Worldbuilding 101: Fictional Economies
Since the dawn of time, there has been a fundamental issue at hand for all humans, even as hunter gatherers. It is an issue that even transcends us as a species and goes across all species. There is a want, and it needs satisfaction. What do I mean by that? I mean that every lifeform wants things, from the most basic of things like food, water, warmth, etc. And when we have the want, we seek to satisfy it. All wants, or desires, are, however, not born equal, and their relation can fluctuate throughout a day, a week, a year, a lifetime. Economy is all about a singular question, How do you satisfy infinite wants with finite resources? You question the initial point but I will get into it soon. First, the obligatory disclaimer.
Disclaimer: In these and the economy series I will discuss various economic systems that have existed or can potentially exist, and their demonstrable, or logically deductible, pros and cons. No matter what pros and cons I state for anything, they are not an endorsement or condemnation of the economic system itself. These are for informative purposes for worldbuilding and nothing else.
Infinite wants
I said I would talk about it, so here it is. You probably sit now in your computer chair or lie in your bed, or however you read this, thinking along the lines of “What, I do not want everything and more constantly! I have a fixed amount of wants! Once sated I want nothing else,” to which I would call you a blue faced liar if I didn’t think you actually firmly believe it. It is okay it certainly feels like we have finite needs in any given moment. Now, think back, there was once in the distant past, maybe even your childhood, teenager years, even recently, you had this thing you absolutely wanted. A toy, a game, a car, a bike, it can be anything. You dreamt, you desired, you worked hard or got it as a present from your family! Huzzah! Life is now good and all is well for all eternity!
Except it wasn’t, the thing lost its novelty, you might over time have grown tired of it, or you still used it and enjoyed it, but it was no longer the big thing. Instead, in your mind, a new thing started bubbling, a new thing you wanted. A new grand project of a thing that you desired. One of your desires had been sated, and in its place was content for a brief time, but in the end, it was replaced only by a new desire for yet another thing. This is why the wants, the desires, are infinite. No matter what we get, no matter what we have, we always keep looking for what we do not have and start to desire it. This is not a bad thing in of itself, nor is it good in of itself, but it is a fact of life.
But if everyone gets everything they wanted, there would be no earth left, as all resources would be used up within a generation of all new desires.
Finite resources
No matter what kind of society we have, there are only finite resources (the ideas of replicators will be addressed later in the blog). However, how it is finite changes with time.
Pre-machines
In the old days, this is obvious. Only so many people can mine, only so many can cut wood and so on. All resources are severely restricted. Everything has to be extracted by human or animal labour, and preferably both. This is why in the old days, a lot of metals, which are hard to acquire and harder still working, were so highly valued (economy!), and it is better to fix something than get it new.
Machines on a world
Humans are here today. You’re stuck on your little world and have tonnes of machines that are tearing through the world trying to gain all the resources they can. As the machines improve, prices drop, manufacturing improves, prices drop. Bigger, better, MOAR! But you still only got your own world! And some metals and materials you so deeply desire are rare and hard to get, so you need to do even more mining just to acquire them. This illustrates that as technology improves and you discover more and more things you can use and their properties, what has now become easy is no longer the bottle necks, the new stuff is that you are struggling to figure out and find enough of.
Machines through space
Maybe you imagine you have the entire solar system, maybe you are like us Limaces and have a vast interstellar empire? Surely there are more than enough materials now! Not so fast there, or I’ll sick Bob on you! Yes, you can mine, and as you mine, you will gain more material to mine, and so on, and eventually, you will have enough to mine for all the material imaginable even within a singular solar system. Finite resources still will haunt you. It takes time to send things through space and processing still takes effort and energy. Yes, you can keep building up and so on, but even then, resources are still finite, though it can for all intents and purposes, for you humans, seem infinite.
At this point, it is honestly really hard to predict how things will go, as by this type, you will be Kardeshev type 2 civilization which is extremely difficult to predict and understand. The best prediction I can make is that there will come a breaking point where the wants keep mounting, and either ingenuity or resources will be the breaking point to create scarcity.
This is honestly so hard to predict and understand for us that I strongly recommend against having societies where everything has no more scarcity. Introducing some other mineral, material, anything that is scarce will help. Scarcity is a great source of conflict and worlds, and stories need conflict and sources of it. Even if the known periodic table stops being scarce, having new made up elements being scarce can solve a lot of the problems here and is one strategy I have chosen in my own world.
Solutions
Now we have infinite want and finite resources, assuming you followed my advice before. How do we solve this issue of resources, production and distribution? There are multiple methods that have been used, and I will lay out the most common ones, but there are more that have existed.
Feudalism
This one is common in fantasy, but it is often misunderstood, as it is wrapped up in a political structure and much more. Economically, it is best understood as a land distribution hierarchy. One has to understand that in eras where feudalism was used, about 900 CE to 1500 CE, the fundamental resource was land because agriculture was the dominant need for the society. Food was the most limiting factor, and the more land you had, the more land you controlled, the more resources and food you had, and the more power you wielded. This is one reason why conquest was so popular back in those days, but I digress. The land was distributed in a hierarchy where the king or emperor technically owned everything and then bestowed the land to those underneath in exchange for their vassalage. I say technically because due to the nature of this division of land to others, it lends others control of it, even if they are underneath you, and if they get too peeved, they might decide it is no longer yours and fight for it. Assuming they’re content, they then in turn bestowed it on those below them, and so it went until you had the local lord or lady that gave it to the farmers that worked it. In exchange for working the land, a fraction of the harvest was given to the lord and lady, who may pass it upward, and so on it went. So the economy became focused around what these nobility needed, and in turn their farmers. What didn’t support them was generally ignored. The base thought in these economies is “Land is the fundamental economy”.
Mercantilism
As agriculture progresses and land starts producing an ever increasing amount of food to feed an ever growing population which are starting to move into cities or towns and do other jobs, the land’s value as a fundamental resource dwindles severely and other things start gaining more value. Given this era used silver and gold as fundamental currencies, and there were limited supplies of them, buying things from other nations meant your supplies of precious metals shrunk, while exporting meant your supplies grew. When you connect the economy and money to a substance or item of finite supply, such as precious metals, it seems obvious that losing it will only damage your economy as a whole. This is the central thought of Mercantilism: “The size of the economy is the supply of the central currency’s commodity”. This is why mercantilism is a model that tries to minimise imports and maximise exports. All nations that subscribe to this will try to be as self-sufficient as possible. This is one of the driving forces of colonialism in its early stages; by colonising and taking the resources of foreign lands, you can grow your abilities to manufacture everything you need in the homeland, plus it creates larger markets you can export to, and thus push more currency toward the homeland economy. Huzzah!
Market economy
This is often lumped together with Capitalism, but they are not quite the same. Market economy is the idea that what should be produced, and in what quantities, shall be determined by the market. Here “market” refers to the area where the population and all entities that can engage in the economy can decide whether to buy a product or service for the given price given (how currencies work and value will be discussed later). If things are sold faster in the market than it are produced, the market has chosen that more of it needs to be produced, and if it lies around unwanted, the market has chosen that it is overproduced. This is the central tenet of market economy, and it is not incompatible with many other systems. Socialism is often considered incompatible with it, but in fact, they are not. Even the aforementioned systems of feudalism and mercantilism have market economies in them at places.
An issue with market economy is that it can respond incredibly poorly to sudden shocks and be thrown entirely into disarray by a sudden change in perception. This change in perception might be based on real things or imagined due to rumours. So the market can suddenly decide something is underproduced when in fact, it is not if everyone calmed down, but of course, they don’t, and the producers can then erroneously react accordingly and ramp up production, but by the time it hits the market, it is now overproduced instead.
Command economy
Similar to market economy being tied to Capitalism, this one is strongly tied to the idea of Socialism, but they are not necessary to be tied. All a command economy means is that there is a central authority, unlike a market economy where all participants of an economy decide, that dictates what is produced, how much and at what rates, where and how. The strength here is that if the central authority has all the necessary information and ability to process, it can be incredibly efficient, as it doesn’t need to guess what the market wants. This assumes, of course, a central authority could ever possess this level of information and have the manpower to sufficiently predict things. These are huge things to assume, and when a command economy fails, a black market will rise up in an attempt to compensate for the imbalances in the flawed productions demanded by the authority. This will not solve the fundamental issues if they arise, but it will be there as a market economy sneaks in once more.
Capitalism
I will re-iterate, capitalism and market economy are not one and the same. Capitalism simply means that the means of production, factories, stores etc, are to be privately owned and not by the state. You can have a capitalistic system with a command economy where the state dictates the industrial sectors and all involved to produce the required amount of goods and can even set up specific goals for each sector or producer to produce, and then it is up to them to fulfill their quota, all while it is private people owning all the means. Due to the nature of ownership and the scaling with time, where the private owners gain more money and use it to acquire even more capital to produce more, this system has over time the effect of concentrating capital (means of production) in an ever shrinking amount of people which is why many countries try to limit it.
Socialism
Once more, say after me, Socialism is not a command economy! Socialism, and even communism, which comes later, are complicated topics that involve sociopolitical aspects as well; here I focus only on the economy of it. Socialism says that the means of production are to be owned by the people/public and not a small oligarchy of people labelled “capitalists”. The capital is to be as close to the workers that do the actual production as possible. There are many forms of socialism that never took off that advocate market economies. A lot of early believers in it were for market economies and democracies and even viewed socialism as a necessity to maintain both the market and democracies.
Communism
Of course I have to bring up the big boogie man. Communism is a flavour of socialism, no doubt about it. The crucial point in this is that the state is labelled and considered the representative of the people in general and thus may act in the public’s interest. How well that goes is a different story not for here. This is why they generally adopt a command economy: the state is the people’s representation, it represents the market, the needs, the everything. Thus it takes a command economy and also seizes all the means of production, capital, for the state to control. After all, they are the people in their eyes, and thus the state gets to control it all, means of production and the choices of production.
Mini Practicum: Tsxobjez
A species I created for my universe is based on socialist ideals. They have their own socialist economy which I have based around the concept of syndicalism. Their government is not authoritarian but a form of democracy (which I won’t go into here), but they have a market economy based on socialism where the workers of factories and stores etc, are the principal owners (for the most part). Details will come in a later proper Practicum post.
Summa Summarum
These are only a few economies and fundamentals to think on. It is not an exhaustive list, or even perfect. When you do your own economies in the world, the fundamental question is always what to produce, how much, and to what ends. These decisions can be decided in many ways, and which you pick will depend on the culture and people you are trying to create. One thing to pay attention to is that no matter how much one wants, command economy and market economy are on a spectrum, and there exists no system that is purely one or the other. Even the state wanting to spend on military means it is commanding certain productions, even if it is a small fraction of the entire economy. Be creative in where on the scale your economy sits, and what style, flavour and beliefs surround it! More will be done in subsequent posts. Here is an example of an economic system I have developed for my universe of Stellima.
Want to dive into a discussion about Stellima or the art of writing on Discord? We’d love to have you! And if you have any topics you struggle with or that you would like to suggest for a future blogpost, we’re open to suggestions!
Interested in supporting our work? Join our Patreon and become a part of Stellima as a citizen of Mjatreonn! Or would you like to give us some caffeine to fuel our writing? Consider buying us a coffee at Ko-fi! Every contribution inspires our creativity and keeps us going. Thank you for your support!
Copyright ©️ 2023 Vivan Sayan. Original ideas belong to the respective authors. Generic concepts such as the basis for an economy and the economy types are copyrighted under Creative Commons with attribution, and any derivatives must also be Creative Commons. However, specific ideas such as the Tsxobjez species and all language or exact phrasing are individually copyrighted by the respective authors. Contact them for information on usage and questions if uncertain what falls under Creative Commons. We’re almost always happy to give permission. Please contact the authors through this website’s contact page.
We at Stellima value human creativity but are exploring ways AI can be ethically used. Please read our policy on AI and know that every word in the blog is written and edited by humans or aliens.
