4,000 Years of Failed Price Controls by Jon Miltimore for American Institute for Economic Research
In 1892 the French archaeologist Henri Pognon made a historic discovery a few dozen miles northeast of Baghdad: a massive tell that held the ruins of the ancient city-state Eshnunna.
Though it was not excavated until decades later by another archaeological team led by Dutch Egyptologist Henri Frankfort, the tell was one of the great finds of the century, revealing secrets of a Mesopotamian city that had been hidden for millennia.
Among the secrets discovered on cuneiform tablets was that Eshnunna used price controls, a discovery notable in that it appears to be the oldest historical record of humans fixing prices. (I’ve attempted to verify this fact with economic historians, and will let you know if I get a response.)
1 kor of barley [she’um] is (priced) at [ana] 1 shekel of silver;
3 qa of “best oil” are (priced) at 1 shekel of silver;
1 seah (and) 2 qa of sesame oil are (priced) at 1 shekel of silver. . . . The hire for a wagon together with its oxen and its driveris 1 massiktum (and) 4 seah of barley. If it is (paid in) silver, the hire is one third of a shekel. He shall drive it the whole day.
Eshnunna’s price controls edge out by a couple centuries the Code of Hammurabi (1755–1750 BC), a more famous record from ancient Babylon that was a “maze of price control regulations,” as the historian Thomas DiLorenzo put it.
This might explain why the First Babylonian Empire fizzled nearly a thousand years before the Greek poet Homer told the story of the Trojan War. Price controls don’t work, and an abundance of history (as well as basic economics) proves it.
A Brief History of Price Controls
The Ancient Greeks may have given us Homer and his wonderful stories, but they suffered from the same economic ignorance as the rulers of Eshnunna when it came to price fixing.
In 388 B.C., grain prices in Athens were out of control—largely because Athenian rulers had an incredibly complex set of regulations on agriculture production and commerce, which included “an army of grain inspectors appointed for the purpose of setting the price of grain at a level the Athenian government thought to be just.” The penalty for evading these price controls was death, and many grain traders soon found themselves on trial facing such a punishment when it was discovered they were “hoarding” grain during a (man-made) shortage.