In a world obsessed with the present, with short memories filled with rhetoric, it can be instructive to take a step back and gaze at the long span of human history. Much of what has happened before is still highly relevant now, particularly when it comes to the long and twisted course of economic growth. Economic historians often deal with questions of why economic growth happened in the way it did, where it did, and that wealth of knowledge should be brought out of the shadows to better understand what is happening in our world. Reams of paper have been spent on why the industrial revolution began in Britain instead of in other countries.
Historically less considered why it took place in Europe at all, and not some other part of the world. In spite of this, recent scholarship takes on the issue of industrialisation and why China, India, or the Muslim world did not spark industrialisation before the Europeans. A fascinating region only recently considered is the Byzantine Empire – that Eastern Roman legacy that is mainly remembered for succumbing to the Turks in 1453 (which, coincidentally occurred 563 years ago last month). So why is Byzantium an interesting consideration in terms of development? It can offer insights into understanding why major economic shifts took place in certain places and at certain times instead of others, which is key for understanding general conditions for growth in the modern world. This melding of historical analysis with current problems is the synthesis of much of modern institutional economics and has born much fruit for the development community.
Institutional and development economics has generated a consensus around what sort of institutional framework is ideal for promoting growth and industrialisation. A stable and predictable institutional environment helps to foster certainty and entrepreneurialism, leading to the growth of commerce – sweeping and frequent changes to the systems of government are not conducive to sustained economic activity. Fair and even enforcement of laws is also required, people will be less likely to invest in and gain property if they fear the state will appropriate that property on a whim once it is gained or throw them in jail arbitrarily. Education and human development is important as well since it allows for the development and adoption of new technologies. These are benchmarks that have been largely adopted by the international development community and the World Bank and currently inform much of the policy space in the field of international development.
Byzantium itself is an interesting case since it seems to satisfy many of these accepted preconditions of development, yet it failed to industrialise or even develop a pre-industrial commercial revolution. Why this failure occurred, when institutionally it should not have, is an important question for development experts today and can be instructive for how to proceed in terms of future policy advice for developing nations that seem to be doing everything right.
Whatever issues Byzantium may have had, it certainly had the time to develop economically. It must be remembered that for the majority of recorded European history, Europe was under the aegis of the Roman Empire, with much of Europe itself under the direct rule of Rome, or later Constantinople. In 1769 Joseph Priestly drew a chart that clearly illustrates how ubiquitous Roman rule was – in both time and area
The Roman Empire itself was founded in the first century BCE and existed until its division in 395 CE – a period of over 400 years. The successor state, popularly called the Eastern Roman Empire, Byzantine Empire, or Byzantium, maintained its hegemony until Constantinople was sacked by Crusaders from Western Europe in 1204 CE – generally accepted as the effective end of the Byzantine Empire. Even after this it limped along until it was finally conquered by the Ottoman Turks in 1453 CE. Taking the earlier date, Byzantium existed for 820 years; holding sway over much of the eastern Mediterranean for a period of time that is longer than the amount of time that has elapsed since its fall in 1204 CE. In contrast, the modern political entity of Great Britain has only existed since 1707 CE – a mere 309 years.
Roughly a millennium of existence isn’t all Byzantium had though, added to this is the technological legacy that it inherited. The Roman Empire had developed running water and modern sanitation, centralised internal heating, and even a rudimentary form of the steam engine – that harbinger of the industrial revolution. It possessed the highest standard of living at the time and the level of development achieved by the Roman Empire would not be seen again until the nineteenth century. Yet Byzantium was not the region to bring about this revolution is living standards.
The Byzantine Empire benefited greatly from a secure institutional system. It lacked much of the institutional instability and turmoil that plagued the rest of Europe from the sacking of Rome in 410 CE up until the fall of Napoleon. As the direct continuator of Rome both in spirit and practice, Byzantium continued many of the institutional practices of its parent. This stability would have avoided the disruption inherent in highly changeable systems that hampers growth and entrepreneurism.
In addition to this stability, Byzantine institutions were also highly modern and successful (despite what the term ‘Byzantine process’ has come to mean in modern parlance). Byzantium’s parent empire had established much of its civil code early on and Roman law was exceptional for its fairness and lack of arbitrary measures. Byzantium inherited this system of reasonably independent courts and jurisprudence and further improved on this in its own right, translating the entire legal code into Greek in the 530s CE, the working language of the empire by that time, and in the process simplifying the civil code and modernising the parts related to property rights and commerce. This reform of Roman law is the basis for the civil code still used in countries as diverse as Canada, France, Italy, and Russia. More importantly, this new code created a foundation for modern property rights, something that is a fundamental precondition for capitalistic industrialisation. These strong property rights should have laid the groundwork for citizens to foster economic growth and investment.
The Byzantine economy also began with a significant head start over the rest of Europe. The economic strength of the empire was demonstrated in the dynamism of its trade, the bounty of its markets, and the richness of its luxury goods. When Western Europe was struggling to make meat edible with highly expensive spices from the east, Constantinople was the western entrepôt of the Silk Road, bringing in exotic goods from the furthest reaches of the Eurasian continent. Its currency, the solidus, was considered the ‘dollar’ of the medieval period; people across Europe preferred it to the local currencies of western potentates that were often inflationary and insecure. The riches and prosperity drew people who sought to make lives for themselves in the capital of Constantinople, making the city the largest in Europe for much of the period. Until its fall, Constantinople rarely had less than 200,000 inhabitants and often approached nearly half a million. By comparison, the other major cities of Western Europe never reached 100,000 people; London was inhabited by less than 50,000 people, and Rome itself – the old centre of the world that boasted a million residents at its peak – was populated by a mere 20,000.
On top of this prosperity and institutional clarity was a highly educated and literate elite, providing the human capital that could have been exploited to achieve growth. Latin and Greek were the languages of Byzantium, and the old texts that were lost to the West until the Renaissance were available and often read. This continuance of knowledge from the Greco-Roman period would have allowed for scientific pursuits to continue and advance, leading to new innovations and ideas that could have sparked serious economic advancement – much as the Renaissance is credited with doing in Western Europe.
So with all of this going for it, what happened? Byzantium seems to check all the institutional development boxes, yet why did the Byzantine Empire stagnate and fail to produce an industrial revolution, or even a commercial revolution along the lines of 15th and 16th century Italy?
The economic failure of Byzantium can be traced back to military conflict – much like its political failure. While most of Europe was engaged in war throughout the medieval period, wars affected Byzantium differently. These differences were caused by the situation Byzantium was in and the political structure it had, and they bred a very different set of outcomes than in western European society.
There are very few years in which the Byzantine Empire was not at war during its existence; and most of these wars were highly defensive, or became at best Pyrrhic victories. Byzantium was beset on all sides – Slavs wanted land in the Balkans, the emergence of Islam claimed its southern lands, and the Mongols and Turks coveted its territory in Asia. While Western Europe was a churning tournament of violence over small duchies and pride, Byzantium was afflicted with near constant existential crisis. Similarly, western European leaders tended to farm the warfare out to vassals and mercenaries while Byzantium’s centralised power structure inherited from Rome led to state controlled armies. This combination of destructive invasion and centralised military control led to the development of a highly militarised state, one that was unable to foster the type of development that its institutions should have allowed.
From the 7th century CE onwards, Byzantium was under immense military pressure from external forces that wanted to rip it apart. In this situation, mobilising men and resources to defend the empire was of primary importance. This strain on the state gave rise to a top heavy military-political bureaucracy that shifted economic activity to serve the military and reformed society to fit within a military mould. This culminated with the development of the Theme system where provinces were organised around the standing armies stationed within them and the offices of military commander and civil governor were fused. Individual soldiers were provided with state owned land to farm given that they promised their descendants would join the military – a convenient work around for the always unpopular conscription. This caused a fundamental breakdown in normal economic activity; the soldiers were not able to own their land and were dependent on the state for their livelihoods during wartime and peacetime.
This extensive militarisation of the state prevented the Byzantine government from relaxing taxes and regulations sufficiently to allow its citizens to take advantage of the strong set of institutions available to them. The overarching institution of the state was unable to change from an extractive focus to a more developmental or commercial focus. The state needed every available resource in order to perpetuate its own existence and thus left nothing for the citizenry to build on – there was no available capital for large-scale commercial enterprises or industrialisation since any capital created was redirected towards the army. Security was the fundamental reason the Byzantine Empire failed to develop and it is an issue many developing countries contend with still today.
The lesson within the Byzantine story is that regardless of the solidity of the rule of law, the stability of state institutions, or even the wealth of the nation, if the state is unable to shift away from an extractive mindset due to militaristic preoccupations then it will not be able to grow economically. An excellent modern example of this is the Soviet Union – another large territorial empire that perceived threats on all sides and consequently shifted economic activity to support military expansion. It too resulted in a military bureaucracy fusing itself with the civil governance structure and created a heavy dependence on arms production as an economic driver. These policies similarly resulted in economic stagnation.
More broadly, the legacy of Byzantium lives on in modern development studies; its shadow is cast over every developing nation as it makes the transition away from extractive governance. It shows us that even the most prosperous of nations can be left behind due to institutional decisions and prioritisation failures. Of fundamental importance to development experts everywhere should be this all-important shift away from extractive institutions.