The Roman Empire faced a significant crisis during the period known as the Crisis of the Third Century (235-284 AD), marked by political instability and a staggering turnover of leadership. With the throne changing hands 26 times in just over fifty years, the military was frequently engaged in the chaotic process of appointing and deposing leaders. These self-styled rulers, often dubbed “barracks emperors” due to their military backgrounds, typically lacked the necessary administrative skills to govern effectively. Their policies were largely shaped by a desperate need to appease the military, leading to economic strategies that prioritized soldier satisfaction above all else. A prime example is Severus Alexander, who, despite not being a soldier, relied on the Praetorian Guard to secure his position. To finance increased military pay and campaigns against the Alamanni tribes, he resorted to debasing silver coinage. This reckless monetary policy not only weakened the currency but also left other borders dangerously exposed, resulting in invasions from the Sassanids and ultimately leading to Severus’s assassination by the very guards who once supported him. This backdrop of currency devaluation set a troubling precedent for his successors, paving the way for ongoing inflation.
When Diocletian ascended to the throne in 284 CE, his predecessor Aurelius had already taken steps to restore stability by reuniting a fragmented Empire and repelling invaders like the Sarmatians and Vandals. Diocletian sought to build upon these efforts by introducing the Tetrarchy—a system of shared governance with three co-rulers alongside him. However, continual inflation plagued his reign as he significantly ramped up military and public works spending. Compounding these issues, a series of poor harvests—exacerbated by misguided policies that diverted labor from farming to constructing a new capital in Nicomedia—fueled discontent, particularly among soldiers who depended on the Emperor’s goodwill for their livelihoods. With the military’s welfare directly tied to his regime’s stability, Diocletian faced the precarious task of appeasing their needs amid escalating unrest.
Diocletian Issuing his Edict on Maximum Prices to assembly of merchants and farmers
In 301 CE, citing the nefarious influence of “evil traders,” Diocletian issued his Edict on Maximum Prices, which imposed stringent price controls on over a thousand goods, from basic staples like rice to the wages of craftsmen (for a detailed examination of the price controls, an English translation of the Edict can be found here). In a preemptive move, he blamed any failures of this initiative on the greed of others, launching tirades against unscrupulous speculators and profiteers who he claimed were robbing the impoverished populace. Yet, he conveniently forgot to mention the expansion of provincial governance from 40 to 105, which necessitated a fivefold increase in high-salaried public officials, alongside a sixfold hike in military pay and the establishment of lavish palaces for the tetrarchs. These expenditures were being financed by a currency in freefall, to the point that the government refused its own money in transactions, instead demanding goods in trade.
The fallout from the Edict was predictably catastrophic. The penalties for violating price controls were draconian, with death looming over those found guilty of overcharging or “hoarding” goods. As the currency’s value plummeted and fixed prices rendered selling anything at a profit impossible, producers either ceased operations or resorted to black market dealings, leading to widespread shortages. Desperate Romans turned to violence in their struggle to secure basic necessities, a situation particularly acute among soldiers, who found themselves with little to offer in exchange for goods that had become scarce.
In a desperate bid to restore some semblance of market order, merchants, farmers, and consumers began to ignore the Edict altogether; after all, starving soldiers were hardly inclined to enforce the law against those providing food. Over twelve centuries before Thomas Gresham articulated his principle, Diocletian illustrated the age-old truth that bad money drives out good. His attempt to rectify poor fiscal policy—whether through excessive taxation, currency manipulation, or, in our modern context, burdensome tariffs—by introducing further damaging measures is a lesson in futility. Whether in ancient Rome, the Soviet Union, or even today’s democracies grappling with mixed economies, it is abundantly clear: price controls seldom yield positive outcomes.
Tarnell Brown is an Atlanta based economist and public policy analyst.
