I. The Evolution of Economic Modelling in RPGS
II. The Political Economy of Murder-Hoboing
III. Cotton-Eyed Joe Gold Pieces
IV. Random Hyperinflation Tables
A. This Town
B. Another Town
V. Dungeons and Debt Instruments
2. Debt (again)
3. Debt (again (again))
4. Venal Offices
5. The Weimar Approach
It seems like there is a lot more consideration being given (in podcasts, blogs, etc) to aspects of game worlds like the economy these days. I don’t mean to suggest that nobody ever thought about these issues before – not only did some people consider it, but some games even made it pretty central (a lot of science fiction games like Traveller have emphasised things like trade, for instance). However, it seems to me, oh-so-subjectively, that there has been somewhat of a quantitative and qualitative shift in thinking about these things compared to a decade or two ago.
Traditionally, I think a lot of the discussion of game-world economies was based around relatively tight, realistic modelling and historical data, used to try to enhance play in some form. Initially it was just a question of historical fidelity, but then people realised that you could do interesting things with in-game economies.
The idea was that, for instance, perhaps if you had a way of accurately modelling commodity markets in-game, characters could become rich through speculation and use their newfound wealth to bolster their political power, combat prowess, or whatever it was that motivated the particular characters in play; this might also bring prosperity to the whole kingdom, providing a psychological/emotional reward for players. At the very least, Gerald wouldn’t complain about how unrealistic the wage rates for falconers, or whatever.
These days, it seems like a lot of these ideas about how to deal with fictional economics have been incorporated into games in this very mechanistic way, but that there is also a new way of thinking about game-world economies that has become the focus of most of the discussion. Namely, the idea is that you can take some basic economic concepts and use them to emphasise the interactiveness of the world and the ramifications of characters’ actions. A lot of this is about incentives, cost-benefit analyses, unintended consequences, and so on.
The point is now not to help the mayor tackle unemployment, for instance, but to show how player decisions could actually create unemployment! Maybe this murder-hobo business we’re all so fond of has a destabilising effect on the economy? When confronted with a choice, do the adventurers go for the low-risk, low-payoff option or the high-risk, high payoff option? Or, a Traveller game might implicitly moralise about the debilitating effects of smuggling on communities in which the PCs are smugglers – oops!
I may be overstating the nature and degree of the shift, in which case I hope I can be forgiven for that isn’t the thrust of this post anyway. What I want to suggest here is that some people are taking this latter approach in particular too far. Now, I don’t mean “economics is boring, shut up about it and let me slay a dragon.” Rather, I mean “you keep predicting economically apocalyptic consequences to standard genre-trope behaviour, and that’s probably a bit severe compared to how we should be thinking about the economies of our games.”
I was prompted to write about this largely by Emily Dresner-Thornber’s post ‘On Mid-Medieval Economics, Murder Hoboing, and 100gp‘ (which also touches on issues like disease and the economic effects of magic somewhat too, but I’m going to try to leave that stuff alone, at least for this post). I’m going to stick with her assumption that we’re talking about games in which the players are stereotypical nomadic adventurer-troubleshooter types in a world that “is ‘Vaguely Western European Medieval’ with some hand waving about elves,” but I hope that some of what I say will be useful in other genre and setting contexts too.
I’m somewhat suspicious of this genre of game writing – the whole “political economy of murder-hoboing” thing in which alarmists wildly wave their hands and scream “hyperinflation!” and suchlike. I think a lot of the economic consequences are being overstated here (as they always are in this type of article). Sometimes people point to these things merely as observations on how certain types of games are inherently and fundamentally unrealistic, or just as jokes. Either way, I think it’s become something of a commonplace assumption that in fact the kind of economies we often see in classic fantasy RPGs would tear themselves asunder, and I remain unconvinced.
I want to try to address some of the ideas Emily put forward and show that her analysis seems pessimistic and cataclysmic, when we could put a much more measured spin on things. I want to be clear that I’m not saying that cataclysmic economic consequences would never make for an interesting game-world, or that nothing characters do should ever have significant negative effects on the economy. Perhaps more interestingly and usefully, I will also extend her article by considering some alternative ways that funds could be raised in a game-world, and how they might make for good gaming opportunities.
III. Cotton-Eyed Joe Gold Pieces*
Here is the scenario we are being invited to think about:
‘The party stands before the local Lord of the small town they’re passing through and responding to an ad: Kill the local ogre in the hills for 100 gold pieces! George the Ogre menaced the roads leading into the Lord’s holdings and villages so the Lord wants George gone. You, the Murder Hobos, who breezed through go hey, we have weapons, we have skills, we have experience points, we can take out George. And you do! The local Lord hands out the 100gp (along with the party getting whatever experience points an Ogre was worth) and the Murder Hobos hobo along.
Where does the 100gp originally come from?’
I think Emily deserves a lot of credit for asking where the money comes from, an often-neglected question in writing on this topic; she also points out later in the article that she has far from exhausted the possibilities on this front (there are other alternatives such as debt in various forms, seignorage, etc). I’d have really liked to see her put a few more alternatives on the table and follow through their consequences, actually, but later in this post I will consider some of these things myself to try to build on what she’s offered.
The post quite quickly goes on to consider the consequences of where the money goes to, which is more standard fare. In some ways, it makes sense to focus on where the money is going rather than where it came from – after all, players are interest in the consequences of their decisions. Nobody wants their in-game economy to be merely another opportunity for a world-building GM to present an automaton society that tells the story it has been programmed to tell, etc. I think the question of where things come from can be used in really interesting ways to create a world that feels alive, though.
Emily offers an interesting discussion of possible sources of funding, like an extraordinary tax on peasants (and presumably artisans, etc, who always seem to exist in relatively sizeable proportions in fantasy worlds but which are rarely accounted for very well in discussions like this).
Immediately we can see how the question of where the money for the reward came from injects life into the world: at the very least, you can imagine NPCs grumbling about the tax, the blacksmith’s shop being shut for a few days when the PCs next go to buy equipment because he resisted the tax, etc. Or you could ask yourself what kind of tax it was – a poll tax, or perhaps something more redistributive, like a tax on luxury goods? How does the tax map onto different groups in society – are certain people unfairly penalised by it, or are others exempt from it as a special privilege? Does this make the peasants surly towards the party cleric in conversation?
Remember that things outside of the PCs’ control also have consequences, and these can also help to bring the world to life, even when they don’t reinforce the sense of agency in quite the same way. Note, though, that these ramifications are not just stage scenery and scripted events – often they are also potential hooks for the PCs to act: they might try to intercede on behalf of the blacksmith, or turn down the reward and insist that it be paid back to the people the tax was extracted from, etc.
I’ll say it relatively up-front: the hyperinflation thing everyone talks about seems largely a red herring, to me. Yes, you get hyperinflation if you consistently dump huge amounts of money that was previously external into a closed or semi-closed economic system. That’s what happens when you go to another continent and bring back a whole bunch of gold. But would the same thing happen from low-level adventurers wandering from town to town throwing money down on weapon and armour upgrades and sucking wealth out of the local economy in the form of bounties and rewards, as Emily and others seem to suggest? It seems far from obvious that it would, for several reasons. The most obvious is that the sums might just not be large enough to have a significant effect, but there are other considerations too.
Suppose that the Lord taxes the hell out of the serfs etc in his domain. The money is pooled and offered as a reward to the adventurers for killing the ogre. The adventurers now do one of two things:
The PCs could, most obviously, spend a bunch of it in the town, thus feeding the money back into the economy it was pulled out of.
This is obviously not going to harm the local economy very much – you’re not multiplying their money supply (which would cause inflation), you’re just redistributing it a bit. This shouldn’t cause such significant problems, and will probably end up working itself out relatively quickly.
Suppose, for instance, the pooled money accrues to the blacksmith, fletcher, etc (because the adventurers are far more interested in buying swords and arrows than grain or cheese) – those people, as specialised artisans who don’t grow their own food, then need to buy grain/etc. All of the local peasants, however, have been wealth-soaked recently, and they know that most or all of that has been appropriated by the few people in the town entirely dependent on the market to feed themselves.
So the peasants – or the guilds (as Emily suggests, they may run the show in a pseudo-medieval world) – raise the price of the food they’re selling, in order to effectively re-appropriate the tax money. The economy rebalances to more or less the previous status quo, and prices fall back to normal. The peasants effectively exploit the market-dependency of the artisans to ‘tax’ them, since they constitute the few nodes in the economy that have captured disproportionate money wealth. No problem.
The PCs could take it to another nearby town and spend it there, or save it up for a large purchase at a city in the future, etc.
This is a less attractive outcome, in some ways – it’s less neat – but does it cause major economic turmoil? Probably not – unless the PCs are among a very small number of adventurers, or adventurers operate only in a specific geographic region, the likelihood is that this will more or less balance itself out in the long run. Sure, you’ve taken a bunch of money from one town and given it to another, but the towns probably trade with each other, there will probably be adventurers coming in the opposite direction on the same road relatively soon who will have brought money from another community and return it to the original town you left, etc.
So why does hyperinflation not result from these transactions? We’re talking about large amounts of money that were previously already part of the economic system they’re being dumped into. This isn’t like coming back from the New World with stacks of gold bars the size of your forearm, it’s like a Lord suddenly spending a lot of their savings in one go.
To clarify: I’m not saying that in a realistic world this is definitely how things would work, but rather that we can imagine fantasy economies running relatively smoothly even with periodic recoveries of dragon hordes (remember, that dragon has probably been slowly accumulating its horde from the same towns it’s now being spent in, one way or another). There’s really no reason to expect that the average adventuring troupe in the average fantasy world is going to crash a whole region’s economy without putting some serious effort in.
In particular, note that the currency being withdrawn form circulation in the first place (whether it’s money that was hoarded by a dragon or money that was taxed out of the system by a lord) should presumably have resulted in deflation if the quantity of money is enough to induce inflation when it’s reintroduced. This is another facet of the effects balancing themselves out.
There will probably be short-term fluctuations in prices within localities and so on. Of course I am not denying that the economy might be tilted into a disequilibrium in the short term by these kinds of events, just suggesting that there’s no need for us to rush straight to hyperinflation, economic crashes, etc when we think about the effects of adventuring on the economy, and that it’s entirely reasonable to suggest that these effects are minor and balanced enough that they don’t really effect the game world noticeably.
There are various possible sources of funds that are mentioned but not discussed in detail in Emily’s post. I’m going to offer a series of further alternatives beyond those she has covered (based on real-world techniques for sourcing state revenue), and I’ll try to give a few ideas about the ramifications these might have for the game world, or the plot hooks they could provide for players, etc. I’ll assume throughout that we’re talking about lords for the most part, but the same logic can generally be applied to kings, mayors, guilds, etc. I’ll start with one of the most significant and interesting options:
Perhaps a lord who lacks the wealth (but not the inclination) to offer a reward out of his own coffers will borrow from another lord, or from some wealthy merchant(s) or another source. This helps to explain where the generous rewards received by PCs come from, given that they are often out-of-kilter with the nature of the (at least primarily) feudal economy.
In real-world economies, borrowing and taxation tend to operate alongside each other – it’s rare to see a state which has either no debt or no tax base. It’s not unreasonable to expect that a lord might extract value from the peasants to cover the standard running costs involved in maintaining their social power, but might resort to borrowing when faced with crises.
A savvy lord would realise, for instance, that there’s a lot more risk of a peasant revolt if you exact a heavy extraordinary tax or rough people up compared to just getting a loan from a merchant. A lord might therefore be more likely to resort to borrowing funds when the nature of the crisis is one that threatens their authority, or which they have so far handled badly (thereby undermining their own authority). A lord might also issue a debt instrument (see below) in order to raise the funds, rather than taking out a traditional loan.
Taking on debt might play out in various ways. Firstly, the lord has to find the funds to pay for their debt somewhere – will they increase taxes more moderately in the longer-term, or cut back on their military expenditure (which might lead to the region becoming less safe for not only the general population but also the PCs), expand their territory (possibly into another lord or nation’s territory, leading to military conflict), etc?
Moreover, taking on a debt forms a relationship between the lord and the lender – one that might become very important to the plot. 1 Someone now has a financial interest in the maintenance of the lord’s authority. If the lord is ruined (socially or financially) they will be unable to pay back their debt. The lender might therefore become an important figure in a more politically-oriented game, propping up the rule of the borrowing lord (and who knows who else has received funds from the lender?). With non-sovereign borrowers such as mayors, the loan might also come with some strings attached which allow the lender influence over the borrower’s personal or municipal/estate budget.
Yes, I know, we just did this, but this time it’s different – honest. Debt and credit are two faces of the same coin, and in the real world some debts were theoretically assignable even before sophisticated and highly liquid financial markets developed in places like Amsterdam and London. This meant they could be transferred from one individual to another. 2
Suppose I need to pay for some goods from the blacksmith but I don’t have enough gold pieces – but what I do have is an IOU for nearly the same value from the fishmonger. I can give the IOU to the blacksmith – and then either paying them the difference in coins if it comes up short or getting change back in coins if it’s worth more than the goods – and now the fishmonger owes the blacksmith and I have paid in full (this is actually similar to how modern paper money evolved). 3 I’m effectively paying the blacksmith with the debt owed to me by the fishmonger.
Payment in assigned debt presents obvious opportunities to hook the PCs in to challenges, adventures, or journeys. Perhaps getting payment from the debtor constitutes a challenge in itself, in which you have to wrangle with them socially to try to get your money, or threats of violence are required. It’s quite possible that a debtor could be from elsewhere in the campaign world, especially if the creditor is a wealthy merchant, banker, or lord – whereas it’s less likely that an innkeeper would accept a promise of future payment from a foreigner in return for bed and board, for instance – which may require the PCs to travel to another city, region, country, island, continent, etc… Which might necessitate a dangerous voyage, or bring them to the site of the next major story events in a campaign, etc.
Another possibility with debt is that rather than paying in full just before or after the quest, the lord actually issues the PCs with some kind of debt instrument to spread the payment over a longer time. Annuities were among the most common in the early days of Europe’s financial system(s) – there are contracts which pay out an amount (normally fixed) each year over some specified period – this could be for e.g. 100 years, or it could be for the lifetime of the named recipient (life annuities), etc. Perpetuities are similar except that they are much less common and they keep paying out forever. 4
Having the lord pay off the PCs over a long period of time would be particularly effective if it is an unexpected reward rather than something offered up-front, since this will minimise any negotiations that might otherwise try to force the lord towards paying out immediately even if the PCs receive a lesser reward overall, etc.
Some of the implications here would be similar to those already discussed, except that they would apply to the PCs; for instance, the characters would acquire an interest in the stability of the issuing regime. You could even make this explicit if you don’t think that your players will cotton on – make the annuity contract last as long as a certain family holds the throne, or somesuch. If the players are receiving (and anticipating) substantial annuity payouts further down the line when some political intrigue leads to an attempted usurpation, the players may have a vested interest in protecting the crown, etc.
Of course there are other ramifications too – firstly, the PCs now have to wait for their reward, preventing them from immediately upgrading their equipment or whatever it is they want to spend the money on. They might just choose to save the annuity payments, but on the other hand the payment structure might actually influence what they spend the funds on – perhaps rather than throwing down the cash for a new minor magical item they take on a new hireling (whose wages are covered by the annuity).
Finally, there is another advantage to the debt approach: Something like a relatively modest annuity or perpetuity could feel like a very substantial reward to very low-level characters without significantly unbalancing the game. For instance, you could offer a contract that paid out monthly at a rate that was enough to afford something meaningful to lower-level characters (like an acid flask and/or other useful expendables). At first, players would be psychologically impressed by the long-term nature of the reward, and would be reminded on a regular basis of their achievement when they saw the payments rolling in; over time, however, the money would become less significant as their expenditure and income increased with their level, but they would always be left with the contract as a memento.
Debt is not the only way of providing funds for the kind of fiscal emergencies caused by ogres and other budget bugbears – here are a couple more:
Before the enlightenment came along and popularised notions like rational administration and equality of opportunity, some states relied on venal offices for substantial funds. In essence, they were official posts that could be bought and became private property. These offices often also came with payments for life in addition to their official privileges, making the office a genuine financial investment on which one would see a return, rather than just a political bribe. 5 You could certainly have venal offices which didn’t have financial benefits, however – in this case individuals would be purely buying the office for the sake of social standing, administrative power, etc. In fact, in some regimes, rather than paying out to the officeholder, the venal office had a tax levied on it annually which the officeholder had to pay in order to retain certain property rights over the office. 6
Of course, once it became an individual’s property, a venal office could be sold on to another individual. This could present problems for rulers, as could the fact that many venal offices provided administrative power – an official could insert themselves between a sovereign or a higher administrator and pursue their own agenda in carrying out instructions, or they could use discretionary powers to their advantage. 7 They might delay or sabotage a project, award contracts on a corrupt or nepotistic basis, persecute individuals they disliked, overlook transgressions by those favoured, etc; there was often little that could realistically be done about this, since stripping individuals of their rank risked eroding the willingness of wealthy individuals to buy venal offices – nobody wants to put down a large lump sum only to find that the powers they invested in (and perhaps intended to pass on to their descendants) are taken away from them just a few years later.
Establishing that your game world has venal offices could open up a whole range of hooks. We can safely assume that nobody wants a necromancer to buy the office of “graveyard superintendent” – but can the PCs stop it? Maybe a ruler’s opponents are buying up important administrative offices and using them against the ruler. Presumably holders of venal offices (like holders of debts) would be invested in the stability of the power that awarded the offices, lest future regimes repudiate and refuse to honour them.
If we are dealing with a senior lord or a monarch, it may be that they have the power to mint coins (or issue paper currency if it exists in your game world). See, you thought that 100gp reward had been lying around in the lord’s coffers for months, didn’t you? In fact, the lord only had the coins minted last week, in anticipation of hiring some adventurers to deal with the well-established ogre problem. If paper money exists in your game world, all the better – the lord doesn’t even need any gold in order to simply print more money.
The obvious consequence of this approach is the hyperinflation that we’ve been putting off throughout this post. It’s certainly true that in some circumstances, printing money fails to solve the problem and creates self-perpetuating downward cycles. However, I think it’s far from obvious that the effects would be the same in 1420s Germany as they were in 1920s Germany. As long as the quantities aren’t too large, minting or printing more money shouldn’t send the economy into a tailspin; certain factors would make the strategy more or less risky, and I can only assume that having a largely market-independent agrarian economy would help to stabilise prices, although that’s merely off the top of my head. Certainly, plenty of economists these days argue that money-printing in moderate quantities is probably fine, especially if the economy is depressed and inflation is low. 8
1 Bruce Carruthers, City of Capital: Politics and Markets in the English Financial Revolution, especially the Introduction.
3 See Geoffrey Ingham, The Nature of Money, Chapters 7 & 8, and Ingham, Capitalism, Chapter 4, for more on the origins of money, including paper money and credit money.
4 John Munro, “The Medieval Origins of the Financial Revolution: Usury, Rentes, and Negotiability” in International History Review 25(3).
5 Carruthers, op. cit.
6 Ralph Giesey, “State-Building in Early Modern France: The Role of Royal Officialdom” in Journal of Modern History 55.
7 Carruthers, op. cit.
8 And I’m referring to mainstream economists here, not heterodox thinkers like Marxists and Hayekians. For instance, there’s this over at Forbes.