Currency Debasement and Social CollapseSubmitted by Charleston Voice on Fri, 05/04/2012 - 10:18
Friday, May 04, 2012 10:15
Mises Daily: Friday, May 04, 2012 by Ludwig von Mises
[In a recent debate between Ron Paul and Paul Krugman, Dr. Paul said, "Professor Krugman indicates we just want to go back 100 years or so. That's not exactly true. We want to improve on what life was like back then. But he wants to go back 1,000 years or 2,000 years, just as the Romans and the Greeks … debased their currency."
In Human Action, Ludwig von Mises explained how currency debasement contributed to the fall of the classical civilization of antiquity.]
Knowledge of the effects of government interference with market prices makes us comprehend the economic causes of a momentous historical event, the decline of ancient civilization.
It may be left undecided whether or not it is correct to call the economic organization of the Roman Empire capitalism. At any rate it is certain that the Roman Empire in the 2nd century, the age of the Antonines, the "good" emperors, had reached a high stage of the social division of labor and of interregional commerce. Several metropolitan centers, a considerable number of middle-sized towns, and many small towns were the seats of a refined civilization.
The inhabitants of these urban agglomerations were supplied with food and raw materials not only from the neighboring rural districts, but also from distant provinces. A part of these provisions flowed into the cities as revenue of their wealthy residents who owned landed property. But a considerable part was bought in exchange for the rural population's purchases of the products of the city dwellers' processing activities.
There was an extensive trade between the various regions of the vast empire. Not only in the processing industries, but also in agriculture there was a tendency toward further specialization. The various parts of the empire were no longer economically self-sufficient. They were interdependent.
What brought about the decline of the empire and the decay of its civilization was the disintegration of this economic interconnectedness, not the barbarian invasions. The alien aggressors merely took advantage of an opportunity which the internal weakness of the empire offered to them. From a military point of view the tribes which invaded the empire in the 4th and 5th centuries were not more formidable than the armies which the legions had easily defeated in earlier times. But the empire had changed. Its economic and social structure was already medieval...
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