Reading Richard Ebeling’s brief summary of the economic misadventures of the Roman Emperor Diocletian (244-312 AD), the striking lesson is how stunningly we fail to learn the lessons of history, with Venezuela’s being a recent example:
Michael Ivanovich Rostovtzeff, a leading historian on the ancient Roman economy, offered this summary in his Social and Economic History of the Roman Empire(1926):
“The same expedient [a system of price and wage controls] have often been tried before him [Diocletian] and was often tried after him. As a temporary measure in a critical time, it might be of some use. As a general measure intended to last, it was certain to do great harm and to cause terrible bloodshed, without bringing any relief. Diocletian shared the pernicious belief of the ancient world in the omnipotence of the state, a belief which many modern theorists continue to share with him and with it.”
Finally, as, again, Ludwig von Mises concluded, the Roman Empire began to weaken and decay because it lacked the ideas and ideology that are necessary to build upon and safeguard a free and prosperous society: a philosophy of individual rights and free markets.
Ebeling details that there is much more to the error than simple price controls. One underlying theme, however, of which we can’t lose sight is the hubris of the central planner. As with quantitative easing, the planners don’t see themselves as flailing around looking for some solution. They really think they’ve got a workable idea. They aren’t entirely dismissive of the risks; they just think the risks are minimal.
And for the most part, the piece they’re missing is the likely response of the people. Ebeling peppers his essay with descriptions of people’s reactions to Diocletian’s heavy-handed economic policies, and they all seem obvious. We can guess, though, that they weren’t obvious to Diocletian. If only he’d been able to imagine what he would do if he were in the position of his subjects. If our own elites could do the same.