Raven Crowking said:
If the people of Bongo are the finest axe crafters in the world, and it costs them 10 sp to make an axe that they can sell for 15 sp, but they can make crappy hammers for 2 sp that sell for 6 sp; and the people of Tongo are the finest hammer makers in the world, but they pay 4 sp to make hammers that sell for 7 sp (although they can make crappy axes that cost 6 sp to make and sell for 12 sp), the odds are good that the world is going to be flooded with crappy (but cheaper) axes and swords, rather than finer (but more expensive) axes and swords. Unless, of course, there is some incentive other than money involved. That's economics at work.
Well, people need axes because you can't chop down trees with a hammer. So if the situation starts off like you say, then there's lots of hammers and few axes. Price of hammers goes down, price of axes goes up. I don't think there's really going to be a flood of crappy axes - enough that the demands are satisfied, and then merchants are going to be sailing around with shiploads of axes trying to sell them - they're certainly not going to buy more, which means the people of Bongo aren't going to make more because they'll find quickly that there's no one to sell them to.
So the prices don't stay at the levels you indicate if there's not an equilibrium between buying and selling, supply and demand. What I assume for simplicity sake is that the base price for an axe represents the equilibrium.
And economies that don't use money still have a sense of value. And for purposes of the game I think that the exchange rates according to a standard can still be used to determine how things go. If I'm in a completely feudal environment, then one noble might trade 10 laborers working for a week in exchange for an ox. No money is involved, and yet how do you, as a DM who doesn't live in that world (or one even like it) gauge whether or not it would be considered a fair trade? In my scheme, you'd compare 10 man-weeks of labor on a chart (with a resulting gp value) to an ox, and compare the gp values. If they're close, then it's a done deal. Again, no money is involved - but value is.
Raven Crowking said:
Where the disconnect lies, I think, is in that the modern Western world is largely based upon a monetary incentive system. Most pre-modern civilizations had other incentive schemes, some of which were far more important than money, because, ultimately, they governed what you could hope to gain more than the coins in your pocket did.
There's a question of perception vs. reality. The people living in medieval times might have perceived that their world consisted of fighters, clerics, and peasants. Theoretically, people served, prayed, and fought according to their station. However, in reality people valued gold, and that gold oftentimes, IMO, was enough to cause people to ignore their principles. A lord might borrow gold from a merchant beneath his station in order to pay for silk for his wardrobe. So at some point I think you have to decide how much you want to idealize the non-monetary exchanges in a culture - since it's fantasy, I suppose you can completely idealize it for purposes of the campaign.
Also, even if there are things more important than money
within a culture, international trade exists throughout every period and time I can think of, and there are no social bonds. The example of the Mongol to Chinese trade in silk and horses is an example. There may very well be no money involved (instead based on tribute or allegiance) but these things are still judged on value since the two societies have no other basis to trade things on.
Raven Crowking said:
As an aside, can a person in a D&D world reasonably survive on 1 sp/day? Assuming that the person has even one non-laboring dependent, how much does it cost to eat and be sheltered per day?
A while back I spot checked the "Trade Goods" prices in the PHB against my notes regarding historical prices, using labor costs as a comparison. The 1 sp daily wage happens to agree with the relative worth of eggs, oxen, and wheat (there's alot of fluctuation in the historical prices, so at best I was looking at order of magnitude). I found the prices for flax and salt to be too high in the PHB.
The DMGs advice is that 1 sp/day assumes that the person grows his own food, sews his own clothes, and does his own work to maintain his household. There's some evidence in a book that I read on the English Manor that the "work day" for a peasant actually ended at noon - although I've only seen this in one book but it was a fairly detailed one.