Sometimes, I think that speculative fiction authors must be the most broadly and deeply educated people in the world. How else could they know enough to write custom laws of physics, develop cultures over thousands of years, and understanding the dynamics of civilizations across all different eras? Then I remember that most authors are not quite as obsessive as I am about taking everything from first principles, and are quite content to use historical analogy and fact as the basis for their world-building. Sometimes, that fascination of mine allows me to develop really unique and interesting worlds. Other times, it leads me down rabbit holes that smack of painful anachronisms. One of those? Economic systems.
As I was writing several of the scenes in the later episodes of Blood Magic‘s first season, I was struggling to describe what, exactly, Prime Wezzix and Borivat do all day. Specifically, I had a discussion in episode eight about Merolate’s budget. As I was writing it, I was trying to make it realistic, but I found myself wondering what a budget for a nation-state at a level roughly comparable to Italy in the thirteenth or fourteenth century might reasonably include. What would a national economy even look like at that period of time? I knew of specific types of transactions from that period of history, but little on the larger scale.
Although I can’t bring myself to go so far as to call economics a science, I have long been fascinated by the discipline (yes, I’m fascinated by a great many things. Most things, actually, in an academic, rational sense). There have been multiple instances in which I subjected people to conversations about the merits of free market capitalism, the origins of the welfare state, and the finer points of so-called modern monetary theory (which is not modern, nor about money, nor a theory, but that’s another post). I like to bring that fascination to my world-building efforts, developing the economics of different nations and exposing them to, for instance, inflationary forces, or considering what Merolate’s natural rate of unemployment might be. That, however, is a mistake.
For the vast majority of human history, such economic systems as there have been were almost exclusively the barter system, exchanging goods and services. Such “currencies” as there were in the earliest major civilizations were useful goods. Coppersmiths in Sumer, for instance, were paid in oil or edible animal fats. Some major civilizations, like the Greeks and Romans, did develop currencies, and Rome famously had issues with currency devaluation and inflation, but plenty of major historical cultures did not. So what is reasonable? To a large extent, answering that question requires understanding why organized economic systems develop in the first place.
Looking at the civilizations across history, the common features of the those that developed currency (which can in most cases be considered a proxy for an organized economic system at a national level) are two: a capital or other major city with a large population that does not generate significant, useful goods, and a significant national source(s) of precious material, usually metal. Whether that metal is copper, iron, silver, electrum, or gold, most early, organized economic systems that share significant traits with more modern systems started with applying a value to a weight of metal, issuing currency in those weights, and benchmarking the value of goods and services to that currency.
To me, currency itself is probably worthy of its own post, but the essence is that it is a store of value. However, most currencies were just a commonly exchanged good with value in the marketplace, like gold. Gold or silver was useful as an early “hard backed” currency because you could exchange your wool for an amount of gold, and then turn around and use that gold to purchase wheat from a farmer, who could then use that gold to pay a smith to repair his plow. Although not always, I think in most world-building situations, having a hard-backed currency is fairly reasonable.
What is less reasonable is what I call soft currency, or currency that is not fixed to a material standard. Legal tender in the United States, for instance, is tied to the perceived market value of the dollar. In other words, the medium of exchange is the trust of the populace in the good faith and credit of the United States central government. If that trust disappears, the currency loses its value. Of course, there are more complexities than that – I’m reducing it to very basics for this post, to explain what I mean by hard currencies versus soft currencies. These soft currencies are a lot less common, and more prone to trouble, throughout history than are hard currencies.
Yet, to a certain extent, any currency is really only useful so long as there is perceived value in it. Gold and silver, until relatively recently, weren’t really useful – their value was in being rare, difficult to obtain, and resistant to impurities (oxidation, staining, and so forth). If times are tough, the butcher isn’t going to accept a farmer’s gold coin – he’s going to demand grain, or some other useful substance, in exchange for his meat. Which brings to mind the Adam Smith saying about the benevolence of the butcher, the baker, and the brewer, but that, again, is a whole different post. However, it reveals a useful point: if there is no perceived benefit from trading in currency instead of direct barter, people will stop using the currency.
Bringing it back around to Merolate’s economy, the other consideration is the existence of trade and a middle class, which was relatively rare throughout human history. I like to include it when I can, because I think it makes for a more interesting world, rather than having just the upper and lower classes, but it means I do need to pay a little more heed to the economic system. The existence of trade, and of significant cities, as I’ve established in Blood Magic, I think justifies me in having a hard currency system, a middle class, and a government that pays in its own currency for the goods and services it requires.