How Can I Keep an Economy Stable Using Food as Currency?

Jolenealaska 04/18/2016. 3 answers, 1.453 views
economy food currency class-structure

I am creating a world where the currency (the only currency) is tablets that dissolve in water to create food. Each tablet provides all of the nutritional needs for an average adult for one day. The gruel doesn't taste particularly good, and the person feels hungry again right away. But, most people rarely eat anything else and the population stays fairly healthy (barring plagues, natural disasters and the occasional war).

In most ways, my people have reached a technological level about that of Europe in 1650.

The small planet has five island continents (think Australia), with urban centers mostly in the coastal areas. Ocean water is potable, so there is plenty of water for everybody. Unfortunately, there are no aquatic animals.

On four of the five continents, most of the land is also very barren. The largely barren continents have pockets of fertile soil, in which various crops can be grown. Every continent also has indigenous large herbivores that eat the few plants that grow wild on that continent, plants that can't be digested by my people.

The fifth continent is nearly overgrown with a fast growing plant that is processed to make the tablets. The plants cannot be made to grow anyplace else but on that continent. (There is magic involved here, the nature of which will be revealed towards the end of the story.)

The total population on the planet is about 100 million people, with the population pretty evenly split among four of the five continents. Each continent has a monarch and nobility. The monarch and nobles own all of the land and everything it produces including the wild animals (meat). Poaching or stealing of food other than the tablets is punishable by death on all five continents. Three of the continents deal in slaves and on the continent that makes the tablets, almost all of the (grueling) work is done by slaves. The two other continents on which slavery is legal get a lot of tablets in exchange for slaves. Slaves on my planet are slaves for life, as are their progeny (even if the other parent is a free person).

Food other than the tablets is scarce. Peasants are lucky to eat real food a few times a week, slaves never do. On the other hand, few nobles have ever tasted tablet gruel.

The monarch and most of the nobles on the continent that produces food are extremely rich, extremely powerful, and solidly evil. They like things as they are and want to keep them that way. The fifth continent has its royal family, perhaps 300 rich and powerful nobles, a few thousand pretty darn comfortable peasants, and 50,000 slaves.

My story begins at least 150 years later, at the cusp of an industrial revolution. I want the economy of my little planet to have been fairly stable for the past 150 years.

It is here that I ask the question:

How can I keep this economy stable for at least 150 years (200 to 250 years is better)?

I figure that the tablets have to be produced at a rate of at least 100 million per day (every day), but the average day will produce enough so that basic necessities can be purchased with small caches of tablets. As a rule, tablets are not hoarded even by the rich. Wealth is accumulated in the form of 'stuff'. Additionally, my people have the sense (or perhaps I can address the issue later as a matter of biology) to keep the population stable.

This currency is mostly consumed as quickly as it is "minted".

I am not averse to using magic to make things work, but I'd like to keep it pretty subtle. Magic is not a day to day concern of people not involved in the manufacture of food tablets. The world has a significant maritime structure that has evolved because of the tablets. It's a small planet, the sailing distance between continents is only a few days. So, 'spreading the wealth' is a non-magical industry important to my people.

OH! And as far as my people suspect, they are the only 'intelligent' people in the universe.

(Yes, this question was inspired by The Force Awakens.)

3 Answers

Cort Ammon 04/18/2016.

The answer depends on a lot of small details which one might fit into a storyline. From this Quora answer by a former financial adviser:

  1. Generally Accepted - Many people must accept the money as a settlement of debt or as a discharge of obligation.
  2. Durable - Its quality/value does not deteriorate over time, which is why we do not tend to use food products as money. (my note: your food does not seem to deteriorate, so I don't think it has a problem with this criteria)
  3. Divisible - If you divide the money in half, each half should be worth 50% of the whole. This is why we tend not to use diamonds or artwork as money.
  4. Stable/Consistent - The value does not fluctuate substantially with time.
  5. Transportable - It is easy to move from one place to another.
  6. Scarce - It is difficult to acquire.
  7. Easily recognizable - It needs to be obvious what it is, mostly for the purposes of #1.
  8. Difficult to Counterfeit - This mostly has to do with #6.

You can analyze your food tablets to see how well they fare, and possibly shape them slightly to better fit that list of requirements.

One detail which I think would be very important is looking at how transactions with large numbers of tablets would work. Let's say I work for the nobles, and I have a million dollar helicopter that I want to trade for a piece of rare artwork (okay, maybe those aren't exactly 1650's items, but you get the idea). Will I accept, say, 300,000 tablets in exchange for the helicopter and will another party accept 300,000 tablets in exchange for their artwork? This is the "Generally Accepted" criteria listed above. In a more difficult case, I sell my helicopter for 300,000 tablets, but my art vendor has sold the artwork before I could get my hands on it. I now have 300,000 tablets on my hands, enough food for me to eat for 822 years straight! Am I still happy with my trade? Am I comfortable that I can still find ways to get the desired value out of 822 man-years worth of food?

If you can convince the readers that the answer is "yes," you are certainly on your way to using food as a currency.

Scarcity would be a big deal for this currency. If the nobles start manipulating the food supply, and the poor are dependent on it, it may artificially raise the value of the tablets above their "actual value." This is no problem, as long as the tablets remain scarce. However, if the market is suddenly flooded with tablets when the nobles stop making it artificially scarce, the value of the tablets will plummet. This would actually create a complicated metastability that you would have to deal with: the value of the stockpiles of tablets the nobles have would be worth more as long as the poor are oppressed and hungry.

Kys 04/19/2016.

Take a look at the Kokudaka of feudal Japan for a historical example. A landowner's wealth was determined by the amount of koku the land could purportedly produce. A koku was equivalent to the amount of rice needed to feed a man for a year (about 5 bushels). A smaller unit, the masu defined the amount for a day, similar to your tablets. Daimyo's estates had anywhere from 10,000 koku to over a million. This is not to say that their wealth was exclusively in rice. Think about how we talk about rich estates as being worth "billions of dollars" as if they could liquidate all of their assets whenever they pleased. A noble's wealth might be defined by the amount of tablets their estate could earn, but in practice the actual food would go towards feeding their subjects while the majority of their wealth would be in goods. The feudal Japanese system also included the ryō, a currency unit equivalent to four koku (later changed to 1:1). The ryō and its lesser denominations were used for everyday spending. So in this way, food was the basis of the currency, but people weren't literally taking bushels of rice to the market.

Luís Henrique 07/12/2016.

There are several problems with your premise.

Money is something that has to circulate. If a society has a monetary economy, the circulation of commodities is intimately tied to the circulation of money; if circulation of money stops, the circulation of commodities also stops - and if it is a monetary economy, circulation of commodities must be the main, if not the only, way commodities are distributed.

Problem is, if money has other utilities besides being a means of payment, people will always be tempted to use money as something else. In our case, people will be tempted to eat their money. And the only thing keeping them from that is the idea that the food that they might buy with their money is more (or much better) food than the money itself. But your description goes on to say that proper food is usually unavailable, so people eat money instead of it. Which means your money doesn't circulate properly; it is eaten, and therefore is withdrawn from circulation.

In a low fantasy world, this would be extremely unstable; it would make the production of any other food inviable (who would pay for proper food? How do you prevent people involved in the production of other edible items from eating them, instead of selling it for... bad food?). All of this means that the economy will always be on the verge of returning to a "natural" (ie, non-monetary) economy, or, even more, that it will be basically a natural economy, with only a few markets where money actually circulates (and this would mean an economy that in all likeness is immature for an industrial revolution - there would be not enough demand for non-agricultural products to sustain an industrial sector, for people would have eaten their money before buying industrial gadgets).

Of course, since your world is high fantasy, these things can always be explained away by magic; and if you start from the premise that the workings of your world are magic, it is probably better not to try and make all things explainable in terms of a non-magical world. You have to suspend your readers disbelief; if you try to explain too much, you risk raising their doubts instead of dispelling them. The money in your world is tablets of food. As long as you explain how they would be able to buy both a large house and a pair of shoes, that's it; if you try to explain how they would run a stock market, or even banks, based on food-money, you risk to put all your system under scrutiny, instead of keeping your readers focused in your story, which is what really matters. - Download Hi-Res Songs

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