Understanding Byzantine Economy: The Collapse of a Medieval Powerhouse

From the first partition of the Roman Empire in 284, the Eastern or ‘Byzantine’ Empire as it came to be known, was an economic powerhouse. With an advanced state tax system and trade links reaching across Eurasia, the Byzantine economy maintained an important position into medieval times, projecting an image of great wealth and prestige. However, the 1204 Fourth Crusade proved to be a catastrophe, plunging Byzantium into an economic decline from which it never recovered. Upon the eve of the Ottoman conquest of Constantinople in 1453, the once-great Byzantine Empire was effectively destitute, a pitiable shell of its former glory.

The power of the Byzantine Empire’s early economy was largely predicated upon the land. Anatolia, the Levant, and Egypt were well developed agricultural regions which yielded huge amounts of tax revenues for the state – some estimate that Egypt alone may have contributed up to 30% of the annual tax take.

The climate across the empire was excellent for various types of farming activity. In coastal areas cereal crops, vines and olives were produced in vast quantities, whereas interior areas were mainly given over to raising livestock of various kinds. Fruits and vegetables were also widely produced, including in urban centers – there were large sections of Constantinople given over to gardening.

Agricultural production was based around the village. Villages were occupied by a variety of inhabitants, many of them landholding farmers who owned their land and therefore paid taxes directly to the state. Gradually, this system was replaced by a network of large estates worked by a mixture of slaves, wage laborers and tenant farmers.

From the 10th century, the concentration of land in the hands of fewer and fewer powerful noble families accelerated, and successive emperors passed a series of ‘land laws’ attempting to prevent the alienation of land from small landholding farmers. Despite this legislation, by the high middle ages, the rural landscape of Byzantium had changed completely – the patchwork of small villages that had previously made up the agricultural economy had been almost entirely replaced by large estates.

These powerful landowning families (particularly concentrated in Anatolia) represented a political threat to the imperial crown in Constantinople, as they were essentially self-sufficient, with their own tenants and retinues. For example, Bardas Skleros, Byzantine general and member of the Skleroi family who held vast estates in the east led a revolt against Basil II that lasted from 976-79.

Thanks to its Roman history, Byzantium possessed an advanced bureaucracy and tax collection system that had been introduced by the emperor Diocletian (284-305 AD), based around capita (‘heads’) and iugera (‘land’). Constantine (306-37 AD), emperor and founder of Constantinople, had sought to combat inflation by minting a large amount of high-quality, high-carat gold pieces. It was this currency, known as Nomisma or Solidus that formed the monetary basis of the Byzantine economy, and stayed fairly stable until the 11th century.

Later emperors instituted further fiscal reforms, and the period up until 7th-century was a time of considerable growth. Anastasius I (491-518) introduced a bronze coinage and abolished the chrysargyron, an imperial tax on merchants. He also removed tax-collecting powers from the hands of local dignitaries and instead gave them to state-appointed officials, whilst also formalizing military payrolls, thereby reducing corruption and increasing the state treasury. This great wealth allowed subsequent emperors such as Justinian I (527-65) to expand the empire through conquest.

The most important of Byzantine taxes was the land tax, which was calculated based on the value of the land that each person owned. The division used was a modius (roughly equivalent to ¼ of an acre): high-quality land was valued at 1 gold coin, second-rate land was worth ½ a gold coin, and pasture 1/3, while vineyards were valued much higher than other lands. Peasants also paid a personal tax which later on became a household tax, known as the kapnikos.

Aside from agriculture, trade was an important element of the Byzantine economy. Constantinople was positioned along both the east-west and north-south trade routes, and the Byzantines took advantage of this by taxing imports and exports at a 10% rate. Grain was a key import, particularly after the Arab conquests of Egypt and the Levant meant the empire lost its primary sources of grain.

Silk was also an important Byzantine import, as it was crucial to the state for diplomatic and prestigious purposes. However, after silkworms were smuggled into the empire from China, the Byzantines developed their own silk industry and no longer had to rely on foreign supplies.

Various other commodities were also traded, both internally within the empire, and internationally beyond its borders. Oil, wine, salt, fish, meat and other foods were all traded, as were materials such as timber and wax. Manufactured items such as ceramics, linens and cloth were also exchanged, as well as luxuries such as spices, silks and perfumes.

Trade was also important to Byzantine diplomacy – through maintaining trade relations, the Byzantines could bring various peoples and nations into their sphere of influence and potentially use them in regional alliances. Bulgarian and Russian merchants brought wax, honey, furs and linen, while hides and wax were purchased from the Pechenegs, a nomadic people who lived north of the Black Sea in the 10th century. Spices and manufactured goods entered the empire from the east, usually in trade caravans that passed through the cities of Anatolia. Venice was also a trading partner, and by 992 Venetian naval power was considerable enough to warrant Venetian merchants being granted a reduction in customs duties in Constantinople.

The state held a monopoly on coinage and intervened in the economy in various ways. It controlled interest rates and carefully orchestrated economic activity in Constantinople, setting stringent regulations for the city’s guilds to follow (which can be seen in the 10th-century text, the Book of the Eparch). The state also intervened to ensure that the capital was provisioned with grain and to drive down the cost of bread – riots could occur that threatened the emperor’s reign if food was not cheap and readily available in Constantinople.

Despite the upheaval of the early medieval period, the Byzantine Empire still maintained a wide-reaching bureaucracy and powerful state mechanisms, which allowed it to have standing armies and effective tax collection. As it was so large, the state also created a huge amount of economic demand, meaning market forces had little effect on the Byzantine economy. Soldiers and bureaucrats were paid in gold coin, which they used to purchase goods, ensuring coinage was effectively recycled through the economy and ended up back in the hands of the state through taxation of the peasantry and rural elite.

The Early Byzantine Economy To 7th Century Crisis

The Eastern Roman Empire suffered far less than the Western half of the empire during the 4th and 5th centuries when the Western Empire was subjected to repeated barbarian raids and eventually collapsed altogether in 476. Figures actually suggest that urban centers in the east grew, and the imperial revenues remained consistently high, allowing Justinian I to embark upon wars of expansion, as well as imperial building projects such as the great cathedral of Hagia Sophia in Constantinople.

The 6th and 7th centuries were disastrous for the Byzantine economy. The great plague of 541/2 ravaged the empire and may have reduced the population by up to 30%. Subsequent recurrences of the pestilence were common and lasted well into the 8th century. A costly war with Persia also drained the state coffers during the 6th century. Annual revenue, which stood at around 11 million solidi in 540 dropped to just 6 million in 555.

Furthermore, the empire lost a great deal of land to foreign conquest: Arab invaders captured the Levant, Egypt and North Africa as part of the first Muslim conquests; the Lombards moved into Italy; the Balkans were taken by Slavic peoples. The losses of the eastern provinces were the greatest blow, as they may have accounted for as much as 75% of the Byzantine economy. Population loss was also enormous – over a 40-year period, the population of the empire may have shrunk by as much as 6.5 million, from 17 million in 600 to 10.5 million in 641. Revenues also dropped drastically to just 2 million nomismata in 668.

The failed siege of Constantinople by the Muslim Umayyad Caliphate in 717-18 marked something of a turning point for Byzantine fortunes, and emperors such as Constantine V (741-75) were able to secure the borders of Byzantium and pave the way for an economic recovery.

Although international commerce had declined dramatically during the 7th century, it slowly recovered during the following centuries thanks to increased political and military stability, until in 850 trade accounted for 400,000 of the total 2.9 million nomismata state revenue. Successive emperors were able to accumulate increasingly larger reserves in the state treasury – these totaled 4.3 million nomismata during the reign of Basil I (867-86).

From the 10th until the 12th century, Byzantium enjoyed considerable economic prosperity, with annual revenues in 1025 standing at 5.9 million nomismata, and a treasury reserve of 14.4 million. This wealth allowed the Byzantine empire and its emperors to project an image of their power abroad, increasing their own prestige. Visitors to Constantinople, such as the Italian diplomat Liutprand of Cremona, were impressed by the luxurious imperial palaces and incredible riches that they witnessed in the city. However, this economic success was not to last.

13th Century Disasters And The End Of Byzantium

Several factors contributed to the terminal decline of the Byzantine economy, the greatest among which was undoubtedly the fourth crusade. Beginning in 1202, the crusaders had originally intended to attack Jerusalem via Egypt but ended up encountering financial issues that saw them attack the Christian city of Zara on the Adriatic. En route to Jerusalem, they entered into an agreement to aid the Byzantine prince Alexios Angelos in restoring his father Issac II to the Byzantine throne, in return for military and financial aid.

In 1204, when the newly crowned co-emperor Alexios was overthrown by a mob in Constantinople, the crusaders simply decided to conquer the city. What followed was the brutal sack of Constantinople in April 1204. For three days the crusaders looted and vandalized the great city, stealing much of the vast wealth that had been accumulated over many centuries. Ancient Greek and Roman works were taken or else destroyed (the famous bronze horses from the Hippodrome were taken back to Venice and now decorate St. Mark’s Basilica there), and Constantinople’s churches were systematically plundered. The human cost was enormous too, with many thousands of civilians being massacred in cold blood.

The crusaders left a gutted and destroyed city behind – it is estimated that Constantinople was looted of some 3.6 million hyperpyra (the currency that had replaced the nomismata). The crusader leaders divided the empire amongst themselves into what became known as the Latin Empire, while the Byzantines were left with three successor states: The Empire of Nicea, the Despotate of Epirus, and the Empire of Trebizond. The Nicean Empire lost a great deal of territory in southern Anatolia to the Sultanate of Rum, and by the time it recaptured Constantinople from the Latins in 1261 and reestablished the Byzantine Empire, it was ravaged by warfare.

Subsequent emperors attempted to expand the empire and restore some of its former glory but were hampered by a shattered economy. A reliance on harsh taxation angered the peasantry and the use of mercenary troops proved to be unreliable and ineffective. From the mid-14th century until the fall of Constantinople in 1453, the empire slowly lost territory to Serbian and Ottoman aggressors. It is estimated that in 1321 the annual state revenue stood at just 1 million hyperpyra.

By the time of the siege in 1453, the once-great Byzantine empire effectively consisted only of territory on the European side of the Bosporus surrounding Constantinople. The city itself was hugely underpopulated and in a state of extreme disrepair – it could only muster 7,000 soldiers to defend itself, 2,000 of whom were foreign (primarily Italians). Constantinople, and the Byzantine Empire with it, fell on 29th May 1453 after a two-month siege. The last Emperor Constantine XI Palaiologos was seen throwing himself and his retinue into the fiercest hand-to-hand combat following the fall of the walls.