Along with political challenges, major economic problems also confronted Diocletian and Constantine, including inflation and declining tax revenues. Their attempts to solve them illustrate the methods and limitations of absolute monarchy. In an attempt to curb inflation, Diocletian took a step unprecedented in Roman history: he issued an edict that fixed maximum prices and wages throughout the empire. He and his successors dealt with the tax system just as strictly and inflexibly. Taxes became payable in kind, that is, in goods and services instead of money. All those involved in the growing, preparation, and transportation of food and other essentials were locked into their professions, as the emperors tried to assure a steady supply of these goods. A baker, for example, could not go into any other business, and his son was required to take up the trade at his death. In this period of severe depression, many localities could not pay their taxes. In such cases local tax collectors, who were themselves locked into service, had to make up the difference from their own funds. This system soon wiped out a whole class of moderately wealthy people and set the stage for the lack of social mobility that was a key characteristic of European society for many centuries to follow.
The emperors’ measures did not really address Rome’s central economic problems. During the turmoil of the third and fourth centuries, many free farmers and their families were killed by invaders or renegade soldiers, or abandoned farms ravaged in the fighting. Consequently, large tracts of land lay untended. Landlords with ample resources began at once to claim as much of this land as they could, often hiring back the free farmers who had previously worked the land as paid labor or tenants. The huge estates that resulted, called villas, were self-