[Basic] Skills of the week: Economics, Finance and Market Analysis

[Agemegos]

Originally Posted by Anthony

Most game systems would handle this by not having a distinct 'economics' skill at all, it would just be a generic Profession and it means whatever the player and GM agree it means. This is really a GURPS-only problem, because you can't have an inaccurate definition of 'economics' if you don't have an economics skill to start with.

Quite. Except where there has been a deliberate game-design decision to use common words in a non-standard way as terms of art in the game design — such as calling dissimulation “Acting” and acting “Performance” — it’s better not to pad out an RPG rule book with amateur lexicography.

[Fred Brackin]

Originally Posted by whswhs

I would note that, while the definition of economic as the study of the allocation of scarce resources is clearly superior to that in the Basic Set, I remember when I decided to take a look at academic political science, and the first textbook I looked at defined political science as the study of the allocation of scarce resources! .

I've never seen that one. I'd be happy with Political Science being "The scientific study of politics" but I'd first have to get it made a "real" Science first instead of an Expert Skill.

On the other hand I do think the economists have been poaching a bit.

[Agemegos]

Originally Posted by Fred Brackin

On the other hand I do think the economists have been poaching a bit.

Yeah. Public Choice Theory is an outright invasion.

[whswhs]

Originally Posted by Fred Brackin

On the other hand I do think the economists have been poaching a bit.

But when you define a science in terms of method, that method may be applied to the subject matters of other sciences.

[Fred Brackin]

Originally Posted by whswhs

But when you define a science in terms of method, that method may be applied to the subject matters of other sciences.

I would have to define "study allocation of scarce resources" as a desire or perhaps a mental framework rather than a method. Statistical analysis is a method.

[The Colonel]

Originally Posted by Agemegos

That's not really right. The ideal free market system with price-taking consumers and profit-maximising firms is a fruitful model, but it's not used in macroeconomics anyway, and most of micro since 1920 (publication of A.C. Pigou's The Economics of Welfare) has been about cases in which its assumptions do not apply (in specified ways). No-one after freshman micro ought to suppose that the modern economy really is a free market, nor that any of the assumptions of the First Fundamental Theorem of Welfare Economics holds in the real world.

...

Early economics — going back to Adam Smith and David Ricardo — consisted largely of analysis and criticism of those arrangements. Modern economics can analyse them to some extent, but it is hard to characterise them very thoroughly. Nevertheless they is some interesting work being published about how they operated in fact, how well they performed, and how economic development actually occurred in them.

So do things like price signals function at all in that kind of market? Failing that is there any systematic flow of resources? I struggle to believe our ancestors managed for milennia on a totally irrational system, but cannot really wrap my head around how things work without at least a market principle, however distorted...

Originally Posted by whswhs

It really depends on your audience. For a comparable case, Connie Willis won a Hugo Award for her two volumes Blackout and All Clear, even though more than one British reader has criticized them harshly for getting British culture and details of everyday life badly wrong.

Sort of like Harry Turtledove's bizarre ideas of British people then?

[Agemegos]

Originally Posted by The Colonel

So do things like price signals function at all in that kind of market? Failing that is there any systematic flow of resources? I struggle to believe our ancestors managed for milennia on a totally irrational system, but cannot really wrap my head around how things work without at least a market principle, however distorted...

Most of the things you listed — guild price-fixing, legal monopolies, bans on most people trading in capital and land — are best recorded from a times at which markets existed even if locally and discontinuously. Price controls and black-market prices, price rises during shortages and price slumps in gluts are recorded a long way back. There was a lot of trading and even illicit sales and purchases of land within manorialism. But if you go way back early communities seem to have done a lot of communal production, coerced labour, planning, and rationing. Which worked as well as it did only because the communities were small and their economies had few goods in them. A lot of what you might call rationality came from priests and lords starting with a presumption of how much of what things each person needed, working out a total, commanding the production of sufficiencies, gathering, and rationing.

Actual barter seems to have been a lot less common than our parables about the origins of money supposed. You had a lot of small high-trust communities that ran on credit, with the credit balances being settled in standard commodities on settlement dates such as harvest-time. Direct barter was confined to low-trust transactions mostly between communities.