Building an Economy: Capital

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Last post, we briefly noted that economies need capital to generate wealth and resources. Sometimes this amounts to a circular definition: we use money to make money. Moreover, money is infinitely flexible: we can use money profitably in a number of ways. If you have a moneymaking venture, and opportunities shift, you can easily shift your money in response. And it doesn’t have to be money; other forms of capital are also flexible and easily repurposed, like a computer, or a college degree in English.

But some kinds of capital are very specific: an aluminum-smelting furnace is designed to do one thing, smelt aluminum. You can’t use an aluminum smelter to bake bread, or dig a hole, or weave cloth. The smelter is capital, but it is a form of capital that cannot be repurposed; and if you tried to sell it, you’re likely to get back a fraction of its original cost. That changes things a great deal. If you invest in capital that is inflexible—whether because it has only a few use cases, or literally cannot be moved once it’s built—you’re committed. You will resist changes that make your capital worthless, and you will likely continue trying to pursue the original venture even after it stops making sense.

This has effects in the economy narrowly, but also in politics. Michael Hiscox argues that if the prevailing technology of capital in a society is flexible, capital can readily shift between uses and the important distinction is between people with lots of capital and those with little. As a result, you would tend to see broad political coalitions based on class: capital against labor, or haves versus have-nots. Policies favoring particular industries would be of little importance in the political system, since failing industries will simply have capital shift out of them with little drama; more important would be how to allocate the economy’s gains in general.

On the other hand, if capital is largely specific and inflexible—for example, large factories built around a single product that cannot be retooled easily, or large sources of natural resources like oil—then it will be difficult to shift between industries, and the economy will see a wide variety of industry-based interest groups. In such a setting, the workers in these industries would tend to be allies of their bosses; if the factory closes down, both groups suffer. And each industry will fight fiercely to defend its position, to push policies that favor it, to defeat policies that threaten it, and to squelch potential disruptor industries.

In the real world, economies tend to feature a mix of flexible and inflexible capital, which complicates things. (Some oligarchs’ wealth might be based on flexible capital, for example, and others’ on inflexible capital, which would potentially put them in conflict.) And it gets even more complicated once you factor in other types of resources—particularly land and labor, which we will discuss in future posts. (But we’ll be going nice and slowly, not least because I’m still figuring out the best way to present all of these factors, and build them into a workable model!).

Still, just the difference caused by flexible versus inflexible capital is already a powerful tool for story conflict. Not bad, eh?

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(This post is part of Politics for Worldbuilders, an occasional series. Many of the previous posts in this series eventually became grist for my handbook for authors and game designers, Beyond Kings and Princesses: Governments for Worldbuilders. The topic of this post belongs in the planned second book in this series, working title Tyranny for Worldbuilders. No idea when it will be finished, but it should be fun!)

Building an Economy: The Struggle Between Urban and Rural

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As Trotsky noted, much of politics is about “who and whom?” In other words, which social group gets to benefit at which other group’s expense? This plays out vividly in the conflict between rural farmers and city workers—and governments often take the side of the city. This clash of interests can be a fantastic engine for fictional conflict, in your stories and your worldbuilding.

(This post is largely based on Robert Bates, Markets and States in Tropical Africa, with some flavor from Charles Tilly, James C. Scott, and David Graeber.)

We said before that cities play important roles in generating wealth and projecting state power, but that their size is limited by their access to food (or more abstractly, the energy surplus of the society). This also means that city dwellers and farmers have precisely opposite interests with regard to the market price of food: farmers are selling food and would like a high price for their crops, but city dwellers must buy food and want a low price.

Another limiting factor is capital, the fuel not for people’s lives but for their ability to produce goods and infrastructure. (This often takes the form of money, but remember that money is simply a convenient representation of other things people need—natural resources, machines, human labor, et cetera.) This presents a problem for state rulers in a dangerous world: if they want to develop modern industries and manufacturing in a country that is presently agrarian, where do they get the capital from? Often, the best available source of capital is the rural farmers—who might be individually poor, but still collectively have the largest available source of capital: their crops.

Worse, keeping the cities happy is often far more important to states than is keeping rural provinces. The reason is simple: the state officials are in the cities. If the state antagonizes a bunch of farmers a hundred miles away, they can do little to the state officials; but if the state antagonizes a bunch of city dwellers, the city dwellers will riot and perhaps lynch state workers or even overthrow the government entirely.

Thus, states trying to build up their cities must somehow balance off three competing priorities:

  • keep food prices low;
  • extract capital from the rural populace and use it to develop city industries (or perhaps to build a military, or other purposes); and
  • don’t leave farmers so poor that the food supply dries up.

In ancient times, this was done straightforwardly. Taxes were levied on food directly, which the government then distributed to its own personnel and to associated artisans; and people were also drafted for terms of forced labor (“corvée labor”), their own bodies providing the capital that the state needed. (The Bible, for example, attests to people being drafted for three months out of every twelve during the period of King Solomon’s great building projects.) If taxes became too burdensome, the people would resist, but as long as the state didn’t push the populace to the breaking point they could access a fair amount of resources with little trouble.

In more modern times, states had some fancier tools available. Robert Bates writes of postcolonial African states, which were able to make use of a preexisting colonial institution, the monopsony—a single buyer which farmers were obligated to sell all of their cash crops to at a given price. (As opposed to a monopoly, a single seller of a good.) This allowed states to extract foodstuffs from the rural populace at artificially low prices, which could then be sold to urban workers or exported for cash. (To do so, they often had to ban export of crops as well when the world market price was higher than what they were paying.) This meant that urban workers could pay low prices for their food, and the state had lots of capital available for economic development (or other, less useful purposes).

But how to sustain the farmers if you’re paying dirt-cheap prices for their goods? The answer was to subsidize farming inputs, such as machinery, fuel, and access to cheap credit. This had the additional advantage to the state that you could direct the subsidies to chiefly benefit your own supporters, often wealthy members of the government who entered farming specifically to soak up all the subsidies they could. In practice, therefore, a regime of subsidized inputs and too-low output prices would squeeze the peasants while benefiting large farms owned by elites.

(Meanwhile, farmers often resisted by shifting some of their crop production to goods not covered by the monopsony, and by selling some of their goods on the black market. Bates estimates that no more than 30% to 40% of agricultural production was captured by the monopsonies, on average.)

Such systems in real life often performed worse than expected, because the states’ programs of economic development were poorly run, frequently corrupt, and prone to pursue prestige industries such as heavy manufacturing that were impossible to sustain with the countries’ given level of technology, human capital, and infrastructure. But that is a story for another post. For now, the point is to highlight the conflicting interests between urban and rural populations—and how the state, trying to augment its own power and economic resources, will favor the city over the countryside.

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(This post is part of Politics for Worldbuilders, an occasional series. Many of the previous posts in this series eventually became grist for my handbook for authors and game designers, Beyond Kings and Princesses: Governments for Worldbuilders. The topic of this post belongs in the planned second book in this series, working title Tyranny for Worldbuilders. No idea when it will be finished, but it should be fun!)

Building an Economy: Types of Cities

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Part of worldbuilding is deciding on the map of your territory, whatever that looks like. (A vast empire sprawling across continents, or a tiny province nestled in the hills, or a series of star systems?) And part of that process involves deciding where the cities are. As my last post indicates, cities play a vital role in the economy—but they can also play a key role in politics directly. We’ll discuss that aspect in more detail in future posts, but for now, the key point is that cities can be built for several different purposes—and which purpose a given city was built for will explain where it is located geographically.

So this post will inventory those purposes, to set the stage for our future discussions of cities in politics.

(The concepts here are largely taken from Jane Jacobs’ Cities and the Wealth of Nations, as discussed in the previous post; Charles Tilly’s Coercion, Capital, and European States, AD 990-1992, which we’ll discuss more in the future; and my hazy memories of Fernand Braudel.)

First, we should define our terms. A city, as I’m using the term, is a large settlement of people, most of whom are not producing food. This distinguishes a city from a village, which might feature a few specialists like a blacksmith or cartwright, but will mostly consist of farmers or ranchers. By contrast, a city depends on the efficient production of food by others, and its transport to the city, often from the surrounding rural areas.

A society’s capacity to support cities will depend on the size of its energy surplus and its ability to efficiently transport and distribute food. Tilly notes that during the Middle Ages, perhaps 10% of the European populace lived in cities because agriculture and especially transportation could not support more. An oxcart of grain could travel perhaps a few hundred kilometers before the oxen had eaten more than they carried. The most efficient transport was over water, either by sea or on the rivers. It was not uncommon for waterfront warehouses to be filled to bursting with grain that could not find a buyer, while a few hundred miles inland villages were starving.

By contrast, today over 80% of the North American population lives in urban regions, and over 56% of the world’s population. We commonly transport food across the globe, and many people have never even seen a farm, much less worked on one.

So why do people live in cities, and why do they get built in the first place? For our purposes, we’ll focus on the following:

  • commercial cities,
  • industrial cities (loosely defined), and
  • administrative/garrison cities.

And of course, once a city exists and starts to grow, it often takes on aspects of the other roles as well.

Commercial Cities

Cities that naturally emerge to facilitate commerce and trade are the most common, the most “natural,” and the most easily sustained. The simplest model for a commercial city would be one that grows up in the middle of a collection of rural villages; all the villagers from the different villages converge in the center to trade with each other, and somebody has the bright idea to build houses there and set up permanent establishments to more efficiently cater to the villagers. It grows over time as more industries set up, and eventually could start trading with other more distant cities as well; eventually its size reaches the limit of what its food supply can support, but its wealth might continue to grow if more valuable industries develop.

The Platonic ideal of a commercial city springs up on its own, as a result of people freely coming to the city and setting up shop. People are attracted by the prospect of working in a trade, or markets for their goods produced back at the farm, or even finding a spouse. If economic prospects in the city dim, it will lose population as people head for greener pastures.

The biggest commercial cities are at the intersection of trade routes and along the coast or rivers (the highways of the old world), especially where a river reaches the sea or several rivers intersect—or even better, if they don’t actually intersect, but pass close enough together that one can transport goods overland from one river to the other, passing through the city in the process. Think of Paris, Lyon, London, Amsterdam, the great Italian cities, and the like.

Conversely, if the trade routes shift, the city might find itself cut off from much of its commerce. For example, when the railroads were laid down across the United States, they largely ran along flat terrain since trains could not climb slopes of more than a few degrees. Communities that had previously lived in hilly regions near small rivers found themselves sucked inexorably into the lowlands as trade patterns shifted, and many towns and cities dried up as a result.

Industrial Cities

By “industrial,” I mean a city whose main purpose is to provide a place for people to live while they work at their jobs. This could include “factory towns” or “company towns,” essentially the dormitories of a major company’s factory workers; mining camps, where a bunch of individuals collect together as they work in the surrounding areas; or even “college towns,” where a college or university is placed in the middle of nowhere and a town grows up around it to support it.

Naturally, the industrial city will be placed convenient to the site of the work, be it a factory, a region rich in raw materials, or the like. It will have to have access to a food supply, but will pay for it with the proceeds of its production, rather than as a hub for trade in general. In some cases, the industrial city itself is a center for food production (making it an edge case for our definition of “city” above), but differs from a large village due to its size and that it mainly produces for export.

Industrial cities are common in supply regions that disproportionately produce materials for export (see previous post). Over time, industrial cities may develop elements of the commercial city as well, which might form the basis of more durable prosperity; but if such development is limited, the industrial city will rise and fall with the fortunes of its industry.

Sometimes, industrial cities will emerge spontaneously, especially of the mining-town variety. Other times, these cities will be built at the initiative of the cornerstone company or industry, which invests heavily in the city as a part of its production base and might even import workers from elsewhere. Sometimes, industrial cities can be built by governments trying to encourage particular industries or patterns of development, and sometimes they are populated by force—with slaves, or serfs, or other captive peoples carried off from their homes.

Administrative/Garrison Cities

These cities have little or no commercial basis, at least not initially; they are typically created and supported by governments, to project government power and authority.

Garrison cities are bases for military units; some might be in the heartland, where they can be easily supplied, but others might be placed on the frontier for defensive or offensive purposes. Often they are walled, or might be actual castles or fortresses. Such garrisons must be provisioned at great expense if they are outside the normal trade routes; sometimes they even grow their own food. A garrison would feature the soldiers themselves, plus their families and whatever camp followers or support specialists would be necessary, such as smiths or doctors. Depending on the garrison, other civilians might live there as well to sell services to the soldiers, hoping to drain the cash of a captive populace of bored young men (or women?) with little else to do.

(Some garrison towns might play host not to state military units, but to strong mercenary units.)

Administrative cities might overlap with garrisons, but are generally placed in the heartland. Their main function is to collect taxes, or otherwise enforce the laws. They act as nerve centers for the bureaucracy, often including the state security services if these are different from the military. While garrisons are placed where military necessity dictates, administrative cities are placed where the people are, the better to control them. People living in an administrative city are usually state functionaries, or those selling services to them. (Think of Washington DC, for example.)

Such cities produce few or no economic goods and rely on tax revenue, and when the state stops supporting them they wither away (unless they have developed a commercial or productive basis in the meanwhile). The exception is when a garrison city, or an administrative city hosting a police force, simply takes food from surrounding regions at swordpoint to support itself once the tax money dries up.

Cities and Power

As we noted above, cities can play multiple roles at once, and many do once they have existed long enough. But the initial location of a city is determined by its starting role; and once it takes root, it influences economic, political, and strategic changes around it. Cities are critical tools for the development of economic and political power, so where you put your cities will condition the conflicts that break out in your stories.

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(This post is part of Politics for Worldbuilders, an occasional series. Many of the previous posts in this series eventually became grist for my handbook for authors and game designers, Beyond Kings and Princesses: Governments for Worldbuilders. The topic of this post belongs in the planned second book in this series, working title Tyranny for Worldbuilders. No idea when it will be finished, but it should be fun!)

Building an Economy: Cities and the Wealth of Nations

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Suppose you’re writing a story that involves trade between cities, or maybe between a city and a rural area. Maybe your protagonist is a merchant, or a farmer selling goods in the marketplace, or the Lord Mayor. So you’d better have at least some concept for how a city economy works, and how cities interact with their surrounding regions. There is much to say about the topic, of course; Fernand Braudel (for one) wrote three massive books on cities and capitalist economies. But you’re not writing an economics textbook; you just want a simple yet powerful model to sketch out some background for your story. If so, you’re in luck. I love simple and powerful models, and here’s a good one.

Writing in the 1980s, the pioneering student of cities Jane Jacobs produced a short, scintillating book that should have been like a torpedo into the waterline of conventional economics, Cities and the Wealth of Nations. She argued that most national economic policy was wrongheaded, because it focused on economic activity at the national level, rather than at the level of the fundamental unit of economic activity: the city. Globalized supply chains of the type we are familiar with, on the other hand, don’t tend to produce regional prosperity, because they don’t generate complementary webs of economic activity in the places that feature nodes of the supply chain.

Needless to say, Jacobs’ work has not been popular among the business class or conventional economists. And many of her arguments get complicated by the radical decentralization of the internet. Still, especially for authors writing about pre-internet societies, Jacobs’ work provides a useful set of tools for understanding complex economic effects. If you want to feature economic change as a major contributor to your plot, read on.

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Jacobs argued that the main way that a city can generate sustainable prosperity is by developing local industries that produce things that the city formerly imported. This allows the city to internalize the profits that formerly went to the trade partners. But more importantly, it allows the city to develop webs of technical expertise and complementary industries, which it can then build on to grow related industries and replace more complex imports, and so on.

Meanwhile, the city does not import any less than it once did; it may in fact import more as it grows wealthier. But it does import different things than before (including innovative goods produced by other cities), raising its material standard of living. Imports thus play three roles: they are consumed; they are the earnings of successful economic development, and thus stimulate that development; and they are candidates for local replacement. (This makes them different, and more economically potent, than simply throwing money at a city in order to magically produce economic growth.)

(This echoes our discussion of energy surpluses as the spur to material and cultural development.)

As the city replaces imports, it exerts five kinds of forces on surrounding regions:

  • Enlarged markets for new goods from rural regions or other cities;
  • Increasing numbers and kinds of jobs in the import-replacing city;
  • Displacement of former city industries into surrounding rural areas;
  • New uses of technology, especially to increase rural productivity; and
  • Growth of city capital.

When these five forces are in balance, they tend to make the surrounding region more prosperous as well, anchoring a general growth in wealth and human flourishing. That is, a balanced city turns its hinterland into a city region. A city region benefits from the increased economic activity of the city, but is not distorted by it; it still produces more for its own use than for export to the city. But the availability of city markets for rural goods, city jobs for people who lack employment at home, and new industries spilling out from the city, along with new productive technology and the money to pay for its use, make the city region thrive.

The five forces often do not act equally, however. When one or two of the forces acts with disproportionate power on a given region, the region becomes distorted in characteristic ways.

A stagnant region, for example, features widespread poverty, a sluggish economy, and a low level of technology. If a nearby city becomes more prosperous, the stagnant region does not benefit. It cannot produce much that the city needs, and for whatever reason cannot support the industries that are being displaced from the city. What does happen is that the most productive and adventurous people living in the stagnant region pull up stakes, and move to the city to work. The stagnant region, already in a desperate state, becomes hollowed out as its workers leave. If workers send remittances home, that can help improve the standard of living of those still there; but only by funding current consumption. Such remittances don’t tend to generate local industries and economic growth, because the stagnant region cannot support new businesses or work the way that the city can.

In a clearance region, on the other hand, new technology makes production more efficient, displacing some of the existing workforce, but few or no new jobs are forthcoming. Many people are driven from the land or from their previous jobs, and they suffer as a result. The ones who are able to stay, on the other hand, benefit from the new technology and their improved productivity. For example, in the 1970s, India, seeking to improve conditions for the rural poor, sponsored the development of a bicycle-powered spinning wheel. Using it, a villager could produce as much yarn as twelve workers using traditional spinning wheels. However, the other eleven villagers, who had spent their whole lives spinning wool, had no other work to do; the new spinning wheel simply made them destitute, even as the first worker benefited. So India could not dare to encourage the use of the labor-saving device it sponsored.

If growing city capital and growing city markets combine in an unbalanced search for raw materials, a region can be transformed into a supply region, where economic activity is dominated by the extraction and transport of raw materials for export (like timber, iron, or coal). Without new local industries to balance out the economic effects of the city’s inexorable need for raw materials, most workers in the supply region will depend on supplying the one thing that the city wants. Extractive activity doesn’t tend to generate new webs of productive or commercial expertise in the supply region; the region instead goes through unproductive booms and busts as its main resource becomes more or less valuable. This is the “banana republic,” the “oil town,” where momentary wealth goes into expensive imports from the outside world that do not generate sustainable prosperity in the region itself. (Partly due to the “Dutch Disease” or “Resource Curse,” which I hope to discuss in a later post.) If the supply region is particularly unfortunate, its populace may even be enslaved by the armies of the cities that need its resources. The Congo Free State was a particularly tragic example.

Finally, some regions are lucky enough (or so they think) to attract an economic transplant. These are large factories belonging to huge companies trying to create a regional, national, or even global supply chain. However, transplant factories are not integrated into the local economy, but are like self-contained bubbles of productive capital, parachuted from the sky. Unlike factories that emerge organically in a city or city region, the transplant factory might employ local workers but does not depend on local support industries and so does not generate complementary economic activity or technological development. Specialized equipment and the technicians who get it working are flown in from the company’s home base; production inputs might come from another country, or several other countries; and the local workers don’t tend to learn transferable skills. Even though local governments often compete furiously to attract such transplants, they rarely end up generating broad growth as the governments hope.

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Now, Jacobs’ theory predated the internet, and even when it was written it had detractors. But for authors’ purposes, it gives a handy set of conceptual tools we can use. Five major forces that productive cities exert on other cities or regions; four examples of what happens to regions when those forces are out of balance. Easy to wrap your head around, but rich enough to generate lots of story texture.

Plus, material for new stories. (How many fantasy stories spend a lot of time on the trade between cities? I’d sure like some more.)

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(This post is part of Politics for Worldbuilders, an occasional series. Many of the previous posts in this series eventually became grist for my handbook for authors and game designers, Beyond Kings and Princesses: Governments for Worldbuilders. The topic of this post belongs in the planned second book in this series, working title Tyranny for Worldbuilders. No idea when it will be finished, but it should be fun!)

Building an Economy: Energy

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In my quest to give worldbuilders powerful tools to make their stories cooler, I’ve hesitated for a long time to tackle the subject of wealth and economics. Economics matters for politics quite a lot, and authors who want grist for compelling conflicts can find an embarrassment of riches here, so to speak. But how the heck do you turn such a complex subject into a useful model?

However, my recent post on the vicious internal politics of the Russian economy proved illuminating. I now think that the correct approach is not to try and jam all of political economy into a single model. Instead, we’re going to lay out several distinct lenses that you can pick and choose between, to organize your worldbuilding the way you want it. No one lens will tell the whole story, and we’re not going to try. But each lens will highlight a specific set of conflicts that can play out in economic behavior. In your own stories, you can focus on a single lens that clarifies the conflict you want to write about, or layer several lenses on top of each other if you’re feeling ambitious.

(This is similar to how we discussed empires in a previous post.)

We begin with the most fundamental level of economic analysis: energy.

(The following is largely based off of ecologist Joseph Tainter’s massively useful book The Collapse of Complex Societies. It also takes some from Lewis Mumford’s Technics and Civilization.)

By “energy,” I don’t just mean electricity or oil, although these are important. “Energy” includes any accessible way to turn a resource into work. The most fundamental energy source is food. If we don’t eat, we die. So, much of our activity is organized around producing calories and other nutrients that we can then consume. We invest the energy source of human labor and transform it into calories, which then are turned into more human labor to produce more calories.

Let’s say that it takes a full day’s work for a man to get enough food to feed himself. If so, the man would be in a desperate state: no clothing, no shelter, no leisure activities other than collapsing at the end of the day in total exhaustion. All activity would be directed toward getting food. A group of people in such a state would have a low level of culture, hardly worthy of the term.

Now, suppose that this group developed some way to get food more efficiently. It could be a new division of labor between male hunters and female foragers that raises the productivity of each; it could be finding a new, energy-dense food like tree nuts or buffalo. In either case, suddenly the group has a new surplus of food production. People have a few hours in their day to do something other than produce food. Or, the work of one person can now feed more than one person; so not everyone needs to gather food, and some people can devote their time to other kinds of work.

Note that the availability of an energy surplus presents options for how to benefit from it. Perhaps everyone gets to work a little less hard, but then devotes the rest of their time to leisure. The society that results would have about the same low level of material wealth, but might develop a rich culture of games and storytelling. Perhaps everyone spends less time gathering food, but they also develop different arts and crafts with the rest of their time; people might make better clothing and live in more comfortable shelters, and accumulate various prestige goods. Perhaps most people keep gathering food as before, but the surplus food goes to feed a small class of artisans who do useful work for the group: blacksmiths, potters, tanners. And perhaps another class of functionaries who do rather less work: chiefs, priests, poets, or professional warriors.

The development of a group and its culture depends on the availability of an energy surplus, its source, and its size. Possibilities for cultural development are very different if the average person works 12 hours a day to produce enough food for everyone, compared to 11 hours, or 3. How a culture responds to the availability of an energy surplus will dramatically influence its future development. Perhaps everyone will benefit, or perhaps some people will benefit from the surplus and others will work as before. And the manner in which they work and benefit could vary widely.

But back to the source of the surplus. A surplus can be generated in three main ways:

  • exploiting a new energy source;
  • using existing energy sources more efficiently or productively; or
  • allocating the surplus unequally between persons.

Suppose a farmer is working a small farm with hand tools. It’s grueling work and long. But then she gets the idea of yoking a donkey to a plow. Suddenly, she controls a new source of energy than just human labor: animal labor. The animal can do a lot of the work, and the farmer needs to work less hard, or can produce more food. And the animal eats food that people would not. The energy surplus grows.

Then, benefiting from the strength of her donkey, the farmer develops a new and heavier plow that can produce more food with the same effort. The energy surplus grows again.

Then she realizes that if animals can be made to work for a larger energy surplus, so can people. Slavery is born: slaves are made to work for more of their day than their owners would have, and the surplus is captured by the owners. The benefits of the energy surplus are divided unevenly. It gets even worse if the slaves are fed less than free people would eat; the energy surplus grows and the slavers benefit, but the slaves may waste away and die. The slavers would have to capture new slaves, perhaps by raiding other groups, perhaps by enslaving unfortunates within their own group.

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For most of human history, the main energy inputs were human labor and animal labor. Firewood too; the chemical energy from fire was used in cooking food and keeping us warm, and later for other things as well. The invention of the sail turned wind into an important energy source, which made ocean transport much easier. But then the gear was invented: suddenly, kinetic energy from other sources could be transformed into useful work. The windmill and watermill were able to replace labor that was previously done by animals. Then came the steam engine, and suddenly coal became a useful energy source. Then the combustion engine and the battery, then nuclear power, and so on. Each new energy source brought benefits with it, but also brought political changes—in part because the people who controlled that energy were different.

In our time, the computer has revolutionized all of society. In this model it is not a new energy source, but allows us to use existing energy sources more productively. It also changes the allocation of our energy surplus, as unskilled labor becomes displaced and technical expertise becomes massively more productive than at any previous time in human history. The rise of robotics is already having similar effects, and those effects will grow as robots replace more and more human labor. We now must ask what we will do, as a society, with all the available human capacity that is no longer needed for its former employment.

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This discussion was quite brief, but you can already see how it provides a powerful way to think of economic conflict in your stories. We can add another layer and ask what happens when energy surpluses suddenly shrink. Suddenly, societal arrangements that worked with a given level of energy become unsustainable. If you want to know what happens next, check out Tainter’s book. (The title is a spoiler, though!)

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(This post is part of Politics for Worldbuilders, an occasional series. Many of the previous posts in this series eventually became grist for my handbook for authors and game designers, Beyond Kings and Princesses: Governments for Worldbuilders. The topic of this post belongs in the planned second book in this series, working title Tyranny for Worldbuilders. No idea when it will be finished, but it should be fun!)

The Empire in “Star Wars: A New Hope” as a Failing State

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Writing a revisionist interpretation of the political structure of the Galactic Empire in Star Wars, that rejects the official canon (as it developed across the many reimaginings of George Lucas), seems like one of the more self-indulgent things for me to do—but here we are.

Continue reading

Interest Groups, Winning Coalitions, and an Autocrat’s Economy

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I just read a fascinating discussion of the inefficiencies of the Russian economy, and how they make political sense if not economic. Kamil Galeev, a fellow at the Wilson Center, looks at major Russian industries and divides them into three categories: “extractive” industries such as oil and gas; metallurgy; and machinery. He then notes that Vladimir Putin’s inner circle of KGB alumni typically control the oil and gas companies and other extractive primary-commodity exporters; the old 1990s oligarchs (not the main supporters of Putin, but holdovers who are grudgingly tolerated) control the metallurgy companies; and “nerds” with little political power control the machinery companies.

The reason for this, Galeev argues, is the same reason that mafias tend to control basic industries like avocado growing and olive oil: mafias are specialists in violence, not in running complex companies. They lack the expertise to manage anything technical, so they don’t try.

Similarly, members of Putin’s winning coalition have no expertise in running companies, so they were installed in the extractive companies—dead simple to run, easy to siphon money out of. The earlier cohort of oligarchs from the 1990s were run out of the oil and gas sector, but allowed to remain in control of metallurgy—a somewhat more complex area, that apparently is beyond the skills of Putin’s circle. The truly technical area of machinery manufacture, meanwhile, are run by the “nerds”: people with technical chops and little political pull. They are tolerated because the metallurgy and oil and gas sectors need a functioning machinery sector, but only so far.

As Galeev reports, when the ruble falls, the extractive exporters actually benefit, because they earn more rubles from the same amount of dollars. (Assuming that exports keep going, which obviously is less the case today.) But the machinery companies, dependent on Western technology and inputs, lose money. And in the case Galeev notes, when a mining-machine company tried raising the prices for its equipment in response, the Putin stooge who was buying the equipment instead started shifting his orders to a Czech company. But to do so, he first had to transfer the Russian technology to the Czechs so they could duplicate the machines!

This seems illogical. The mining firm is unlikely to save money by ordering at Czech prices, and ends up reducing Russia’s self-sufficiency in the process. But in the context of domestic power disputes, it makes sense: to pay higher prices to a “nerd” would mean to increase the power of the “nerd.” Putin’s winning coalition would rather harm the interests of Russia and of their own companies in order to preserve their own relative position in the power hierarchy.

This is an excellent example of concepts I discussed more abstractly in my worldbuilding handbook, Beyond Kings and Princesses. In particular, it ties into the discussion of selectorate theory and how rulers reward their supporters for keeping them in power. Other examples that come to mind are how many African countries, newly independent in the 1960s, tried putting in place industrial programs to build urban manufacturing industries by extracting resources from the rural farmers. In general, regimes are very much willing to wreck their national economies if by doing so they can improve their internal power position, and that of their cronies. I hope to expand on this topic in Volume Two.

What can we as authors take from this? First, always remember that for a tyrannical regime, relative power almost always matters more than absolute benefit. This shows up in domestic politics as well as foreign affairs. Second, it’s worth thinking about how to classify different parts of a country’s economy, in a way that helps you usefully organize the parts for your story needs. If you can come up with a relevant model that breaks the economy into two or three chunks, based on factors important to your story, it can clarify your thinking immensely.

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(This post is part of Politics for Worldbuilders, an occasional series. Many of the previous posts in this series eventually became grist for my handbook for authors and game designers, Beyond Kings and Princesses: Governments for Worldbuilders. The topic of this post belongs in the planned second book in this series, working title Tyranny for Worldbuilders. No idea when it will be finished, but it should be fun!)

Is War Good for States?

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Randolph Bourne, an American pacifist, famously wrote during World War I:

War is the health of the State. It automatically sets in motion throughout society those irresistible forces for uniformity, for passionate co-operation with the Government in coercing into obedience the minority groups and individuals which lack the larger herd sense.

Was he right? Only some of the time.

Recall the context. America’s entry into World War I gave the Progressive movement of the day, led by Woodrow Wilson (our first totalitarian president, and a key influence on the development of Fascism), the opportunity to dramatically reshape the relationship between citizens and state. Before the war, American government had a light footprint, and states jealously guarded their powers from Federal intrusion. But during the war, the Federal government greatly expanded its powers due to the wartime emergency; and it set a precedent which would be eagerly seized on during the New Deal fifteen years later.

In early modern Europe, frequent war was a great spur to the development of powerful states, but also to the increasing role of popular representation in government and strong social-welfare policies. As the eminent political scientist Charles Tilly put it, “War made the state, and the state made war.” His thesis, briefly put, is that rulers desperate to raise soldiers and money to pay them had two options: ratchet up their control over the populace and squeeze them until they comply, or else offer them valuable rights and privileges to get their willing cooperation. (Or both.) The enduring effect was that the state’s power over citizens grew, but in some states frequent wars also laid the groundwork for expanded political rights.

The story gets more complicated, of course, but it seems to be a recurring pattern. Peter Turchin argued convincingly that most empires first developed under the pressure of frequent barbarian invasions, which forced the rapid growth of strong state structures to defend against them. More contemporary examples come easily to mind. So is that the end of the matter? Should all states be fomenting wars in order to extend their control over the populace?

Not quite. Miguel Centeno reminds us that not all states grow stronger during war. War is a tremendous stressor, and some states crack under the strain. States that began the war with weak institutions, with tenuous control over their populaces, may never achieve the longed-for unity in the face of the enemy. Instead, the desperate need for money and manpower may force states into bad deals, where they accept long-term problems for the sake of short-term survival. Different factions may harden among the people, undermining the development of healthy patriotism and breeding disloyalty for generations to come. Struggles over government power and taxation may hobble the state likewise.

The key question seems to be: is a state that is facing wartime stresses stable enough to survive them and thrive? If so, then its power will likely grow, justified by the emergency but lingering long after the war is over. If not, then state dysfunction may be the result.

(Of course, in real life you can get both outcomes, in different domains. The military-industrial complex is many things, but a rational exercise of government power is not one of them.)

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(This post is part of Politics for Worldbuilders, an occasional series. Many of the previous posts in this series eventually became grist for my handbook for authors and game designers, Beyond Kings and Princesses: Governments for Worldbuilders. The topic of this post is at the intersection of the planned second and third books in this series, working titles Tyranny for Worldbuilders and War for Worldbuilders. No idea when they will be finished, but they should be fun!)

Empires versus Nation-States

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What’s the difference between a country and an empire?

It depends. Annoyingly, “empire” is one of those terms that picks up several different meanings, and gets used in different contexts. So first we have to decide, “Why do we want to know?”

In this blog, we focus on worldbuilding for fiction writers. So to me, “empire” is useful as a concept when it helps you think about complex ideas in a straightforward way, and make cooler invented worlds. Let’s talk, therefore, about three lenses through which we can think about an “empire” compared to a “state”: indirect versus direct control; multi-national populations versus a single nation; or rule for the benefit of the imperial class/caste at the expense of the subject peoples, versus rule for the (nominal) benefit of all subjects.

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One way you can think about an empire is that it controls a bunch of smaller cities or even states, but not directly. Instead of levying taxes on individuals, an empire might levy tribute on an entire town, or even a whole region or state. How the tribute is collected, and how its burdens are allocated between people or social classes, is not the empire’s concern; these decisions are usually made by local authorities from the native population. Similarly, law and order might still be run by the natives, subject to the dictates of the empire; if matters are getting out of hand, an imperial legion might sweep through to put some heads on spikes, pour encourager les autres, and perhaps replace the local leadership with more cooperative local personnel. But usually, the empire doesn’t want to be bothered, beyond a necessary minimum.

By contrast, a state (in this lens) has direct control over its populace, applying taxes and laws on a more granular basis. Where an empire wants most of the benefits of dominating people without having to worry about controlling them, and having a large staff of functionaries, the state exerts more control, with a more developed staff of bureaucrats and enforcers to do the controlling.

This is just one way to think about empires. But if this is the distinction you are looking for, you now have terminology to express what you mean.

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Another way to think about an empire is in contrast to the nation-state: where the state is inhabited predominantly by people who are part of a single nation, with a shared history and culture and often a shared language. The state is seen as the agent of the nation; the role of the government is to see to the nation’s welfare. The state of Japan is made up of the Japanese nation, for example; people from other nations might be allowed to live in Japan (if they behave themselves), but can’t really become Japanese. And the role of the state is to defend the Japanese people and further its goals. Nearly the same could be said about Finland, or Nepal, or many other states.

An empire, by contrast (in this lens), is multi-national. Think of the Hapsburg Empire (AKA Austro-Hungary), a royal dynasty ruling over several different nations (which typically despised each other). The Roman Empire, too, ruled over many different peoples, using the carrot of Roman citizenship and the stick of the Legions to keep the whole thing together. If an empire of this type is to justify itself, it cannot be with reference to nations; perhaps the empire will claim some sort of functional value, or a unifying mission like the Pax Romana, or (like the Hapsburgs) it might simply claim to exist from the privileges of the ruling family at its head.

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In the third lens, what makes an empire is that it dominates other peoples for the benefit of the original people who formed the empire, whether or not the other peoples benefit as well. If taxes, slaves, and commerce are drained toward the imperial homeland, while the welfare of the conquered peoples is neglected or seen as an afterthought, we have an empire in this sense.

A clear example is the Congo Free State. Massive amounts of natural resources (primarily rubber) were shipped from the Congo back to Europe, and rivers of native blood were shed in the process, often with very little purpose. (The Belgian Parliament concluded in its investigation that the native population had been cut in half during the Free State period.) The Force Publique did build roads and other infrastructure, but only where it was necessary to improve resource extraction. They largely did not train native officials or improve native health or education.

By contrast, a state (at least ostensibly) cares about the welfare of all its citizens. This may not hold in practice—favored ethnic groups or social classes, or particular provinces or cities, might get the lion’s share of state largesse—but this would be seen as a deficiency in the state, a failure to carry out its duties to the citizenry. A Nazi official would laugh if you suggested that he ought to care about conquered French or Poles or Ukrainians as much as he cares about Germans; but even during the darkest days of Jim Crow in the United States, segregation was justified as being ultimately for the benefit of the oppressed black community (however absurd an argument this was). Supporters of segregation could not baldly state that they wanted to keep blacks as an underclass, at least not in public, because the United States is formally based on the equality of citizens.

An empire dispenses with such hypocrisy, at least to some degree. The conquered peoples are seen as livestock to be farmed by the empire, and little more. The British Empire at least had pretensions to benefit the locals, a bit; the Spanish Empire scarcely bothered.

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You’ll notice that these lenses need not all be true at the same time. Many empires did not levy tribute on cities or provinces, but collected taxes from individuals; similarly, even some states would levy taxes on a whole city or village. Many states are not nation-states, like the United States or Canada, and some combine several distinct nations, like Switzerland or Belgium. And some empires act on behalf of a single nation, such as the German Reich. And whether a state acts for the benefit of all its citizens is always a fraught question.

But now you have a rich series of concepts you can apply in your worldbuilding. You can pick and choose to express what you want your setting to look like, how you want your empires and states to act, and where you want the conflicts to be.

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(This post is part of Politics for Worldbuilders, an occasional series. Many of the previous posts in this series eventually became grist for my handbook for authors and game designers, Beyond Kings and Princesses: Governments for Worldbuilders. The topic of this post belongs in the planned second book in this series, working title Tyranny for Worldbuilders. No idea when it will be finished, but it should be fun!)

Unity, Division, and State Formation

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One of the tricky things about recognizing a country that is becoming dysfunctional or tyrannical is that many tyrannical practices are the same as the normal practices one would find in a “healthy” country, but amplified to unhealthy levels.

A key example is patriotism/nationalism on one hand, and conflict between groups on the other.

For a community to work, its members need to feel a sense of shared fate. A selfish attitude of “I got mine, you can go to Hell” must be seen not only as immoral, but actually against your interests—because if members of the community are harmed, the community as a whole is harmed as well, and therefore the community is less able to advance the interests of any of its members.

A state, trying to create a sense of political community among many, many people who have never even met, does this by fostering patriotism. That is, the welfare of other Americans (for example) would be important to me because they are Americans, even if they are richer than me or poorer than me or a different skin color or a different religion. To create a sense of patriotism usually requires creating a national myth (loosely based on the truth) about our shared mission on the planet, our creed, the heroic circumstances of our founding. Citizens must be proud of the nation before they can be proud of the state, which (ideally) is an expression of the political values of that nation.

But a national myth fostering patriotism can very easily shade into a state ideology justifying compliance, and finally become sheer propaganda justifying whatever acts of tyranny the state chooses to carry out.

One waypoint in this direction is when political disagreement with the ruling ideology is condemned as disloyalty to the nation. This might not be tyrannical, depending on the nature of the disagreement (anyone agitating for blacks to be returned to slavery, for example, gets little sympathy from me if the cops break down his door), but it should perk up one’s ears at the very least. Political opponents can be reasoned with, bargained with, compromised with. Traitors are hanged.

For a nation to avoid tyranny, it must preserve the ability of its members to disagree about political things, without jeopardizing the larger sense of shared fate that unites them. This is tricky, since we have a tendency for policy disputes to become partisan chasms. Seymour Lipset argued that for a democracy to work well, it must feature cross-cutting cleavages: the same people who disagree with each other on Issue A might be allies on Issue B, and so continue to see each other as people and potential comrades. By contrast, for every dispute to map itself along an existing party cleavage was extremely dangerous, as political disputes harden into cultural enmities. (Obvious analogies to the present situation omitted.) (See a fairly abstract discussion here.)

On the other hand, if political disputes rage without end or without moderating tendencies, to the point that the sense of shared fate is lost or never existed, this can also lead to a form of tyranny that has become proverbial: divide and conquer. In short, if a state rules over a collection of groups in endless conflict with each other (policy conflict, ethnic conflict, etc.), then it can credibly claim that only the power of the state can protect each group from the others. Thus, the people must acquiesce to whatever injustices the state chooses to perpetrate, because facing the wrath of their neighbors without the state’s protection would be worse. Yugoslavia, before its catastrophic breakup, would be a good example of this.

More diabolical would be for the state to deliberately encourage conflicts between its communities, to encourage dependency on itself and make a broad alliance of oppressed peoples unlikely. In then-Zaire, for example, Mobutu put in place policies designed to foment conflict within each province between its “autochthons” (so-called indigenous peoples) and those other communities arbitrarily decided to be foreign intruders. Those policies allowed Mobutu to maintain his grip on power, but after his eventual overthrow they culminated in horrible civil wars.

(Relatedly, a political leader might foment conflict between two communities even if he only leads one of them, in order to make cooperation impossible or even to drive the other community away and thus ensure that no one can challenge his power.)

Worst of all, perhaps, would be a state that manages to do both: enforce a suffocating official ideology, while at the same time turning all of its people against each other. The Soviet Union is probably the most terrible example we have of this so far; children were turned against parents, neighbors gleefully betrayed each other for a better apartment, and preserving one’s ethnic and religious identities was made tantamount to treason.

A tyrant might demand conformity and compliance. But the tyrant might also turn neighbors into enemies, cynically using social conflict as a lever to maintain power. Or both. As citizens and authors both, we should keep this in mind. Political conflict needs a way to be concluded, and for opponents to reconcile, or the social fabric will fray.

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(This post is part of Politics for Worldbuilders, an occasional series. Many of the previous posts in this series eventually became grist for my handbook for authors and game designers, Beyond Kings and Princesses: Governments for Worldbuilders. The topic of this post belongs in the planned second book in this series, working title Tyranny for Worldbuilders. No idea when it will be finished, but it should be fun!)