Category Archives: Politics

Economies Dependent on Outside Investment

26 Wednesday Oct 2022

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

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One of the most trafficked posts on this blog is a brief discussion of “Varieties of Capitalism” theory, pointing out how some capitalist economies feature a set of institutions that foster a more dynamic economy and radical innovation, and others have institutions that foster a more sedate, “managed” economy featuring more incremental innovation. (As far as I can surmise from web traffic stats, some comparative-politics professor at San Francisco State University must have noticed the post and included it in a course syllabus. I’m flattered!)

But in the years since I left grad school, the field has marched on. Apparently, scholars have identified at least one other “variety” of capitalism that fills in a bunch of empirical gaps of prior theory. This is the dependent market economy (DME), whose distinguishing feature is that it relies heavily on the foreign investment of outsiders for capital—typically transnational corporations. In this post, I’ll briefly discuss the key features of the DME that would be useful for worldbuilders.

The first economies to be designated as DMEs were found in Eastern and Central Europe, countries that had formerly been dominated by the Soviet Union. They featured an unusual combination of factors: a populace that was reasonably well educated and technically skilled, yet still had low wages, and where the countries’ economic institutions had been totally wiped away and could be built afresh according to the preferences of anyone with enough clout. These were the transnational corporations, who are always on the lookout for skilled, cheap labor. They used the lure of their massive investment to induce the former Warsaw Pact countries to establish institutions that were favorable to company interests—and turned these countries into favored sites for the assembly of “semistandardized industrial goods.”

What are the features of the DME, and the institutions that develop there?

  • A population that had reasonable technical skill—but not too much, or they could develop their own indigenous industries and not be dependent on outside investment.
  • Low wages.
  • A massively disproportionate level of foreign direct investment that dominates the economy, usually because of the lack of domestic capital. (For example, in 2007 Hungary and the Czech Republic both had FDI equal roughly half of their entire gross domestic product.)
  • Governance that is largely controlled by transnational corporate hierarchies, so local company subsidiaries take orders from the parent companies back home. (They also receive funding from back home, rather than relying on local banks or the stock market.)
  • Weak labor laws and no national labor unions.
  • On the other hand, individual companies typically treat their workers well in relative terms, because they don’t want their supply chains disrupted; so management and labor tend to work closely together, company by company. (But companies try to avoid simply paying higher wages, which defeats the point of the exercise!)
  • Little investment in worker training or a public education system, and the education system’s reorientation to the specific skill needs of the transnational companies, because companies don’t want to spend a lot of money or make it easy for their workers to leave, and because the DME is not meant to develop new technology—only to implement the technologies developed elsewhere.
  • Sectors of the economy where the country has a clear comparative advantage, such as the assembly of automobiles or electronics, are dominated by foreign ownership. The same is often true of the banking system, which needs a lot of capital. Meanwhile, less competitive segments of the economy remain in domestic hands, but languish. If left unchecked, this division could lead to tensions between wealthier and poorer worker groups in society.

We thus have another model for what an economy could look like, and why it would look that way. True, few worldbuilders will be working with a direct analogue to something like the collapse of the Iron Curtain; but if you’re thoughtful, you can extract useful principles from the foregoing for use in your work.

There are additional types of economies—chiefly the typical “dependency” economy (or supply region) that is exploited for basic commodities; the “patrimonialist” society with high corruption, patron-client networks, informal arrangements, and pervasive insecurity; and the incoherent mishmash that borrows features from several other economies which don’t necessarily work well in combination. I hope to explore some of these more in later writing.

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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!)

Different Types of Colonies

12 Wednesday Oct 2022

Posted by in Politics, Politics for Worldbuilders, State Formation

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Adam Smith, in the fourth book of his Wealth of Nations, has a section discussing colonies—of particular interest to him, since at the time of his writing European powers were far more interested in establishing overseas colonies than they had been since Ancient Rome. His discussion is useful to worldbuilders, since he conveniently lists three categories of colonies, to which we will add a fourth (of somewhat lesser importance). And we love our simple-yet-powerful classifications, indeed we do!

A colony, for our purposes, is when a country sends a significant number of its people to settle in a place outside of its official borders, but within its control. The colony may be more or less autonomous and may even be self-governing, to a point. Certainly, the mother country has less control over a colony than over its “home” territory. And sometimes this matters.

A colony can be founded for one of the following reasons (and once founded, can take on aspects of the others—as with cities):

  • to relieve population pressure in the home country;
  • to relieve political unrest by giving opportunities to the dispossessed;
  • to secure riches, or the promise of them; or
  • for geopolitical or military advantage.

Smith begins his survey with the ancient Greeks (he could have added the Phoenicians, if he cared to). The city-states of these societies often had limited territory, and few prospects to gain more territory in the same neighborhood, since they were surrounded by hostile neighbors. As their populations grew, the only way they could provide for the growing populace was to send much of the people abroad, usually by ship, to explore distant lands and form colonies where prospects were good. Smith notes that these colonies were often autonomous of the mother country, writing their own constitutions, choosing their own leaders, and being effectively independent. (Smith slightly overstates the point; colonies often sent regular tribute to their mother country, and often were expected to support the foreign policies of the mother country by custom. But colonies did often break free of such expectations.) Also, the colonists often formed a cross-section of their societies, with people of all classes going abroad.

By contrast, when Rome formed colonies in its conquered territories, they were intended not to relieve population pressure, but to provide some measure of opportunity to the desperately poor of Roman society. The Roman economy and property laws tended to concentrate wealth in the hands of a few, and left large numbers of people with no land or capital. To prevent unrest or even rebellion, the Romans encouraged their poorest to go abroad to farm new lands outside of Rome proper; those who moved to the colonies were awarded generous land grants. (Note that this was a change from the earliest Roman colonies, which were placed in defensive positions on the coastline or in strategic locations in conquered regions; these earlier colonies would thus be of our fourth type.) One could draw parallels to the role of Britain’s colonies in the Americas in providing a safe haven for religious or political dissidents, which had the beneficial effect of cooling down sectarian tensions in Britain.

The original European colonies in the Americas, meanwhile, were motivated strictly by personal enrichment for the first explorers and administrators. Columbus was hoping to find a lucrative shortcut to India; when he found the West Indies instead, he exaggerated the prevalence of gold and silver among the natives in order to keep his royal patrons happy. He thus encouraged generations of adventurers and brigands to set sail for the New World. (Both they and the monarchs who bankrolled them were avidly looking for gold and silver supposedly in the possession of the natives, but they found little. The new colonies eventually became prosperous, but it often took fifty or a hundred years, by which time the original investors were typically bankrupt.) These sorts of colonists were usually skewed towards military men and government administrators, especially if there was a native populace that could be enslaved for the heavy labor.

Similarly, the European colonies in Africa of the 1800s and 1900s were meant typically to extract resources, rather than to provide accommodations for excess population or to offload political instability. With a few exceptions (such as South Africa or Algeria), large numbers of Europeans did not move to the African colonies to live; typically, the Europeans were technical specialists like engineers, government administrators, and security personnel. They were interested in developing the societies they ruled only to the degree needed to efficiently harvest resources like diamonds, rubber, or uranium—and no further. The entire economy of such colonies was organized around resource extraction and export.

Finally, Smith omits mention of colonies that were placed primarily for military purposes. We mentioned the early Roman colonies; in more modern times, we could look at the role of Gibraltar for Britain, or the various islands in the Pacific grabbed by one great power or another. Such colonies were meant to support permanent military deployments far from their home base so that the mother country could project power, and would consist of the military forces, their families, and the families of various other specialists and artisans needed to support a permanent settlement.

In short, if you feature colonial powers in your worldbuilding, think about why the colonies were placed in the first place (at great expense and risk), and how that influences the location, population demographics, and subsequent histories of the colonies.

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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!)

Moral Economies

02 Sunday Oct 2022

Posted by in Economics, Politics, Politics for Worldbuilders

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If a sharecropper grows food on a landlord’s land, how are the profits split between them? How should they be split? And what is the effect of those moral expectations when things go wrong, and there’s not enough food to go around? (And how can we exploit such conflicts in our fiction?)

I’ve mentioned James C. Scott before, and will probably mention him many times to come. His early book The Moral Economy of the Peasant discussed this issue in detail, in the context of the peasant societies of Southeast Asia. In these societies, peasants could be roughly divided into three groups: those who had their own farmland, those who were impelled to sell their land to landlords and become sharecroppers, and those who were pushed out of even this position and were reduced to landless laborers.

Over time, more and more peasants lost their land and became sharecroppers, as the ups and downs of agricultural life caught farmers in dire straits and allowed those with surplus capital to benefit. But for our immediate purposes, the interesting action occurred with the sharecroppers. The “traditional” system was to sell your land to some magnate in your own village or a village nearby, who would take a large chunk of the harvest—say, 30 or 40%.

But in exchange for such a large share, the peasantry expected something in return. This magnate was more than your landlord; he was expected to be a patron as well, protecting the welfare of the sharecroppers when times were bad and harvests poor. Depending on how bad things got, landlords might be expected to reduce their share of the harvest, extend low-interest loans to the sharecroppers to tide them over, or even to open their storehouses and share out some of their accumulated grain.

That is, landlords were expected to insure the subsistence of the sharecroppers, and only their commitment to do that would justify their taking so much of the harvest in good times, and their claimed social position as landlord and patron. This is what Scott called the “moral economy of the peasant.”

Sometimes, landlords reneged on their social obligations and withheld food during bad times. Or worse, landlords actually increased their demands on the peasantry, in order to stabilize their own incomes at the expense of the peasants. (This was a particular hallmark of the colonial European regimes that took power in Southeast Asia in the late 1800s and early 1900s.) Doing so was hazardous, since starving peasants with nothing to lose would sometimes rise up and massacre the landlords, and seize what food they could find. They would feel justified in doing so: the landlords had violated the moral economy. They had broken the bargain.

But in the early 1900s, excessive demands on the peasantry in Southeast Asia became more and more common as two things changed in tandem:

  • local patrons were gradually replaced by absentee landlords who lived in the cities, away from the villages; and
  • regime security forces became stronger, and better able to repress peasant uprisings.

For more on what happened in that case, read Scott’s book. (And in writing this post, I came across the article that apparently inspired Scott, a nice discussion of food riots in 18th-century England, which the author argues were undergirded by a similar moral economy; summary here.) For our purposes, we should focus on the key question: in bad times, whose position is stabilized at whose expense? And what moral system or expectation is being upheld, or violated, in the process?

This shows up frequently in “modern” society. Insurance companies, for example, collect money from us every month based on the promise of making us whole if some catastrophe happens. If we suffer a loss but the insurance company denies the claim, we feel betrayed, as if we had been robbed. On the other hand, if (say) a massive hurricane sweeps through an area and wipes out all the housing, property insurers may face the prospect of bankruptcy and go running to the government for a bailout. The bailout, in turn, would ultimately be financed by taxpayers, so the justness of the bailout would partly depend on the how just the tax system is. And so on.

The government itself taxes us a great deal, but we only acquiesce if we think that the government is seeing to our wellbeing in return. In bad times, the government is supposed to protect us from harm, or at least cushion the blow. If it does not, then the government will have a hard time justifying its taxation. And taxpayers will feel a moral right to object and demand better, perhaps at gunpoint.

In general, we tend to have a moral expectation that the wealthy and the powerful protect the welfare of the poor, especially if the wealthy became so on the back of the poor. This is a moral economy, a set of expectations that are overlaid on “normal” economic relations and help to constrain them. (You can imagine other types of moral economy rather than the patron/client model. For example, what if rather than guaranteeing subsistence, the economy was “supposed” to guarantee opportunity? Or provide a pure meritocracy, in which the unmeritable deserve to suffer?)

Unfortunately, it often happens that the powerful elites stabilize their own position at the expense of the weak masses, as happened in Southeast Asia during the Great Depression. This causes great suffering or even starvation; and it can also sow the seeds of revolutionary violence, if the weak are able to rise up. In the very worst case, as Joseph Tainter teaches us, it can lead to entire societies collapsing: if elites make greater and greater demands on their societies even when times are bad, eventually the societies are unable to meet those demands and the society implodes. (What will arise in its place is a different question. Sometimes the answer is “nothing,” if the society wipes itself out via starvation and violence.)

To recap, in your worldbuilding, it is worth asking these questions:

  • What moral expectations do the weak have of the powerful, especially if the powerful become so on the back of the weak?
  • Whose income, wealth, or social station is being stabilized at the expense of whom?

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Addendum: The posts in this series are intended to go into books of my planned series Politics for Worldbuilders, the first book of which is already published. I had initially planned the second book to be Tyranny for Worldbuilders, which would discuss various techniques of state rule and how they are resisted. But as I’ve been writing out these posts, I realized that I was trying to mash too many concepts into the same book (state capacity, and authoritarianism, and political economy, to name a few), and they didn’t coexist nicely. So I’ve decided to split off the discussions of political economy into their own book, which will be the new Book Two in the series. At present, the plan is that this book will start with the concepts discussed in this post, and build on them with the other “Building the Economy” posts as well as other posts on political conflicts revolving around economics. I think that the book writing will go a lot faster now that I have a more focused plan.

Watch this space!

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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!)

Building an Economy: Money, Part 1

14 Sunday Aug 2022

Posted by in Economics, Politics for Worldbuilders, State Formation

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Living in our modern world, we have certain assumptions about how money works. But historically, money has taken many more forms than we are used to. That’s actually good news for writers: if you want to do something cool with your setting’s system of money, there’s a wealth of concepts to play with (no pun intended).

In this post, I’m not trying to give you a crash course on what money is. (There’s a decent article on Wikipedia that does the job, though it is perhaps too heavily influenced by David Graeber’s work.) Instead, let’s drill down and ask when a particular form of money might be more useful, to the political regime, than other forms.

In a nutshell, people tend to form different kinds of economic relationships depending on the kind of interpersonal relationships they have:

  • A family unit tends to be run as a dictatorship (with all financial decisions being made by the head) or a political community (different members have different inputs into the decision process, and eventually some sort of guiding consensus is reached). Family members might loan each other money or buy and sell between them, but these relationships are often highly conditioned by the “normal” expectations between family members.
  • Good friends or neighbors will often give each other reciprocal gifts, trying to stay more or less in balance over the long run; or they will extend and receive loans of goods or services, trusting that debts will be settled in some form in the future. Cash deals might occur, but in general cash feels somehow gauche, cheapening the social bonds between people.
  • With more casual acquaintances or people you don’t know well, but who live in the same economic community as you, you tend to do business on a cash basis—using a shared currency that is preferred in that economic community. Loaning money to people you may never see again is unwise, but you still operate in a shared social-economic framework and share a currency that you, and the people around you, value.
  • If two utter foreigners meet—living in entirely separate societies, sharing no long-term economic relationships so that they do not have a mutually-valued currency to use—they will resort to barter, directly exchanging useful goods that each party has and the other party wants. They cannot rely on any shared system of economic value, because there is none. Instead, the scope of the relationship is narrowed to the purely functional. (In today’s world, this has become vanishingly rare; even people on opposite sides of the globe can transact in dollars, euros, or bitcoin.)

From this sketch, it seems that the less trust you share with someone else, the more likely you will do business with tangible goods (like wheat, cows, or gold and silver coins) rather than relationship goods (like debt and gratitude).

Unsurprisingly, we see in history that money has taken several forms, but we can lump them into four main categories: commodities, representative currency or tokens, coins, and fiat. In real life these ideal forms sometimes mixed with each other at the margins, but we can start by understanding the pure forms.

Commodities

In trade relationships, some communities will tend to produce particular trade goods like olive oil, tin, colorful beads, and the like, and trade them for other goods from other communities. Over time, settled trade routes tend to develop, with predictable trade goods and expectations surrounding their exchange. Eventually, commodities like grain, timber, spices, or precious metals develop standard forms, measurements, and relative values with each other. For example, in the Ancient Near East, the Mesopotamian sheqel became a standard weight for gold, silver, and copper, used widely across the region. Egypt used a different system of weights and measures, as did the seafaring Mediterranean societies, and international traders had to be fluent with all three systems.

In a more modern context, think of how cigarettes are used as money in prison, or in areas wracked by war and dislocation.

For commodities to play the role of money usually means that there is no better money available. Trust is low, shared economic frameworks are weak or absent, and political authority is fragmented. A government would usually prefer a different monetary system if possible, because the other systems provide more ways for government to skim off the top or enforce its own authority (see below). On the other hand, if the government itself controls a commodity source—a gold mine, or wheat fields, or similar—then it will be happy for a barter system to standardize around its commodity.

Tokens

Commodities are heavy. They are also expensive to transport. (One estimate was that to carry gold bullion from Rome to Naples in the Renaissance era, it cost about 10% of the gold’s value in pack animals and bodyguards!) Unavoidable if you actually need the commodity for functional reasons; but if you only need it as money, wouldn’t it be nice if you could carry a piece of paper that could be traded to some trusted authority in exchange for, say, 100 bushels of wheat?

Alternatively, tokens can represent not an asset, but a liability—I borrow money from you, and in return give you a piece of parchment or paper or a stone tablet that entitles the bearer to get money from me. The paper represents my debt; it also makes it easier to borrow, since the lender can sell the debt to another party if she needs the money early.

Tokens allow for commerce to be much more efficient that having to rely on raw commodities as money. But they also tend to restructure commerce around those trusted authorities that hold the raw commodities in storage—merchants, banks, temples, governments, and the like. Thus, wherever possible, the regime will want to encourage such tokens both to generate more economic activity and to keep the economy’s focus on itself. Governments especially love debt tokens, since they can thus borrow large sums by creating new money (right up to the point that the money loses its value…).

Tokens can also be an especially useful way to make tax collection easier. One fascinating example of this was in colonial America. Colonial governments would issue “bills of credit” as paper notes that could be used to pay the bearer’s tax bill. The bills had an expiration date; so as the expiration grew closer, people with large tax burdens would tend to collect these bills and then use them to pay the taxman, at which point the bills would be burned. In theory, issuance of bills of credit would be restricted to a reasonable level, commensurate with the general tax burden. However, colonial governments often were tempted to issue too much “free money,” with results so dire that the American Constitution specifically banned the states from issuing bills of credit (see Art. 10).

On a more “squishy” level, a token currency can strengthen communal bonds compared to commodities, since each transaction implicitly endorses the token system undergirding the currency.

Coinage

Surprisingly, gold and silver coins were a later development than token money, first emerging (as far as we know) in the 6th century BCE in Asia Minor. They combined the “intrinsic” value of a commodity with the “brand power” of the issuing government. So in political situations that were on the less stable side, or that featured lots of trade between neighboring (and sometimes hostile) countries, a coin-based system might make more sense than a token system.

Why issue coins? Two main reasons:

  • If your coins became desirable, or else you actually banned the use of foreign coins within your realm, it would stimulate local demand for the coins.
  • If you issued your coins for more than the raw metal was worth—either because of the abovementioned demand for the coins, or because you were secretly debasing the coinage with base metals—then you would earn a profit on the difference, called seigniorage.

Thus, there were two competing impulses: to keep the currency strong so people would want to use it, or to lower the precious-metal content in order to make short-term gains (at the expense of an eventual economic crisis). Stable societies tended to prefer a strong currency. If people trusted that Tyre’s silver drachma actually contained a drachma of silver, they would prefer Tyrian coins to those of (for example) Rome, which frequently debased their silver denarii with copper. As a result, coins that were known to be sound tended to circulate at a premium, compared to coins from less stable governments.

A heavily debased coin, meanwhile, could effectively act more as a fiat currency (see below) than one backed by valuable metal. (This illustrates that the categories we are discussing are more conceptual than actual; a currency can have attributes from multiple categories.)

Fiat

Fiat is the system we generally use today: governments issue money that only has value because they say it does, and they demand that taxes and other debts are paid with that currency. Governments would obviously want to issue fiat currency, if they can; it basically lets them expropriate a vast amount of value by “growing money on trees,” so to speak.

The drawback is that weak or unstable regimes quickly see their currencies become worthless. Even regimes that aren’t in danger of collapse can destroy their currencies, by issuing too much of it. Hyperinflation is basically impossible for commodities or coins (even heavily debased coins), but is historically common for fiat currencies. The temptation for governments to overspend seems far too powerful in the long run.

Now, fiat currencies do have some virtues. Under prudent management, they can allow the money supply to be much more responsive to economic conditions than even a token-based system, avoiding deflationary spirals that can crush debtors. In the United States, we managed to somehow not mess up a period of low inflation for roughly thirty years. (But that seems to be over for now.)

In general, a fiat currency is a way for governments to try and create a store of value (and borrow lots of money in the process) through sheer force of will. Sometimes it works. But more than any other form of currency, fiat relies fundamentally on trust in the issuing government. No more trust, no more fiat money.

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Hopefully, this has been a useful look at different currencies, and some of the conflicts that can be expressed through them. And as we know, conflict = plot.

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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!)

Worldbuilding, National Beliefs, and Punishment

03 Sunday Jul 2022

Posted by in Politics for Worldbuilders, State Formation, Writing

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The political and social institutions in a country are, in part, designed to reflect the country’s beliefs or governing philosophy. This is intuitive: you design your government (in part) the way you think will work best, so its design depends on what you think will work best. Sometimes this can be an unconscious process, as when the spread of mass production helped condition an entire generation to believe that fascism was better than democracy. At other times, this can be explicit. For example, Spain’s colonies in South America rebelled, in part, because of the galvanizing influence of the American Revolution and its great experiment of republican democracy. Later, in the mid-20th century, Latin American generals lost faith in democracy’s ability to run their countries, and decided to do the job themselves—launching coups against the elected governments and claiming the right to rule based on technocratic skill.

When we do worldbuilding and design our world’s countries, we should keep in mind the deep influence of ideas. Mind you, it’s easy to go overboard, and have every facet of a country be the pure expression of some philosophical system or other. Just remember that politics and history have their say too. But ideas still matter.

We can see this very clearly, for example, with how societies punish their lawbreakers. In the United States, most people tend to believe that prison is an appropriate punishment, and flogging is not. In Singapore, by contrast, criminals often accept caning as a way to reduce their prison sentence. In the ancient Biblical penal system (and in most penal systems of stateless societies), prisons were virtually unheard-of; most crimes were punished by fines of money or involuntary servitude, with some crimes resulting in flogging or the death penalty. Why?

In part, the differences are due to historical or practical factors. In particular, prisons are expensive and waste good labor. Still, we can learn a lot about the impact of ideas by looking at how the American prison system is justified philosophically.

The first thing we notice is that there is no single justification offered, and that many of the justifications conflict with each other. California Rule of Court 4.410, to take one example, lists eight objectives of the penal system:

(1) Protecting society;

(2) Punishing the defendant;

(3) Encouraging the defendant to lead a law-abiding life in the future and deterring him or her from future offenses;

(4) Deterring others from criminal conduct by demonstrating its consequences;

(5) Preventing the defendant from committing new crimes by isolating him or her for the period of incarceration;

(6) Securing restitution for the victims of crime;

(7) Achieving uniformity in sentencing; and

(8) Increasing public safety by reducing recidivism through community-based corrections programs and evidence-based practices.

Punishment and deterrence are not the same thing. To punish an offender, we decide how “bad” the offense was and then inflict a penalty commensurate with its “badness.” In part, this is to demonstrate that the offense was bad—that it merited a certain level of punishment. But to deter, we might have to inflict a penalty that is much worse than the offense. If it is hard to catch criminals, a proportionate punishment will not deter others.

For example, suppose that if you are caught stealing money, you have to pay back double what you stole—returning what you took and paying a further penalty. This makes sense from a punishment perspective: you stole from someone else, so your penalty is to lose the same amount as you took. Yet that punishment may not deter other criminals, if it is difficult to catch thieves. If only 10% of thefts are solved, for example, other criminals will figure that they will likely not be caught, and that it’s worth the risk.

If a society’s goal is to punish alone, it may view the lack of deterrence as an acceptable cost to keep punishments fair to the individual criminal. But if the society is worried about the overall level of crime, it might make the penalties harsher to deter other would-be thieves. For example, you might have to return five cattle for every one you stole. Or, as in early-modern England, you might be hanged. (Today, we would be horrified if someone were executed for stealing a sheep. On the other hand, in America the typical prison sentence for tax evasion is longer than for manslaughter.)

Such disproportionate punishments are unfair to the criminal, in one sense—it’s not her fault that most criminals escape punishment. A society that puts the highest value on individual rights might hesitate to use harsh “Beckerian” penalties. On the other hand, a society that prioritizes the collective good may be more apt to use harsh penalties if it thinks that the crime level will be kept lower that way.

Similarly, consider the tension between “encouraging the defendant to lead a law-abiding life,” and “isolating” the defendant by locking him in prison. If prison can be used to rehabilitate its inmates, then we ought to free an inmate as soon as his rehabilitation is complete. On the other hand, if someone is a hard criminal who will not change, and who will simply keep hurting people if able, it would make sense to keep her in prison forever, regardless of the particular crime for which she was convicted. So which is it? Do we as a society believe that criminals can be made better, or that they are irredeemable? Based on that difference, a society will tend to favor one approach over the other.

(In the real world, America isn’t sure what it believes—and everyone pays the price. The recidivism rate of the prison system—how often inmates are convicted of new crimes after their release—is over 75% in five years. Our prisons are not designed to rehabilitate people, in the main, but to dehumanize them. A more rational system would spend far more effort on rehabilitation, and society would benefit for it. Yet we also fail to treat many crimes with the seriousness that they merit, so that many dangerous criminals are released too early to harm again. Some would-be reformers focus on decarceration, which is easy, without spending much time thinking about reducing recidivism, which is hard. The result is more suffering, not less.)

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Now, suppose that you were an Evil Overlord. You believe that individual freedom or moral worth is unimportant, and the main purpose of punishment is twofold: keep yourself in power, and keep society functioning smoothly enough to keep the taxes flowing. How might your “justice” system work?

The worst crime would be treason, which would be punished with death by slow torture. The traitor’s family and friends might also be tortured to death, if you go for that sort of thing. Theft would be next, especially theft from a tax collector. By contrast, the seriousness of murder would depend on who is doing the murdering. If one of your nobles decides to kidnap a peasant girl, use her, and leave her body in a shallow grave, little harm done. But if her peasant father decides to kill the noble in response, that would be a threat to the entire social order and must be met with harsh penalties.

Individual guilt would matter, but not much. The appearance of swift punishment is more important. Forced confessions would be commonplace, collective punishment might be used if worthwhile, and penalties would be harsh. Slave labor might be common, being a nice bonus to help the state turn a profit on its criminals.

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We could keep going, but you get the point. We could go through a similar exercise thinking about other things besides punishment: property rights, the relative positions of men and women in society, attitudes towards work and wealth, and so on.

Sometimes this process goes in reverse. If society’s institutions happen to be a certain way, due to historical accident or material necessity or whatever, some people will develop justifications for why those institutions represent the pinnacle of moral achievement, no matter how cruel. (See under “chattel slavery in the American South,” for example.)

So in your worldbuilding, spend some time thinking about the impact of ideas on societies, and of societies on ideas.

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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!)

Group Identities in Politics: Ethnic Groups

02 Thursday Jun 2022

Posted by in Politics, Politics for Worldbuilders, Writing

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Let’s take a break from economics (see prior posts) and start to tackle an even thornier subject: group identities, and how they matter in politics.

That our identities matter is obvious, as a quick look around the contemporary scene shows. But as worldbuilders, we need to ask a few questions:

  • How does a group identity form?
  • How is a group identity maintained and perpetuated?
  • How and when does a group identity shift over time?
  • When does a group identity become politically salient?
  • What happens when groups come into conflict?

Now, this is a massively tricky field that a lot of people have grappled with for millennia. Any answers we settle on are going to be incomplete, and that’s okay. Remember: all models are wrong, but some are useful. For our purposes, “useful” means that a model helps us develop story conflicts and keep them organized.

One thing to keep in mind: in the most fundamental sense, “groups” don’t do anything. Only individuals do. On the other hand, the cumulative influences of the many individuals of one’s group can structure the choices available to the individual, so that we can talk about group action and mean something real. Still, the individual always has the option of flipping over the table and walking away, so to speak.

Any “group” tendency has to act on the individual level to mean anything. That is particularly true when we talk about politics. Groups don’t magically decide to take political positions or engage in political conflict; particular individuals within the group actively choose to do so and to convince or force others in the group to follow along. That also matters for fiction; we generally tell stories about people, not groups of people.

With that as our basis, let’s talk about ethnic groups.

There’s lots of possible definitions for “ethnic group,” and different theories for how such groups form and dissolve. But since we are not trying to explain the whole world, but to develop a useful tool for worldbuilding, let’s narrow our focus to three such lenses—which we will call primordialist, instrumentalist, and constructivist.

In a primordialist lens, an ethnic group is based on some real, immutable basis. A people exists because its members share ties of blood, deep history, and culture. Try as you might, you can never truly escape your ethnic group; it is a part of you. Similarly, you can never truly join another ethnic group, because even if you interact with it or even marry one of its members, you lack the deep heritage that they share with each other, and that you share with the ethnic group of your birth. In a fictional story, this might be an even more powerful force: ethnic groups might make up entirely different species, or have different magical talents, or whatever. In a primordialist viewpoint, ethnic identity is pretty much a given.

In an instrumentalist lens, by contrast, ethnic groups are constantly changing and adapting to the world and their own changing needs. People within the ethnic group are always reinterpreting its traditions, its practices, its relations with other groups, the boundaries between in-group and out-group. Tribal societies usually espoused an ancient blood identity in mythic terms, but pragmatically incorporated other bloodlines as a matter of course through adoption or marriage ties. In the instrumentalist viewpoint, the focus shifts from ancient history to modern practice: how the ethnic group is reproduced across generations, how it maintains or modifies its cultural practices, how it defines itself and distinguishes itself from others.

The constructivist lens shifts its focus again—not to what the group thinks of itself, but what others think of it. Constructivists recognize that at the extreme, some ethnic groups may coalesce from previously unrelated peoples who are thrown together by circumstance and kept together by the attitudes of those around them. Consider the category “Black.” Africa is a massive continent, and the peoples living there have a long history of national enmities and bloody wars, as peoples tend to do. Yet when African slaves were brought to the Americas, their previous identities suddenly became less important than the fact that the surrounding white freemen considered them all to be in the same group. Over time, Blacks began to see themselves in the same terms, by necessity: if others were going to relate to them as a particular identity, they needed to grapple with what that meant and to adapt to the needs of their circumstances.

“White” too has shifted in constructivist terms. Once, Irish and Italians were considered “lower races” by “white” Americans. Today, they are not. The difference was not in how these groups see themselves, but in how the majority society’s views of them changed. Similarly, many non-whites today think of Jews as white, even though most Jews would tend to resist such a label. But even if we reject thinking of ourselves as white, Jews need to be aware of the consequences of such a label and how it changes the way that others view us. (Asian-Americans, meanwhile, appear to be the “new Jews” in many respects, and are starting to awaken to what that means in political terms.)

A much more ancient example would be the Apiru of the Ancient Near East. Originally “Apiru” showed up in Mesopotamian texts as a reference to indigent, landless laborers or mercenaries. Over time, the term apparently took on an ethnic meaning. One might suppose that the existing landless class started to see itself as a group, the same way that the surrounding properties classes did, and to act accordingly. Ultimately, the Apiru became a feared enemy of the existing political order; in Middle Bronze Age Canaan, Apiru frequently conquered city states and massacred their political elites, and the cities’ Egyptian overlords were unable to stop them.

(Some have speculated that the Apiru are the historical basis for the Israelite people, though there is little evidence linking the two other than the claimed etymological link between Apiru and Ivri, Hebrew. I think the argument weak, based on my review of the debate. But I digress.)

Importantly, ethnic group identities can be constructed or altered through government action. (And so can other forms of group identity, which I hope to discuss later.) For example, American Indian tribes once had fluid criteria for membership, and frequently welcomed European settlers who were trying to escape the oppressive political or economic systems of their day; but today, the tribes are largely defined by reference to blood quantum, a racialist categorization not adopted by the tribes of their own choice, but imposed by the United States government. Similarly, British colonial officials in Africa would frequently mash together several local groups into artificial “tribes” and appoint leaders over them, the better to control them administratively.

In real life, all of these lenses and more are operating at once, in a confused tangle of forces pulling us in many directions as we navigate our own identities. In fiction, you can find it useful to think of them separately, and then to purposefully layer them on top of each other if it helps your story.

(EDIT: apparently this is not the first time I’ve written about this topic. A similar post from 2018 covers some of the same ground, but not all; but also touches on how group identities can be activated in political terms, which I hope to flesh out in a future post.)

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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: Capital

12 Thursday May 2022

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

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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

10 Tuesday May 2022

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

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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

06 Friday May 2022

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

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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

13 Wednesday Apr 2022

Posted by in Economics, Politics, Politics for Worldbuilders

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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.

*****

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.)

******

(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!)