Marginal Theory of Value

[halbort]

Most economists now believe wages are alotted by the marginal theory of value. This is a pretty standard belief among economists despite pseudoscientific beliefs among a vocal minority. Vicky 2 unfortunately uses a labor theory of value which is probably easier to code. I believe that an easy way to correct is that the wages take into account how rare the pop type currently is. Rare pop types should get a larger cut of the wages.

 

[Niko92]

I think the labour theory suits better. In the game, you'll have farmer and labourer POPs converting to craftsmen to work in factories. If the wages were based on the number of POPs, farmers and labourers would have their income increased and craftsmen decreased by the end of the game. This doesn't really make sense on how it went irl. Basing the wages on the price of goods manufactured ensures a constant "wage attraction" for POPs to keep switching to craftsmen as the manufactured goods will (most likely) have better prices than primary goods.

 

[halbort]

I think the labour theory suits better. In the game, you'll have farmer and labourer POPs converting to craftsmen to work in factories. If the wages were based on the number of POPs, farmers and labourers would have their income increased and craftsmen decreased by the end of the game. This doesn't really make sense on how it went irl. Basing the wages on the price of goods manufactured ensures a constant "wage attraction" for POPs to keep switching to craftsmen as the manufactured goods will (most likely) have better prices than primary goods.

I am not saying it shouldn't be based on the price of the good. It should but the amount of the cut each pop type gets should be based on the scarcity of that pop type.

 

[Spartanlemur]

I am not saying it shouldn't be based on the price of the good. It should but the amount of the cut each pop type gets should be based on the scarcity of that pop type.

Perhaps you should explain why rarer pop types should have higher wages.

 

[Spartanlemur]

I should add that I think a discussion of Victoria's economics is very important, because it's right that Victoria represent as far as possible the general consensus among academic economists, as failure to do this is going to be misinforming people who may very well develop an economic intuition from the game.

If any Paradox game offers an opportunity for a mostly accurate representation of economics, it is Victoria III.

 

[halbort]

Perhaps you should explain why rarer pop types should have higher wages.

Basically if there are less people possible who can do your job, you get higher wages by supply and demand. The number of people who are able program is less than the number of people who are able to work at McDonalds. Thus, programmers make more. There are even fewer people which access to large amount of capital to invest, so capitalists make even more. This is widely accepted economic theory https://en.wikipedia.org/wiki/Marginalism

 

[hjarg]

Well, there's the supply part. Then, there's the demand part. There might be more craftsman then farmers, but if your industry needs more craftsman then your agriculture does farmers.

Or say I'm an expert of obscure Latvian 19th century writer. Only one in the world. Does not mean I would be living a life of luxury, for demand of my expertise would be around 0.

 

[halbort]

Well, there's the supply part. Then, there's the demand part. There might be more craftsman then farmers, but if your industry needs more craftsman then your agriculture does farmers.

Or say I'm an expert of obscure Latvian 19th century writer. Only one in the world. Does not mean I would be living a life of luxury, for demand of my expertise would be around 0.

Yeah I agreee. My idea is too simplistic. Ideally, each pop type would be in the local market like a good.

 

[Spartanlemur]

Basically if there are less people possible who can do your job, you get higher wages by supply and demand. The number of people who are able program is less than the number of people who are able to work at McDonalds. Thus, programmers make more. There are even fewer people which access to large amount of capital to invest, so capitalists make even more. This is widely accepted economic theory https://en.wikipedia.org/wiki/Marginalism

But for example there aren't many blacksmiths today, yet that does not mean that blacksmiths are in greater demand.

And the reason for this is that the products they produce can be made more cheaply in factories.

Otherwise we see artisan wages rising as they are replaced by factory workers.

Another example would be wooden shipwrights, who are small in number because wooden ships are not in demand as they were in the 19th century. If Demand for the product falls, so too does demand for the labourer.

 

[halbort]

But for example there aren't many blacksmiths today, yet that does not mean that blacksmiths are in greater demand.

And the reason for this is that the products they produce can be made more cheaply in factories.

Otherwise we see artisan wages rising as they are replaced by factory workers.

Another example would be wooden shipwrights, who are small in number because wooden ships are not in demand as they were in the 19th century. If Demand for the product falls, so too does demand for the labourer.

Yeah I agree. My idea is too simplistic. Ideally, each pop type would be in the local market like a good. That way you could factor in supply and demand of the pop type.

 

[Belph]

Note that Victoria takes a generally Marxist view of history and societal development through its mechanics (I believe a dev gave a GDC talk about how Historical Materialism is great for game design), so LTV isn't the worst fit, even if it is "inaccurate". Similarly, EU uses a mercantilist model of economics, not because it is "right", but because it fits with how the games systems are designed.

 

[halbort]

Note that Victoria takes a generally Marxist view of history and societal development through its mechanics (I believe a dev gave a GDC talk about how Historical Materialism is great for game design), so LTV isn't the worst fit, even if it is "inaccurate". Similarly, EU uses a mercantilist model of economics, not because it is "right", but because it fits with how the games systems are designed.

Yeah but I feel Liberalism should be an effective strategy even if its not historic. You should be able to roleplay a bunch of historical stratgies.

 

[TeutonicTortoise]

Basically if there are less people possible who can do your job, you get higher wages by supply and demand. The number of people who are able program is less than the number of people who are able to work at McDonalds. Thus, programmers make more. There are even fewer people which access to large amount of capital to invest, so capitalists make even more. This is widely accepted economic theory https://en.wikipedia.org/wiki/Marginalism

Problem is that based on a static environment whereas the victoriana era had so many changes and improvements in methods and technology that although pop numbers changed supply wasn't proportional since fertiliser, farming equipment etc was modernised and in terms of factories the basic 1770 English textile factory wasnt what a 1850 English textile factory in efficency, technique or capacity of workers

 

[Belph]

Yeah but I feel Liberalism should be an effective strategy even if its not historic. You should be able to roleplay a bunch of historical stratgies.

Economic Liberalism still "works" under the LTV, it just sucks for the workers. Marx concedes that Capitalism is great for developing technology and generating wealth, the whole problem is that it is exploitative. The game needs to pick a model to run it's internal logic on, and LTV isn't the worst pick. Marginalism has the potential to get very complicated very quickly from a simulation perspective, due to the subjectivity of Marginal Utility.

 

[Lord Canterbury]

Ah, this sort of thread is why I love Paradox Forums. Thanks for the post OP

I'm broadly of the view that while marginalism might be a bit more accurate, its probably not a good idea to implement it, as it would create more complexity for little end result.

The period is dominated by shift the means of production. So as factories start to appear, the amount of (for example) clothes that are available increases enormously. Whilst the number of artisans might decrease a bit at the same time, the demand for those artisans services is decreasing much, much faster. The reducing supply of artisans will have a little effect... just not very much compared to the much bigger changes happening.

Trying to model the effect of reducing pop numbers is just one more thing to try to balance in the game... and given the difficulties PDS had in balancing Vic2, I'm keen for them to keep things as simple as possible.

In any case, how they implement the economy is going to be VERY important to the success of the game.

 

[Spartanlemur]

Trying to model the effect of reducing pop numbers is just one more thing to try to balance in the game... and given the difficulties PDS had in balancing Vic2, I'm keen for them to keep things as simple as possible.

The problem is that complexity is what makes the economy interesting, and in a "society simulator" game, it's the sort of thing we'll be spending a lot of time on.

 

[Lord Canterbury]

The problem is that complexity is what makes the economy interesting, and in a "society simulator" game, it's the sort of thing we'll be spending a lot of time on.

Yeah, that's also true. Hopefully they can find the balance in adding plenty of complexity, but still making it balanceable. Dev Diary 0 suggests they will be heading down the more complex route.

 

[Vernichtere]

The problem is on two levels. The first level is relatively easy. Economic theory still does not have a particularly good reputation as a science. The reference to the belief of the majority is of little use if this majority repeatedly proves to be incapable of predicting developments.

Then the point is simply that we are working with another level of abstraction in the game. There are very few types of Pops that don't differ that much and have fixed minimum requirements. Ultimately, it is about creating a game system that is able to more or less simulate the developments that have taken place historically. The system presented by the developers halfway fulfills this task.

We could of course introduce a hundred different types of pops and at the same time exclude the historical labor disputes. According to the logic, the wage increase in the game would be largely tied to the state of the art. The Pops would alternate between different factories, with a slight delay to simulate retraining.

 

[Spartanlemur]

Economic theory still does not have a particularly good reputation as a science. The reference to the belief of the majority is of little use if this majority repeatedly proves to be incapable of predicting developments.

And what's the alternative? Mainstream economics has a better track record than blind luck and the alternative theories which have a worse track record. Social science in general is very difficult because human societies are immensely complex things, and it's never going to have the level of perfection of something like physics, but it's better than nothing.

 

[qer]

No please no. If we end up introducing mainstream orthodox economics there will be no game: just let the market do it's work and that's it. Plus that the societal part of this type of economics is non-existant, which is in itself an important part of the game.