Category Archives: Politics

Internal Discipline in Rebel Movements, Part I

13 Thursday Jul 2023

Posted by in Politics, Politics for Worldbuilders, Revolution, War

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We fiction writers often feature resistance movements in our stories. American culture in particular lionizes rebels and guerrillas, thanks in part to our rose-colored cultural memory of the American Revolution on the one hand, and some people’s idealized picture of socialist revolution in the Che Guevara mode on the other.

In real life, most resistance movements fail before they even get started. Of the ones that get established enough to fight a serious war against the state, most of them lose—and before they lose, many of them victimize civilian populations more brutally than the states they try to overthrow.

Yet some resistance movements are protective of civilians, and maintain internal discipline to ensure that their foot soldiers do not steal or murder with impunity. Some of them end up getting corrupted by success and start predating civilians; but a few manage to stay moral all the way to victory.

What makes the difference? Why do some rebel groups routinely harm civilians and others don’t? And more to the point, how can we writers use these concepts in our stories?

Jeremy Weinstein, in his book Inside Rebellion, provides an unexpected answer that becomes utterly compelling as he lays out his evidence. Weinstein argues, on the basis of considerable fieldwork in Peru, Uganda, and Mozambique as well as analysis of the literatures on several other civil wars, that the key difference is the level of resources available to the rebel group at its inception.

If a group initially has very few resources (primarily money, food, and weapons), then it must quickly build links to a broader civilian community in order to survive. The need to maintain relationships with the populace then impels the group to develop strong internal discipline and governance, and to behave well with civilians (except for selective killings done for strategic reasons, for example executing collaborators).

If, on the other hand, a group has access to significant resources—money from a state sponsor, or from the drug trade, or from natural resources, for example—then it has much less need to maintain good relations with the civilian populace. That, by itself, doesn’t force a group to harm civilians; but the easy availability of resources tends to lead a group to pay its members well, which attracts a different (and less savory) caliber of recruit than would agree to join a poor, weak resistance group without resources.

This is not a simple argument of “rich group kills civilians, poor group does not.” Weinstein carefully lays out the cascading effects of that difference in initial conditions as they bear on five distinct problems faced by rebel groups (and by governments too, although that is outside of Weinstein’s scope):

  • Recruitment;
  • Maintaining discipline;
  • Managing civilians in areas the group controls;
  • Punishing people for cooperating with the enemy or otherwise shirking; and
  • Resilience (that is, maintaining your membership and its governance structures over time)

*****

Before I explain these, let me just take a moment to rhapsodize about good theories. (Because this is my blog, and I can do what I want!) The world is full of thorny questions, and equally full of bad answers to those questions—as H.L. Mencken put it, “[T]here is always a well-known solution to every human problem—neat, plausible, and wrong.” It is a true joy to read a theory that suggests an answer that is utterly unexpected, and yet as you read the argument, it addresses so many features of the initial problem that the theory seems impossible to refute.

Obviously, later work can improve on even good theories. But some theories stand the test of time, and persist in their unaltered form despite the best efforts of later scholars. (Einstein’s theories are good examples. In a different domain, so is the work of Mancur Olson on collective-action problems.)

Not to suggest that Weinstein’s work is definitely in that latter category. But if it were, I wouldn’t be surprised.

Now back to our regularly scheduled program!

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Weinstein’s model builds from the starting assumption that there are two kinds of people who might join a rebel movement: “investors” and “consumers.” Investors are willing to incur significant short-term costs for the sake of the long-term goal of victory. Consumers, on the other hand, are interested in gaining benefits today from their association with the rebel group: a salary, a gun, prestige, the chance to loot plunder, the chance to harm neighbors they don’t like. Which type of recruit predominates in a rebel group has powerful effects on the development of the group.

If a rebel group is poor, it cannot offer immediate benefits to members. As a result, consumers would tend not to join the group, having little reason to. The group’s only option, therefore, is to attempt to appeal to investors—that is, develop links to a civilian population with which it shares ethnic, communal, or ideological ties to which it can appeal to gain support and foster loyalty. This means that the group will have to build institutions of self-governance, so that the civilian populace has reason to trust that the group will protect civilians from the government and from its own members.

It is important to emphasize that getting the support of a civilian base is a strategic imperative for poor rebels, regardless of their political program, ideology, or even personal standards of morality. Those poor groups that don’t manage it will simply wither away from lack of recruits or lack of food. This task will be easier with a rank-and-file made up of investors, who are relatively more willing to submit to discipline that serves the group goals, than it would be if most members were consumers and therefore willing to break the rules for personal gain.

Weinstein also finds that poor rebel groups spend a lot of effort filtering out low-quality recruits, despite the difficulties in finding manpower. Such groups have far too much at stake to risk antagonizing civilians with undisciplined behavior, like the National Resistance Army in Uganda and the Shining Path in Peru (except for the Shining Path in the Huallaga Valley, which became enmeshed in the cocaine trade and therefore followed the “rich group” trajectory).

If a rebel group has significant starting resources, on the other hand, it will be able to rapidly gain recruits by offering them steady pay. This tends to attract a much higher proportion of consumers. It also means that the strategic imperative to gain the support of civilians is largely absent: the group can support itself even if it is hated and feared by civilians, as long as the money or guns keep rolling in. As a result, the group will spend far less effort appealing to the populace, and will also spend less effort on filtering out low-quality recruits because it incurs little penalty from undisciplined behavior that harms civilians.

Moreover, even if the group wanted to stop its forces from harming civilians, it would have a hard time doing so: because most of its members are consumers, i.e. out for immediate gain, they will tend to resist orders not to predate on the civilian populace. So the group will tolerate bad behavior by its troops towards civilians in exchange for demanding obedience on the battlefield.

Now, you might wonder what happens if a group with significant resources nevertheless managed to resist the temptation to behave badly—and instead managed to only recruit investors, impose strong discipline, build links to the populace, etc. In theory, this is possible. In practice, however, the tremendous risks that rebels take when opposing the government would make it almost impossible for them not to take the quick and easy way of recruiting a bunch of thugs to boost their manpower, if they had the cash available. Remember, most rebellions fail miserably. Immediate survival often weighs more heavily on the minds of rebel leaders that the problems of tomorrow that they are unwittingly setting into motion.

*****

The foregoing is only the first half of Weinstein’s discussion, and this post is already quite long. In future posts I will summarize his discussion of how “rich” and “poor” rebel groups differ in how they govern civilians under their control, how they punish civilians for resisting their control or for apparent collaboration with the enemy, and how they maintain their own membership over time. But you can already see where the trend is going.

******

(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 fourth book in this series, working title War for Worldbuilders. No idea when it will be finished, but it should be fun!)

Banking and Economic Development

09 Sunday Jul 2023

Posted by in Credit, Economics, Politics for Worldbuilders, State Formation

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If you think about the differences between a poor peasant society, a relatively affluent society such as an 18th-century English city, and a 21st-century technological society as we experience in much of the West, one of the big differences is the sheer amount of infrastructure that we have. If you think about roads, power plants and power lines, sewers, networks of schools and hospitals, and on and on, it’s a little bit staggering to think about how sheer stuff had to be built to enable our modern lives—and how much money had to be spent in order to build it all.

In poor societies of yesteryear, roads are typically mud tracks. Electricity does not exist, and people often had to cut their own firewood. What “public” facilities there were, such as single-doctor clinics, are small scale. This is not merely a question of technology. The Roman roads were tremendously useful tools of power projection (and consequently, tools of commerce), yet they remained the gold standard for perhaps fifteen hundred years in Europe because few people wanted to pay the huge amount of money it would take to extend, or even maintain, the road network. Even in major post-Roman European cities, there were no paved roads until the 13th century. (Baghdad had streets paved with tar beginning in the 8th century.)

What this means is that to take a society from abject “backwardness” to a high level of “development” (in the sense of Alexander Gerschenkron) takes not merely technology, or manufacturing ability, but the money and other resources to build the massive amount of stuff necessary.

Some types of development can be done gradually, in a decentralized manner. For example, local communities can each build a school, without necessarily needing to coordinate with other communities or a national authority. However, other types of development functioned more effectively if they were coordinated at the national level. (Or at any rate, that’s how it tended to work in our actual history, with the types of technology that we had to work with and the kinds of conceptual models that our national planners used, given the role of massive scale in the 19th and 20th centuries.) For example, the electrical grids in 19th- and early 20th-century Western European countries tended to be much more stable than those of America at the time (and even today), because the American grid was a patchwork of local grids built by local power companies, whereas the European grids were built according to a national plan, with money and resources mobilized from the entire country.

One key element in this was the role of massive banks. America had an early lead in its financial development, due to the proliferation of local state-chartered banks that soon blanketed American society. These banks were a tremendous stimulus to local and regional commerce and the development of new settlements. (The English experience was broadly similar, although it was still relatively difficult to start a bank in England.) European powers were slow to catch up, but in the 19th century settled on a strategy of having centralized national banks that would finance not merely local businessmen, but the vast infrastructure projects of modernization. America was hobbled by the system of unit banking, which tended to keep banks relatively small, and by the lack of a muscular national bank. (Such a lack was not necessarily bad, as the conflicts over the Banks of the United States indicate!)

In an era before banks, much wealth is economically sterile—golden and silver goblets sitting in some nobleman’s vaults (for example), where they do not contribute to ongoing commerce. But when such wealth is deposited in a bank, it can serve as the basis for lending and new capital investment. (It can also promote new kinds of systemic risks, but that’s a different discussion.) Banks thus can mobilize formerly unproductive resources and put them to good use. And when the bank is national in scale, it can attract the money of the vast middle and even lower classes (in the case of the postal banks of e.g. Germany and Japan) and pool the money into a vast fund, which can then be used by the state in its development plans.

Banks are not the only way to do this, of course. But in our history at least, the alternative was coercive taxation or sheer plunder by the state (as in the case of Tsarist Russia, and later the Soviet Union).

At any rate, the key point here is that to build up a society takes a lot of money, and often that money has to be pooled somehow and deployed in coordinated projects. How that process works in your invented setting is, of course, entirely up to you.

*****

(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 Wealth [Commerce?] for Worldbuilders, along with some overlap with the planned third book, working title Tyranny for Worldbuilders. No idea when they will be finished, but it should be fun!)

Building an Economy: Labor and Motivation

06 Tuesday Jun 2023

Posted by in Economics, Politics for Worldbuilders, State Formation

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We return at last to our discussion of the Land/Labor/Capital triad of the factors of production (plus entrepreneurship, which is nowadays considered its own factor). We’ll start with a broad overview of Labor as a factor of production, and then zoom into the role of motivation on labor productivity.

Labor is unlike other factors of production like raw materials, for two main reasons:

  • If you don’t use an iron bar today, you can use it tomorrow; but if you don’t work today, that work potential is gone forever. You can work tomorrow, but you could have worked tomorrow even if you also worked today. That is, labor is a perishable resource. (It’s also a flow, not a stock; you have a maximum intensity of work that you can do at a given time, and you can’t “store extra work” for later.)
  • Unlike resources like wheat, or gold, or cars, which are largely interchangeable with other units of the same resource, one person’s labor is not the same as another person’s labor. Our labor is affected by individual skill, training, motivation, and differing opportunities to apply that labor to useful work. Labor is thus heterogeneous. (Indeed, one of the trickiest problems with labor is the difficulty in measuring labor outputs, and in assigning people to where they can do the most good—a great source of frustration when you’re out of a job!)

As we are trying to build a simple but powerful model of a fictional economy for worldbuilding purposes, rather than trying to exactly describe the real world in all its messy glory, we’re going to identify three major factors that influence the labor productivity of a society:

  • Human capital,
  • Physical strength and health, and
  • Culture.

The rest of this post will discuss the impact of culture on labor productivity—and particularly, cultural influences on our motivations for working.

Culture has many effects on labor productivity—for example, whether individual initiative is rewarded or punished, whether people are used to teamwork and obedience or if they resist authority, whether people are diligent and careful in their work or take a slapdash attitude towards maintenance. (The eminent economist Thomas Sowell noted that in the early United States, a Scots-Irish Southern “cracker” would walk around or through a creek running through his property for years on end, without any thought of improving the situation; whereas a Puritan-descended Northerner would almost immediately build a footbridge. This is but one example of the larger pattern identified by Max Weber in his Protestant Ethic and the Spirit of Capitalism.)

All of that is important, but for now we will focus specifically on motivation. Different people are motivated by money differently, as John Médaille discusses. Médaille, in Towards a Truly Free Market (a fascinating argument for the Catholic-infused economic doctrine of Distributism), points out that employment is unlike most commodities in that “[l]owering wages does not [automatically] increase employment; only the prospect of selling more goods induces employers to take on more hands.” On the flip side, wages cannot rise arbitrarily high; at a certain point, either profit rates will go to zero (causing capital to withdraw from that industry in search of better returns elsewhere), or wages will rise above the capital substitution rate, i.e. the point where it makes more sense to spend money on infrastructure and robots than on people.

Moreover, unlike other commodities where rising prices stimulates more supply, higher wages will not automatically elicit more effort from people. In some cases, it actually reduces effort. Médaille presents three stylized models for worker motivation:

The surfer works only as much as needed. Once he earns enough money to feed himself and see to his other necessities in a minimal way, he stops working and goes surfing for the rest of the week. If you want to elicit more work from a surfer, you would actually need to pay him less. (This tendency occurs in many peasant societies. In 19th-century Germany, the ruling-class Jünkers found that they could increase agricultural yields by suppressing peasant incomes to a level of utter misery, forcing them to work more in order to survive; if they paid the peasants more, on the other hand, yields dropped as the peasants simply drank away the surplus.)

The homebuyer has goals: he wants to achieve a certain level of material comfort (such as buying a home), to take care of the family and achieve some level of social status. Increasing pay will elicit more work from the homebuyer as these goals become achievable—but only to a point. Once pay is high enough and the goals are achieved, the homebuyer will not continue to increase work output and may even start to reduce output at the high end, as other things (leisure time, time with family, social involvement, etc.) become relatively more important than another few thousand dollars in the bank.

The oil rigger, on the other hand, is highly motivated by money and will work more if he gets more of it. At a time in his life where he has few other commitments, the oil rigger is willing to work incredibly hard in exchange for incredible pay, with the plan of benefiting from the accumulated money later in life. The more you pay the oil rigger, the harder he will work, until the point of sheer exhaustion. Cut the oil rigger’s pay, on the other hand, and he will leave in disgust to find better opportunities elsewhere. (See also investment banking, many commission-based jobs, and so on.)

As a result, the productivity of a given society’s workers will be influenced by the relative proportions of Surfers, Homebuyers, and Oil Riggers among its workers. So what determines that proportion?

Ronald Inglehart’s 1997 book Modernization and Postmodernization argued that societies exhibit coherent patterns of cultural development that are partly predictable, based on economic conditions that allow for and stimulate cultural change. This change generally happens across generations; people’s values are usually set by their experiences in childhood and early adolescence, and do not change much as they get older. But in times of rapid economic change, the values of the next generation can differ significantly from those of their parents. Moreover, even though economic conditions make cultural change possible, the resulting cultures also have an independent influence over later economic performance.

A key argument is the scarcity hypothesis: people tend to most value things that are in the shortest supply. In a time of social disorder, people will value authority and tradition; in a time of poverty and starvation, people will value material things. In a time of material abundance but soul-crushing conformity, people will value self-expression and autonomy. And these values persist once they are stamped into a person during adolescence and early adulthood, even as external conditions change.

In this book and in later research, Inglehart argues for two discrete axes of broad cultural variation between societies (and to a much weaker extent, between individuals): traditional versus secular-rational values, and survival versus self-expression values. (He initially thought that these axes were independent of each other, but later research suggested that they correlate strongly.) A society with “traditional/survival” values is a Traditional society, marked by deference to tradition, low economic growth and consequently significant poverty and insecurity, and little importance placed on political rights or personal fulfillment.

In a society with growing wealth, increasing state capacity, and bureaucratic organization, this cultural pattern gives way to the “secular-rational/survival” configuration, which Inglehart calls Materialism. In short, the spread of rational methods and organization is thought to bring true prosperity into reach—all we must do is work hard to achieve it. As a result, traditional authority is displaced by Science, Industry, and the State, and people develop strong work ethics beyond what are typically found in traditional societies. Work brings reward, and so the more you work, the better you are rewarded.

As wealth grows even more, societies reach a point where increasingly hard work no longer yields as much marginal benefit. Material safety is now taken as a given by those who grew up with it; this new generation shifts from a survival mindset to a self-expression mindset, which Inglehart calls Postmaterialism. This generation lacks the focus on material reward that marked their parents’ work ethic; they work in order to express their values, not merely to feed themselves, and are not as willing in the aggregate to spend nights and weekends in the office for the sake of higher pay.

(Obviously, Postmaterialism depends on the material prosperity that enables it. If material conditions suddenly regress, a cohort with Postmaterialist values will struggle to adjust, and the social consequences of this struggle may be dire.)

So as worldbuilders, we can think about the cultural attitudes at play in our invented societies, and how they will influence labor productivity and the economic development of the societies. There are some fun stories that can be told on these themes; can you think of any?

*****

(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 Wealth [Commerce?] for Worldbuilders. No idea when it will be finished, but it should be fun!)

Uncertainty and Institutions

04 Sunday Jun 2023

Posted by in Economics, Politics for Worldbuilders, State Formation

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The world is a complicated place. Especially when you are dealing with lots of other people, it can be very hard to predict how other people will act. And that, in turn, makes it very difficult to plan what you are going to do. Which then makes it harder for other people to predict how you are going to act, and so on.

With all of this uncertainty, how do we manage to function during the day? And just as importantly, how do we make long-term plans for the future, such as building infrastructure or growing food? As Douglass North writes in his book Institutions, Institutional Change, and Economic Performance, we use institutions to reduce the uncertainty of our interactions with other people. As a result, the structure of a society’s institutions plays a huge role in its economic and social functioning.

(If you read my book Beyond Kings and Princesses: Governments for Worldbuilders, you might remember that a good chunk of the book was inspired by Violence and Social Orders, by North/Wallis/Weingast; this is “North” of that trio.)

In a nutshell, here is North’s argument: in a vacuum, there is often too much uncertainty to permit voluntary interaction between people. Institutions are created to reduce uncertainty. Then organizations form or entrepreneurs make deals to take advantage of the possibilities created by the institutions, and the feedback from same gradually changes the institutions.

Some institutions are formal, such as laws, rules, regulations, religious doctrine, and the like. Some are informal—North identifies three kinds: (1) extensions or modifications of formal rules, (2) social norms, and (3) personally imposed standards. Either kind of institution can be created for many reasons, and formal institutions in particular often are created for self-interested reasons by those in power. As North puts it, “Institutions are not necessarily or even usually created to be socially efficient; rather they, or at least the formal rules, are created to serve the interests of those with the bargaining power to devise new rules.”

Nevertheless, institutions have the effect of reducing uncertainty, by giving us stronger beliefs about how other people will act in a given situation. Because of this, environments of high uncertainty (such as quickly changing social or environmental settings) often drive people to create new institutions, either formal systems or new belief systems.

(That need not always be socially optimal; a cultural belief that “my countrymen will deal honestly, but foreigners will always rob and murder me” would certainly reduce one’s felt uncertainty in both directions, but probably would not be helpful overall—unless the foreigners in question would actually do so!)

Reducing uncertainty has the effect of reducing transaction costs in commerce—particularly the costs of gathering information, forming agreements, and enforcing them. This is a significant issue; many of the weirdest parts of our own economy are the result of difficulties in gathering information. (Think of how hard it can be to find a job or hire people, for example.) Thus, lower transaction costs can dramatically encourage economic activity.

Okay, but what happens next? North is particularly interested in the feedback process between institutions and the people acting in light of them. In particular, entrepreneurs can sometimes perceive new opportunities that exist thanks to a given institution, take advantage of the opportunity, and therefore incrementally change the environment, creating new opportunities etc.

(For example, Jared Rubin writes about how a financial instrument first created in Muslim lands, the bill of exchange, was gleefully adopted by Christian merchants to evade currency controls between countries and served as a key impetus for the development of international banking in Europe.)

There are limits to such incremental feedback, however. North writes, “Individuals act upon incomplete information and with subjectively derived models that are frequently erroneous; the information feedback is typically insufficient to correct these subjective models.” Additionally, some institutions are designed not for economic efficiency, but to facilitate exploitation and oppression; these institutions actually raise transaction costs. Entrepreneurial adaptation can help ameliorate their effects, but only to a point. Finally, some well-meaning institutions are so flawed that no amount of adaptation can make them useful, and some kinds of adaptation can actually make them worse. (America’s short-sighted regulatory policies around housing finance, and how they sowed the seeds of the 2008 financial crisis, come to mind.)

Another key point that North makes is the importance of path dependence. In short, a given institutional environment will reward some kinds of activity and discourage others, which will in turn cause future development to lean in a particular direction. Examples:

  • If there is strong rule of law and enforcement of contracts, there will be more impersonal economic exchange. If rights are weak, on the other hand, people will tend to exchange only in trusted networks. This will weaken the future development of economic networks.
  • Insecure property rights will encourage the development of technologies that have low sunk costs, and are mobile. This also discourages long-term agreements.
  • The advance of knowledge is in large part path-dependent. Knowledge influences ideology, which guides the search for knowledge.

And once a given institution is in place, it is often difficult to change. As W. Brian Arthur pointed out, there are at least four processes that make it less likely for people to change systems once put in place: large fixed costs; domain-specific learning; coordination effects; and adaptive expectations.

*****

What are some takeaways, especially for worldbuilders? First, every time that you think of some new organization or new law or new environmental condition, spend time thinking about how self-interested people will react to it—and how other people will react to them, and so on. Second, remember the importance of reducing uncertainty.

*****

(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 Wealth [Commerce?] for Worldbuilders. No idea when it will be finished, but it should be fun!)

Building an Economy: Natural Resources

28 Tuesday Feb 2023

Posted by in Economics, Politics, Politics for Worldbuilders, State Formation, Writing

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Having discussed population density and ease of transport, it’s time to finish off our discussion of land by talking about natural resources—and some surprising implications that natural resources can have for economic development, and politics.

(And in retrospect, this one really should have been the first subtopic in land that we discussed, since it really conditions all the others. I’ll correct that in the book to come!)

“Natural resources” can mean many things. One of the most fundamental will be the presence of available food production, from fertile soils and rain or rivers for agriculture, wild plants and herbs for gathering, animals to be hunted, or fish to be—err, fished. If a region does not have enough food production to feed its populace, it will have to depend on imports, which means that it will have to have something to sell to the outside world in order to pay for those imports.

Other things might or might not be a natural resource, depending on the details of your setting. For example, deposits of aluminum will only be valuable if the society has figured out how to smelt aluminum, a surprisingly difficult process. Small streams might be good places to fish, but if the society has developed the technology of the gear (meaning the round turny thing with teeth), streams can also drive watermills to provide kinetic energy for machines in a workshop.

(This also means that advances in technology, or other changes that turn something that was previously useless into something valuable, could bring new prosperity to formerly backward regions—or make them tempting targets for invasion!)

For each region you would need to decide what the key natural resources are for your story, and how abundant they are. The details of them obviously matter; but for our model, we will abstract away from the details (for the moment) and characterize each natural resource (in relative terms) as

  • rich or poor, and
  • concentrated or widely available.

Resource-Poor

If a region is poor in necessary resources, the people will have to either trade for them, substitute some other inferior resource, or do without.

If the people are wealthy—perhaps they are skilled businessmen or traders, or perhaps they are successful pirates—they can sustain a society even in a place with few resources; but they would be dependent on the outside world for most of their essentials, like food, fuel, raw materials, and the like. Essentially, a region with few natural resources stands in a similar relationship to the outside world as a city does with its surroundings: it must produce a lot of economic value to pay for its imports, and it lives and dies with the ability to transport the needed goods.

If the people don’t want to trade for the good they are missing, or the good is simply not available, they may try to use substitutes. For example, the Scottish Highlands had few trees for firewood; instead, the Scots burned peat (something halfway between coal and mud). Few people would prefer burning peat to wood; but it did the job. Similarly, early iron weapons were actually inferior to bronze in most respects, contrary to the common assumption; but bronze is made from both copper and tin in a specialized process, and when the tin trading network across Eurasia was disrupted for unknown reasons, local communities fell back on iron, which was readily available and easy for blacksmiths to forge. (That was a gross simplification of a complex process with many causes, but for our purposes it makes the point.)

If no substitute is available, then the populace will do without. The typical result is widespread poverty (at least in “objective” terms; a people that has never known the telephone will not mourn its lack, and will find plenty of other prestige goods to compete over). If the missing resource was critical to sustaining life, its lack may put a hard cap on how many people can live in the region. In the worst case, the region may simply be empty of people.

(The concentration of the resource matters, but only on the micro-scale; if you have a small amount of wood and no one else has any, you will be prosperous personally, but it won’t affect the rest of the region much.)

Resource-Rich

If a region is rich in natural resources, on the other hand, it could have wildly varying effects depending on whether the resource is mainly used by the region itself, or mainly exported. If the resource is mainly used by the region—either directly, such as foodstuffs, or as an input into some other production, such as timber into shipbuilding or iron into machine production—it will contribute directly to the region’s prosperity. Not only will the region use the resource, the availability of rich resources will tend to encourage the growth of new industries that require that resource (though not automatically; see our later discussion of entrepreneurship). In ideal circumstances, the natural resource serves as fuel for the larger economic engine, being transformed into ever more valuable uses as products move up the chain of production, and the economy will develop in healthy directions.

Problems emerge if the resource is produced mainly for export, however. The economy will tend to develop mainly to facilitate the export of resources, and other industries will be relatively less developed. An economy that is heavily unbalanced in the direction of exporting natural resources (or really, by any other single desirable export) is prone to Dutch Disease. For our purposes, Dutch Disease happens when a particular economic sector generates massive amounts of money from external sources; this could be oil, or timber, a wildly successful service sector such as London banking, or even foreign aid or foreign direct investment. People end up using that money to import new luxuries or to enjoy more local services, diverting revenue and labor away from local productive industries to a degree. (It gets worse if countries have independent currencies with fluctuating values; the vast exports of oil or whatever will cause your country’s currency to strengthen, making imports relatively cheaper, but also kneecapping your other industries such as manufacturing or tourism.)

The result is that even as the growing sector prospers, the other parts of a region’s manufacturing economy will tend to stagnate. If allowed to continue unchecked, the end result of Dutch Disease is to turn the region into a supply region with a hypertrophied primary export sector and a bloated service sector, and relatively little industry otherwise. The region will be excessively dependent on its main export industry and suffer booms and busts along with that industry. (This often happens on a smaller scale with oil towns, mining towns, and the like.)

The Resource Curse

We must also ask if the rich resources are concentrated or widely available. A large timber forest is relatively hard to monopolize, though kings certainly try; and as a result, it would allow a relatively large number of people to support themselves from the resource. But a much more concentrated resource is easier to monopolize, either by the state (a common occurrence) or by a private actor (which might accumulate much of the effective power of a state, as with the “Shell police” in Nigeria). Often, this actually leads to worse outcomes for the region—the so-called “paradox of plenty” or “resource curse.”

Investigating the paradox of plenty, Terry Lynn Karl in her book identified a common pattern in modern oil-dependent states. When oil is first discovered in a previously poor state, the state has a sudden budget surplus—either because it takes control of the oil directly, or heavily taxes the oil companies. With the sudden influx, the state massively raises its spending, usually first on social services, then on subsidies for new heavy-industry as the state tries to translate its new wealth into durable prosperity. Often, taxes on the broad populace are reduced, sometimes to zero. (This is not an unmitigated good; often, regimes reduced taxes and increased subsidies in order to demobilize their populaces and render them indifferent to national politics, the better to rule tyrannically in the absence of popular opposition.)

However, state spending often grew much faster than oil revenues, as new interest groups form to feast on the new state largesse. Moreover, efforts to nurture new industries often failed, overcome by the mismatch between the planned new industries and the existing technological competence of the society, the resulting inability of the economy to support the planned new industries (as Jane Jacobs discusses), the eventual growth of political patronage in subsidized or state-owned industries, and their resulting implosion from ineptitude. Factor in the effects of the Dutch Disease and consequent inflation, and the economy as a whole actually suffers from the new oil wealth. Many petro-states found that they could no longer feed themselves without imports, as local food production was crowded out by inflation and the lack of farm labor.

The ultimate beneficiaries, however, are the state itself (which grows massively from the new revenue) and the new stratum of state functionaries that fills all the new state jobs. But such prosperity is brittle, depending as it does on the revenue from oil. When oil prices suddenly fell in the mid-1980s, these states faced crippling crises that lasted decades.

Matters are less bad in states that already have strong state institutions, even if their economies are heavily dependent on the resource in question. Alaska, for example, managed to avoid the worst ravages of the resource curse by distributing much of its oil wealth directly to its citizens each year. The temptations of rentier-state gluttony are certainly present, but mitigated by the preexisting power of the citizenry and the strong tradition of limited government.

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This post has already gone on too long, but you can already see that the effects of a region’s natural-resource endowment can provide great fodder for plot conflict. And once you add in a few elements from the other building blocks of an economy? Yowza.

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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 Wealth [Commerce?] for Worldbuilders, along with some overlap with the planned third book, working title Tyranny for Worldbuilders. No idea when they will be finished, but it should be fun!)

Building an Economy: Ease of Transport

22 Wednesday Feb 2023

Posted by in Economics, Politics, Politics for Worldbuilders, State Formation, Writing

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In our last post, we started building a model for how to think of a region’s geography with three major factors: population density, ease of transport, and natural resources. Here, we will discuss the second factor, ease of transport.

We’ve referenced the importance of transport several times before, including with regard to cities and touching on it briefly in Book 1 of my “Politics for Worldbuilders” series during the discussion of the Nobility. Now we’re going to discuss transport squarely. It plays vital roles for economic activity, the placement of cities, and politics.

Let’s begin by assuming that a given territory can be easy to cross, difficult to cross, or have particular constrained routes such as rivers or valleys that allow for easy transport but can also be easily controlled. Each of these options generates its own set of possibilities.

Trade

The easier it is to transport goods and people, the easier it is to trade—you have to be able to get your goods to buyers without too much cost, and on the flip side you have to be able to access raw materials. If transport is cheap and easy, a lot of trade becomes feasible and economic activity will tend to flourish. Cities will be supported by food transports and shipments of raw materials such as iron ore or coal, paid for by the goods and services they generate, and they can also trade finished goods with each other and with their surrounding rural areas.

Similarly, the easier that transport is, the easier it is to stay current on news from distant places. This is somewhat less of a factor in our modern era of instant communication, rather than having to wait for the latest ship from far-off shores; but even today, there needs to be people on site to report what is going on, who want to report it to you or to an audience that includes you. This is more likely when transportation is easy and cheap.

If transport is difficult—the territory is a rugged mountain range, for instance—trade becomes difficult as well. People will have to depend more on their own production, rather than producing for trade with distant buyers. Villages will be inward-focused, struggling to produce their own food, clothes, tools, and other goods. Traveling peddlers might come along every month or three, or not at all. Cities will be rare, placed in the few places where transport is relatively easier, and more likely to be administrative/garrison cities supported by the government than commercial or industrial cities, simply because it is so hard to produce anything and transport it out to buyers. Economic activity as a whole will be stunted as a result.

(Many scholars believe that this is one of the reasons for the relatively low economic growth of the inland part of the African continent and Eurasia. In contrast to Europe, which features long coastlines and many rivers that penetrate into the hinterlands, Africa and Eurasia are mostly landlocked and have few rivers. As a result, areas along the coast and next to rivers will tend to flourish more than inland areas that have a relatively difficult time getting goods to market.)

Trade and production in places with difficult travel will tend to focus on valuable and rare goods if they are present, such as gold, spices, uranium, and the like. If there is enough money to be made, governments or merchants will invest in roads or other transport at fantastical expense that go directly to the production site and nowhere else, in order to make extraction easier. This will create path-dependency effects that favor continued focus on the extractive industry, rather than allowing the economy to broaden and deepen in healthier ways. The region will likely become a supply region. If no such valuables are present, economic activity will simply stagnate. People will focus on producing their own needs, or else migrate to greener pastures if available.

If transport is possible through otherwise rough terrain down particular pathways such as rivers or valleys, we can expect these roads to become the focus of military conflict or economic competition. Whoever controls them will be able to profit from the trade that goes through them, and if the pathways are the key enablers of trade between vast regions then the rewards might be great indeed.

Note that if the transport situation changes—new roads are built, or somebody invents magical zeppelins, or the mountain pass suffers an avalanche and is blocked until spring—the effects on the society might be profoundly good or bad. There is certainly a story to be written here, about who would benefit from such changes, who would be threatened, and what they would do about it.

Politics

Just as trade is easier if travel is easier, so is power projection. It is no accident that the Roman Empire spent incredible effort on building its famed roads.

Political boundaries often map onto geographic boundaries such as rivers or mountain ranges, simply because it is hard to transport armies across, or to enforce laws or collect taxes on the other side. The more rugged the terrain, the more likely that an area will feature a patchwork of smaller domains rather than a unified government. (This is part of why Afghanistan continues to be the graveyard of empires.) As with trade, nominal distances as the crow flies matter less than travel time. This is particularly true with the transmission of information; the less information that can get through, the less likely that an empire or other political unit can maintain its control and the more likely that control will devolve to a more local level.

And naturally, the political situation will have effects on the economic one as well, good or bad. A vast regime might enable more internal trade, as Rome did, or it might ruthlessly squeeze its subjects, as Rome also did at various times. A patchwork of small principalities might be littered with obstacles to trade and feature frequent conflicts, or it might become a fecund region promoting creativity and economic development.

You can see how these factors interrelate. A government might build roads for military purposes, which then have the side effect of stimulating new economic activity. The interstate highway system in the United States, and the Autobahn in Germany, are good examples. So is the rail system in much of Europe. Or a transportation system built for commercial purposes might be adopted for military ones, such as airplanes.

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All in all, the ease of transport across a territory will dramatically condition what happens there and how people live. For worldbuilders, we can readily exploit some of the challenges that this presents in our 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 Wealth [Commerce?] for Worldbuilders, along with some overlap with the planned third book, working title Tyranny for Worldbuilders. No idea when they will be finished, but it should be fun!)

Building an Economy: Population Density

20 Monday Feb 2023

Posted by in Economics, Politics, Politics for Worldbuilders, State Formation, War, Writing

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After a great deal of procrastination, it’s time to revisit the Land/Labor/Capital triad, identified by the classical economists like Adam Smith and the like as the key factors of production.

(Side note: modern economists consider entrepreneurship to be a fourth factor of production. I’m still trying to figure out whether there is a nice way to characterize entrepreneurship in our model, as it would obviously lend itself to strong stories.)

Remember, we’re not trying to explain everything about an economy from the ground up. We’re trying to build a relatively simple, yet powerful and flexible framework that worldbuilders can use to quickly mock up the contours of their invented societies. Once the bones are in place, you are then in a position to dive into all the cool little details, confident that they will be consistent with the structuring logic.

So when we talk about land, we’re going to focus on three broad variables—each of which can have surprisingly powerful implications:

  • Population density
  • Ease of transport
  • Natural resources

Really, these are interrelated. For example, you can’t have a dense population without lots of food, and and an easy way to get the food to people. Still, it’s useful to consider them separately to keep everything straight in our heads. Let’s begin with population density.

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If you want to have a country or region with a high population density, that implies several things. We already noted the need for lots of food and efficient transportation of it. On the other hand, you don’t necessarily need to have urban cities, if people are living in densely placed villages and growing their own food with intensive agricultural methods. (It will mean that animal husbandry will likely use methods that require little land, rather than pasture-grazing.) And the material standard of living might still be low if most people are producing food, rather than more specialized goods. Still, the more people there are living close together, the more opportunities for specialization and exchange, and the more likely that the economy will develop more complexity.

Conversely, if the population is thinly spread, the people might still be relatively prosperous. They could have large herds of livestock that move from place to place, or practice a carefree foraging lifestyle where they only spend a few hours a day gathering food and use the rest of their time making luxuries, playing games, fighting with neighbors (!), or relaxing. Or they might be desperately poor, if the land is not very productive and they all have to work hard to feed themselves, since there are few opportunities for trade. With a thinly spread populace that cannot sustain specialization and exchange, chances are that the energy surplus of the society will be small, which limits the development of their society and culture. (And you can see how the productivity of the land interacts with population density.)

So whether you choose to have a dense population or not, you can play around with what that looks like for you and your story.

But what about the political effects of a dense population, or its opposite?

Note that the more thinly spread the population, the harder it is to control the territory. If you are being oppressed by a ruler, or landlord, or moneylender, or cruel family members or whatever, you always have the option to pull up stakes and run; and all else equal, it is more difficult for a ruler to stop you if the population is thin. This is because fortifying the border to keep people in would be too expensive, compared to the number of people being contained. By contrast, if the society has a dense population, it is relatively more efficient to fortify the border even at great expense, because of the large number of people you will be able to contain and control.

Jeffrey Herbst argues that this is one of the key differences between the experience of Western Europe and of precolonial Africa; Western Europe, being densely populated and urbanized, made it worthwhile for rulers to fortify their borders, the better to control the moments of their people (as well as to defend against invasion!). In Africa, however, the landscape was so vast compared to the populace that there was little practical way to control the territory as such. Instead, African rulers focused on strategies to control people directly—ties of loyalty or marriage for some, enslavement and physical domination for others.

Let’s see why. When seeking wealth or other resources, a ruler must ask a key question: is it easier to exploit one’s own people, or someone else? If your people are easily controlled and restrained, it will be relatively easier to tax them. If your people can move around easily, however, then they will not tolerate heavy taxation. On the other hand, if your army can also move around easily, it becomes more attractive to invade your neighbors and cart away plunder, in goods or people.

So as a broad pattern, we see regions of high population density focus on fortification of borders and relatively high reliance on taxation or other means to generate resources from their own people (which does not exclude invading and pillaging neighbors, of course!); and regions of low population density feature relatively higher mobility, societies that feature relatively less political coercion and taxation, and lots of raiding of neighbors for treasure and slaves.

Of course, rulers can also change the population density of their territory. A very common pattern, as James C. Scott tells us, was for city rulers to concentrate the surrounding populations by force within the city walls, and have them cultivate fields that were within easy reach of the city (and the city’s military). This allowed them to tax their peasantry’s output more easily than if farmers were living in distant villages.

So when you’re creating a new territory, think about the population density of the land, and then consider what consequences flow from that. The implications for your story might be surprising.

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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 Wealth [Commerce?] for Worldbuilders, along with some overlap with the planned third book, working title Tyranny for Worldbuilders. No idea when they will be finished, but it should be fun!)

Taxation and Conflict

17 Saturday Dec 2022

Posted by in Economics, Politics, Politics for Worldbuilders, State Formation, Writing

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Worldbuilders often have settings in which tax policies are key drivers of conflict. This is as it should be, given that taxes often drive conflict in the real world, for very good reasons. But typically, the decisions that a fictional ruler face are boiled down to “Do I want money? If so, tax everything that moves.” In the real world, things are more complex. And introducing a bit of carefully chosen complexity into your stories can make the conflicts a lot more interesting.

Our current discussion is based on the seminal model of Margaret Levi. Based on a deep review of the history of governments, Levi starts from the assumption that in general, sovereigns want to maximize their tax revenue. But this does not simply mean jacking taxes up as high as they can go.

First of all, the more you tax, the more opposition you get from those being taxed. This is obvious, but it has some notable consequences. A weaker regime will be able to tax less, because serious opposition could bring it down. Additionally, taxes will tend to fall more heavily on social groups that are less able to resist the government (often because they are poor!), or who depend on the government more, or who would benefit directly from the additional government projects that the tax revenues would fund and are thus more willing to bear the burden. In any event, the rulers will have to limit their taxation if they don’t want to antagonize the people.

Second, the higher the tax rate, the more that economic activity becomes depressed as many businesses simply become unprofitable. Moreover, it becomes worth it for people to rearrange their businesses to pay less tax, or even cheat on their taxes altogether. As a result, if you increase taxes by ten percent, say, your tax revenue will rise by somewhat less than ten percent. And at a certain point, tax collection actually goes down with higher taxes. (This concept is popularly known as the Laffer Curve.)

So a ruler will have to figure out the optimal tax policy for generating revenue. This is a difficult problem, especially if you don’t have a lot of data about the economy. Often, rulers get it wrong and set the tax rate too high for the amount of revenue they want to collect. (It is much less common to set the tax rate too low!)

This basic issue also functions across time periods; collecting lots of taxes this year will often mean that the economy’s growth will slow down in the future, reducing tax collection later. As a result, Levi notes that a major factor in the taxation decisions of sovereigns was their discount rate—that is, how willing they are to forego money today in exchange for more money tomorrow. 

(A quick example: suppose you have an opportunity to invest $100 today, and in a month you’ll get back $110 guaranteed. If you have money in the bank and won’t miss $100, you’ll happily invest the money for a good return. If you only have $100, on the other hand, and you need to spend it on food, it’s another matter entirely. Still, you might be willing to invest the hundred dollars if you would get back a thousand; for that much money, you’ll find some way to last the month. In the first case, you have a relatively low discount rate; you can afford to be patient. In the second case, you have a relatively high discount rate; you need money today, and it would take a massive amount of money in the future to get you to give up what you have.)

Levi notes that sovereigns facing a crisis—particularly a war—needed lots of money today, and were more willing to raise taxes for current revenue even if it harmed future growth, and even if it provoked domestic opposition (to a point). In other words, these rulers had a very high discount rate.

Next, certain types of taxes take different types of bureaucratic infrastructure; if you don’t have the infrastructure, you can’t levy the tax. For example, to tax incomes, you need a way to monitor how much money people make. This is tremendously hard, which is why direct income taxes across all of society were nearly unknown until the early 1900s. And some kinds of taxes would cost more to administer than you would actually raise!

A sovereign will then want to invest in new bureaucracy, to be able to collect more taxes in the future. But such investment takes money and time, and it usually provokes opposition from society—people resent intrusions into their privacy, and know that higher taxes are going to result in the future.

Levi’s model thus has a number of moving parts, including:

  • the discount rate of the sovereign;
  • the capability of the tax-collection apparatus;
  • transaction costs for commerce, and for tax collection (which include information/monitoring costs, and fees, operating expenses, and other forms of friction); and
  • the relative bargaining power of the state versus different classes in society.

Levi’s entire discussion includes many other complex facets, including the concept of quasi-voluntary compliance which I already touched upon in Beyond Kings and Princesses in the discussion of bureaucracy; I hope to write about more from Levi in future posts. But even this starting overview provides some useful tools for worldbuilders looking to juice up their political conflicts.

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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 Wealth [Commerce?] for Worldbuilders. No idea when it will be finished, but it should be fun!)

Pirate Ships

20 Sunday Nov 2022

Posted by in Economics, Politics for Worldbuilders, State Formation, Writing

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We briefly mentioned Peter Leeson’s work on the economics of pirate ships already; now, let’s take a closer look. (Because honestly, who doesn’t like pirate ships?)

In his study of pirate ships between 1682 and 1726, Leeson identified several remarkable features of how pirate ships were run, especially when compared to civilian merchant ships or naval vessels. While the latter vessels were run autocratically, with an all-powerful captain who could not be gainsaid, pirate ships were typically run along democratic lines:

  • they were governed by written articles of association, which had to be adopted unanimously;
  • they featured separation of powers between the captain, who controlled duty assignments and tactical authority, and a popularly elected quartermaster, who controlled the money and administered discipline—and the crews could replace either of these figures if they were abusing their power; and
  • crew members were typically paid in equal shares of the plunder (the captain and quartermaster typically got two shares), net of costs for repairing the ship or medical care and bonuses for the wounded.

Why? Leeson argues that pirate crews had to solve several problems in order to function well. First and most pressing was the risk that the captain could abuse his position. A frequent scourge of civilian ships was that the captain, nominally the omnipotent representative of the ship’s investor-owners back on shore, would exploit his power to harm the crew members, or enrich himself at the owners’ expense. This is an example of a principal-agent problem. (Indeed, many sailors turned to piracy in order to escape such exploitative captains.) But on a pirate ship, usually the sailors were the “owners” of the ship; and they would not tolerate a captain who would abuse them or divert “their” plunder.

Second, pirate crews were fairly large—the average pirate ship had some 80 crewmen (and some had many more, or even fleets of ships such as the expedition of Captain Morgan), as opposed to merchant ships which carried 13-17 men. (By contrast, naval ships often carried hundreds of sailors.)  With such large crews, it became harder to monitor individual sailors’ behavior. Yet harmony aboard ship needed to be maintained if the crews were to fight well. Disputes needed to be prevented, or resolved peacefully.

In response, pirate crews (which often shared ideas between them) soon developed a system of formal governance, with strong democratic features, well before any national governments adopted separation of powers or democratic voting. Ships’ crews drew up written articles of association (and so did pirate fleets, when several ships joined together for particular expeditions), which had to be approved unanimously. These articles laid down rules for the ship, and assigned different authorities to the captain, the quartermaster, and the other officers. They also specified how officers could be removed by popular vote.

The captain had total control over decisions during battle, and the assignment of ship’s duties. But he had no control over discipline, or over the plunder. That was the job of the quartermaster. Yet the quartermaster too was constrained; he was typically not allowed to store the plunder under lock and key, and many crews had a system of random searches to detect if a quartermaster (or any other crewman) was stealing plunder. Theft was punished severely, usually with marooning or execution.

Interestingly, Leeson finds that privateers—“legal” pirates whose activities were sanctioned by their governments—shared some of these features. They too paid out plunder in equal or nearly equal shares, and also used written constitutions. Leeson concludes that profit sharing and written constitutions must have been an efficient solution to the problem of keeping order among large crews, far from home.

But few privateers had the checks-and-balances system of captain and quartermaster, or democratic governance. (At least, not officially; Leeson doesn’t discuss how many privateers would engage in unsanctioned piracy on the side.) This was likely due to the need to enforce the authority of the ship’s government, just as merchant ships needed to enforce the authority of the absent owners. Pirates, lacking fealty to a distant authority, didn’t have this problem.

Leeson and other academics such as David Skarbek look at several other forms of organization, such as stateless societies in Africa, or prison gangs; and I hope to write more about these. But the basic takeaway for worldbuilders is that certain kinds of settings, like a pirate ship, present certain kinds of problems that the people have to solve. And the way that they solve those problems can make for fascinating 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 Wealth for Worldbuilders. No idea when it will be finished, but it should be fun!)

Trading with Bandits

13 Sunday Nov 2022

Posted by in Credit, Economics, Politics, Politics for Worldbuilders, Writing

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Suppose you were a merchant going into the mountains, seeking to trade for rare spices. The local clans know where the spices are; but they would much rather kill you and take all of your trade goods than part with their own valuable spices, even in a profitable exchange. You know this, and they know you know this. Is there any way that you can trade with the locals anyway, and escape with your life and a good profit?

There are a few ways to entice the locals to trade peacefully. One is to invest in military strength to deter attack—hiring bodyguards or improving your own martial skill. Another is to offer the possibility of repeated interactions, meaning that you will keep coming back with more trade goods if each trip goes well. Therefore, if the locals behave peacefully they will end up making far more profit over time than if they simply plunder your caravan. (This strategy only works if the locals trust you to come back, and if their time preference isn’t heavily weighted to short-term gains rather than long-term gains. If they need lots of money today, they might be willing to plunder you and sacrifice the long-term profit.)

Another method was to threaten the bandits with retribution from your allies, even if they are not present at the time. Your own weakness could be counterbalanced by the strength of your allies. This was one of the perks of being a Roman citizen, for example—everyone knew that a Roman was inviolate. If you harmed a Roman, you could expect legionnaires to be knocking on your door in short order. This did not prevent banditry entirely, but it certainly kept it to a much lower level.

All well and good; but let’s spice things up a bit. What if the merchant were the bandit, and the local clan were too weak to resist? And what if the clan had a permanent village, so they couldn’t simply escape from the traveling merchants until they had passed by? The merchants have powerful weapons, and while they wouldn’t mind striking a fair bargain if they needed to, they would cheerfully sack the village and take all of its valuables and people as booty if they thought it worthwhile.

If the weaker party is immobile and cannot escape, the above methods to induce peaceful trade no longer work. By assumption, the village is unable to invest in greater strength. And since the merchants are mobile, the village cannot easily threaten it with retribution from its allies. Repeated interactions are trickier too; merchant expeditions are expensive, and the merchants would want a high enough profit margin to be worth the bother.

So what is there to do?

I shamelessly stole the title of this post from the journal article it is based on, by Peter Leeson. Leeson, who would later enjoy some fame for his work on the economics of pirate ships, investigated our second case with the dangerous merchants and weak village, and gained some insights by looking at trading patterns in Central Africa. There, trade networks would connect producer villages deep in the interior with the European trade outposts on the coasts. The producer villages were at constant risk of being attacked by the merchant caravans, so they developed two major strategies to protect themselves.

The first strategy, paradoxically enough, was to demand that the merchants paid their side of the bargain upfront, and extend credit to the village. The village would then provide its own goods to the merchants the next time they came by. This allowed the village to reduce its stores of plunderable goods during the merchants’ first visit, since they wouldn’t need to pay right away. That way, the merchants would have less reason to plunder the village, since there would be little booty to plunder. And when the merchants came back, they had already paid for their goods and would have little incentive to use violence—unless the village tried to cheat them and withhold payment.

Since the merchants were stronger than the village, they could safely extend credit and know that they could punish the village for cheating if they needed to. (The reverse would not have been true; the village could not dare pay goods up front—that is, lend money—to the merchants, because they could not possibly enforce the bargain.) And the merchants had an incentive to play along: if the village didn’t think it was safe to stockpile its trade goods, it would simply produce no goods for trade and only enough to subsist on. That would make it unprofitable for traveling merchants to come all the way out and plunder them, discouraging violence.

But there was still a problem: what if the village makes a bargain with one set of merchants, then produces the trade goods that it owes, only to be attacked by another set of merchants?

To mitigate this risk, the village would expect the merchants that it bargained with to protect the village from other merchants. That is, part of what the village was trading for was protection. It was worth it for the merchants; they would lose out if their precious trade goods were stolen by some other group of merchants.

Still, the whole business was touch and go. For the system to work as described, the merchants had to be sufficiently patient to prefer long-term riches to short-term plunder, and be able to protect the village and enforce exclusivity against other merchants—and the village had to be able to reduce its stock of trade goods to unprofitable levels for the merchant, to make plundering a poor proposition and induce the merchant to offer credit. If the village’s trade goods were of the sort that was difficult to deplete or hide (such as livestock, or slaves or people who might be enslaved), then the village would have a difficult time indeed avoiding attack.

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In your own worldbuilding, you might not necessarily have these specific situations. But the concepts involved are delicious for generating story conflict. Stakes are high, incentives can balance on the edge of a knife, and much will depend on the characters involved. A good deal can be messed up by an impatient character, or implacable enemies might recognize an alignment of interests that can encourage the first tentative steps toward peace.

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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 Wealth for Worldbuilders. No idea when it will be finished, but it should be fun!)