The Roman economy collapsed in the third century. Barbarian incursions and civil wars disrupted trade and agriculture. Emperors worsened the crisis by debasing the currency. The disruption caused inflation and stagnation. Diocletian attempted to remedy the ailing economy in 301. The emperor tried to reform taxation, the currency, and leveled price controls. The Edict of Maximum Prices set wages and prices throughout the empire. However, market forces quickly overwhelmed the edict and the economy failed to recover its former glory. Romans flouted the law under penalty of death. Compliance actually stifled the economy leading many to ignore the edict.
Diocletian worked diligently to restore Rome’s sagging economy. His predecessors minted their own coins and reduced their value to pay their bills. By 284, Rome’s currency was worth dramatically less than a century before. In some parts of the empire, people abandoned currency in favor of barter. The government actually took tax payments in kind as opposed to currency. The emperor tried to restore the value of the currency using silver. However, the treasury did not produce the new coins in sufficient numbers to impact the economy.
Currency problems led to hyperinflation. In response, Diocletian issued the Edict of Maximum Prices. The first portion of the edict doubled the value of Roman coins and established penalties for speculators. Anyone caught profiteering on Roman currency faced the death penalty. The emperor also banned merchants from passing on the costs of doing business onto their customers.
The emperor moved from coinage and business costs to product pricing. He imposed price controls on over 1,000 goods and products subdivided into 32 categories. These ranged from food to clothes to travel charges to wages. It even included slaves and wild beasts such as lions. Unfortunately, the emperor set the values much too low. Diocletian had no concept of what goods cost. Additionally, he did not perceive regional pricing differences.
Predictably, the edict hurt commerce. Merchants ignored the law whenever possible because they could not turn a profit. Some turned to barter while others created a black market. Compliant citizens could not afford to produce or sell goods. Workers saw their earnings collapse under the weight of hyperinflation and wage controls.
The Edict of Maximum Prices failed miserably. It depressed the economy further, created a black market, increased inflation and speculation, and lead to social instability. There are some reports of violence breaking out in response to the economic pressure. On top of this, it appears many regions ignored the law entirely. As a result, imperial enforcement proved uneven and disproportionate.
Wage and price controls rarely succeed. The population needs to support the provisions otherwise inflation results. Diocletian learned this lesson in the early fourth century. People openly ignored the Edict of Maximum Prices even under penalty of death. In areas of compliance, the edict further retarded the economy and fed inflation. In the end, Diocletian’s efforts to restore the Roman economy failed.