Echoing a Roman Emperor, Croatia Tries to Cap Soaring Prices

Diocletian, who once ruled territory that now includes Croatia, tried and failed to rein in inflation by dictating prices. Today’s government hopes its own such plan will succeed

By Joe Orovic of The NY Times. Excerpts:

"In 301 A.D., the Emperor Diocletian made a bold but ultimately unsuccessful bid to address the inflation that was rampaging across the eastern half of the divided Roman Empire.

Prices of everything from purple thread and feathers to slaves and cattle were dictated by his Edict on Maximum Prices. Violators faced the death penalty. Diocletian gave up power about four years after issuing his edict, watching his measure fail from his sprawling retirement palace in the heart of what became the city of Split in Croatia.

Now Croatia’s government is trying a similar tactic to rein in prices that have soared in recent years and sparked protests and retail boycotts by the country’s beleaguered consumers."

"It is unclear whether the new edict will be any more successful than Diocletian’s, which economists say ended up being counterproductive by causing shortages, fueling a black market and enabling profiteers."

"a surge in prices, with inflation hitting 5 percent in January after remaining stubbornly above 3 percent throughout 2024.

The rules that came into effect this month are the Croatian government’s third attempt at controlling prices by fiat since September 2022. The first two efforts were largely ineffective, with retailers simply refusing to stock most price-controlled goods."

"shop entrances must display a list of all 70 items that fall under the government’s pricing regime.

Centuries ago, Diocletian’s edict accused some citizens of price gouging, and said their greed needed to be reined in."

"“We support companies that work well and make a profit, but within realistic frames. That can’t be at the expense of the little guy,” he [Prime Minister Andrej Plenkovic] said at a stormy meeting with retailers in January."

 "Economists blame the increases on a three-headed hydra of pandemic-era economic rescue packages that flooded the country with cash, increases in public sector wages and retailers rounding up prices after Croatia adopted the euro in 2023."

"John H. Cochrane, an economist and fellow at the Hoover Institution, a research center, pointed to the role Diocletian’s edict played in causing shortages and fueling a black market.

“It’s like trying to stem the symptoms rather than treating the underlying disease,” Mr. Cochrane said of price controls. “It offers people the appearance of help for a while, and then it takes a few weeks or, a month or two, for all the problems to break out.”"

Related post:

Price controls in ancient Rome (2024)