Bridge over ocean
1 January 1980 Financial Analysts Journal Volume 36, Issue 1

Economic Policy and the Rise and Fall of Empires

  1. Jude T. Wanniski

Confronted with a fragmented world—countless governments, currencies, legal systems, religions, armies, languages and customs—Alexander of Macedonia understood the enormous benefits of unification. In the years before his death in 323 B.C., he conquered his world, breaking down the barriers to communication and commerce.

Caesar Augustus’ Empire-wide tax census made it possible to lower the rates of those who had previously borne all the tax burden, ended the confiscation of the incomes and properties of the most visible citizens and generally encouraged the accumulation and spread of wealth that continued until the accession of Commodus in 180 A.D. The following 100 years of spending, taxes and monetary manipulation yielded chronic inflation, however, and led finally to Diocletian’s decree of universal wage and price controls.

After the Pax Romana ended the quest for a world government and a world economy did not resume until the American and French revolutions in the late 18th century. The latter was a blind, angry rebellion against the political leaders who had strangled the French economy with excessive taxation and government regulation.

Unlike Alexander and Augustus, who had begun with conquest and brought reforms afterward, Napoleon began with internal reforms made possible by the revolution. He lowered domestic tax rates, stabilized the currency and reformed French (and eventually European) law with the Napoleonic Code.

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