Fantasy World Economics

[Algolei]

Although having a realistic world isn't possible in a fantasy game by definition....

:\ I find that a strange opening line to this thread.

 

[Mac Callum]

Something to keep in mind ....

Karin's Dad and I kicked some numbers back and forth some time ago starting with the question "How much money does a peasant need to survive?" According to the DMG incomes tables NPCs can't afford anything. Literally. Warriors can't afford weapons, farmers can't afford seed or a hut. Assuming your average human peasnt has a wife and several kids, they need more money.

If you want to keep the prices for good, staples, and equipment the same (which I recommend, for simplicity), but want it more "realistic", the non-magical Income Tables have to be multiplied by 5. That's one thing to keep in mind.

Another is the productivity-enhancing powers of magic. Cantrips like hygiene and mending are incredibly useful to a non-manufacturing society. Among other things, hygiene keep the beer from spoiling. Also, consider the effect of a simple plant growth spell. Spells are free to cast (yeah, there's a market price, but pro bono spells have no material costs), so a cleric tending to his flock can considerably increase the farm productivity of his constituents. Instead of 80% of the population being farmers, less than 40% would have to be - and that's just one spell.

You can assume there are many spells not in the PHB that make day-to-day life more productive and bearable. In fact, if you're shooting for a "internally consistent world", you have to assume those spells are going on all the time.

The world the DMG paints is one with a lot of wealth, but the wealth is concentrated in a few individuals within society, much more so than we in the modern world are used to. If you compare NPC wages (even multiplied by 5) with the price for spellcasting services, a moderately leveled wizard puts today's top-shelf legal talent to shame, from an hourly billing point of view.

Wealth is more concentrated, but also much more liquid and in flux. The wealth get's invested in magical items and weapons, and then one adventuring group bets half the wealth of a nation on winning a couple fights with BBEG's. Very risky, like an entire civilization based gambling ... wait a sec, ever been to Las Vegas?

Like Vegas, a D&D society probably has heavy rollers coming in with loot all the time, that money gets passed around to Wizards and Churches for spellcasting services, taxes are then paid by those guys to support the gryphon-riding King's Guard, and then the heavy rollers blow town to take on (and get eaten by a dragon). Don't worry though - it's not like +4 Defenders "go bad." It will just sit there waiting until some group succeeds in taking down the dragon.

In other words, if you assume that non-PHB productivity enhancing magic is going on in the background, and you multiply non-magical wages by 5, pretty much everything else in the DMG "just works out."

Does it work out perfectly? Probably not, but it's good enough for this economist, and at that point I apply "Hong's Law": Don't think too hard about D&D. Because if you do, you'll realize it's cheaper & safer to just build a network of permanent teleportation circles from Big City to Big City and dispense with roads and sailing ships altogether, and then none of the established worlds make any damn sense.

 

[Hanuman]

painandgreed You sir, write a damn fine article.

 

[painandgreed]

Karin's Dad and I kicked some numbers back and forth some time ago starting with the question "How much money does a peasant need to survive?" According to the DMG incomes tables NPCs can't afford anything. Literally. Warriors can't afford weapons, farmers can't afford seed or a hut. Assuming your average human peasnt has a wife and several kids, they need more money.

Well, in D&D, “the prices do not include materials, tools, or weapons the hireling may need to do his or her job.” (DMG, p.105) If you figure in pay for those that already have their own equipment, then you might multiply the fee by 5 as you suggest. Agreed, that the pay rates there are near bare minimum for many things to keep a family alive but if labor is cheap and there are no laws for treating such peasants otherwise, then that’s what they end up getting paid. Many of the other things such as seed are considered communal property and kept as such by the lord like the animals and plow used to plow the land. Land itself is also owned by the lord and probably so is the hut they live in for the example I figured out earlier. A freeman who owns his land and equipment would be under different circumstances.

In real life they reduced taxes and required services instead in some cases. In our example peasant, the lord may only require 2/7 of the harvest but require a month of service during the year to be used in either manual labor or training for the army. Such a reduction in taxes would result in an annual increase of 37 GP more a year. Enough to let him buy his weapons and give him some investment in his land so he has a reason to fight.

You can assume there are many spells not in the PHB that make day-to-day life more productive and bearable. In fact, if you're shooting for a "internally consistent world", you have to assume those spells are going on all the time.

No doubt. I do expect their to be such spells. I might even come up with some, but that will come after I finish going over the various ramifications of the RAW. One that is done, I’ll look at what changes might need to be made or added.

Speaking of getting this done, once I’ve gotten this as far as I think it’ll go, I’m going to have to do it over again. Some things just have got anew perspective on them after figuring out something else, and other things are just wrong. For example, I forgot that our large city gets multiple rolls (three) so there would also be a 12th and 10th level wizard as well as some more 6th and 5th in the main city. Then we’d have +4 stuff that is very expensive and more people to make +3. Also, as per the example in the book, they rounded up while I rounded down in some cases. I used 2 for half of 5 while they treated it as 3. Yet we both used 1 for half of 3.

Now, let’s get on to the other core classes.

In all we have 1200 clerics in our kingdom. A single of 13th, 12th, 11th and 7th levels. We end up with 7 6th levels, 12 5th, 35 4th, 132 3rd, 210 2nd, and 800 1st level clerics. So far as making items goes, they have more muscle than the wizards. Out goes the market of the magic item business. Of course, the clerics have an ample income to begin with. Of our 13 million GP economy, the clerics tending the peasants in the field end up getting 1/10 of this for 1.3 million GP. Let’s say they pass half of what they get up the line to the church proper. Our cleric watching over a hamlet of 200 people ends up with 1300 GP per year in tithes. 650 of it goes to his superiors and the rest he gets to keep although some of it probably find its way back into the community doing his “good (or evil) works”. Still, explains why there are more clerics than wizards, that’s where the money is.

Of course, there is more than just one church. Those high level clerics might be spread out among various churches for various gods. Each small cleric will send his money to the head office of his church. So, the individual churches are broken up and not an economic whole. Let’s say that the majority of the income producing clerics (90%) belong equally to five churches. That means each church brings in a base income of 117,000 GP a year above what their clerics out in the field bring in. that’s a little above the economic power of four noble families all held by what is probably a few people. If we assume that these are the clerics that reside in the City and the large towns, that is an average of 13 or 14 clerics per church reside at the head of all that money. The main temple is probably pretty nice.

Also, with Plant Growth capable of increasing this by 1/3 at 5th level, there are plenty of clerics capable of doing such, …if they can cast it. AFAIK, it is only castable by druids and clerics of the Plant domain as it is not a normal cleric spell. Economically, gods with the plant domain have a stranglehold on the economy. With such a cleric able to demand 1/20 of the total production for such land for a single spell cast, it might be reasonable for gods of money and wealth to also cover plant domain. It would also be in demand by clerics of various evil persuations for its reverse. By casting it once to counter the plant growth and another to actually decrease the normal product of the land by 1/3, the land could end up producing 1/2 of what is expected. Done at a critical time of the year or when people might not notice, such effects might not be reversible in time for the next harvest. Poverty and famine for hundreds of villages could all be caused by a single 5th level evil cleric in the course of a year.

What about druids? It’s there spell and according to the RAW, there are just as many druids of equal levels as there are clerics in our kingdom. Don’t know about you, but IMC, there tends to be one or the other. There is some over lap, but not the 1200 clerics and the 1200 druids running around the same kingdom. Thus, I’m going to ignore druids, assuming that in the grand scale of things, there are not enough to worry about in our kingdom.

For fighters and rouges, we have 2231 of each in our kingdom due to identical methods of figuring them out. We have singletons of 14th, 13th, and 12th levels, 2 8th levels, 9 7th levels, 30 6th levels, 91 5th levels, 96 4th levels, 172 3rd levels, 465 2nd levels, and 1,363 1st levels. Although some of these may be lords (the fighters anyway), most are just going to be mercenaries or otherwise hired. Thieves, …er, I mean rogues will do what rogues do and achieve similar heights of experience for it.

For all the classes we can try and figure an average of how fast they advance and how many challenges they face. Let’s assume that our highest level member is near venerable and has an even rise his entire life. At 13.3 challenges of equal level per level, over ~55 years, we can figure out the average number of challenges per year and the average number of years per advancement. (There is a break in our levels with some missing, bu tthis is because we have no small cities in our kingdom. Taking this into account, we might decide the highest levels are aberrations and only figure out the averages for the more populated levels. I didn’t think of this till after I did a whole bunch of calculations, so we won’t do that here.) For clerics, we end up with 3 challenges a year (adding weight to the advanced rate we picked arbitrarily back with wizards and their XP) advancing every 4.5 years. For fighters and rogues, it’s a little faster with advancement happening every 4 years. From that we can figure the average mortality rate for core class NPCs which seems to be about 25% per year for lower levels. Almost every day in our kingdom a 1st level fighter and thief die someplace. The mortality rate drops drastically as they get higher level, which seems about right till you have these single guys that continue to survive way past the odds, probably through being high level enough to afford Raises and such.

The average income of such a thief or fighter (again, the same due to the average prices for challenges and the similar advancement schedule) is ok. The first level fighter or thief makes 244 GP a year. 2nd level reward doubles to 488 GP/year before reaching 3rd. 3rd is 731. 4th is 1,028. 5th is 1,300. 6th is 1,625. 7th is 2,112. 11th is 6,094. 12th is 7,962. 13th is 10,702. However, I have a hard time seeing fighters making as much as thieves as fighters in such circumstances are going to be paid a set amount to kill thieves for the good of society. Soldiers often got loot in wartime, so maybe the city guard also gets loot they get from killing law breakers. Either that or they get it from the thieves to kill other thieves. Looking at the totals, it seems that between fighters and thieves alone, half the total economy of the kingdom ends up changing hands every year. What matters for the kingdom is where they get it from. If there is no net treasure deficit between the kingdom and its neighbors outside its borders, then the economy is stable except for the 6 killings and thefts that go on every single day in our kingdom for our fighters and thieves, …er, I mean rogues to get their challenges. I suppose for a large city and lots of little ones, that doesn’t seem very bad at all.

 

[drnuncheon]

Karin's Dad and I kicked some numbers back and forth some time ago starting with the question "How much money does a peasant need to survive?" According to the DMG incomes tables NPCs can't afford anything. Literally. Warriors can't afford weapons, farmers can't afford seed or a hut. Assuming your average human peasnt has a wife and several kids, they need more money.

Sounds about right from what I know - the warriors are dependent on their lord for their equipment. The serfs weren't sowing their own grain, they were sowing their lord's grain on their lord's land.

J

 

[Rel]

What about druids? It’s there spell and according to the RAW, there are just as many druids of equal levels as there are clerics in our kingdom. Don’t know about you, but IMC, there tends to be one or the other. There is some over lap, but not the 1200 clerics and the 1200 druids running around the same kingdom. Thus, I’m going to ignore druids, assuming that in the grand scale of things, there are not enough to worry about in our kingdom.

I've been enjoying your analysis immensely, but you lost me here. This "not enough Druids to worry about" seems arbitrary and illogical. It's your analysis and you can make whatever assumptions you want but I think it stands to reason that, with Druids being so darn useful, they could easily become the dominant religion in an agrarian society.

Think about it: Two priests come to town and try to win over the local flock. One is from Pelor and one is a Druid. The Cleric of Pelor says, "I stand for righteousness and will keep at bay the ravening hordes of undead...of which I notice there are not too many around here." The Druid says, "I'll keep you well fed and double your income! Is it okay if I set up in that oak grove right over there?"

I think the old saying is that people tend to vote their pocketbook.

 

[Storminator]

I've been enjoying your analysis immensely, but you lost me here. This "not enough Druids to worry about" seems arbitrary and illogical. It's your analysis and you can make whatever assumptions you want but I think it stands to reason that, with Druids being so darn useful, they could easily become the dominant religion in an agrarian society.

Think about it: Two priests come to town and try to win over the local flock. One is from Pelor and one is a Druid. The Cleric of Pelor says, "I stand for righteousness and will keep at bay the ravening hordes of undead...of which I notice there are not too many around here." The Druid says, "I'll keep you well fed and double your income! Is it okay if I set up in that oak grove right over there?"

I think the old saying is that people tend to vote their pocketbook.

But he's saying you're EITHER have druids OR clerics, not likely both everywhere. Certainly true IMC.

So if you pull out clerics in his analysis and replace with druids, you get basically the same thing.

PS

 

[painandgreed]

I've been enjoying your analysis immensely, but you lost me here. This "not enough Druids to worry about" seems arbitrary and illogical. It's your analysis and you can make whatever assumptions you want but I think it stands to reason that, with Druids being so darn useful, they could easily become the dominant religion in an agrarian society.

Right. If druids did exist in equal numbers in relation to clerics, they probably would have the advantage economically. However, I have never seen this in any campaign I’ve played in. There have already been very few druids, not a number on the order of that of clerics. Thus, ignore them not because they don’t have any effect, but because we’re not going to include them. Regions that have clerics typically don’t have many druids and regions that have druids don’t have many clerics. Reasons for this can vary, but it seems that clerics do have some sort of advantage over druids that they tend to take over in more advanced cultures. I would guess that this goes to that the druids aren’t willing to simply use their powers to become magical agricultural industry for humanity. They could use their powers to greater effect than the average cleric and become the dominant religion, but they don’t want to because to do so would be against what they stand for. You average human cleric can use his powers all he wants for the benefit of society because his gods want humans to prosper. Druids are interested in nature and the balance and wouldn’t want to use their power to give humans power over nature. They might use their powers to reward a village for services, punish them for transgressions, or otherwise lessen what might be an unusual circumstance, but not because they’re getting paid more.

Similar thoughts go towards barbarians, monks, and sorcerers. Where there be barbarians, I usually don’t see fighters. The flavor text for barbarians even says that they are from special regions. I could see a group of barbarians out and about in the large cities, as they are prone to adventure and if modeled on the Vikings, were very good and far reaching traders. Still, to be equal to wizards throughout the entire kingdom is a little much. I mean really, 25% of all the thorps all have a single barbarian in them? Are there roving bands of barbarians that drop off their children in strange out of the way places? Is there a barbarian school that families save up and send their children to? Were they forced out of their homeland to decide to split up and live alone among hundreds of thorps and villages throughout the entire kingdom? Monks and sorcerers are more a matter of campaign flavor but I still don’t see very much of them in play except for PCs and special, named and described NPCs. I’m going to have to break with strict rules here and will simply ignore them and concentrate on the core classes.

Creation of wealth

Most of the wealth in the kingdom is added. Raw materials are taken and then with work, turned into something more valuable. With most items, the rate is about three times the cost of materials. For the creation of magic items, the value added is two times the cost of raw materials. Even crops are turned from seed into a new harvest by the work of the peasants.

Determining crop results

Crops aren’t a sure thing. A late frost or a rainstorm in the wrong time can mean failure for a crop. To find out how a crop harvest turns out for the year, figure at harvest time the amount of seed crop by the crop multiplier.

(Base+Skill+Weather)/10 = crop multiplier

Base: 20
Skill: 1d20+ranks (always take 10 when dealing with large groups)
Weather result: 3d6

The multiplier is used to figure how much the crop produces out of the crop seed. Figure the number of GP worth of seed used and multiply it by the multiplier to find the crop harvest for the year. Typical usage is 3GP per acre. If using Plant growth to increase the harvest multiply the crop harvest by 1.3. Having a wizard who can cast Control Weather available to cast the occasional spell allows the change of one of the weather dice to a 4 instead of what was rolled.

Flow of wealth

So we have all this wealth being generated. What happens to it all? Most of it gets eaten. A share of the rest ends up broken due to entropy as tools rust, clothing wears out, and things break. Even high dollar magic items like potions and scrolls get used up. If the kingdom is creating more wealth than it is using, then it gets richer and if it doesn’t, it gets poorer. This is where gold and silver comes in. Gold, silver, and copper are just more trade goods and material resources. They differ because they do not rust or degrade. Gold does not corrode much and can be polished without worrying about losing weight. Thus it can be kept for long periods of time without worrying about loss of value. Food spoils and most other raw materials can grow rotten. Gold, and to a lesser degree silver and copper remain incorruptible and are durable enough to store for long periods and not lose value. (Platinum also. Hell, it probably can’t even be melted down except with magic in this age.) Iron, while a useful raw material, is not so stable and one might open a long untouched chest only to discover a leak has turned the family wealth into rust. Thus the majority of the wealth left over, that can be freely circulated through the economy anyway, will be made of precious metals.

How much of it is out there? Historically, countries have dealt in tons of gold for large projects, with one ton of gold being equal to 100,000 GP. A failed invasion of Africa cost the failing Roman empire 65 tons of gold and “left the treasury bankrupt for years”. Attila the Hun received 9 tons from Byzantium in a few years through the bribes they paid him to leave them alone. If our kingdom produces the equivalent of 130 tons of gold a year, how much is probably actually laying around as gold or precious metals at the end of the year, so to speak? Of hand, I’d guess about 10%. Probably less.

One of the main troubles is that the more money that the lords stash away, the harder it becomes to conduct trade. Hoard too much money and the economy slows because it becomes hard to conduct trade. Without coins, trade is reduced back to barter for material goods that degrade or may not be as useful to you as they are others. Yet, if the kingdom releases too much of the money, then they can’t store that wealth to use later. Worse yet, if they release too much, a neighboring country may horde it and thus prevent our kingdom from getting richer. Even a lack of one type of money over another can cause troubles. Not enough copper and the poor can’t trade. Not enough gold and the rich have a harder time trading, as the sheer weight of things will be multiplied by ten. More if you consider volume. Gold at 1/50th of a pound (9 grams) is close to what many historical gold coins were. They were also about the diameter and thickness of an American penny but three times as heavy. Platinum would be slightly smaller as it is denser. Maybe close to a dime bur probably larger than that. A silver or copper piece is going to be closer to the size of an American quarter for that much metal with the silver being pretty close but the copper being a little thicker.

What about magic items? Would it be possible to have some sort of magical currency? You could trade items but most large price items are sort of single purpose and smaller ones tend single purpose and disposable. You could trade in potions of extra healing but they are really only as valuable as the need for healing. They also can break or freeze, or be dropped on the floor. If you could perhaps store magical energy into small objects like coins, or perhaps the XP that is needed for the creation of magic items, then perhaps it might be possible to create a magical raw resource to act as currency. It’s a thought, but that’s as far as I’m going with it for now.

Inflation

For the age-old question of “why don’t adventurers cause inflation when they come into town?” inflation is caused by “too much money chasing too little goods”. This can be caused by a number of circumstances, not all bad. The population can increase faster than the production causing a shortage of goods. Wages can increase giving the people more money to spend. Fewer goods are produced than there is demand for. If you include treasure being spent in an economy, a simple equation could look like this:

((T+E1)/E2)(P2/P1)=C

T – the amount of treasure spent in an economy
E1 – the GP economy of a community for the previous year
E2 – the GP economy for the current year
P2 – this year’s population
P1 – last year’s population
C – the cost multiplier to items from the base price

Sense so far our E’s are derived from our Ps, they equal out as our production grows with out population. Perhaps we’ll come back to that later. All that matters is the amount of wealth spent by the players, which will relate to a percentage increase in price proportional to the percentage of the economy spent. e.g. if they spend an amount of money equal to the economy of the local economy, prices will double. Another effect is that this will decrease next year’s economy( E3 ) proportionally, so that if prices double then production will be halved as people give up their normal jobs to cater to the whim of those spending money.

So a party of adventurers wanders into a Hamlet, decide that it is a good place for a base of operations. They hire people to build them a house while staying in an inn and eating and drinking like lords. The normal economy for such a 400 person hamlet is 26,000 GP. 1% of that is 260 GP. For every 260 GP the party spends in town, prices go up 1% and future production goes down 1%. It would be easiest for the DM to relate this value to the GP limit of a community according to Table 5-2, DMG p.137. Let’s round it off and call it 2.5 times the GP limit. It doesn’t quite follow the above equation for large towns and cities, but it’s not too difficult to explain their ability to absorb such expenditures. Towns and cities are going to have more unemployed people than small, self-sufficient communities. Thus there is a buffer zone of money that can be spent in large areas before inflation sets in.

So, in our example, lets say that the adventurers come into town and decide to build a grand house according to Table 3-27, DMG p.101 for 5000GP in a small hamlet. That’s going to raise prices 20% as people get more money from working and buy more stuff. Next year, production will be down 20% due to people busy working on their house rather than on crops and such. Of course, this will not go well with the local lord. It would most likely be prohibited in a slave or serf society. There will probably be taxes to prevent such things in a free community and thus the lord will make up most of that loss.

Keep in mind that that a drop in production is going to cause inflation itself the next year due to shortage of product. The villagers will have all that money, so things should equal out. Eventually, as the money flows into surrounding communities, everything should return to normal.

 

[SSquirrel]

I came up with the exact same number! I like the way you think.

One thing to consider is the effectiveness of armies in your campaign world. If you have lots of mid- to high-level characters, I don't think that armies will be worth the amount of gp it takes to keep them. Instead, the kings might have various teams of "special forces" that they keep on retainer to deal with things cropping up.

Heh this sounds a lot like the idea of Elites in Aberrant, where countries just hire a few elites to fight for them. Cuts down on loss of life of your populace and ends up being cheaper. I would assume it would mean larger unemployment tho *grin* That is always one of the reasons they would have armies. Keep people employed to keep them from being poor and resorting to thievery.

Also, how are the thieves in this world? Do guilds run a whole lot?

Hagen

 

[painandgreed]

Also, how are the thieves in this world? Do guilds run a whole lot?

There’s a thought. What is the economic power of the thieves guilds should such things exist? Or any guild for that matter as per DMG p. 132. We’ll work out thieves guild and the same economics should hold for a fighter’s guild.

Each guild takes in dues. There are two ways to do such and varying rates to collect. They can either charge a flat fee of so much per member or they can charge a flat percentage of their yearly income, much like a church tithe. The more serices they provide, the more money they collect, and the more powerful they are. The more powerful the guild, the higher rates that it could charge. The two flat charges they suggest are either 50 GP or 1000 GP. Very few could afford a yearly fee of 1000GP, free training or not. Most would be in for 50GP. A flat rate would be from 10-50%. In our large city, they charged 1000GP from everybody for which is was less than a third of their yearly income and 50GP from everybody else, it would pull in 5100 GP/year, over half from three members. If they pulled in a flat rate of 10% from every member they’d equal this amount and more equally distribute the load (off of the three most powerful members). I think it’s obvious that they’d require a percentage form members in good standing. Perhaps charging a flat charge for temporary or trial membership of somebody who is not from the area or whose skills are unknown. These flat charges would not be figured into the average income.

So we have 5,000 GP per every 10% that the guild charges of it’s members in our large city. If it was a powerful guild that was able to charge 50% of its members, it would rival one of the hundred noble families in the kingdom for income. If it spread itself out to the entire kingdom and collect from all the appropriate potential members, the dues would jump up to over 44,000 GP per 10%. Thus, a fighter’s or thief’s guild that was able to collect dues from all classed individual at 20% their yearly income would be making almost 90,000 GP per year and more powerful than 3 average noble families. With that sort of money, the nobles themselves would be looking at controlling such organizations. Even a kingdom wide thief’s guild that only managed to pull in 10% from half the potential members would bring in around the income of a noble family.

Rival guilds would drastically cut down on the economic power of such guilds by siphoning away their dues. They’d have to be dealt with. In kingdoms that feared the power of such guilds, the nobles might sponsor rival guilds to cut down on such power within the kingdom and protect the power of the nobles.