The Villain Was Always the Merchant: How Leaders Have Been Misdiagnosing Inflation for Two Thousand Years

In the autumn of 301 AD, the Roman Emperor Diocletian did something that would feel entirely familiar to any C-SPAN viewer in 2024: he called a press conference and blamed the economy on greedy middlemen.

His Edict on Maximum Prices — a sweeping imperial decree that set legal ceilings on the cost of everything from wheat to a haircut — was not framed as a correction to monetary policy. It was framed as a crackdown on exploitation. The preamble to the edict reads less like a fiscal document and more like a campaign speech, denouncing merchants whose "unlimited and frenzied avarice" were robbing ordinary Romans of their livelihoods. Diocletian was, in his own telling, the protector of the people against a class of parasites.

He was also, in any honest accounting, the man most responsible for the inflation he was trying to punish.

Debasing the Currency, Then Blaming the Baker

To understand what Diocletian was actually dealing with, you have to go back several decades before his reign. The Roman monetary system had been quietly disintegrating since the third century, as a succession of emperors reduced the silver content of the denarius to fund military campaigns and bureaucratic expansion. By the time Diocletian consolidated power in 284 AD, the silver content of Roman coinage had fallen to somewhere between two and five percent. The coin still said it was a denarius. It was not, in any meaningful sense, a denarius.

Prices rose accordingly. Merchants, who were not economists but who were not stupid, charged more for goods because the coins they received in exchange were worth less. This is not greed. This is arithmetic.

Diocletian's response was to fix prices by law and to make violations punishable by death. The edict covered more than a thousand goods and services. It also failed almost immediately. Merchants either withdrew from markets entirely, sold goods on black markets at whatever the traffic would bear, or simply vanished from the historical record along with their wares. Shortages followed. The edict was quietly abandoned within a decade.

The intervention did not fix inflation. It could not fix inflation, because inflation was not caused by merchant behavior. It was caused by the systematic destruction of the currency's value — a process Diocletian had himself continued and in some respects accelerated.

The Psychology Is the Policy

This is where the Long Game perspective becomes essential. It would be easy to read this story as a simple case of ancient ignorance — rulers who lacked the conceptual tools of modern monetary economics making understandable mistakes. But that reading lets everyone off the hook too cheaply.

Diocletian was not uninformed about the relationship between money supply and prices. Roman writers of the period had observed the connection. The problem was not ignorance. The problem was incentive.

Admitting that inflation was a consequence of imperial monetary policy meant admitting that the emperor had caused it. Finding a villain in the marketplace meant the emperor remained a hero. The political logic was immaculate even as the economic logic was catastrophic.

Human psychology has not meaningfully changed in the seventeen centuries since. When prices rise sharply, the instinct of virtually every political leader — across cultures, across centuries, across ideological systems — is to locate a human agent responsible for the suffering. The systemic explanation, which implicates decisions made by people in power, is almost always less politically useful than the moral explanation, which implicates someone with less power and less access to a podium.

This is not cynicism. It is pattern recognition.

From Rome to the Modern Stump Speech

The 2021-2024 inflation cycle in the United States produced a remarkable profusion of villain narratives. Depending on which channel you watched or which press release you read, prices were rising because of corporate greed, price gouging by oil companies, pandemic profiteering by grocery chains, or the predatory practices of landlords. Each of these narratives contained at least a grain of empirical substance. Each of them was also more politically serviceable than the more complete explanation, which involved the interaction of massive supply-chain disruptions, historically unprecedented fiscal stimulus, and Federal Reserve interest rate policy that remained accommodative well into the inflationary cycle.

None of this is unique to any one party or any one administration. The price-gouging narrative was deployed by politicians of both parties. It is not a left-wing or right-wing reflex. It is a human reflex.

The Federal Trade Commission launched investigations. State attorneys general held hearings. Proposed legislation targeting algorithmic pricing and grocery consolidation moved through committees. Some of these policy responses had genuine merit independent of the inflation question. But the framing — the insistence that prices were rising primarily because of bad actors rather than macroeconomic conditions — followed Diocletian's edict with uncomfortable precision.

What the Long View Actually Teaches

The value of studying Rome here is not that it produces a tidy lesson about free markets or monetary restraint. Economists can argue those points. The value is that it illustrates something about how political systems process economic pain that no controlled experiment on a college campus can fully replicate.

When an economy produces widespread suffering, the demand for a culpable party is not a failure of reason. It is a feature of the way human communities have always processed collective misfortune. Scapegoating — the ritual assignment of blame to a manageable human target — is one of the oldest social technologies in existence. It predates Rome by millennia. It will outlast our current political moment by a comparable margin.

The question worth sitting with is not whether leaders will reach for this tool. They will. The question is whether the electorate has the historical literacy to recognize it when they see it — to distinguish between interventions that address causes and interventions that merely satisfy the psychological need to punish someone.

Diocletian's merchants were not innocent. Some of them almost certainly were hoarding goods and extracting whatever the market would bear. But they were responding to conditions created above their station. Executing them for it did not bring a single price down.

The edict is gone. The instinct that produced it is alive and in excellent health.