... the State required more money and labour to maintain internal peace and security. Confining itself, as it did, to the problem of State life and being indifferent to economic progress, the government did nothing to promote and foster the latter. Rather, it helped to accelerate the process of stagnation by protecting the city bourgeoisie and taking very little thought for the prosperity of the masses.
In our time we call that supply-side economics. The excerpt continues:
Thus the burden of supporting the life of the State lay entirely on the working classes and caused a rapid decline of their material welfare. As they were the chief consumers of the industrial goods produced by the cities, their diminished purchasing power reacted adversely on the development of commerce and industry and greatly aggravated the torpor which had come over them.
Their supply-side
economics led to the "rapid decline" of the standard of living for the
working classes, and their "diminished purchasing power" made the
economy sluggish. The excerpt continues:
The decay had definitely set in as early as the beginning of the second century. The wars of that century demonstrated the hopeless economic weakness of the Empire and awakened the interest of the Emperors in economic problems. But, even when they realized the danger, they were helpless to cure the disease. Their constructive measures were puerile and brought no relief.
• Bad economic policy created the problem.
• Bad economic policy was unable to solve the problem.
• Economic decline implies decline of civilization.
1 comment:
In a book that was published ten years before Keynes's General Theory, Rostovtzeff prefaced the above thoughts with these:
"With the collapse of the immense fortunes of the imperial aristocracy and with the concentration of their wealth in the hands of the Emperors, the forms of the Hellenistic city-capitalism, based on commerce, industry, and scientific agriculture, revived again and developed rapidly under the benign influence of the peace and quiet re-established by Augustus...
This city-capitalism, however, gradually degenerated. The prevailing outlook of the municipal was that of the ..."
By "rentier" I figure Rostovtzeff meant the same that Keynes meant, and the same that I mean, which (it turns out) is defined by Vladimir Lenin at Wikipedia:
"... rentiers, i.e., people who live by 'clipping coupons' [in the sense of collecting interest payments on bonds], who take no part in any enterprise whatever, whose profession is idleness."
From Chapter 24, Keynes's use of the term:
"... it would mean the euthanasia of the rentier, and, consequently, the euthanasia of the cumulative oppressive power of the capitalist to exploit the scarcity-value of capital. Interest today rewards no genuine sacrifice, any more than does the rent of land."
Like Lenin, Keynes identifies the rentier as one who collects interest on his capital rather than investing it in productive enterprise. But like Adam Smith, Keynes used the word "interest" to mean the interest on money, and used the word "rent" in reference to the payment for natural resources such as land.
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