
… Romans did not enjoy good health, and their life expectancy was
only about 25 years, similar to India and China around 1900 (Frier, 2000).
Not all Romans were sick, of course, but they lived in a high-disease
environment.
…Explanations for the surprisingly high standard of living in the
early Roman Empire cannot rely [be explained] on any spectacular
technologies [inventions] of that time…. Markets for goods, labor and
capital were relatively well-developed in ancient Rome, which in turn
encouraged specialization and efficiency. These markets were able to
work well in the environment created by public authorities
[government] who provided local public services in cities and a
functional rule of law across most of the Empire.
The city’s population in the early Roman Empire generally is
estimated at about a million inhabitants. Rome therefore needed a lot of
supplies—about 150,000–300,000 tons (20 to 40 million modii) of grain a
year, plus extensive supplies of olive oil and wine. It was far cheaper to
ship food over sea than over land—as it would remain until … the railroad.
7 & 11 & 12
Grain was shipped across the Mediterranean to Rome from Sardinia,
Sicily, Egypt and Africa. Olive oil was exported to Rome from Spain
and Africa.
…. Some taxes from Egypt and Africa were paid in kind [traded]
with grain, and these were used for free distribution in Rome (the annona),
but only a small part of the grain imported into Rome—perhaps 15 to 30
percent—was for free distribution [to the citizens]. The bulk of grain
imports was privately owned. And grain from far away, even when destined
for the annona, was shipped in privately owned ships.
13
…The monetary system of Rome was based on the silver
denarius. This coin became the ubiquitous [seen everywhere] penny of the
medieval period and survived into the twentieth century as the “d” in the
abbreviation for pennies in the English pounds-shillings-pence system.
Mediterranean Area in the Early Roman Empire
This wheat market was mostly private…. Wheat merchants and traders
made use of agents, maritime loans, a strong legal framework [laws],
and provisions [rules] designed especially for grain merchants….
7
…Roman Italy gained greatly by being at the hub of an empire
and a large trading network as Spain and Holland did much later. Rome
imported food from around the Mediterranean, bringing in wheat,
olive oil and wine from as far west as Iberia and as far east as Egypt
and the Middle East. The Roman economy of the first and second
centuries C. was integrated [woven together] … in the Mediterranean
Sea.
Labor Markets in the Early Roman Empire
13
Some Roman rural laborers were paid by piece rates [based on
what they made]; others, daily wages. There also were salaried long-term
free workers in Egypt in the early Roman Empire. Workers in large
organizations like mines and galleys were paid wages. Craftsmen sold
their wares [goods] and also supplied them to patrons [wealthy
protectors] in return for long-term economic and social support. …
Building in Rome was accomplished largely by free laborers and gives
evidence of a labor force that could be diverted [moved] from one activity
to another. Most free workers of course were farmers, typically tenant
farmers.
14
…The wages of the large Roman army stayed constant for many
decades at a time, and it was staffed by a mixture of attraction [voluntary
joining] and conscription [being forced to serve]. When the army was not
fighting, which was most of the time in the early Roman Empire, soldiers
often built roads and public monuments near where they were
stationed.
Since the army was stationed at the frontiers of the empire, this
construction activity did not interfere with the labor market in Rome or
elsewhere in the center of the empire.
In the early Roman Empire, particularly in cities, slaves were able to
participate in the labor market in almost the same way as free
laborers, even if their starting point often was less favorable. Frequent
manumission—that is, freeing of slaves—was a distinguishing feature of
Roman slavery.
Slaves in the early Roman Empire could anticipate freedom if
they worked hard and demonstrated skill or accumulated a peculium,
money
“owned” by slaves, with which to purchase freedom. Some ambitious poor
people in the early Roman Empire even sold themselves into slavery as a
long-term employment contract that offered a greater chance of
advancement [improvement] than the life of the free poor….
Financial Markets in the Early Roman Empire
Romans loaned money to each other with great frequency. Some
of these loans were to finance consumption [purchases]; others were
for production. Many loans were made to finance trade. Merchants
…appear to have played a key role in ancient finance as well. For
example, loans were used extensively [wisely] to finance maritime [sea]
trade in classical Athens, and maritime loans appear to have been
widespread as well in Rome….Roman merchants and shippers could
purchase insurance; they were able to borrow with repayment conditional
on a safe return. A common rate for loans seems to have been 1 percent a
month or 12 percent per year, which was the official maximum and also the
default rate. Banks were in operation in Greece before the Roman conquest
and continued after the Romans came….
The Roman Empire did not borrow; it ran on a cash basis. For
the imperial government to avoid borrowing, it needed to accumulate tax
revenues for future expenditures.
From Markets to Growth
…In the early Roman Empire, there is reason to believe that
resources were used relatively efficiently. Roman technology clearly did
not resemble the Industrial Revolution [in England of the 1700s]. However,
15
by the standards of the time, the Romans did make many technological
improvements. Their most impressive innovations were concrete and the
Roman arch, giving rise to internal spaces like temples and baths, and
extensive public works like aqueducts and theaters. Roman cities—
almost all on the same pattern—are still a marvel.
The purpose of many surviving structures, however, was not just
for consumption. The Pont-du-Gard [an aqueduct in the south of France]…
not only a structure to bring water for the residents of Arles to bathe in,
watch in fountains and drink, it also was part of an agricultural irrigation
system tapped at several points… and even power for milling grain
(Greene, 2000).
15
Water-power was used on a wide scale…by the first century CE,
and archeologists are discovering ever more evidence of the widespread use
of new technologies in the early Roman Empire. Both horizontal and
vertical water wheels were used widely to power grain mills, saw mills
and grain pounders. Hydraulic mining techniques using water to sluice,
crush and sort ores….
Senators and knights lived well, as a small elite can do even in poor
societies, but they were not alone. The poor were helped by the free
distribution of food (the annona mentioned earlier) and the public provision
of water, public streets and even recreation. In addition to the public
provisions for urban residents, the government also supported a standing
army of about 250,000 men. Mostly idle, these soldiers were to dispel
internal dissent more than external enemies. They were maintained and
used for local construction activities by moderate taxation (Goodman,
1997, pp. 82–83).
The upper classes were educated in Rome, as were most urban
slaves. Literacy appears to have been universal for any Roman in a
managerial role and may have extended to skilled workers as well. Rome
was a literate society, and that undoubtedly helped raise incomes.
The city of Rome was the center of a large empire, and the
Romans managed to bring a lot of the empire’s assets to Rome,
whether as taxes, booty or slaves….Booty, in the form of landholdings
outside Italy, and slaves were more important. Such transfers explain why
Roman Italy was richer than other parts of the Roman Empire, but transfers
cannot explain why the Empire was productive.
16
The early Roman Empire had political institutions that
promoted economic activity. Primary among these assets was security
for private individuals. When a society moves from rulers who demand
money in exchange for protection …to nonviolent rulers who charge taxes
in a framework of law, the stage is set for economic growth. Greek citystates had created political conditions that promoted local stability, but the
Romans were the first in the West to establish a wide area within
which business could be transacted relatively safely. The Roman
Republic expanded what would become the Pax Romana as its conquests
mounted, and it cleared the Mediterranean of pirates in 67 BCE.
By the time of the Dark Ages in about the fifth century CE, there
were still markets, but no longer a market economy. Roman agricultural
technology and city planning were abandoned, education decreased, and
long-distance trade in bulk commodities vanished. The Pax Romana ended,
and Roman law was forgotten in Europe for close to a millennium.
All societies organize their economic functions through a mixture of
redistribution, reciprocity and market exchange. From an economic point of
view, the important characteristic of the early Roman Empire was the
relatively large role played by market forces, certainly as compared to
the medieval [Middle Ages] economy that would follow.
Large-scale production and movements of resources in the early
Roman Empire were dominated by markets. This mode of organization
promoted the exploitation of comparative advantage [competitions to
increase wealth], helped by political stability, personal security, and
widespread education. It also promoted a modest rate of economic
growth that resulted in the prosperity of the early Roman Empire,
which was not to be equaled in the West for almost two millennia
thereafter.
Summary
The Rome of 100 A. D. had better paved streets, sewage disposal,
water supply, and fire protection than the capitals of civilized Europe in
1800. Market institutions [ways of buying, selling, and borrowing, etc.] and
a stable government appear to have been the combination that produced this
remarkable result.
Ancient Rome managed to achieve this high standard of living
through the combined operation of moderately stable political conditions
[reliable government] and markets for goods, labor and capital, which
allowed specialization and efficiency.
Roman shipping was organized in shifting. There is evidence of
Roman shipping that spread throughout the Mediterranean. Provincial
incomes in the early Roman Empire may have been in the range of
European inland areas in the 1600s and 1700s.
Incomes and assets were distributed highly unequally in the early
Roman Empire. A very small elite group at the top of society and the
economy, composed of several hundred “senators” and a several tens of
thousand “knights” in a population of around 50 million, held great
wealth—typically in the form of land. At the other end of the distribution
were farmers and farm laborers [workers]. In between, was a group of
skilled and often literate [could read and write] tradesmen and service
workers.
Markets for goods, labor and capital were relatively well-developed
in ancient Rome, which in turn encouraged specialization and efficiency.
These markets were able to work well in the environment created by public
authorities [government] who provided local public services in cities and a
functional rule of law across most of the Empire.
. Grain was shipped across the Mediterranean to Rome from
Sardinia, Sicily, Egypt and Africa. Olive oil was exported to Rome from
Spain and Africa. …The monetary system of Rome was based on the silver
denarius. Wheat merchants and traders made use of agents, maritime loans,
a strong legal framework [laws], and provisions [rules] designed especially
for grain merchants….
…Roman Italy gained greatly by being at the hub of an empire
Rome imported food from around the Mediterranean, bringing in wheat,
olive oil and wine from as far west as Iberia and as far east as Egypt and the
Middle East. The Roman economy of the first and second centuries C. was
integrated [woven together] … in the Mediterranean Sea.
Some Roman rural laborers were paid by piece rates; others, daily
wages.. Craftsmen sold their wares and also supplied them to patrons in
return for long-term economic and social support. When the army was not
fighting, soldiers often built roads and public monuments near where they
were stationed. Slaves were able to participate in the labor market in almost
the same way as free laborers.
Romans loaned money to each other with great frequency. Some of
these loans were to finance consumption; others were for production. Many
loans were made to finance trade. Merchants appear to have played a key
role in ancient finance as well. The Roman Empire did not borrow; it ran on
a cash basis.
In the early Roman Empire, there is reason to believe that resources
were used relatively efficiently. The Romans did make many technological
improvements: concrete, the Roman arch extensive public works like
aqueducts and theaters. Water-power was used on a wide scale. Water
wheels were used widely to power grain mills, saw mills and grain
pounders. Rome was a literate society, and that undoubtedly helped raise
incomes.
The city of Rome was the center of a large empire, and the Romans
managed to bring a lot of the empire’s assets to Rome, whether as taxes,
booty or slavesThe early Roman Empire had political institutions that
promoted economic activity. Primary among these assets was security for
private individuals.
The Romans were the first in the West to establish a wide area
within which business could be transacted relatively safely. The, the
important characteristic of the early Roman Empire was the relatively large
role played by market forces.
Large-scale production and movements of resources in the early
Roman Empire were dominated by markets. This mode of organization
promoted the exploitation of comparative advantage, helped by political
stability, personal security, and widespread education. It also promoted a
modest rate of economic growth that resulted in the prosperity of the early
Roman Empire, which was not to be equaled in the West for almost two
millennia thereafter.