Kay showed how, contrary to popular belief, Rome was a coherent economic entity, with real per capita economic growth. The focus of the lecture was on the role of banks in expanding Rome’s money supply, much as they do in today’s economy. Over expansive lending by the argentaari, and a boom in money liquidity, later led to the world’s first international credit crisis.

Given the lack of empirical data, Kay explained how he used the writings of Roman scholars, such as Cicero, to illuminate the role capital and credit played in the economy of the Roman Republic. The increase in the flow of silver bullion and imports to the republic, Kay believes, suggest perhaps a 0.5% increase in GDP per annum during the period of imperial expansion. He argued that Mithridates’ invasion of Asia in 89 BC, and the destruction of the port of Delos, meant that repayments of loans were interrupted.

Kay surmised that this sophisticated society might have been hampered by a republican ideology. Prior to 300 BC the majority of citizens were agrarian peasants. At the time of Rome’s expansion into an empire, however, the size of the army increased and jobs in the military became very profitable professions. From 88 BC to 27 BC, when Octavian became the first Emperor, Rome was blighted by civil wars, waged by wealthy generals such as Caesar and Pompey who had amassed private armies.

We should not underestimate the importance of bankers in the financial system at the time, Kay argued. Before the second century BC there is no mention of bankers in the literature. There was little change in family partnerships or business structures, apart from owners sending their freedmen to Delos, who became new Italian entrepreneurs. Following the destruction of Delos, bank finance was replaced by members of the elite lending to each other. Kay proved, from Cicero’s writings, that he lent money to Caesar. The discussion looked at the impact of Roman rule on its empire. Kay pointed out that, with the exception of Carthage in North Africa, bizarrely the Romans did not impose their own currency on captured territories.

The economic revolution of the Roman Empire meant that free citizens in Pompeii, Herculaneum and Rome enjoyed unrivalled prosperity. The famous eruption of Vesuvius in 79 AD preserved much of the sophisticated lifestyle of citizens in Pompeii for archaeologists to discover. The remains of roads and aqueducts throughout the Italian peninsula are existing proof of the huge amount of money that was devoted to civil infrastructure.

Kay concluded by acknowledging the similarities between Rome’s financial crisis and the 2008 global crisis, two millennia apart; two unsustainable economic systems, which led to struggling governments, a rise in inequality and a fall in world trade.

The Legatum Institute was delighted to welcome year 12 students from the Harris Experience, an academic and cultural enhancement programme, for the first time. They will be joining the 2015 lecture series and follow-up seminars with the speakers.



  • Rome's Economic Revolution - Transcript of Lecture [PDF] - Download
  • Rome's Economic Revolution - Event Handout [PDF]- Download
  • Rome's Economic Revolution - Presentation Slides [PDF]- Download

About the History of Capitalism Series

This series of lectures, which forms part of the Legatum Institute's 'The Culture of Prosperity' programme, investigates the origins and development of a movement of thought and endeavour which has transformed the human condition. Capitalism's characteristic emphasis on freedom of trade and market expansion has encouraged social mobility, global exploration and intellectual curiosity. Wherever and whenever it has appeared across the world's continents capitalism has undermined monopolies, economic protectionism and restrictive practices. Our lecturers will therefore be assessing case studies in business history and the individual biographies of thinkers, writers and inventors as well as describing particular periods in the histories of cities, states and nations. Further information available here.