At a North Carolina campaign rally on August 16th, 2024, Vice President Kamala Harris laid out the economic plan she hopes to enact if she becomes elected (full speech here). These included policies such as tax credits for builders of homes sold to first-time buyers, as well as up to $25,000 in down-payment assistance for “eligible” first time buyers, and $6,000 tax credits to families the year a new child is born. However, the policy that many have their eyes on is her proposal to ban “price-gouging” by grocery chains, essentially calling for price controls and price maximums. This is in an effort to “fight to give money back to working and middle class Americans.” What I would like to examine today is the efficacy of such a plan and the positive and negative effects of the policy, if any. 

To accomplish this goal, we must be able to reference examples where policies similar to this have been enacted. Former President Donald Trump cited Maduro in Venezuela and the USSR in a recent rally, but I find it to be more interesting—and more effective—to evaluate the effect of similar policies on Roman society, given that it was significantly less complex, compared to modern society. One could argue economic downturn or collapse in more modern reference were caused by one of the many new forces that have popped up in the modern era, however, there’s much less to blame when we examine an older civilization and situation. The chief example for Rome would be Emperor Diocletian’s Edict of Maximum Prices. 

Prior to speaking directly about the Edict, it is necessary to highlight that this massive policy change did not just magically appear and disappear, so it is imperative we look further into the context in which this policy was born. This will be split between the circumstances that occurred prior to Diocletian’s ascension in 284 A.D. and the happenings during his reign. First, prior to his reign, as some may know, was the third century crisis—a huge span of time from around the year 220 A.D. to the beginning characterized by particularly weak and incompetent leaders, save Aurelian in 270. This led to huge amounts of resources being spent fighting internal conflicts and massive economic loss stemming from extreme unrest and instability in the government. At this point, the silver denarius, once, as its name implies, made of silver, had been debased to the point where government issued coinage was now tin-plated copper. This debasement led to runaway inflation and higher prices. Thus was the state of the empire that Diocletian inherited.

After Diocletian became emperor, he made a few major changes that would have serious implications for the economy and played into the creation of the Edict of Maximum Prices, including splitting the empire and declaring new official currency. To combat the size of the bureaucracy as well as the ever increasing number of border incursions, he split the empire into 4, having a de facto king for each. Although this may have been necessary to combat the border tribes, this had a few unintended consequences. Firstly, it created what was essentially four totally independent, but equally showy nations within the empire, each furnished with its own capital, court, army, etc. This led to significant tax hikes for the general population, in some cases, the wealthy would be executed on essentially fake charges so that their property could be seized for the treasury. This caused prices to go up further, since the actual amount of income sellers took home was drastically diminished. Lastly, Diocletian officially changed the denarius from silver to copper, which was no help to prices either, since the debasement was now official. So, by the time the edict was published, he had been dealing with the inflationary effects of his other policies for nearly 20 years. 

According to a UPenn Law Review article, the Edict, published in 301 A.D., intended to combat inflation and rising prices, set price controls on over one thousand goods and services for the empire on the punishment of death. Though it was meant to be an empire-wide policy, evidence seems to suggest that it may have only been in the quarter of the empire controlled by Diocletian, as he had split it into 4 for ease of rule. Regardless, in the areas affected, many vendors who had prices above the maximums were killed by rioters. The remaining, arguably smarter, vendors ended up hoarding their stock and withholding it from the public, attempting to either sell it illegally on the black market or to outlast the policy. This removal of a portion of the market supply from the market actually did the reverse, raising prices on many goods. In the end, the policy was abolished, though when exactly or how remains unclear. It stands to reason though, that the policy was abolished prior to Diocletian’s abdication in 305 A.D. Many even speculate the economic crisis that got worse during the latter part of his reign may have played into his ultimate decision to retire, even though he said it was for health reasons. Regardless of the specific reasons and dates, this ancient policy decision from nearly two thousand years ago remains relevant today, as history tends to repeat itself. If we project the outcomes experienced by the Romans under Diocletian onto the United States, we might observe similar fundamental results. While there may not be a death penalty for violating price controls, and we can hope to avoid riots that harm grocery store workers, the overall economic effects are likely to mirror those of the past. When a price ceiling is implemented, it typically leads to higher demand for a good compared to the equilibrium amount in a free market, while simultaneously resulting in a lower supply. This occurs because consumers tend to purchase more when prices are lower, while suppliers are often hesitant to produce the same quantity when their profit margins decrease.

Judging from historical documents, this result occurred in ancient Rome, vendors hoarded goods and either charged higher prices on black markets or just simply waited it out. Now imagine what would happen if this occurred in the United States, in the quote inserted above from the Vice President, she wants to protect the middle class by making the necessities more available and affordable, the opposite of what would happen. The policy decision would only serve to worsen current, overall economic conditions, adding on to the problems like stock market instability, seen in the recent sell-off, and the now $35 trillion national debt (I highly recommend you watch some of Representative David Schweikert’s presentations on Youtube regarding the national debt). In conclusion, price controls are not a good thing and are not a great tool for fighting price inflation.