We have no more of idea what is happening in our game economies than do the talking heads on CNBC
After reading City Works by Fantasy Flight Games I've found myself thinking a lot about the nature of economics in the Dungeons and Dragons game. After experimenting for a few days it seems that the game is only able to support three simple types of economies: Static, Dynamic, and Modified. If we use more complex economies, such as fully realized capitalism or communism, then we begin to run into the real world problems that face modern economists. Which means that we have no more of idea what is happening in our game economies than do the talking heads on CNBC know about what's happening in the markets. So for that reason I'm eschewing the more complex economies and focusing on the three simplified versions.
Static Dungeon and Dragons Economies
The Static economy is the least labor intensive economy out of the three. It is no more complex than pulling out your player's handbook and going down the list to purchase an item. In earlier versions of the game this was a simple way to get play moving as the list consisted of nothing more deadly than a mundane weapon. That began to change in Advanced Dungeons and Dragons Second Edition as the Player's Options books began to provide more specialized weapons; still though, for the majority of cases these weapons were not magical and held no more intrinsic advantage than any others.
All of that began to change with Third Edition.
In Third Edition you began to have books like Weapons of Legacy where powerful magical items could be purchased with a price that players were expected to see. This was a major change from previous editions as there appeared several books with significantly more powerful items available for purchase within their pages. This created a situation where the Dungeon Master had to more carefully monitor what books his players were using and what items they were purchasing. This created slightly more work for the Dungeon Master but in a static economy where prices are fixed it also provided a situation where the Dungeon Master had less work as he could simply say, "All prices are as listed."
There are perfectly valid solutions to this situation but they all involve spread sheets and hours of tedious data entry
In Fourth Edition this sort of system really ran off the rails as the Player's Handbook actually has prices for magical items up to 30th level right there for everyone to see; and it is incredibly difficult to look at another person and say, I realize what the book says about pricing but we're not fucking following it, without coming off as an asshole. Now there are perfectly valid solutions to this situation but they all involve spread sheets and hours of tedious data entry.
Dynamic Dungeons and Dragons Economies
A Dynamic Economy is the closest approximation to the real world we can get and still control all the factors involved. It will require the Dungeon Master to keep track of a few different factors: currency valuation, imported goods, exported goods, harvest fluctuations, inflation and deflation of prices, current market tensions (such as wars, land disputes, guild disputes, et al.), and labor prices. It sounds like a lot because it is, but that doesn't mean that it is impossible to do.
Currency valuation can be either in flux, if you hate yourself, or static.
Currency valuation can be either in flux, if you hate yourself, or static. A flux currency requires that you determine how much the currency changes in relation to other currencies. To begin you will need to choose a global currency backer as your standard for all subsequent currencies. This currency will always equal 1 and all others will be in relation to it. Next you will need to take each of the currencies available in your game and assigned them values in relation to 1. For example, if the nation of Rul is your global currency backer then its gold Ruble is the standard 1 gold in the players handbook; however, for its sister nation of Cormyr this not the case as it is set at a standard of 1 = 0.0046 or 1 gold Ruble is equal to 214 gold Crowns, 8 silver Sisters, and 5 copper Guineas in the Cormyr currency. Now if we were doing a static currency this would be the end of your work, but with a flux currency you have to consider other factors: how much of your currency is out there; how much do people want it; is it being counter-fitted. Each answer to these questions will adjust the value of your currencies either up or down which will in turn effect inflation, deflation, labor prices, imported good prices, and exported good prices. Here's the kicker, if you really want to do this in a realist way you have to determine the currency valuation daily.
If you're like me and you have no interest in determining fluctuations for fantasy currencies that your players may never actually encounter and that holds no real value for you game then you'd use a static currency. But if you like the idea of that sort of fluctuation within your game and the mirroring of real world currency markets have at it. It can be done - just not by me.
In order to determine the status of prices based on importation and exportation I'm going to take a page from Mike Mearls and use his simplified Economy from City Works. In brief you take five items in your economy and designate them as exports, take five more and designate them as imports. Imports are considered scarce items and are valued at 1.5 x normal value. Exports are considered glut items and are valued at .5 x regular value. All other items are valued according to the chart below based on their availability within your economy.
|Rare||2 x regular value|
|Scarce||1.50 x regular value|
|Abundant||0.75 x regular value|
|Glut||0.50 x regular value|
Now it's a simple system that can be ported into just about any game with relative ease if you use it as is; but if you're talking about a Dynamic economy then you have to consider the intangible factors in your trade network. Consider some of these questions: is Cormyr at war; do they no longer need your grain; how does that overabundance of grain impact the price; is there anyone else your merchants can sell the grain to; how does the local dock loader's strike affect the price of your grain; and so on, and so on.
Everything in your world is interconnected and in a Dynamic economy you have to realize that each action is going to have consequences that as a Dungeon Master you have to track. For example, a good harvest will reduce the price of grain; which reduces the price of bread; which in turn makes it to where bread merchants and millers are making higher profits (for a while) or under cutting each other (and thereby driving the price down) to drive each other out of business. By the same contrast if your players burn down the field to kill off a nest of giant spiders then there is a scarcity of grain; which raises the price of grain; which increases the price of bread; which in turn reduces the bread merchants and millers profit margins and causes some of them to go out of business because people can't afford their products.
Devaluation is a scary thing for a Dungeon Master as you can unintentionally ruin the economy of your fantasy city, nation, and world just by allowing your players to find the treasure they so desperately want.
Before I move on to the Modified economy I just want to touch on the devaluation of a currency. Devaluation is a scary thing for a Dungeon Master as you can unintentionally ruin the economy of your fantasy city, nation, and world just by allowing your players to find the treasure they so desperately want. Think about it in these terms: your players have killed the dragon Gnarlwood and are flush with a million gold Rubles. They go into town and begin purchasing and throwing money around like it's rain. Suddenly a gold piece isn't worth as much because there's one just about everywhere you look. So the lower currencies begin to lose value as well and before you know it you can't buy anything with a copper piece, silver is basically useless, and people are spending five gold just to buy what once cost five copper. In a Dynamic economy this can happen easily and there are examples of such things happening in fantasy game settings (look at Dragonlance where a gold piece is essentially useless).