Save For Half

Dungeon Crawling Economics

One topic you should not think too much on in Dungeons and Dragons, Pathfinder, or similar game is the economics involved. When your party's livelihood depends on looting treasure from enemy strongholds, most player characters (PCs) care about buying new swag more than the inflation resulting from introducing a currency surplus into the local economy. Despite this, I could not help but overanalyze the logic in an attempt to reconstruct and justify this trope.

Mind you, most fantasy worlds have magic spells that allow things like transmutation of one material to another, but we'll ignore that for now. Let's say those spells are rare and likewise simply not cost effective. We'll also say that there are gods or powerful beings of trade who aren't particularly active. This concept was verified by a graduate school educated economist, so make of that what you will.

My basic idea is that the adventurer-driven economy depends on treasure hoards amassed by monsters, dragons, liches, undead, etc. Said beings may use the funds to wage war (by funding armies) or dangerous magical research (like necromancy that results in the occasional zombie horde or skeleton army) or summoning evil beings (like Cthulhu or demons/devils). Many political and economic actors have incentive to avoid this.

Now, going to define a few quick economic terms to define here: Supply and demand is simply that the supply and market of a product will determine its cost. If there is very little of a commodity (meaning it is scarce), it's more expensive. If there's too many, the price drops. Inflation is the loss of value of a currency due to too many of them being around, meaning prices rise as currency loses its worth. Deflation is the removal of currency from the economy or negative inflation, causing prices to drop. If a magic sword costs 100 gold at first, inflating the value and the same blade costs 150 gold. If deflation kicks in, the magic sword might go for 50 gold.

Compulsively hoarding treasure means that money is removed from the day to day lives of peasants and merchants. Removal of money from the real economy into the treasure hoard has deflationary effects, and rapid reintroduction of such treasure to the economy means that adventurers have good reason to spend it on swag fast (like buying a magic sword) before inflation kicks in, as opposed to long term investments (like a savings account, although they may build a hoard of their own).

Likewise, dungeon crawling requires a versatile skillset, and often negates the advantages of numbers (by bottlenecking them in narrow halls, etc), so political leaders might find it cheaper and more effective to hire adventurers than send in their armies. Their own professional armies, however, may be more useful in defending their lands from depredations of said monsters or rival states.

The strategic balance favors better prepared defenders able to wait out long sieges (as common in ancient warfare, with sieges being more common than battles). Smaller adventuring groups may likewise lack the resources to pose a significant threat (maybe being a nuisance at most) and they could be more expendable (as the public cares less about adventurer losses than soldiers killed in battle), so political leaders have incentives to hire them to bust up dungeons rather than sending in the army. Of course, a few groups might try to train a fantasy SWAT team or similar elite unit for their forces, but they'd still be small in number and likely need specialized help...hence the incentive for contractors.

Another issue is that political and business leaders have interest in preventing runaway inflation and deflation from such funds rapidly entering and leaving the economy. They might set up banks or currency exchanges to maintain a more consistent flow of funds into their societies to keep prices predictable. Of course, the problem with centralized planning is that if often does the wrong things, enriching a few at the expense of the many. And those few could also have incentive to build hoards of their own…

One idea is to set up an artificial peg to a new currency. This means arbitrarily setting a number, rather than allow it to flow naturally. For example, if the dragon's hoard consists of ancient gold pieces, you could set a fixed rate of 1 dollar is equal to 100 ancient gold pieces. However, the informal economy (meaning black market, small transactions, and/or anything untaxed, say like roadside vendors) might already prefer the ancient gold pieces, despite laws or currency pegs out, or at least until the new currency catches on.

Even then, trying to deprecate the value of dungeon hordes might just prompt the hoarders to stockpile the new currency instead (a savvy one might have multiple currency reserves). A REALLY savvy dungeon overseer would set up their own currency or counterfeiting operating to screw up the currency pegs and financial system of their foes. However, if you've got the god of trade personally intervening or sending clerics, such efforts can easily get unwanted attention... Here's a PC I wouldn't mind playing: the cleric of a trade god, pissed at currency rigging and financial scams run by scheming undead. Interpret that however you want