Brooke Shaffer

Author, Ski Patroller, and Pasta-Eater Extraordinaire

World Building: Economy and Trade

In this installment, we’re going to talk about the economy of your world.  Now, no matter the system you’ve got set up for your people, every economy boils down to basic principles of supply and demand.  Someone has something that someone else wants and Person A isn’t likely to freely part with it.  Barring killing that person to get it, how does Person B obtain it?  What does he have that will compensate Person A fairly for losing that something? What economic, moral, religious, political, or other motivations prevent Person A from parting with it for no compensation?

In order to begin to answer these questions, we have to look at the roots of supply and demand.  What resources are available?  What resources are needed, and to what extent?  What resources are desired, even if they have no quantifiable bearing on quality of life?

For example, Sifura’s people live in the desert where resources are especially scarce.  The D’Bok live in a rainforest-type environment.  The D’Bok are just breaking into metalsmithing and are making bigger, better, stronger weapons which Sifura and the Xur need for hunting and everyday life.  The Xur don’t have much, but they do have knowledge of how to make basic cement and concrete, and they can build houses with these blocks.  In exchange for the stronger weapons, they can show the D’Bok how to build stronger houses.

Similarly, there are few birds in the desert, which mean few feathers.  But the Xur do have exotic desert fruits and enormous palm leaves.  The Xur have no need for feathers, and the D’Bok don’t have any need for desert fruit.  But they each want what the other has, which satisfies both parties and keeps trade relations good.

When considering these goods, consider why the people need them and why they don’t have any (or enough) of their own.  Why do they need to import the goods they need?  Why can’t they use their own?  Why don’t they have enough?  On the flipside, what circumstances are causing a surplus of goods that they are able to export?  What happens if this trade gets disrupted or changed in some way?  Why are the people dependent on this trade, or are they?

At the time that I’m writing this, there’s a big to-do about the cherry trade, with cheap cherry imports from Turkey destroying local markets.  Speaking abstractly, why is this important?  If the area is supposed to be “The Cherry Capital of the World” (which it’s not anymore), why do we need to import cherries?  Why can’t local cherries be cheaper?  What happens to the cherry market if imports are permitted freely, or if they’re cut off entirely?  What happens when local cherry farmers can no longer export their crops because they’re being outbid by foreign interests?  What would happen if our farmers suddenly had a bad year and lost all their crop?  What if the same happened to Turkey? What if we got rid of the dumping mandate and let farmers keep their entire crop instead of burning it?

Your story’s situation might be different, but these are things to consider if the economy is to play any kind of major role in your story.  True, you may not go into the nuances of trade and tariffs, but if your character is or knows a cherry farmer under this kind of pressure, it helps to have an understanding of what’s happening, how you got there, and what’s being done about it, for better or worse.

On that topic, you should also consider how product moves in your economy.  Does it travel by land, sea, air, or through space?  What is a reasonable expectation of shipping?  What resources are utilized to move product?  Do your people use pack animals and sailing vessels?  Motor vehicles?  Have they invented teleportation, so everything is basically instantaneous?  What happens when this movement of goods is interrupted?

In a more modern economy, what gives money its value?  Is it universally accepted?  Is it made of a rare metal or other material?  Are the people legally or morally obligated to use such currency?  How is the money’s worth determined?  Is it bound to a certain standard like the gold standard?  Is it competing against foreign currencies?  Is it just printed freely and so basically worthless?  How dependent is your society on its economy?  Would life come to a halt if the stock market crashed?  Would the farmers simply shrug and carry on?  How influential are foreign markets?

Also consider the bureaucracy involved in your economy.  Taxes seem to be a fairly universal evil.  Who and what gets taxed?  Why?  What kinds of regulations are in place to make it easier or harder to buy and sell goods?  How are monopolies treated?  Are they given special treatment or told to kick it to the curb?  What sorts of favors do large business get?  What about small businesses?

On that note, who is allowed to be a merchant or shopkeeper?  Can any old person just set up any old lemonade stand and be in business?  Do you need a specific license or some kind of training?  Is there schooling or apprenticeship involved?  How do the common people feel about the hoops one might need to jump through in order to be a merchant?

How do new inventions arise, and how are they received? Can anyone be an inventor? Are they allowed to sell their inventions and make money? Are there patents? Copyright laws? How do inventions evolve? What if two people have the same claim on an invention?

Are businesses and inventors allowed to compete? What minimum standards do they have to meet? What thresholds do they have to cross?

How involved is the government in the economy?  Do they sit back and let the market sort itself out?  Do they control everything and stifle innovation and competition through heavy-handed taxes, regulations, and a stranglehold on the use of currency? Do they strongarm businesses with threats of fines or imprisonment if they do or don't do something as ordered?  Is it something in between?  How do the common people feel about it?

Are there business or professional guilds that regulate certain trades or industries? How are the rules decided? Are they fair? How do people join?

What happens if there suddenly appears a deficiency in a certain market or industry?  How is the need filled?  If your people suddenly need ten times the metal they’ve been using because a war broke out, where and how do they obtain and pay for that metal?  Or any such resource that comes into demand too quickly for natural market progression to keep up?  What happens when a common item’s supply can’t meet the demand and people can’t pay?  What about when demand is low and supply is high?  How are the scales balanced?

What kinds of jobs are available to your people?  What is considered fair pay?  Is pay based on the job, or on the person?  What would your people consider good benefits, or does that not factor into your economy?  Do people retire, or work until they die?  How do the elderly or disabled pay for things, or is that part of social life?

What is your society’s attitude toward the economy?  Are they hopeful?  Anxious?  Depressed?  What do they consider successful in terms of business?

What is banking like? Is it a physical vault, or is everything digital? Are bankers honest? Corrupt? Do they prey upon the poor and unsuspecting? Do loans exist? How are they handled? What if someone can't pay it back?

How do the economies of different planets, countries, or even cities compare and compete? Why would someone want to do business in one place but not another?

When discussing markets, you also can't forget about the most famous one of all: the black market. Is it an obvious secret, or truly underground? Why? Who runs it? How are black market merchants treated by governing authorities? By the police force? By the general public? Are the goods truly illicit, or basic necessities that are otherwise denied to the people buying them on the black market? How are new customers or merchants vetted so they won't snitch to The Man?

Also consider basic necessities of life. Food and water. Do people have an inherent right to have access to food and water? How is this handled? How do your people ensure that everyone gets an equal share, or do they?

What do your people consider economic success? How do successful people treat unsuccessful people? Are there classes of people based on their wealth, and how are they divided, if at all? What is the gap between rich and poor? How much effort would it take for someone in poverty to get themselves out of poverty? What incentives are there to become successful? Are there perhaps more incentives to stay in poverty? For what reason, and how is it handled?

Dipping into the social aspect of things, how does the economy provide for people who can't provide for themselves? Is it a private matter? Is everyone taxed in order to provide care? How are they taxed, and by what means?

Who handles the money? How are they vetted, if at all? What happens if someone is caught embezzling or using the money for other illicit gain? What happens when the people at the top are corrupt in such a way and there is nowhere to turn?

Granted, most stories aren't likely to tackle especially nuanced economics, unless it's a Star Wars episode, because of course. But having a basic understanding of how economies function will help you in setting up a believable atmosphere. Economic strength plays a big role in government function and social life. Basic economics will also prevent you from setting up conflicting laws versus reality, for example, obscene taxes on everything that have driven the wealth and class gap to levels that are nearly impossible to breach and yet your normal character leads an average middle-class life in a typical middle-class neighborhood.

Play around a little, run some scenarios, go out to the market yourself and see what's what.

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