Last time, we talked about the spiritual backbone of a fictional society. This time, we’ll be talking about building the material backbone: the economy.
Economic activity is fundamentally an answer to a very simple human problem: most people can’t create everything they need out of whole cloth. Even in the earliest Hunter-Gatherer societies, humans needed other humans to watch for danger while they slept or ate. As societies continued to grow larger, the number of material goods and services which were considered “needs” grew as well, which meant that a single person could only provide for themselves a minute fraction of the material goods they required to live what that society considered a normal life. The solution was the division of labour, and the harnessing of that specialised labour through economic activity: each person in a society would focus on fulfilling one need, and then provide that need in return to others for the ability to secure other needs from other individuals. This is the fundamental principle behind any system of economics, be it free market capitalism, feudalism, centrally-planned economics, or mutual aid. Society literally cannot exist without it.
Unfortunately, as societies have grown larger and the needs of its members more complex, these interactions have grown more complex. It is easy enough to trade goods and services directly when such goods and services provide only the basics needed for survival, but when a society’s idea of a decent standard of living includes a vast array of goods and services – many of which can’t even be produced by a single individual – then things get very complicated, very quickly. When you add the desire for individuals to obtain material security by hoarding as much in the way of resources as they can, then things get even more complex. Indeed, our own societies have webs of economic interaction so complex that their behaviour has to be generalised into broad metrics like GDP (Gross Domestic Product, or the nominal value of everything a society produces). We even have entire disciplines of people who solely exist to study these interactions and explain them to others – something which many would argue they do imperfectly.
Thankfully, as worldbuilders, we have two powerful advantages over actual real-world economists: as the single power in control of a setting, a creator can determine both the economic inputs and the economic outputs of an economy. That is to say, they can control precisely who makes what and where – as well as how the end result of all of these economic interactions affects a given society as a whole.
This gives us two methods in which to worldbuild a society’s economy.
The first is the top-down method, better suited for creators looking to build a setting around a narrative, rather than the other way around. In this method, the first thing to do is to establish what the narrative needs a society’s economic situation to be. Is the local region suffering a famine? Grinding poverty? Unparalleled prosperity? From there, a creator is able to work downwards, establishing the causes for those required conditions. If a story needs a famine, then the worldbuilder could create a local economy that is built on a single food crop which is suffering blight, or or one subject to a central government which has cut off trade to it for some reason or other (or both, in the case of the irish Famine of the 1840s). In this method, the demands of the narrative inform the parameters of the economy, and economic conditions are ultimately shaped in a way to support the narrative.
The other option is to build an economy from the bottom up, more useful for building an entire setting for independent narratives to take place in. This method requires a creator to start with the inputs: what each region makes or grows, how they trade with each other, and how concentrations of wealth and poverty form and conflict, and create either backdrops for narratives, or the central conflicts within narratives themselves. In this case, the economy is not built with any specific narrative in mind, but as an environment which narratives can grow more or less organically. In addition, the kind of economic interactions which this sort of worldbuilding sets up can be fine-tuned to support the specific kind of narratives a worldbuilder might want to encourage. For example, if a worldbuilder wants to encourage stories about naval battles and piracy, they can create regions which rely heavily on nautical trade, and others which have poor soil and few natural resources save for an abundant coastline. While it’s not the same as saying “This is a pirate story and there are pirates”, the stage has been set so that commonplace piracy makes sense for anyone looking to tell that kind of story in that setting.
Unfortunately, this isn’t the sort of process which can be described with a step-by-step guide. However, I can offer a few guidelines and tips which might make the process of worldbuilding an economy from either the bottom up or the top down a bit easier.
First of all though, some disclaimers: All of these guidelines rely on certain assumptions regarding the world being built. If a setting breaks with our own reality in a fundamentally major fashion (for example, a post-material scarcity society), then they may not always apply. Secondly, “an economist” is yet another entry on the long list of things which I am definitively not, so I’ve kept these tips relatively general. There’s nothing about reserve currencies or quantitative easing or securities exchanges here. For advice on that level of detail, a worldbuilder would probably be best advised to seek out the expertise of an actual expert.
Value is a function of utility and scarcity: This is the fundamental rule behind all economic activity. Goods and services only have value if they’re seen as useful, and they only have high value if there’s not enough of it to satisfy demand. However, different groups of people have different ideas of what’s useful and are subject to differing levels of scarcity: what’s valuable to one person is not as valuable to another. Trade is simply the exchange of one useful thing that is less valuable to one person than another, in exchange for something else which the first person wants more than the second.
People will work exactly as much as they want to: “Want” is perhaps an imprecise word here. What this ultimately means is that so long as someone wants more of what they’re getting in exchange for their labour, they will be willing to work for it. This is not necessarily a material gain. In our world, workers have been “paid” not only in money, but in social position, special privileges, immunity from punishment, and self-gratification. Even fundamental human rights (like the right to continue existing) are sometimes still offered as “payment” for labour – though a society that does this is pretty obviously in the wrong. What this ultimately means is that well-motivated workers are ones who feel like they are getting fairly compensated for their labour, while ones who feel they receive inadequate compensation will only work for as much as they think their pay is worth, demonstrating the old Soviet-era joke: “they pretend to pay us – and we pretend to work.”
The more complex the society, the more complex its trade networks: It’s easy to imagine a simple economy if the only needs that have to be fulfilled are food, shelter, and basic security. But more complex societies also tend to have more complex material needs as well: advanced tools, social standing, better housing, public services, all of which has to be provided by specialists who devote the majority of their time to providing a single good or service – and thus, have to rely on others to fulfill all the others. At this point, a pure barter economy hits its limit: a person who needs dozens of individual goods and services from dozens of individuals simply doesn’t have the time to source what those other providers want in direct exchange while still having the time to do anything productive. This is where currency comes in: a common token of value which serves as a universal adapter. One person may not be able to find the precise good or service another requires in exchange for the fulfillment of their own needs, but they can provide currency which can be traded further along to fulfill the second person’s own needs. This means that money doesn’t have any inherent value: it only has value because of the labour and goods it represents.
Most complex societies are not locally self-sufficient: While some relatively small-scale or particularly lucky societies have all of the natural resources they need to maintain a subjectively comfortable standard of living, most don’t. As a result, those societies have to trade with other societies who do possess those needed goods. This is the basis of what we now call “international” trade, and generally speaking, while most societies can survive at some level without it, the loss of trade will cause a decline in standard of living, and the social and political instability that follows when people realise that things seem to be getting worse.
Trade follows the path of least resistance: Generally speaking, those looking to carry trade goods over long distances tend to choose routes and methods which allow them to move as much in the way of trade goods for as little a cost in resources as possible. In our worlds, this has generally meant transportation over water: ships can carry a lot more than carts or trucks, they move more efficiently, and there’s a lot more in the way of available routes for them since the Earth’s surface is mostly water. Because of that, population centres often developed around places where water-bourne goods could be easily transferred and distributed, with immigrants attracted by a pressing need for labour (which is, of course, usually paid for with currency or other benefits otherwise unavailable), as well as immigrants coming to take advantage of the more ready availability (and thus, lower cost) of goods and services provided by the proximity of a centre of trade. There’s a reason why in our world, almost all major cities are also major ports, situated in places intended to allow for ease of trade with other societies by sea. While fictional settings may not have the exact same conditions, the same basic principles still apply.
There’s definitely more to talk about when it comes to fictional (and real) economies. Stuff like fiat currency, national banks, production methods, labour organisations, as well as things like the social implications of free markets and centrally planned economies, the basic fundamentals of major complex economic systems (read: capitalism, communism, as well as less well-known systems like mutualism) and so on. However, this would probably take at least another installment, and I’m not sure how many people would like to hear me ramble on about these relatively more detailed topics when we could be moving on to another topic.
With that in mind, I’ll be putting it up to a vote, with both a continuation of a discussion of fictional economies, and moving on to a new topic on the table.
Paul Wang 