Publicani in the Roman Republic
The legacy of the Roman Republic continues to provide inspiration for the operation of modern governments, as the Romans first witnessed the challenges associated with the management of large territorial areas and populations in a more or less sustainable fashion. The era of the Roman Republic began with the overthrowing of the kings around 500 BC and ended with the beginning of the imperial rule of the Caesars in 27 BC. During the republican era, civil service, which was the size of modern middle-sized city governments, dealt with organising public policy for nearly thirty million people. The solution for the day-to-day operation of public administration was the extensive use of private contracting in the implementation of public policies. The earliest accounts of contracting describe contracts for feeding sacred hens, which were honoured for warning the citizens of Rome of approaching enemies, on the hill of Capitolium in Rome in 390 BC (Badian 1983).
Private organisations, societas publicanorum, and their managers, the publicani, took care of most public duties, such as constructing public buildings, supplying equipment for the army, operating mines, and, most importantly, collecting taxes. The societies participated in tenders for public duties. Those who offered the lowest price won construction deals, and those who guaranteed the highest amount of collected taxes for the senate succeeded in tax collection tenders. The management structure of the societies represented a core-periphery structure with a relatively small permanent management structure and a large short-term operative work-force, which could be adjusted according to successes and losses in consecutive competitive tenders. The societas publicanorum were probably the first type of limited liability shareholder-owned companies. Interestingly enough, a legal structure for limiting liability in purely private business activity did not exist at the time. To limit personal liability, which could lead to slavery and the confiscation of all personal property, early entrepreneurs invented the practice of common slave ownership, in which a jointly owned slave served as chief executive officer of the enterprise. As slaves were ‘things’ responsible for only their own cost, they liberated the owners of their personal liabilities (Malmendier 2009).
In the Roman Republic, the distinction between politics and business was clear-cut. Senators could not take part in the management of the societas publicanorum or other business activities, but they could be shareholders of the companies. Likewise, private contractors could not enter seats in the senate. Consequently, the publicani, as the most influential group in the order of the knights, became part of the power-balancing mechanism of ancient Rome. Tax farming deals in newly acquired eastern provinces in Asia Minor proved to be a highly lucrative source of income for the companies, which placed publicani in competitive positions with the appointed local governors of the provinces. Also, the exclusion of the publicani from the senate opened up positions for them in the special courts, allowing them to weigh the limits and practices of government power (Badian 1983; Silver 2007).
The actions of the publicani were fiercely criticised. They were accused of insurance fraud in delivering goods during the Punic wars, of excessive greed when collecting taxes in the provinces, of exceptionally crude conduct towards slave labour working in the mines, and of fraudulent practices in trying to get rid of unprofitable public contracts. However, surviving literary sources are mainly based on accounts of senators, who were in a competitive position with the publicani. Still, the overall operation of the private contractors seems to have supplied satisfactory results for the management of the republic. The degradation of the role of private contracting coincided with the beginning of the rule of the emperors, during which the oligarchic power of the senate had to give way for the autocratic rule of the Caesars, and a more centralised public civil service system replaced private contractors in implementing the most important parts of public policy. However, the order of the knights, to which the publicani belonged, formed the backbone of the population from which civil servants were recruited. Throughout history, the publicani, or, more precisely, their local henchmen, were probably best known from their minor local tax collecting duties in Roman provinces during the imperial era.