It can be easy to think that money and a free market exchange system is the main method of how an economy runs, but for most of history, this was not the case. And so it doesn’t have to be in your world either. In this post I will talk about different methods of barter system.
(Pre-Marxist) Communism is probably the original system, which would have worked well in small communities where everyone knows each other, such as in nomadic tribes. Everyone would pitch in with the hunting and making of tools and the food and water would be split among the group. It wouldn’t make sense for food to be allocated by whoever gathered the most, as people would have to switch jobs to fill in different rolls.
For example, one of the women (who is probably a less skilled hunter then the men) may look after the young children, which frees up the other adults to gather food, but they wouldn’t be bringing in any themselves. Others might be teaching the young people the skills they need to be a contributing member of society, which is very important for the future survival of the tribe.
It is only when they began to produce a surplus that private property comes in and the tribe may move onto another system. Usually, but not always the surplus will come with permanently settling. This economy is usually focused on agriculture.
You might like to apply this to a settled country and see if you can make it work. In practice there would usually be an elite class who pretend to be equally distributing the goods, whilst skimming wealth off the top.
Perhaps the most rudimentary of exchange systems, the informal exchange system would have worked in small communities where everyone knows each other. If one person wanted something, they would either exchange goods of a mutually agreed value, or leave with the promise of payment further down the line. This relies on everyone relying on each others honesty and as people are likely to know one another, if someone doesn’t make a payment, they’ll find the community will turn on them. This becomes more difficult as the population grows.
If you want to use a system such as Informal Exchange on a larger scale you could add a cultural trait which would allow this to work.
I’ve done this with one of my cultures, Mesit. Mesit people have an honour bound culture and to not repay debts is big sin, as it represents going against ones word. As everyone strives to maintain and build their honour, they try keep to their agreements. Of course, as the society grows, this is going to become harder and harder until they have to move to something else.
Command Economy (Usually a Marxist Communist Economy)
This is communist economy in a more modern setting. It is one which is controlled by a powerful centralised government which handles the production and distribution of goods and services. It may still have a low level of trade however. Tends to focus more on industrial goods.
A command economy, such as the Inca’s is one where the establishment controls all aspects of the the economy and allocates goods as and where they see fit. I’ll be honest, I’m not 100% sure how the Incan economy worked, but this is my understanding of it. People owed labour and in return received food and shelter. A command economy often goes hand in hand with a communist economy.
Interestingly the Incas did discover the wheel, but it was only used as a child’s toy, not in all the ways that other societies used it. This is an example of how you can turn things on its head.
The free market, or capitalism, means money talks. All goods and services have a price determined by demand and supply, the invisible hand of the market and if you can’t afford something, you can’t have it. Tends to focus on consumer goods with no government intervention.
Most of us experience a mixed economy to varying degrees. There is the private sector, which functions as a free market, and a public sector, which will be under a command economy. Generally this involves public spending on things which are deemed to be in the public interest of everyone, such as the army, sanitation, street lights, lighthouses.
Even economies we would think of as being more free market, such as the USA economy are not, as there is a degree of command economy in there such as education and military spending, but also corporate bailouts and a subsidies. In a true free market, any company that fails would be allowed to fail, no bank would be too big to fail. You could make the argument that this culture of corporate bailouts, tax reliefs and bailouts is actually corporate socialism, which is ironic considering how much of dirty word socialism is in the US.
In feudal economies, manours were largely self sufficient and so little trade occurred from manour to manour. Peasants were tied to the land and were given a plot of land to farm in return for taxes in the form of crops and their services for things such as construction or war. They also had to pay to use manour services such as the mill. This below shows the feudal structure (its from this page (its been a good resource for this post)). This system is a bit unusual and it doesn’t really fit neatly in any other system.
Make Your Own
The first six that I talked about are pretty straight forward and feudal almost looks like something that someone made up in the way that it differs from the other systems, even thoughts it was real and widely used.
All economies deal with “an infinite amount of human needs and wants from a finite set of resources” This is the quote I was taught day 1 of economics A Level. Of course, you put a man down in the forest, his wants and needs aren’t limitless, he’ll want shelter, food, water and heat. You can consider Maslow’s Hierarchy of Needs. Then consider supply and demand.
One approach might be to think about the resources available (maybe using a resource map) and the industries present in the area, and then what policies, or economic set up might benefit them.
Think About What Culture You Have
I have a nation called Tukit which neighbours the honour bound Mesit. In Tukit it is said that “no man starves unless they all do”. So they have a controlled communist economy, where the priests who run the granaries store and distribute the food. Its a point of conflict with Mesit as when famine strikes, they take a loan out with Mesit which they fail to pay back the next year. Mesit considers this a big dishonourable act given the size of the loan, and there fore a diplomatic insult. Tukit thinks that Mesit should share anyway and that they should be forgiving that they didn’t manage to pay back the loan on time. The honour bound warrior nation of Mesit invade.
So you can see how the different cultures might have economies. Throw natural disasters at them, think about how they would react and let the situation play out.
I hope you’ve found this useful and sorry its a tad late. I’ll add to it as more information becomes available; I’m sure people have plenty of knowledge on this to share. I’ll be following this up with a part two on different types of currency.
We have a poll open on setting up a forum to build a community here. Let us know your thoughts.
If you have enjoyed this blog or found it useful and would like to support us, consider pledging using Patreon. This will be most appreciated and will help us expand what we can offer.
If single donations are more your thing, consider using Paypal Donate.
Our current target is $3 a month, to cover domain name costs, we are currently on $1.
Thanks very much, Happy New Year and see you next week.