# Fantasy economics help



## popsprocket (Nov 6, 2012)

For a fantasy project I am working on, I want the economics of the world to play a big role in world-changing events. For instance, I have plans for my main character to use economics as a weapon. I was going to pester a friend who is studying econ with this, but he can be quite hard to get a hold of around this time of year so I thought I'd put the question to the all-knowing internet.

In the geographic region that the story takes place in, salt has incredibly high value (much like it did in our world for so many thousands of years), and is farmed or mined by slaves. The newly appointed emperor wants to free slaves everywhere (approximately one quarter of the working population) and also implement a new method of salt production which would see a dramatic increase in output, but also a dramatic increase in production costs since all workers would now have to be paid for their labour. All told, the increase in output and production costs would mean that in the end, the production companies would still be making more income (increase in output > increase in fixed costs). Assume for the purpose of this that there is plenty of demand for higher salt production levels as the salt merchants can simply find new markets to sell to (so the price of salt will fall only slightly).

What kind of effect would this have on inflation? 

I get the impression that in the short term this might cause inflation to blow up as though the kingdoms were "printing money" since salt has such a high value, but in the long term the increase in GDP would balance out with the increase in workforce. Since increase output > increase FC, there would be some long term inflation when the market finally settled down. I want this to be a good economic decision on the part of the emperor, so even though freed slaves might love him, I don't want the rest of the population to resent him for devaluing their currency - so to speak.

If you want any extra information just ask. I don't have all the details, but I'm sure I'd be able to make them up as I went.


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## Nickleby (Nov 6, 2012)

You have several factors at play here. The balance among them will determine whether you get inflation. For purposes of this discussion, I'll call your country Saltonia.

First, the income of the freed slaves. Remember that slaves require upkeep, even if it's the bare minimum. The salt producers are effectively paying their workers in food, clothing, and shelter. Once they become employees, their income rises. With that income they will start spending on pent-up demand. They'll need housing and more clothes, for instance. That money will stimulate the economy.

Second, the price of salt. If it goes up, the demand should go down. That should also encourage other lands to find other ways to produce salt at a lower cost, such as desalinization of sea water (obviously Saltonia is landlocked), or to find other sellers. If the "new markets" already have suppliers for salt, shouldn't they have lower prices? Otherwise they would already buy it from Saltonia.

Third, the non-salt economy. Would every single salt miner have to stay in the business, or could they change jobs? In a pre-industrial economy, most people are farmers, and most of their output goes to feed themselves. Many of their other needs they fill through barter (which is why we use _trade_ as another word for _business_). What that means here is that the nonfarm economy, and thus the amount of currency, is relatively small.

Fourth, the money supply. In pre-industrial economies in our world, the currency was not only based on gold and silver, it literally _was_ gold and silver. Paper money is a relatively recent development, and it may or may not be backed by precious metals. So to "print money," the emperor would have to find a lot of gold somewhere (not very likely) or borrow it from someone.

Here's one scenario that's almost best case. New salt production process becomes available. Emperor frees slaves and borrows money to pay their wages. Salt becomes plentiful, cost goes down, price goes down. Saltonia sells salt to other lands, brings in gold. Emperor uses gold to pay off loan. Excess salt workers become farmers, economy grows, everyone lives happily ever after.

Bad case: New salt production process becomes available. Emperor frees slaves. Salt producers refuse to pay wages, demand emperor buy salt mines from them. Emperor mortgages everything he can get his hands on, puts huge tax on salt to make payments. Sales of salt start strong, taper off. Currency becomes scarce, prices go up. Other countries learn to get salt from sea water. Price of salt bottoms out. Starving peasants and aristocrats revolt. Emperor is beheaded.


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## popsprocket (Nov 6, 2012)

Yes, it's definitely a  gamble on the part of the emperor as to whether or not this works out in his favour.

Firstly, yes. The price of salt falls. Even if I'm assuming that there's enough demand to sustain an increase in supply, we're talking an extremely efficient production method. So the supply increases in excess of demand, if only slightly.

Despite the fall in price and increase in fixed costs, the producers are STILL earning more than they were  before. The emperor uses this to continue freeing slaves by levying a higher tax against the producers so that he can afford to displace all of these people and find them new homes and new lands to settle in. Whatever difference remains he can fund from a mixture of loans and the treasuries of countries under his control.

So, we've just injected HUGE amounts of money into the economy between increased salt profits and the building of housing for so many people. So money supply increases. But then we're also talking about 30% extra workers so in the medium term the money supply should return to something like equilibrium. Since the salt producers seem to be earning enough extra cash that they can afford higher fixed costs and a higher tax, it seems as though we might be injecting more money into the economy than is offset by the extra workers. This is where they would see inflation, but it should be kept to manageable/acceptable levels.

I hope for his sake it all goes to plan


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## Morkonan (Nov 6, 2012)

popsprocket said:


> ..What kind of effect would this have on inflation? ...



Read this: Amazon: "Salt - A world history" by Mark Kurlansky It's awesome. 

This might also help: C-Span Vid: Kurlansky on "Salt"

It's worth noting that your model leaves out a couple of important things.

1) Slaves are expensive. You have to guard them, capture them, feed them, etc..

2) Slaves who are freed and who end up being paid wages are now turned into paying consumers. 

(More later, phone call... )


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## popsprocket (Nov 7, 2012)

It's true that slaves aren't cheap and don't fit the bill of 'free labour', but remember that salt mining life expectancy was low. So they'll be fed, housed, and clothed in a bare minimum way.

An ordinary working person will earn a wage that is sufficient to house and feed themselves and possible a family with some money left over. So even though the mines would be replacing slaves every six months, the cost of paying a full wage is still greater (assuming that the purchase cost of slaves isn't extravagant).

And yes the fact that they become consumers is the whole point. Inflation is kind of mitigated by a large increase in paid working population because although the salt revenue is bringing in so much extra cash, it gets spread out among many more people.


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## Morkonan (Nov 7, 2012)

popsprocket said:


> ...And yes the fact that they become consumers is the whole point. Inflation is kind of mitigated by a large increase in paid working population because although the salt revenue is bringing in so much extra cash, it gets spread out among many more people.



True.There are also other markets that will be effected: Food, clothing, shelter, diversions and entertainments.. It's a shot-in-the-arm to a stagnant economy, if one exists, provided you can keep riots and retributive strikes down. In that light, there may be economic elements that would be greatly in favor of seeing slaves freed. Imagine cottage industries who don't own slaves or, if they do, own more of an indentured and skilled servant than a menial labor slave. These cottage industries might see a boom in business. What of the Weaver's Guild? The Tinsmith's Guild? (Separate from the Blacksmith's Guild in that they specialize in pots, pans, pins, much like the Tinsmiths of old.) How about the Bard's and Actor's Guild that might like to have a new customer base for low-brow entertainment? Even the Coopers and the Teamster's Guilds might be interested. (Just an example, since I have no idea if you have any sort of Guild system in place. But, Guilds are wonderful for political intrigue and economic plotting.)

But, the problem with the economy is that there's not going to be a way to instantly serve all these new needs. It will have to ramp up and that is going to require time, energy and capital, something that may help to stave off a bit of inflation. Plus, as you say, it's expensive to pay for such labor. Now, you've got a new system that is safer and more efficient. That will mean happier workers, but it will also mean displaced workers. Workers will be displayed by new efficiencies and where will they go, what will they do? I foresee large groups of "Freed Slaves" finding themselves with no jobs and no choice but to raid commerce. From slave to pirate and brigand, in one day.... Crime is going to skyrocket. That means you'll also need more "police."

Those freed slaves need paying jobs. Where are they going to turn? The military? That's one option. 

Here's a great series: Amazon: "The Crosstime Engineer" by Leo Frankowski Conrad Staarguard is an engineering student that finds himself whisked back to pre-Mongol Invasion Poland.... He's thrust into political intrigue and eventually becomes the leader of a movement to resist the Mongols and do something that Poland was not historically able to do - Beat the Mongols. So, Frankowski has Staargaurd deal with the sorts of problems that you are dealing with in your story. Frankowski's solution was to make a militarized economy and to educate the masses so they could work in his new factories. As Frankowski introduces new engineering techniques and new technology in his story, he deals with the resulting displaced workers and craftsman by retraining them or giving them high-status positions in the military. Since we're talking about feudal systems, knights were viewed as the priveleged gentry that commoners could never have access to. But, if everyone who joined the military was a knight....  So, the allure was strong enough for his characters to line up in droves to join the military. (Apparently, knights got all the sex in Poland, and Frankowski pushes that theme to the max as well. No "sex", but a great deal of emphasis on the fact that many who signed up to be a knight in Conraad's army were doing so in order to get laid.  ) It's fun series and I enjoyed Frankowski's romp with an out-of-control Engineering student.

I want to address something:



> ..I want this to be a good economic decision on the part of the emperor..




Why? By all means, make it the worst decision since the Euro! Make it terrible! Make it disastrous! Make it awe-inspiringly stupid! Otherwise, where's the rub? Where's the story in perfect decisions with no conflict and everything tied up in neat little packages? BAH! Bah, I say!

That should be a huge kicker in your story - The Emperor makes a good moral decision with disastrous consequences that he must solve. Never pass up an opportunity to liven up your story a bit. Don't run around solving problems or preventing them before the reader has a chance to get excited by a bit of conflict. Don't solve this problem beforehand. Don't do it. Instead, let the Emperor screw it up so bad that it causes a Major Situation that has to be solved. Let the Emperor run in there with good intentions, but come out with blood on his hands. Don't solve this problem. Instead, illuminate it and then run with it for all its worth. If you don't do that, you're passing up an opportunity to spice up your story, in my opinion. In the end, the reader isn't going to care what sort of economic model you so skillfully build upon the page. They'll fall asleep reading dissertations. Make it lively and then, when it is solved (or not), *tell* the reader it was solved. The reader only believes what you tell them. If you say that a sort of economic model works because of such and such and so and so, it doesn't have to make good economic sense, it just has to be logical given the story and the setting. It just has to _sound_ good, it doesn't have to pass peer review.


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## popsprocket (Nov 7, 2012)

Actually I have given some thought to the displaced workers. I forsee that integration issues might cause a lot of slaves to return to salt manufacturing, and in that there is perhaps room for 50% of the slaves that are freed. Other than that, the emperor wants to expand his armies to further and there would definitely be room for a large portion of other freed slaves to join the ranks. That should only leave out a small percentage - maybe 15% - that can go on to do whatever they want. As for the effect on other industries, I imagine that the slaves will be freed at a gradual rate so that they don't inundate the market.

Bolstering army ranks with freed slaves leads in to my next point which is that I do want this to be a good economic decision because it happens at towards the end. It's a long story, but basically the emperor is my protagonist and he came to power through conquest after leading a slave rebellion. In the end it turns out that the empire he creates makes life worse for most people and makes preparations to fix the mistakes he made and put fires out so that when he dies/leaves his position (haven't decided), the people will be able to prosper, if only for a short while.

I will say that he will make at least two bad econ decisions in his time, both of which contribute to how his reign turns out. But adding any on-screen economics to the world  was only an idea that I had recently and this one is something that came to me while I was researching various currencies (salt supposedly being used as currency at one point). It just happened to coincide nicely with the fact that the emperor was once a slave in salt  mines and has a drive to free enslaved peoples.


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## Morkonan (Nov 7, 2012)

popsprocket said:


> Actually I have given some thought to the displaced workers. I forsee that integration issues might cause a lot of slaves to return to salt manufacturing, and in that there is perhaps room for 50% of the slaves that are freed. Other than that, the emperor wants to expand his armies to further and there would definitely be room for a large portion of other freed slaves to join the ranks. That should only leave out a small percentage - maybe 15% - that can go on to do whatever they want. As for the effect on other industries, I imagine that the slaves will be freed at a gradual rate so that they don't inundate the market.



Good catch, there. It's necessary that the market be prepared to receive them. They're not just going to go into a warehouse and wait around until needed...

You might experiment with the irony of a freed slave returning to the slave labor they know, rather than the unknown. Manual labor slaves, presumably, have little education and no formal training. Taking a collar off a man who has known nothing but slavery is a frightening thing for the newly freed man. Many may choose to labor on with low wages and a slightly improved life. Some may even return, having found the life outside of the one they knew too difficult. (The movie "Shawshank Redemption" and the character of Brooks Hatlen serves a good lesson, here.)



> Bolstering army ranks with freed slaves leads in to my next point which is that I do want this to be a good economic decision because it happens at towards the end. It's a long story, but basically the emperor is my protagonist and he came to power through conquest after leading a slave rebellion. In the end it turns out that the empire he creates makes life worse for most people and makes preparations to fix the mistakes he made and put fires out so that when he dies/leaves his position (haven't decided), the people will be able to prosper, if only for a short while.



Training is going to be an issue. Such slave ranks are likely only going to be good as "Irregulars." They'll not have the knowledge or the physical skills necessary to become good soldiers. That's another issue you could raise: Slaves entering the ranks of the military, but commanders relegating them to tasks only useful for "expendable" troops. Poor equipment, poor food and lodging, by regular standards, may seem wondrous to the average slave. But, because the military sees little benefit in investing the money necessary to train and equip them properly, these slaves aren't likely to live past their first battle. Here, a "Policy Shift" is needed and some conflict can be had between the ruling Emperor, who is trying to solve the problem, and the military's "Old Guard" establishment, that doesn't think very highly of the idea at all.



> I will say that he will make at least two bad econ decisions in his time, both of which contribute to how his reign turns out. But adding any on-screen economics to the world  was only an idea that I had recently and this one is something that came to me while I was researching various currencies (salt supposedly being used as currency at one point). It just happened to coincide nicely with the fact that the emperor was once a slave in salt  mines and has a drive to free enslaved peoples.



Is this a screenplay, btw? (Just caught the "on-screen" reference.) If so, delving deep into economics is going to be hard. There, what you must do is focus that theme on characters. Don't bother with sweeping shots of destitute, yet newly freed, slaves. That's a Bad Idea as nobody is going to "get it" and they won't care about five-hundred extras if there's not a character there for them to focus on. Instead, embody these concepts in struggles between characters on screen. Create a "rebel slave" character and let him pillage the countryside, screaming battle chants about inequality and the worker's right to own the means of production or something...  Have a character in the Emperor's cabinet that is leading a clandestine political resistance to such change. Give him some "Evil Villain Facetime" to drive home the point. The more he's on screen and babbling about all the problems the Emperor is causing, the more the audience will "get it" and understand the situation. The more passionate he is, the tenser the situation. When he sounds desperate, he's losing. When he's exultant, he thinks he's winning. The audience never has to see the struggle, only listen to his words. It's probably cheaper, too. 

As a novel, you might want to experiment with some of the same tricks. For instance, embodying this struggle in characters will save you a lot of exposition. The good guys cheer when they win, the bad guys cheer when they think they've won, but there's no actual battle. In other words, you could outline the entire economic policy of the Empire, including all the problems that are being faced by the country as well as the newly freed slaves, in one scene consisting of a Guild Conclave where all the various trade guilds present their various griefs. Similarly, the Empire could sit with his advisers and they could tell him the bad news, or the good, without you have to write out a bunch of boring exposition that will put the reader to sleep. Dialogue is active, exposition and backstory is not. Active _always_ wins.

Try it. Make up some Emperor's Cabinet Advisers and have them give a briefing to the Emperor, explaining all the problems he has caused. It shouldn't take you very long to really explore it fully by exploring each Adviser's concerns. See how it feels. If you think it'll work, then all you have to do is work with that sort of mechanic and fling around a few scenes that visualize some of those problems for the reader. Then, it becomes a nice byline you can pick up and drop off as you wish and doesn't threaten to hog the story.


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## popsprocket (Nov 7, 2012)

A Cabinet scene is an amazing idea. There's something similar in my NaNo project this year, but I hadn't thought of putting it into this project.

And no, it's not a screenplay. I just think in film terms. My brain is programmed that way thanks to high school film classes which I excelled in. When I write I think about how it would appear on screen. I can actually get quite fluid movies going in my head when I'm interested enough in what I'm reading.

I am concerned about economic content in the story, but not overly so. It would be a sub plot in most cases. Something that causes strife that needs to be dealt with but doesn't leach into the main arc with any immediacy.


Oh man, the page that I was writing my notes for this whole salt production thing is now overflowing. Some great stuff here though. I knew the internet was all-knowing


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## Morkonan (Nov 8, 2012)

popsprocket said:


> ... I knew the internet was all-knowing





When you have a difficult message to get across, especially if it involves the setting, culture or a moral message you're trying to convey, always try embodying it in a character. Characters are interesting, even if they're serving a purely functional purpose in your storytelling. Characters demand attention and are the most alluring when they're saying something. A huge giant of a man dressed in full plate armor swinging a giant sword does not command the reader's attention as much as one tiny little man speaking. Not by half! Think of Darth Vader - Nobody would pay much attention to him if he just stalked around and glowered at everyone.

Get your cabinet up and ready. If you have five things you want to reinforce with that cabinet, it's probably three too many. So, take the least three important things that have the least story built around them and throw them into a few scenes. Make them your stage's backdrop, since they're probably fairly innocuous anyway. Paint in front of that and give the reader an occasional glimpse of the backdrop in the form of description or something in a related scene. (Poor ex-slave families stealing water out of rain barrels.. that kind of thing.) Keep the juices flowing on the main focus problems in the economic subplot with the occasional cabinet meeting or sidekick soliloquy. You'll get it done! 

PS - Don't forget that the characters who you're using to "speak" the problems might have their own motivations and concerns. They might be skimming tax money or blackmailing poor slave families. They could be painting a rosy picture for the Emperor until the One Honest Man (trope, make this one a minor functionary, like an assistant accountant or something) uncovers their shenanigans and reveals it to the Emperor. In any event, don't just make these characters that are "speaking the setting" into wooden dolls, or the reader won't care what they have to say in those meetings. Give at least one of them something to do and tie the other one in either directly with the Emperor or with a supporting character or something.


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## ktee (Jan 22, 2013)

I have an economics degree and from what I know the comments above cover most of the issues. 

The things that seem to be missing:

- black market - this leads to questions about what criminal organisations there are who would most likely be the ones who could set up a scheme quickly because they have the resources already. Then you have to deal with punishments, violence, bribery of officials. 

- how would the general population feel about slaves now being their equals? What would it be like when a former slave walks by their former owner or sits down in the same bar/tavern. So if they are hostile would business spring up just for former slaves?

- who sells the salt? Do producers sell direct to the public or is it purchased by someone else who then sells it on the market? Is the market a monopoly? An oligopoly? This could effect how flexible prices would be. Are the sellers able to engage in price fixing? With a less advanced society there wouldn't be the same measures as we have today to monitor business. Or could they undercut each other causing the closure of some companies, the laying off of staff. Would job losses like this cause hatred towards the ex-slaves?

- what types of business would be hit hardest by the rise in salt prices. The few that come to mind first who are directly hit would be producers of cured meat (in a less developed society would there be more cured meat than fresh meat? Personally, I'm not sure...), taverns and restaurants. Then there would be flow on effects to other businesses. If households don't want to reduce their intake of salt what other things would they forsake to keep to their budget? 

- where do the slaves currently live? If they lived in special housing but when freed would want to live in towns close to the mines, would they go to existing towns or would new towns be built? Would there be an increase in demand for buildings, food (i.e. essentials) and luxuries they were never able to afford before (e.g. alcohol, nice clothing). Would there be the resources to accomodate the schooling that I'm guessing the children of slaves could now access? 

- Would there be a flood of slaves to the main cities as they search out new job opportunies? Could the cities handle this in terms of housing, jobs, food etc. 

- increase in law enforcement because the population has increased?

- new legislation to cover ex-slaves' rights. 

- Would the freed slaves be susceptible to alcoholism because they go from servitude with all food provided to having money and there being taverns. 

- with slaves no free, would they be able to vote? Would candidates who are ex-slaves or who promote the rights of ex-slaves be elected/appointed to government?


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## Lewdog (Jan 22, 2013)

Have the planet get attacked by a race of half human have slug.


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