The last episode of HBO’s wonderful series Rome aired on Sunday with Mark Antony losing the Battle of Actium and Octavian taking the helm as First Citizen. Although it has taken some liberties (Agrippa and Octavia did not have an affair), the series has been fantastic, and will make for a great on-demand marathon whenever I get the time. All that being said, my initial reaction was to think, “you can’t end there – think of all the good stuff that’s coming: Caligula’s madness, Nero’s fiddling, Hadrian’s building, Marcus Aurelius’ musing, Constantine’s conversion, Galla Placidia’s conniving, Theodora’s dancing, and Justinian’s insomnia – just to name a few.” And even when you get to the fall of the Western Roman Empire in 476, you’ve still nearly a thousand years of blood-drenched Byzantine history to go.
However, the more I thought about it, the accession of Octavian really is the best place to end, because this is where Rome sowed the seeds or her own destruction. Octavian may have left Rome covered in marble, but he also transitioned the Empire from a quasi-limited, republican model of government to an unfettered autocracy. This allowed the Imperial government to take ever greater roles in the management of the economy. In fact, the government’s role had grown so large by the third and fourth centuries A.D., that Hayek, von Mises, and other economists argue that the Empire had much in common with modern socialist states. Throw in inflation and price controls with poor economic management, and you are left with an overly bureaucratic state effectively destroying its foundations. In the end, the Empire could have been knocked over with a large feather – not to mention hordes of violent barbarians.
Yet we think of the Roman Republic as weak and ineffective as compared to the power of the later Empire. However, there was relatively little difference between the territorial extents of Republican versus Imperial Rome. Of course, emperors did add some significant territories – Britain (under Claudius), Dacia, and Mesopotamia (both conquered by Trajan and subsequently abandoned) – but most of what we conceive as the Roman Empire had been incorporated by the time of Octavian. Furthermore, while the Republic is often presented as dithering and ineffective, it could be remarkably resilient. Compare the Republic’s tragic loss to Hannibal at Cannae in 216 B.C. (90,000 casualties) to the later Empire’s great defeat at Adrianople in 378 A.D. (10,000-15,000 casualties). The Republic was able to bounce back from Cannae. Adrianople, on the other hard, arguably placed a strain on the late Empire from which the Roman army never really recovered.
Now, of course, lack of space forces me to draw broad conclusions that merit volumes of explanation, but the truth is that empires and businesses tend to grow increasingly bureaucratic as they age. In the beginning, the firm is young, entrepreneurial, and agile. Established firms tend to be like the late Roman Empire – grand in appearance but with rotting foundations. They are ruled from the top down in a manner that discourages innovation and entrepreneurship. Eventually, bureaucracy chokes off the drive and energy that built the firm in the first place, while those at the top fetter away the firm’s hard-won resources on grand projects and trophy acquisitions. The firm inevitably fails, because it is either too rigid to react to changes in the marketplace, or reacts in a manner that is wholly inappropriate. Too often we are quick to blame the demise of business and empires on external pressures, such as market changes or new barbarians at the gate. However, more often than not, great empires and businesses fall because the forces at the top crush the entrepreneurship and spontaneous order that made them great to begin with. Business and history share a common cycle. At its heart, MBM is intended to preserve the things that make businesses initially great, while at the same time ensuring that they are safe from their future, successful selves.