CONFERENCE: Capital, Investment and Innovation in the Roman World (Free University of Brussels (VUB), 28-30 May 2015)

(image source: Wikimedia Commons)

The Research Network "Structural Determinants of Economic Performance in the Roman World" (Ghent/Leuven/VUB, funded by the Research Foundation Flanders (FWO)) organises a conference in Brussels (VUB) on 28-30 May 2015 around the theme "Capital, Investment and Innovation in the Roman World".

Presentation:

Capital may be defined to comprise all man-made resources available for production. These include (1) financial capital : all monetary wealth in whatever form (stocks of currency, bullion, transferable credit bonds, etc.) available to buy whatever is needed or used to realize production: supplies, tools, equipment, labor, licenses, information, etc.; as well as (2) real (or physical) capital: all material resources such as tools, workshops and factories, warehouses, etc. needed or used to realize production. Both forms of capital may be privately or publicly owned. In a wider sense the concept 'human capital' denotes the embodied stock of human competencies, intellectual and other, that allow a person to perform the tasks necessary to create 'labor'. In order to retain a clear focus for the project and monograph, however, we will limit ourselves for this project to these 'classical' definitions of capital. The concept 'social capital', while valuable in itself, would take us too far from what we consider the core issues of our project. We explicitly focus, furthermore, on investments and innovations, i.e. on the quantitative and qualitative changes that stocks of financial, real and human capital underwent in the Roman world. The objective is to produce a coherent and innovative study of capital, investment and innovation in the Roman world.

Capital and credit are important elements in the furthering or holding back of economic growth. The allocation of capital, labor and natural resources through market and non-market channels determines economic performance.

Hence, fundamental issues in understanding the functioning of the economy of the Roman world include: who had access to capital, to what extent, and in what form, and how they dealt with it. Various segments of society controlled capital to different extents and used it for diverse purposes.

Did the social and political elites of the Roman world treat the wealth they controlled fundamentally differently from the magnates of the capitalistic era, or do the different forms and instruments of the Roman business world no more than cloak an essentially identical mentality? To what extent did other segments of society have access to capital, and how did capital circulate through society?

Asking these questions implies that we should not limit our study to the formal instruments of banking and business, but also take into account the wider institutional framework, both the formal rules and the social networks and informal arrangements that eased or hampered the dissemination of capital. Recent approaches within NIE (North, Wallis & Weingast, Violence and Social Orders, 2009) urge us to look at political and social conditions that constrained the pre-modern economy. According to a pessimistic view, the predatory and exploitative inclinations of the state and of the politically leading rentier class, who extracted the surpluses produced by the peasantry and an underprivileged workforce, hampered the accumulation and productive investment of capital. In other views, it was not the shortage of capital, but the poor allocation of capital that restrained economic performance. The question, however, is whether this is a valid assessment of the situation in the Roman Empire.

Some questions that we will discuss are:
•Did the political and social elites perceive money as an economic asset?
•What part of their property and income consisted of disposable money? How easily and/or readily were assets such as land, buildings, workshops, or slaves transferred into financial capital through factor and commodity markets?
•To what extent did the political and social elites dominate ownership of capital goods (land, natural resources, raw materials, production facilities, tools)?
•What is the role of the state (on imperial and local levels) in the accumulation of capital? What was the property rights regime of publicly owned goods ? What is the role of war in the dissemination and destruction of (fixed) capital?
•What was the role of religious institutions, such as temples, in the creation of capital and in making it available? Were there subject to the same property rights regime as private persons?
•How well did the credit market function? What does the level of interest tell us about the value of capital? Which requirements and whose needs determined the development of formal and informal instruments of the credit market?
•What was the role of private voluntary collectives, such as collegia, in the creation of capital and in making it available ? Were there subject to the same property rights regime as private persons ?
•To what extent was credit necessary for production ? What form did this credit take ? To what extent was consumption credit provided for by commercially oriented financial institutions or entrepreneurs - i.e. by enterprises whose financial assets constituted working capital rather than reserves for future consumption ?
•How and by whom were capital goods besides land and natural resources (tools, machines, production facilities, work animals) produced and allocated?

Equally important is the question to which purposes capital was used: what scope for investment did the agricultural and non-agricultural sectors offer, and to what extent was capital invested in means of production that boosted productivity rather than in status-enhancing assets such as urban palaces, benefactions, and expensive cooks? While investments potentially created growth, market oriented capital investment is as much a response to an expanding market as it is an incentive for economic growth in itself. The increasing urbanization and market integration of the Roman world made productive capital investment an increasingly attractive option, as it widened the market and increased the stability of demand. At the same time, to what extent did landowners and businessmen actually respond to these changing conditions of the market? And how did their response to population decline and the shrinking of the urban markets aggravate the economic decline that seems to occur in many parts of the Roman world after the second century AD? The examples of capital investment in agriculture, transportation, and industry in our archaeological and written sources are undeniable, but what limits were there to the investment of capital in the economy ?

One form of investment that deserves particular interest and which operated at all levels of society is that in knowledge and expertise. As with other forms of investment, a costly and time-consuming effort in gaining specialized know-how and expertise was economically only viable in conditions of sufficient - and sufficiently stable - demand. The ways in which knowledge and expertise were disseminated in pre-modern societies has been used as a marker of the economic development of such societies. In concrete terms, how did servile and freeborn workers and artisans acquire the knowledge they needed? To what extent did this stimulate or constrain economic development? In which ways was professional education embedded in the social and domestic context of business, agriculture, and industry? How is education of labor related to the control of capital and other means of production? Who had what interest in the acquisition and dissemination of expertise and know-how among the free and servile population.

Some questions that we will discuss are:
•What forms of investment in agriculture and other sectors of the economy are visible in the archaeological and written sources?
•What conditions stimulated or constrained investments in the various economic sectors? To what extent did imperial and local taxation stimulate and restrain capital investment? To what extent did investment opportunities stimulate the development of financial institutions?
•What is the relation between capital investment and productivity? Is capital investment related to economies of scale?
•To what extent did investments in agriculture lead to an increase in available animal energy and higher labor productivity? To what extent did a fall in demand cause a reversal of this development?
•How was knowledge and expertise acquired and disseminated in various sectors? What is the relationship between the acquisition of specialized knowledge and capital investment in equipment and infrastructure?

As with investment, incentives to modernize methods of production in agriculture or other economic sectors can be seen as stemming from the rise in urban markets and the increase of rural industries as much as causing economic growth in the first place. In many societies, capital investment went hand in hand with innovation. The investment in expertise and know-how does not only concern the dissemination of existing knowledge, but also provides the starting point for the creation of new technologies and methods. Innovation in the Graeco-Roman world not only consisted of the introduction of new cash and fodder crops and new agricultural techniques, but also of the introduction of new forms of equipment and technologies, and of the application of existing methods on a vastly larger scale. A fundamental question concerns the goals of innovation, i.e. whether innovation was intended to overcome the constraints of production (as in irrigation in agriculture or the application of new technologies in industry), to introduce new sources of energy, or to reduce the input of labor. Available energy was a constraining factor in pre-industrial economies, which makes energy-enhancing innovations of vital importance for economic growth. Of equal importance for the allocation of production factors, however, is the extent to which such sources of energy could be concentrated or transported (such as coal was from the 18th century onwards).

Some questions that we will discuss are:
•What forms of innovation occurred in agriculture, transportation, and industry, and what caused these innovations? To what extent did the costs involved and the risks inherent in novelty cause an aversion to innovation?
•What is the relation between innovation and technological change? To what extent do we see investment in larger installations?
•To what extent is the model of the 'low equilibrium trap', which is seen as limiting the need or drive for innovation, a valid model for the Roman world?
•Which goals determined these innovations? What is the relation between the nature of the workforce and the production process?
•In what ways is investment and innovation related to the increase in the availability of new sources of energy?

Programme:

Koen Verboven & Paul Erdkamp, Introduction

Part 1. Capital
•K. Gunnar Persson, Capital, labour, and income estimates in the Roman world
•Wim Broekaert / Arjan Zuiderhoek, Capital goods in the Roman economy
•Norman Underwood, Laboring for God: The Clergy and Human Capital in the Later Roman Empire
•Leonardo Gregoratti, Temples and traders in Palmyra
•Koen Verboven, Credit institutions and financial capital in the Roman world
•Marguerite Ronin, Cooperative investment in rural communities of the Roman Empire

Part. 2. Investment
•Christiano Viglietti, Pecunia adpensa. Capital, investment, and  innovation in an uncoined-money economy: Rome c. 700-350 BCE
•Jean Andreau, Capital and investment in the Campanian tablets
•Sitta Von Reden, Credit and Investment in Roman Egypt
•G. Minaud, Chiffre d'affaires, bénéfice et capitalisation
•Mick Stringer, Impensae, operae and pastio uillatica. New venture investments in the Roman agricultural treatises.
•Annalisa Marzano, A story of land and water: Capital and Investment in large-scale fishing and fish-salting operations
•Tim Clerbaut, The Roman villae: new beacons of capital production, capital management and Romanization in the Roman North

Part. 3. Innovation
•Paul Erdkamp, Malthusian constraints on the Roman economy. A critique of the ‘low equilibrium trap’
•Helmuth Schneider, Technical innovations in the Roman world

•Robin Veal, Forest resources and technical innovation in the Roman economy
•Andrew Wilson, Concluding remarks

Abstracts can be found on the conference website.