Monday, August 08, 2005

The Role of Government in Ancient Rome and Legionary Capitalism

By Karl Moore
Winnipeg, Manitoba Faculty of Management
McGill University

David Lewis
Citrus College

We argue that the government of the Roman Republic and Empire played a
centre role in the development of business of that era. The form of economy
of Rome was what we label Legionary Capitalism, where considerable
business activity arose in order to fulfil needs of the Roman Legions.

The role of government in the economy is a controversial one in today?s world. At one
end of the spectrum we have the lassie fare capitalism of Hong Kong with little government
involvement and on the other, the intertwining of government, business and other societal
institutions found in Japan and France. We believe that a historical perspective is a useful one to
consider the question of whether governments matter? In this paper we take the long view and
focus on the history of Roman and examine the role of the government during first the Roman
Republic and later the Roman Empire. We will show how the role of government evolved over
time and how government was central to the way Roman business operated, organized, expanded and interacted with the rest of society. By considering an exemplar of a society which lasted many centuries and controlled and/or highly influenced the majority of the known world we believe that the current debate is enriched and given greater perspective.

THE ROMAN REPUBLIC

In 509 BCE a patrician revolution created a constitutional republic in Rome. Prior to the
revolution key foundations of the Roman world: the Roman legion, the aristocratic Senate and an
assembly of freemen, with very limited powers, had been laid. During the 600 and 700?s the
monarchy presided over Rome's transformation into a city-state, in which streets were paved and a number of public buildings constructed. However, enough chaffed under the rule of the King to desire a republic (Tacitus, 1971).

The Roman Republic was based upon checks and balances designed to prevent the
installation of another king. The Republic would be administered by two elected Consuls who
could veto one another's actions. Real power lay with the patrician landowners of the Senate. It
was in the context of the new Roman constitution and government which provided a stable social
framework that permitted Roman business to develop in a way it had not been allowed under the monarchs (Freeman, 1996).

As important as the stability of the Roman constitution it was the increase of the role
Roman legions which was more critical to our story. Despite its excellent locational advantages
along the Tiber and the roads of Italy, Rome was still largely an economic backwater selling grain to nearby hill tribes. The same hill tribes such as the Aequi and Volsci Rome sold grain to wanted her farmlands and Rome had to defend them. This led Rome's citizens to war, and it is from war that Roman capitalism received its greatest impetus (Moore and Lewis, 1999, 2000).
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