Rent seeking and taxation in the Ancient Roman Empire

Abstract

Historians maintain that an increase in taxation of the peasant farmers, government corruption and misuse of its revenue by the ruling class led to a weakening of the Roman Empire that culminated in its western demise in the fifth century. But it was not just the taxation issue doomed the Roman Empire, but political change from a Republic to an emperor that exacerbated the climate of rent-seeking behaviour by the ruling classes that culminated in the misallocation of tax resources. One category of rent seeking involves the spending of money that the average taxpayer sees as foolish but that benefits a particular group. The groups who bear the costs can stop the rent seeking if they are informed. These average citizens were peasant farmers who no doubt recognized the costs but were unable to form political coalitions to protect themselves because military control of Roman legions was under the tight control of the emperor. This was not the case under the Republic. With the emperors, public funds were being diverted from the public infrastructure such as road building and repair to more frivolous activities.