Along with political challenges, major economic problems also confronted Diocletian and Constantine, including inflation and declining tax revenues. In an attempt to curb inflation, Diocletian 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. 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. The huge estates that resulted, called villas, were self-sufficient and became islands of stability in an unsettled world. In return for the protection and security landlords could offer, many small landholders gave over their lands and their freedom. To guarantee a supply of labor, landlords denied them the freedom to move elsewhere. Free men and women were becoming tenant farmers bound to the land, what would later be called serfs.