I don’t know how much time Lehman Brothers’ traders spent reading the bank’s copy of Edward Gibbon’s The Decline and Fall of the Roman Empire, which raised £2,375 for creditors at Christie’s last weekend. I recommend the much shorter The Collapse of Complex Societies by Joseph Tainter, which might have helped them understand their own decline and fall.
The sack of Rome, who’s 1,600-year anniversary also occurred last month, was of course, perpetrated by the “barbarians at the gate”. But the fact does not explain why the sophisticated society of ancient Rome, with its advanced weaponry and powerful armies, fell victim to a less developed people.
Jared Diamond’s book Collapse links civilisational decline to external disasters. But natural calamities are commonplace, and societies mostly cope. The chaos in New Orleans was, in a sense, caused by hurricane Katrina, but that misses the point: why was America unable to cope with a contingency that not only could have been foreseen, but was in fact foreseen, and could have been contained by available technologies?
Tainter treats the fall of Rome as only one instance of civilisational collapse, which he defines as the replacement of complex structures of social and economic organisation by much simpler ones. He lists more than a dozen such collapses, examining not just Rome but the failure of the Mayans in Central America and the disappearance of the Chacoan government in New Mexico. The defining characteristic of civilisation is the complexity of its organisation. But complexity breeds complexity, and is subject to diminishing returns. Eventually the costs of increased complexity exceed the benefits.
The greatest achievement of the Romans was territorial conquest. The peoples of the empire initially benefited from law and order and technology. But as the empire grew, the costs of central organisation rose and the benefits of further expansion became ever more marginal.
The Mayans were accomplished engineers and architects. The number and scale of their projects amid the rainforests of Guatemala increased steadily, with increasing cost and diminishing benefit. The Chacoans developed a sophisticated economy, with extensive trading networks; but as these networks expanded, the gains from further expansion fell. In Central America and New Mexico, as in Rome, the complexity of social organisation developed to the point that it no longer benefited most of society.
The phenomenon of multiplying complexity is not confined to ancient civilisations. The nature of bureaucracy is to generate work for other bureaucrats to do. C. Northcote Parkinson describes how the number of people in the British Admiralty increased faster than the number of ships, and continued to increase even after the number of ships declined.
The Christian religion began with a few people breaking bread in a back room. By the time the Roman Catholic Church had reached the height of its power in the 16th century, the spiralling costs of building the religious establishment, and the corruption engendered, had led to the Reformation.
The British empire also expanded until the burden of maintaining it exceeded its benefits. If Britain averted societal collapse, it was because British social organisation was sufficiently robust to give empire away at that point – though the struggle over the current defence review demonstrates how difficult such decisions are.
What of today’s barbarians at the gate? Trading in securities naturally invites trading in derivatives. Wherever there is a collateralised debt obligation there will soon be a CDO squared. The volume of activity, and the number of people employed in financial services, increases more rapidly than the number of people employed in the underlying trade in goods and services.
For Tainter, the fall of Rome was principally an economic phenomenon. For Gibbon, it followed the decline of civic virtue. So much changes, yet so much remains the same.