Magic and tech: economy

One of the biggest topics of the last decade has been the economy. We’re finally climbing out of the hole the banks dug for us in 2008, and it’s been long enough that most people have taken notice. Employment, income, wages, and benefits are important. So are less obvious subjects like inflation, debt and credit, or mortgages. Even esoteric phrases like “quantitative easing” make the news.

The economy isn’t a modern invention, however. It’s always been there, mostly in the background. From the first trade of goods, from the first hiring of another person to perform a service, the economy has never truly gone away. If anything, it’s only becoming bigger, both in terms of absolute wealth—the average American is “richer” than any medieval king, by some measures, and today’s billionaires would make even Croesus jealous—and sheer scope.

How would magic affect this integral part of our civilization? The answer depends on the boundaries we set for that magic, as we shall see.


Our economy, whether past, present, or foreseeable future, is based on the concept of scarcity. For the vast majority of human history, it was only possible to have one of something. One specific piece of gold, one individual horse, one of a particular acre of land or anything else you can think of. You could have more than one “instance” of each type—a man could own twenty horses, for example—but each individual “thing” was unique. (Today, we can easily spot the friction caused when this notion of scarcity meets the reality of lossless digital copying, the lashing out by those who depend on that scarcity and see it slipping away.)

Some of those things were rarer than others. Gold isn’t very common; gems can be rarer still. Common goods were relatively cheap, while the rare stuff tended to be expensive. And that remains true today. Look at any “limited edition”. They might have nothing more than a little gold-colored trim or an extra logo, but they’ll command double the price, if not more.

Supply and demand

All that only applies to something people want. It’s a natural tendency for rare, desirable goods to climb in value, while those things that become increasingly common tend to also become increasingly worthless. This is the basis of supply and demand. If there’s more of something than is needed, then prices go down; if there’s a shortage relative to demand, then they go up.

Although it’s a fairly modern statement, the concept is a truism throughout history. It’s not just a fundamental idea of capitalism. It’s more a natural function of a “scarcity economy”. And you can apply it to just about anything, assuming all else is equal. A shortage of laborers (say, due to a plague) pushes wages higher, because demand outstrips supply. That’s one of the ultimate killers of feudalism in the Middle Ages, in fact. Its converse—a glut of supply—is the reason why gas prices have been so low in America the past year or so.


Another thing you have to understand about the economy is that it’s all connected. Today, that’s true more than ever; it’s the reason we can talk about globalism, whether we consider it a bringer of utopia or the cause of all the world’s ills. For less advanced societies, the connectivity merely shrinks in scale. There was, for example, no economic connection between Europe and the Americas until the fifteenth century, apart from whatever the Vikings were up to circa 1000. The Black Death had no effect on the economy of the Inca, nor did the collapse of the great Mayan cities cause a recession in Rome. Similarly, Australia was mostly cut off from the “global” economy until shortly before 1800.

Everything else, though, was intertwined. The Silk Road connected Europe and Asia. Arab traders visited Africa for centuries before the Portuguese showed up. Constantinople, later Istanbul, stayed alive because of its position as an economic hub. And like the “contagious” recessions of modern times, one bad event in an important place could reverberate through the known world. A bad crop, a blizzard blocking overland passes, protracted warfare…anything happening somewhere would be felt elsewhere. This was the case despite most people living a very localized lifestyle.

Making magic

In role-playing games, whether video games or the pen-and-paper type, some players make it their mission to break the economy. They find some loophole, such as an easily creatable magic item that sells for far more than its component cost, and the exploit that to make themselves filthy rich. It happens in real life, too, but government tends to be better at regulating such matters than any GM. (The connection between these two acts might make for an interesting study, come to think of it.)

We’re trying for something more general, though, so we don’t have to worry about something as fine-grained as the price of goods. Instead, we can look at the big picture of how an economy can function in the presence of magic. As it turns out, that is very dependent on the type of magic you have at your disposal.

First, let’s assume for a moment that wizards can create things out of thin air. Also, let’s say that it’s not too difficult to do, and it doesn’t require much in the way of training or raw materials. Five minutes of chanting and meditating, and voila! A sword falls at your feet! Something more complex might take more time, and living things can’t be created at all, but crafted goods are almost as easy as a Star Trek replicator.

Well, that destroys any economy based on scarcity. It’s the same problem media companies have with computers: if something can be copied ad infinitum, with no loss in quality, then its unit value quickly drops to zero. Replicating or creating magic, if it’s reasonably widespread, would be like giving everyone a free 3D printer, a full library of shape files, and an unlimited supply of feedstock. Except it’d be even better than that. Need a new sword/axe/carriage/house? Call up the local mage. No materials needed; you’re only paying for his time, the same as what would happen to books, music, and movies without licensing fees and DRM.

So that’s definitely a “broken” economy. Even a single user of such magic breaks things, as he can simply clone the most expensive or valuable items he knows, selling them whenever he needs the cash. Sure, their value will eventually start to drop—supply and demand in action—but he’ll be set for life long before he gets to that point.

It’s the economy, stupid

For our magical kingdom, let’s look at something more low-key. It doesn’t have creation magic. Instead, we have at our disposal a large amount of “automating” magic, as we’ve seen in previous parts. What effect would that have on the economy? Probably the same effect increasing automation has in our real world.

Until very recently, most work was done by hand, occasionally with help from machines that were powered by people, animals, or natural forces. The Industrial Revolution, though, changed all that. Now, thanks to the power of steam (and, later, electricity), machines could do more and more of the work, lightening the load for the actual workers. Fast-forward to today, where some studies claim as many as 40% of jobs can be done entirely automatically. (For labor, we’re actually getting fairly close to “post-scarcity” in many fields, and you can see the strain that’s beginning to cause.)

Magical force and power can easily replace steam and electricity in the above paragraph. The end result won’t change. Thus, as magic becomes more and more important in our fictional realm, its effects stretch to more and more areas of the economy. As discussed in the post about power, this is transforming the workforce. Unskilled labor is less necessary, which means it has a lower demand. Lower demand, without a corresponding decrease in supply, results in lower wages, fewer working hours, fewer jobs overall. We know how that turns out. The whole sordid story can be found in all sorts of novels set in Victorian England or Reconstruction America—Charles Dickens is a good start. Or you can look at modern examples like Detroit or Flint, Michigan, or any steel town of the Midwest.

There is an upside, though. After this initial shock, the economy will adjust. We see that today, as those displaced in their jobs by robots have begun branching out into new careers. Thus, it’s easy to imagine a magical society embracing the “gig economy” we’re seeing in Silicon Valley and other upscale regions, except they’d do it far earlier. You could even posit a planned socialist economy, if the magic works out.

But mages are human, too. They’re subject to need and greed the same as the rest of us. So they might instead become the billionaires of the world. Imagine, for instance, wizards as robber barons, hoarding their techno-magic to use as a lever to extract concessions from their rivals. Or they could simply sell their secrets to the highest bidder, creating something not much different from modern capitalism. If magic has a distinct military bent, then they could become the equivalent of defense contractors. The possibilities are endless. All you have to do is follow the chain of cause and effect.

The economy is huge. It’s probably beyond a single author to create something entirely realistic. But making something that passes the sniff test isn’t that hard. All you have to do is think about why things are the way they are, and how they would change based on the parameters you set. Oh, and you might want to find one of those munchkin-type players who likes to find loopholes; for the economic side, they’re more useful than any editor.

Medieval coinage: fantasy vs. reality

I’ve been writing these posts days (sometimes weeks) in advance. Whenever this one may be posted, it was written on 7/7, at a time when the Greek economy is making all the headlines. The talk of money is in the air, so I can’t help but think of it. And when I think of something, I want to write about it, so here you go. (Also, I’m a coin collector, so this fits into not one, but two of my hobbies.)

We all know that fantasy has a tendency to stay stuck in medieval Europe, particularly England. That time (and place) is pretty much the default setting for fantasy literature and gaming. But it’s not the real Middle Ages, only a facsimile, an idealized, romantic notion of that time. World-builders can do better than that; nowadays, they’re all but expected to. However, money is still one place where even the best games and books can trip up.

The Idea

Money is taken as a given in modern society. Whether we’re holding little discs of metal, folded bits of paper, stiff plastic, or bits and our imagination, we use money all the time. For a lot of people, it’s hard to imagine life without it. Thus, since writers write what they know, fantasy worlds almost always have a monetary system, and it’s usually far closer to ours today than those of the Middle Ages.

Money, as an idea, goes back thousands of years. For example, any coin show worth the name will have Roman specimens for sale at reasonable prices. (I bought one for my cousin as a Christmas present in 2004. It cost \$20, and it was just about the cheapest thing I got.) Since those ancient days, it’s been made pretty much constantly. The barbarian hordes of the Dark Ages minted their own coins, even after they had all but demolished the western half of the Roman Empire. Everywhere you look, there’s money. Maybe not always metal and paper, but something will have value. (In parts of America, they were using things like cocoa beans around this time.)

So there’s nothing wrong with a fantasy world having money, simply on the basis that everyone’s doing it, and they always have been. The problem lies in how that money economy is represented, especially in the time period and location we’re talking about here: Europe in the High Middle Ages.

Buy, Sell, or Trade

Not everyone had money then. Not everyone needed it. For a lot of things, you could get away with barter, especially if you were a member of the lower classes (like most people were). You also had the option of payment “in kind”, which was almost the same thing, except that it was a one-way street: you pay your taxes in grain, or cows, or whatever. In a feudal society with heavy serfdom, this works, since the peasantry wouldn’t be buying much, anyway. For games, though, this has its drawbacks, as players want loot, and they almost always want it in cold, hard cash. (Banished, however, is notable for getting away with a lack of money, since it’s a city-building game emphasizing resource management.)

Players want money. Readers expect it. So what’s a writer to do? Well, if you want medieval money, you need to know what money was like in those times. So the rest of the post can serve as a primer to the currency of the Middle Ages.

A Note on Units

For measuring precious metals such as gold and silver, the traditional “Customary” system uses a few units that may seem odd to non-Americans used to the metric system. (In fact, they can be confusing for Americans, too.)

Specifically, precious metals are measured using troy units. The smallest unit is the grain, which was originally based on the weight of a grain of barley; in metric terms, it’s about 64.8 mg. The troy ounce is 480 grains (~= 31.1 g), and the troy pound is 12 ounces = 5760 grains ~= 373.2 g. (Note that this is not the same as the “regular” avoirdupois pound, where 1 pound = 16 ounces ~= 454 g.) We’ll see these units later on, but I’ll try to add in metric equivalents.

Silver: Economic Workhorse

The most common coins in the Middle Ages were made of silver, sometimes nearly pure, but usually alloyed with base metals. Most countries at the time used a system based on the old Roman coinage, where a pound of silver (hence pound sterling) was divided into 240 parts, each making a penny. (The specific amount of weight varied based on the pound used, as different places had different standard weights, but the nominal value is obviously 24 grains, or ~ 1.56 g.) Between the penny and the pound was the shilling, worth 12 pence or 1/20 of a pound, although no actual shilling coin was minted in Britain until around 1500, well after the High Middle Ages.

These are the English names for these specific coins, but other locales in Europe used their own variations. France had the livre (the French word for “pound”), the sou (1/20 of a livre), and the denier (1/12 of a sou). In Italy, it was the lira, soldo, and denari. The states of the Holy Roman Empire had pfunds, schillings, and pfennigs. All of these are translations or descendants of the Roman libra, solidus, and denarius, the forebears of the system.

Pennies, whatever name they go by, were the main currency (when currency was used) for everyone outside the nobility, but they were tiny. The baseline for fantasy RPGs, Dungeons & Dragons (or simply D&D), has its generic “silver piece” coin defined as 50 to the pound, or about 9.4 g. Real pennies were far smaller, rarely heavier than 1.5 g, and often less than one gram. (Not only that, but they often became debased as time went on, meaning you got less and less actual silver content. It was the medieval equivalent to inflation.) Clearly, D&D is way off.

There were other silver coins in use at the time, though, and many of these were bigger. In England, for instance, we have the groat, equal to 4 pence and weighing 4.67 g in 1351. This larger coin was a model going around Europe at the time, also appearing as the French gros, Italian grosso, and German groschen. Most of the time it was valued as four pennies, like in England, but some places had it as six (Genoa), twelve (France and some of Italy), or twenty (Venice). Some places also had a half-groat (2 pence in England) to split the difference between the two main silver coins.

For larger “purchases”, you didn’t necessarily have to have a bag full of coins. Silver bars were still commonly used for trade in the medieval period, and the closest thing to a standard unit for them was the mark, equal to half a pound = 8 ounces ~= 186.6 g. (In D&D terms, this would be around 30 silver pieces.)

Gold: Ooh, Shiny!

Gold, of course, has been valuable forever, and for good reason. Gold coins are some of the oldest in existence, dating back millennia. Focusing on our medieval period, we can see that gold is still valuable, still in use here. Early in the Middle Ages, it wasn’t quite as visible, a bit like \$100 (or €100, I think?) bills today. Later on, though, as wages went up and fineness came down, gold coins became more popular.

The gold standard (see what I did there?) of coinage in medieval Europe was the florin. Obviously, it originally came from Florence, but it was soon copied all over the continent. Florence’s version was as pure as they could make it, and it weighed in around 3.5 g, with a value equal to 1 pound (lira) of silver. Venice followed with the ducat, France with the ècu, and so on. England, after an aborted attempt at mimicking the Continent, made its “noble”, equal to 1/3 of a pound sterling (80 pence) and weighing almost 9 g. (This was very close, in fact, to a D&D gold piece.)

Spain, too, went its own way, taking the maravedi from Arabic coinage. It started out roughly the same as a florin (albeit a century earlier), but greed and inflation took their toll. By 1300, the maravedi no longer had any gold in it. Debasement had turned it into a silver coin. Fifty years later, it wasn’t even that, relegated to a unit of account until the colonization of the New World brought a greater need for Spanish small change.

Copper: Of Little Worth

Copper pieces are a staple of fantasy, especially “low” fantasy more interested in the peasantry than the gentry. But that’s a bit of an anachronism. Copper coinage wasn’t widely used in the High Middle Ages. There simply wasn’t much need, as nobody really wanted to buy anything worth so little that copper would be useful. Later in the period, though, copper coins did become popular, starting as heavily-debased silver “white money”, then becoming the even worse “black money”, before finally removing the precious metal altogether.

It’s really in the later 14th century that copper money gets its start. Usually, it comes about as prices fall and cities grow. Urbanites need more small change than rural farmers, as they tend to deal in smaller quantities. In Italy, where urbanism was at its strongest, copper comes into its own, but the whole thing was a mess of different denominations from different cities.

In general, by 1400 a lot of pennies were on their way to becoming full copper, but they were still technically considered silver coins. England, that favorite of fantasy, was the exception: official copper pieces weren’t minted at all until well after the Middle Ages. Instead, tokens of lead were made to trade in smaller amounts.

For roleplayers, copper pieces are all but useless, almost a joke. But fantasy writers might need small change to put in the pockets of their poor. Well, as long as they’re in a city.

Platinum: Not Even There

D&D defines a platinum piece as 10 gold pieces (or 100, if you’re playing 4th Edition). But there’s a big problem: platinum effectively didn’t exist in the Middle Ages, at least not in Europe. There is evidence of its use among natives in South America, but it wasn’t actually used by Europeans until the 18th century. So, if you’re going for realism, you won’t have platinum coins at all. Of course, fantasy dwarves might use it, and magic may make it easier to find, but that’s a topic for a different day.

Paper: Folding Money

Paper money quite obviously requires paper, which didn’t get big in Europe until the end of the High Middle Ages. Bills of sale existed, though, and these eventually evolved into checks, then to paper money.

A serious paper currency requires a printing press, which, strictly speaking, puts it just outside the Middle Ages. But older methods of printing (woodblocks, for example) could work, too. It wouldn’t be anything like today’s paper economy, but there’s nothing stopping it. It’s just not entirely historical. Obviously, fantasy doesn’t have to worry about that; magic might be able to replace the press. (One of my favorite book series, Daniel Abraham’s Dagger and the Coin, actually uses the invention of paper money as a plot point.)

The Buck Stops Here

Cultures in Middle Ages Europe, broadly speaking, did have a monetary system. It’s not much like our own, but it’s equally distinct from the faux-medieval ideas shown in fantasy literature and gaming. Players of RPGs might not like the complexity of the real thing, but authors surely do. But even they are guilty of anachronism. Even the notion of decimal currency (100 cents to the dollar, pennies to the pound, etc.) was unfamiliar seven centuries ago. Standard weights existed, but each country (in some cases, each city) had its own standard. I doubt anyone would want to play out the process of getting your foreign loot exchanged into local coin, but it wouldn’t be nearly as out of place as knights carrying platinum pieces.

Okay, I’ve gone on far longer than I first anticipated. Time to stop.