Question

What made the Later Roman Economy so unstable? (Bennette, Medieval Europe )

Answer 1

The later Roman Economy was so unstable because of some couple of economic reasons.The reason is mainly financial. Commodus taxed the senators and was generous with the others. Likewise, Nero was popular with the lower classes. The main financial and economic reasons behind the unstability are as follows:

Inflation

Nero and other emperors debased the currency in order to supply a demand for more coins. By debasing the currency is meant that instead of a coin having its own intrinsic value, it was now the only representative of the silver or gold it had once contained.By the time of Claudius II Gothicus (268-270 A.D.), the amount of silver in a supposedly (100%) silver denarius was only .02%.This led to or was severe inflation.The Roman Empire acquired money by taxation or by finding new sources of wealth, like land. However, it had reached its furthest limits by the time of the second good emperor, Trajan, during the period of the high empire (96-180), so land acquisition was no longer an option. As Rome lost territory, it also lost its revenue base.

Land

Rome's wealth was originally in the land, but this gave way to wealth through taxation.During the expansion of Rome around the Mediterranean, tax-farming went hand-in-hand with provincial government since the provinces were taxed even when Romans proper were not. Tax farmers would bid for the chance to tax the province and would pay in advance. If they failed, they lost, with no recourse to Rome, but they generally made a profit at the hand of the peasants.Keith Hopkins says that the diminishing importance of tax-farming at the end of the Principate was a sign of moral progress, but also meant the government couldn't tap private corporations in the event of an emergency.The means of acquiring crucial monetary funds included debasing the silver currency (seen as preferable to increasing the rate of taxation, and common), spending reserves -- depleting the imperial coffers, increasing taxes (which was not done during the period of the high empire), and confiscating the estates of the wealthy elite. Taxation could be in kind, rather than coinage, which required local bureaucracies to make efficient use of perishables, and might be expected to produce reduced revenue for the seat of the Roman Empire.Once the wealthy and powerful were no longer either rich or powerful, the poor had to pay the bills of the state.These bills included the payment of the imperial guard and the military troops at the empire's borders.

Feudalism

Since the military and the imperial guard were absolutely essential, taxpayers had to be compelled to produce their pay. Workers had to be tied to their land.To escape the burden of tax, some small landowners sold themselves into slavery, since slaves didn't have to pay tax and freedom from taxes was more desirable than personal liberty.