Soldiers and booze

Two millennia ago Rome had a large economy based on market institutions and a stable government. ¹ In Italy, the Middle East and in Egypt the Roman Empire (RE) was highly urbanized, containing cities of 100, 000 inhabitants and more, despite being a pre-industrial society. In a seminal article Hopkins (1980) argued that it was the taxes in the form of money that greatly contributed to the development of a market economy in the RE, as people now had to produce a surplus that could be sold on a market to generate the money with which to pay their taxes. ² This chapter aims to study what happened in north-western Europe in this respect. An important and, in our opinion, as yet inadequately answered question is how the Romans got a market economy to flourish in the backward part of the empire that then was newly conquered. In considerably less than a century the Romans produced an effective and successful local economic system largely based on market exchange. This is a surprising result: European colonizers in Africa, for example, were later to experience that just imposing a tax in money on the native inhabitants does not automatically lead to the establishment of a local market economy, not even with military presence as a backup. How did the Romans succeed? The short answer is that the Roman military delivered this feat. ³