17th September 2011

Too big not to fail

Commentators bang on endlessly about the desirability of a ‘global world’, with every economy linked seamlessly to every other. But when it goes wrong, as it has done in the last three years, the painful consequences are equally global. Ask the Romans.

The Roman empire stretched from Britain to Iraq and from the Rhine-Danube to the northern edges of the Sahara desert. At its largest extent (c. ad 117) it probably comprised about 50 to 60 million people and covered 2.5 million square miles. When Rome took over a province, the local elites continued to run the show, as they had always done, but now under the ultimate jurisdiction of Rome’s governor and his remarkably small staff. The one fixed condition was that Rome got its taxes and could station its army there, when needed (in fact, only Britain required a constant legionary presence). Otherwise Rome applied no unitary control. It was up to the governor to lay down the ground-rules. Not even Rome’s legal system was imposed, let alone its coinage, or anything else.

But even under such a loosely centralised regime, the consequence, intended or not, of 700 years of Roman provincial government was a prosperous economic network stretching across the whole empire: flag-makers from Syria worked for the Roman army in South Shields; high-quality pottery from southern Gaul found its way to Africa, Spain, Italy, Britain, Germany and Denmark; and as ice-cap pollution levels show, metal-working (lead, copper and silver) was on a scale to be matched only from the 16th century onwards.

But in the fifth century the empire in the West collapsed. Germanic tribes, harried by Huns, poured into Europe, and Rome was unable to stop them. They established their own kingdoms, taxes stayed local and Rome, starved of money to pay its army, could no longer enforce its authority. The wider consequence was the complete breakdown of the empire-wide economic links that had brought such prosperity to the West. This dramatic economic collapse lasted some 200 years.

As we too are now finding, the bigger the structure, the more catastrophic and wide-ranging the disaster when it all caves in.