The Roman monetary system was historically unique. Its complexity arose out of several intersecting and sometimes contradictory embedding contexts. This chapter identifies several important embedding contexts and provides a broad diachronic outline of their influence in the development of Roman money. Some of Rome’s Republican-era experiments with coinage, for example, were inescapably influenced by Greek practices and concepts. Roman territorial expansion seems to have been correlated with the rise of impersonal exchange in Rome, Italy and beyond – presenting unique cultural challenges for Roman elites in the Republican period. Notions of monetary value in the Roman Principate remained tethered to historical monetary contexts – but shifts in value and in the prominence of certain contexts over others could and did happen. Oscillations in the intensity and breadth of state power, for example, influenced money use, value and the scope for market exchange. It is impossible to import modern economic theory into Roman monetary history without first accounting for some of the key embedding contexts which shaped monetary practices, processes and concepts in the Roman world.

All historical applications of formal economic models require justification – not merely within their own closed system of logic, but in a wider historiographical context which includes serious and thoughtful substantivist critiques of the formalist enterprise more generally and especially of applied economic theory. Even if new institutional economics is not the solution, are there other ways Roman economic historians might use economic theories to better understand the economic choices made by the inhabitants of the ancient world as well as the embedding contexts which channeled such choices? History and economics, despite fundamental differences embedded in each discipline, can meaningfully and symbiotically intersect. Economics offers Roman historians valuable and helpful organizing concepts, so long as these concepts are used within an agenda of historical understanding.

Roman monetary history, like all history, is history of mind. Purposeful action, as a product of the human mind, creates history. Economic models, methods and agendas, therefore, which ignore or assume away the mind are of only limited use for historians. Historians, however, can use the tools and concepts in this book to clarify and redeem some economic theories and concepts in order to better understand the societies they study.

Roman historians are typically trained under the aegis of Classics or Classical Studies; hence, they find comfort in the world of sources – a preference manifest in a broadly empiricist outlook and an affinity for methods of induction. There are, as this chapter argues, good reasons to question the reliability of traditional empirical approaches to historical questions. Equally, however, the deductive use of formal economic theory has its own drawbacks. Emergent neoclassical and new institutional studies have produced new questions and new insights, but Roman historians’ use of economic theory has also promulgated new anachronisms and perhaps even ‘economics imperialism’. Is Roman economic history doomed to be forever caught in methodological tug-of-wars over the use of economic theory? This chapter suggests that a way forward may be found in the sociological tradition of methodological dualism – a framework which unequivocally draws upon economic theory as a tool of ‘understanding’ rather than of testing or predicting. Methodological dualism is a foundational framework for rethinking the use of economic theory for understanding Roman monetary history.

Some Roman economic historians are skeptical of an economic rationality which explicitly imposes capitalism-centric value judgements on antiquity. Should Roman historians study rationality as a phenomenon exclusively ‘locked’ inside the minds of individuals, or is it possible to study rationality as something at least influenced or even determined by collectivized social and cultural structures (or embedding contexts)? In this chapter, I argue that Collingwood’s observation that observers and subjects share the same cognitive process opens up new opportunities for understanding the thinking of ancient peoples. First, I define this cognitive process, after Weber and especially Mises, as ‘purposefulness’ and defend its a priori epistemological status. Then, using Weber’s insights on ideal types, I discuss how embedding contexts bounded purposefulness. Finally, I combine these arguments into an experimental heuristic model for understanding the purposeful actions of historical individuals by comparing these choices to both ideal-typical economic theory and unchosen counterfactual actions.

Gresham’s law is much more than the idea that ‘bad money drives out good’ always and everywhere. Instead, historians should use Gresham’s law as a complex and interconnected set of conditions and premises involving ‘external’ elements (legal tender laws, differing coinage standards, transaction costs etc.) and an ‘internal’ sensitivity among (some!) coin-users to the precious metal content of coins.The ‘external’ conditions of Gresham’s law seem to have been inconsistently present at best. Legal coin values and precious metal values were more or less redundant during first century and a half of the Principate. A growing dissonance between legal value and metal value, however, emerged by the late second century AD, putting pressure on coin-users’ monetary habits. The actions of Roman authorities encouraged any metallist-minded coin-users to avoid the now relative high costs of monetary exchange at legal values and instead adopt special-purpose uses for money. The counterfactual logic of Gresham’s law, therefore, offers historians both improved understanding of Roman coin-users’ thinking as well as broader insights into the workings of the Roman monetary economy.

The assumptions built into the quantity theory of money severely limit its usefulness for studying the Roman monetary system if not all pre-industrial monetary systems. Quantity theory fails to account for the complexity and disaggregated nature of the Roman monetary economy. This chapter, instead, disaggregates the workings of the monetary system by considering both money quantity and quality, the spatial and temporal properties of money and, finally, money’s value as a product of the subjective preferences of individuals. Instead of assuming money is neutral, Roman economic historians can and should examine the specific channels through which money entered the Roman economy. Depending upon the location of these channels in the larger political, cultural and social matrix, as well as the amount of money distributed through them, it may be possible to understand the human responses to money supply changes in the Roman world as well as the wider effects of these changes – effects which include not only price movements and the shifts in the structure of production but also realignments in social hierarchies.