The fall of the Roman Empire
It took just 40 years for the highly advanced, democratic Roman Empire to move from ever growing taxation, to a register of people (ID cards), and then into a system of surfdom and ultimately a caste system. This is how it happened... and how we have faced similar forces.
TimeLine The Roman Empire
200 AD Growth stops. The state refuses to contract and steadly grows. Income taxes rise from 1% onwards.

The fall of the Roman Empire was frightful.The growth of the Empire had always been based on conquest, and the Empire's economy had been fuelled by the exploitation of new colonies. When the Empire ran out of putative victims, its economy ceased to make sense, particularly as the mere maintenance of the Empire, with its garrisons and its bureaucrats, was so expensive. From the beginning of the second century AD, the State had to raise higher and higher taxes to maintain itself and its armies.

293 AD Millions of non-jobs and target chasers result in a massive unproductive burden

.ID Cards = Taxation revenue.

It was under the Emperors Hadrian and Trajan, when the Empire was at its largest, that residual freedoms started to get knocked away to ensure that revenue was collected. Special commissioners, curatores, were appointed to run the cities. An army of secret police were recruited from the frumentarii. To pay for the extra bureaucrats, yet more taxes were raised, and the state increasingly took over the running of the economy.

Massive programs of censuses had to track and chase every individual for taxation. ID cards and a register of all people and land where brought in to trace people and enforce harsher and harsher taxes.

301 AD State expands further

Immense unproductive employment cripples output and leads to even larger inflation. Prices and Incomes policy

 

In AD 301, inflation was so bad as the private sector was crowded out of activities with massive governent spending, that Emperor Diocletian imposed a prices and incomes policy - fixed wages and prices, by decree, with infractions punishable by death.

 Lanctantius wrote that the edict was a complete failure, that 'there was a great bloodshed arising from its small and unimportant details' and that more people were engaged in raising and spending taxes than in paying them.

What is a prices and incomes policy?

A prices and incomes policy is a attempt by the state to fix prices (eg; the price of bread) and relate it to a persons income, which is also set by the state.

This is an attempt by the state to control the economy, when money inflation is very high (as the state is printing money!)

The state, not merit, not how well people do or how productive they are, decides what people's incomes should be in a range of occupations, and what prices should be set for a range of goods and services.

Obvoiusly the state and its banks are the ones who print the money and cause the inflation in the first place, so such a policy is an attempt to get people to work for often negative returns

 

332 AD Collapse into serfdom.

Everything we would associate with the roman empire, laws, science, techonology, libraries, democracy carries on collapsing for a long while afterwards.

The feudal dark ages followed for a thousand years.

The collapse of peoples freedoms, with ID Cards and taxation into serfdom and a caste system took only 40 years.

To ensure that the peasants continued to work under an economy which had lost its free-market incentives, Constantine promulgated a law in AD 332 which bound all coloni to the state as serfs. To reinforce state control on all aspects of the economy, the city trade guilds or collegia imposed compulsory, hereditary trades on all. An edict Of AD 390 forbade children of the workers in the mint to marry outside their caste or trade.

The towns shrank, and the population condensed on the patriarchal, self-sufficient, isolated estates that adumbrate the medieval European villages.

Indeed, the word 'village' derives from the Latin villa, indicating that the feudal villages originated as the private estates of Roman magnates.

Summary

The Roman government's expanded its commitments from 270AD, its welfare liabilties and spending exceeded its income from taxation, and thus created a collapse in the money economy during 270-300AD, with massive hyperinflation. This undermined the artisan (skilled worker) economy, and finally the state which relies on output from the economy, tries to interfere to force people to work for a negative real economic return through a prices and incomes policy, while it carries on spending.

This attempt at controlling inflation by the government failed and a barter system took its place. A move to a barter/land based/Landlord-Renter economy means that output is based around the land, and people cannot practice highly skilled trades. Innovation and finance depend on a sound money economy to save and form reliable contracts to make productivity gains. 

Life in Rome moved rapidly from a money economy with technology, artisans and science, to a land based (barter) economy, with a feudal structure and caste system. Within 40 years every citizen was registered with the government. In fact citizens were not allowed to move from their lands, or occupations as it messed up the 'database' (register) and created additional expense for the government.

In the 1970's and 1980's, there were similar attempts at extending the control of the state over people's output and the economy.  Spending exceeded its income, and inflation reached 17%. At its peak many people thought there would be a collapse in the money economy.

Whenever anything, any state, firm, civilisation, even biological organism spends more than it takes in ; That is; its liabilities are greater than its income, it must either 

(a) reduce its liabilties/spending, or, (b) increase its income through growth.

The nature of the income is irrelevent.
It does not matter if the rise in income is from conquest and slavery, or from technological innovation, or from consuming more resources.

In the case of an organism, like your body, if you spend more energy than you take in, your body will contract to adapt to the new situation. It will first burn its energy store, then start consuming its own functional components.

In the case of a state, when its liabilities and spending exceed its income, there is a process of inflation, as the state prints money to meet its liabilities and commitments, and consumes the saved income of its population.

Then, (as for all practical purposes its population is its income), it nearly always attempts to control the population and thier output, and thus raise its share of income.

Prices and incomes policies, ID cards and registers, both are very powerful means of extensions of government control, which have had terrible consequences for the indivdual's freedoms and liberties. There could have been a similar collapse in the money economy through inflationary spending commitments, a massive economic shock and a move to a landlord based economy in our recent history as inflation raged.

After the register and ID card system was introduced in the Roman empire to control its citizens, Europe took over 1500 years to start to break free from the barter/landlord economy and into the Renaissance and a money/artisan economy again. 

 Recent History - UK Guide to the 1970s
1974 AD Growth stops. The state refuses to contract its commitments and grows. Income taxes rise, a consumption tax is introduced on goods and services.  Income taxes go up from 29%. Business taxes rise dramatically.

 

The recession in 1974 marked a period of declining real output, and rapidly increasing inflation - rarely falling under 8%.

Basic rate income tax is raised from 29%, to 35% 

A new consumption tax on a range of goods and services  more than doubles to 25%.

The indivdual tax burden effectively doubles to 60%. 

1978 AD The public sector has grown to 1 in 3 of all workers (Source: Audit Commission). The government loses control of its liabilities as unions on behalf of the growing public sector demand  higher and higher pay deals.  Spending accelerates.

The money based economy looks as though it will collapse as inflation accelerates. 

"You can't keep spending more than you earn" 

Margeret Thatcher and a change of government.

Inflation accelerates to 17%. Unemployment was rising to an alarming (and unheard of) 4% dispite the spending. The state was borrowing on a massive scale to support its spending, total government debt accelerating to nearly 44% of the economies output. 

1983 AD The State contracts spending. Government contracts from commanding and controling the economy, the free market is centre stage. 

Spending is cut back, massive and horrific levels of unemployment affects 12% of the workforce.  Inflation declines as interest rates are held high.  

There is a high level of discontent with millions unemployed, and other political parties are trying to arrange a pact to take power and start new policies of spending. 

Prices and Incomes policy or, simply to continue spending? The pain and desperation of such high unemployment causes other political parties to suggest ways of resuming spending. There was a real possibilty that an electorial pact and a change of government would see such policies. 

From the 1983 election manifesto of the Liberal/SDP Alliance. 

Prices and Incomes policy .
"In drawing up its counter-inflation programme, the Alliance has faced the question of pay and prices policy head on. Unlike other parties, the Alliance will seek a specific mandate from the electorate in support of an incomes policy"

From Labour's 1983 manifesto : 
"We will expand the economy, by providing a strong and measured increase in spending. Spending money creates jobs. Money spent on railway electrification means jobs, not only in construction, but also in the industries that supply the equipment - as well as faster and better trains. If we increase pensions and child benefits, it means more spending power for the elderly and for parents, more bought in shops, more orders for goods, and more jobs in the factories. More spending..."

 

1983 AD Income starts rising as productivity accelerates. 

As spending, and thus inflation shrinks, the private sector starts to make real economic profits with lower business taxes

Productivity gains and profits accelerate dramatically as the money economy is restored and inflation subsides. People can save and make rational decisions about the future involving money.

Innovation and enterprise start to increase productivity and real wealth, and massive unemployment starts to ease dramatically over the next few years.   

The varoius factions that sought higher spending from the state were crushed. Unions, were stripped from thier powers to disrupt the economy, many workers lost jobs in the public sector as it contracted to 20% (1 in 5) of the workforce. 

The huge pay deals for workers rapidly became a thing of the past, and whole industries were forced to compete with the rest of the world, when spending was cut back from supporting them, resulting in long term unemployment for many workers.

What followed was the greatest economic expansion in postwar history for the UK and a return to very low levels of unemployment as the money economy was firmly restored. 

Other European countries which didn't adopt such policies still suffer from massive unemployment.    

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