Economy and foreign trade in Clash

[Jamir_de_Yard]

At present Clash's economic system is foreseen to work with 4 economic sectors:
Food
Production
Services
Special ressources

First I think that "Production" should be split into consumer goods (necessary to make people happy ), intermediary goods, and equipment goods (necessary for further improvements in productivity...) and war material.

Moreover the quality of specific goods produced in a province should depend on its tech and economic level. An economic zone could for exemple produce 10 units of consumer goods (quality 4/20) and 5 units of equipment goods (quality 10/20).

Thus the trading system could be enlarged to finished goods as well making it possible for civilizations to thrive on for exemple buying ressources from some nations and selling high quality finished goods to others (as have done all dominant export oriented civilizations).
The same is true for services: like physical goods they would be tradable and would have a given "quality" level)
Minimum quality levels of some inputs would be necessary at some stages of development for some markets.
Eg1: To produce 5 quality 10/20 war material a civ could need 1 equipment good level 8/20 or higher and 2 intermediary goods level 10/20 or higher.
Eg2: At some stages of development, economies would constantly need new high quality services (eg IT, IB,...) if the local economy is not able to provide it, it would have to be imported.
If only a limited amount of countries can provide these given goods and services, these ones will be in a position of strength against those who cannot.

One other thing could also be modellised in the game: foreign investments. The private sector or the state could (after a diplomatic agreement had been signed) invest in an other civ (thus creating interdependence) through lending (when our economy is already advanced and desperately looks for projects to invest in) or FDI (to secure our markets and use local competitive advantages: tech...).

Maybe as in the real world countries whose sum of capital outflows would exceed inflows could see their currencies dwindle during the game. (as for the name of each civ's currency it could be left to the player)

Import/Export: After each turn the computer would calculate what the province needs in terms of food, goods and services and put it against what is on offer, in the province and what is produced elsewhere and could be imported(from countries with trade agreement and available merchant). According to the utility functions mentionned on the web site prices could then be calculated directly so that inventories always end up at 0.
This free game of market forces could of course be interfered with by players subsidizing some exports, limiting imports on some category of products or limiting buying prices.
Here an exemple of how it could function:
First the computer begins with food.
On one side the computer has demand functions of food depending on the people's (wealth+ expected income) on the other side the algorithm knows how much food is on offer and the costs imposed on food trade: restrictions, taxes, transport cost by the different nations.
It will then be possible to know how much food is sold to whom, at what price and what the people have left (wealth+expected income-money spent on food).
Then the same is done with consumption goods and then with other goods in this order
consumption goods / raw materials and specials / intermediary goods / services /
military goods / equipment goods
Equipment goods come last as they are tied to the investment process of the country.
Once all this is done we know what has been bought for what price and have the amount of savings. This amount of savings can (once there is banking) be invested in the economic region or elsewhere (with agreements).
In this way a developped cash rich civ could lend money to a smaller ally strugling to develop and neighbor to one of the civ's big ennemies.

Advantages: In this way a realistic economic model is set up simulating economic competition between civs and allowing national markets to be "invaded" by foreign competitors (but also to specialise moreover if trade imbalances were really huge the currency would depreciate limiting the problems afterwards).
Drawback: Complexity of utility functions to be maximized and number of utility functions.

Merchants from one country should be able to make money from import, export as well as from doing trade between 2 countries different from their home one. Merchants would need a fleet (or caravans) and therefore their spread (difference between the prices at which they buy and sell) should also depend on the security they feel granted. This means that a civ with a strong military fleet (or allies) protecting its merchants will see its merchants offer more competitive pricings and gain market shares.




[This message has been edited by Jamir_de_Yard (edited April 15, 2000).]
[This message has been edited by Jamir_de_Yard (edited April 16, 2000).]

[roquijad]

Hi Jamir_de_Yard,

1) I'm not sure what's the gain in splitting production in different types of goods. Maybe you can explain us that in a more detailed way. IMO letting the people consume goods and use their money to invest is good enough and no difference in goods in required.

2) Quality seems like an interesting element, but IMO its effect on trade is too small to model. Quality in the real world tends rapidly to become homogeneus, so even if the germans produce a very good quality machine, the people in Taiwan will soon produce one similar enough not long after, so I think the german gain by quality difference is about null when you're playing a game through out decades and centuries like Clash. On the military side, if you were trying to include quality so units from one civ can be better than other civ's units, then I think that's well covered in the tech model. Since techs are no longer absolute (you have them or not), but you have a level of development on each, military units will improve slowly as time passes giving you the idea that they have different levels of performance, until they finally become obsolete.

3) I really like your idea about civs investing in other civ's territory. That interdependence can create new problems and opportunities for the players and make the game more fun. Now you need to figure out ways in which the current econ model can simulate that in a simple way...

4) Import/Export: I guess the core of what you're saying in already covered by the merchant model.

Rodrigo

[Lord God Jinnai]

JdY
First I think that "Production" should be split into consumer goods (necessary to make people happy ), intermediary goods, and equipment goods (necessary for further improvements in productivity...) and war material.
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I don't think intermediary goods are really ness. Also cosumer goods can do more than increase happiness.

And roquijod, the player would gain by atleast spillting them into 3 by having production goods such as tractors, cranes, etc be used to help increase all other good. Military goods would prob haveto be seperate since they usually don't help with happiness and other things consumer goods do.

Thus the trading system could be enlarged to finished goods as well making it possible for civilizations to thrive on for exemple buying ressources from some nations and selling high quality finished goods to others (as have done all dominant export oriented civilizations).
-----
This is quite realistic, however, it is only good in the industrial age tech since before then things were too costly to make or they brought too little profit. The exception were costal towns, but even these had to have other sources of income. The problem with it after the industrial age of a civ is the cost of production and labor rises. If a civ outside that civ has a signifigantly lower economic level then the industrialization will move to that civ. The former civ will move in more service-oriented directions. It will also move into higher technolgy fields to improve standards of living and reduce costs. It will still do some finished goods production, mostly that which can only be done with the technolofy level and skilled worker force of that civ, but not to the extent of an industrialized society.

Import/Export: After each turn the computer would calculate what the province needs in terms of food, goods and services and put it against what is on offer, in the province and what is produced elsewhere and could be imported(from countries with trade agreement and available merchant). According to the utility functions mentionned on the web site prices could then be calculated directly so that inventories always end up at 0
-----
That may be going a little too far. FE what if there just ins't enough swords able to be produced that a civ thinks it needs in a given round. Their inventory would then still be negative.

This free game of market forces could of course be interfered with by players subsidizing some exports, limiting imports on some category of products or limiting buying prices.
-----
Your forgetting that the Free market is not ness going to be what all or any civs use.

[Jamir_de_Yard]

What the game gains by splitting production into different types of goods and services of different qualities.

Different types of goods:
1) How can there be trade in manufactured goods and services if these aren't not differentiated. Only considering production in terms of "shields" like in civI,II and CTP, means there is no sense to make provinces trade shields for identical shields. Having different kind of goods allows a good trading system and the building of a real economic strategy.
2) Trade thus interdependance and the simulating of the old debate self reliance (autarcy capability) or int. trade. A province / civ poor in say iron and coal (strategic ressources that will be necessary to produce war material) or/ less advanced on the military tech tree could for exemple sell consumer goods or services to another civ from which it buys war material. But then it relies on this for its defence capability. This province would not be able to put up a military industry of its own in two or three rounds.
3) Economic strategy: Being already competitive in the intermediary goods industry U could for exemple subsidize your equipment goods industry or leave it to others and stay with your specialisation.
4) Why I proposed intermediary goods:
a) Because of some circonstances one civ could for exemple not be competitive in finished products but have strategic ressources on its soil. One alternative to exporting raw material would be to focus first on the first transformation and thus to gain more money.
b) Introducing intermediary goods is a way to have the strategic ressources U mentionned fit in this eco model.

5) What do I call be competitive in the game.
From supply anf demand algorithms will give a price. Your economy like a real one will necessitate investments and buying ressources pay for R&D (which will in part be private in your game - great enhancement to what now exists). Your economy will be competitive producing goods if it can make enough money by selling them.

6) What would the default mode be: Without player intervention the computer would automatically select the orientation of your economy that maximizes expected GDP (simplified here as today's price of goods*Nb of goods sold - input)

7) For Lord God Jinnai:
Thus the trading system could be enlarged to finished goods as well making it possible for civilizations to thrive on for exemple buying ressources from some nations and selling high quality finished goods to others (as have done all dominant export oriented civilizations).
-----
This is quite realistic, however, it is only good in the industrial age tech since before then things were too costly to make or they brought too little profit.

Without wanting to open an historic debate: Athens imported mostly raw ressources selling finished goods (and economic competition also fostered the Peloponnesis war - in Thucidyde explanations of it)
Later the Romans, Hanseatic cities or Colbert's factories achieved the same and changed their trading and technical know-how into profit (in a preindustrial environment).

"That may be going a little too far. FE what if there just ins't enough swords able to be produced that a civ thinks it needs in a given round. Their inventory would then still be negative."
No if there isn't enough swords prices of swords will dramatically rise (lest gov does sthg) and the utility function will tell how much are bought. If the province has a trading agreement with a province producing swords and demanding less of it or not enough wealthy to bid as much for it than ours then we will get our swords. In the end a price is found and all swords are sold- inventories are zero.

Your forgetting that the Free market is not ness going to be what all or any civs use.

OK but it could be a good default model - the player is free to modify it which is realistic.

For Roquijad
2) "Quality seems like an interesting element, but IMO its effect on trade is too small to model. Quality in the real world tends rapidly to become homogeneus, so even if the germans produce a very good quality machine, the people in Taiwan will soon produce one similar enough not long after, so I think the german gain by quality difference is about null when you're playing a game through out decades and centuries like Clash."
- Quality would indeed be sthg like tech level of product. Equipment good one would for example be a antique farming machine whereas equipment good 20 would be a modern factory robot or a supercalculator.
Moreover you are right that today differences in quality fade quickly but it wasn't the case in the antique. Therefore as one turn could mean 10 years in 3000 BC it shouldn't be more than 1 year in the 20th century.

On the military side, if you were trying to include quality so units from one civ can be better than other civ's units, then I think that's well covered in the tech model. Since techs are no longer absolute (you have them or not), but you have a level of development on each, military units will improve slowly as time passes giving you the idea that they have different levels of performance, until they finally become obsolete.

I wasn't precise enough: Military material doesn't mean units it is the output of the mil industry.
Thus to produce 1 regiment of musketeers in 1600 U would need for example 1 unit of level "Y" war material. Once the unit is created of course it will be able to improve to become equivalent to a seven year war prussian elite guard in 1750. Though I think maintenance cost should be high to reflect the costs associated with that.

I hope I was more precise this time.
Good luck to those who will try to code these kind of things!

[Lord God Jinnai]

4) Why I proposed intermediary goods:
a) Because of some circonstances one civ could for exemple not be competitive in finished products but have strategic ressources on its soil. One alternative to exporting raw material would be to focus first on the first transformation and thus to gain more money.
b) Introducing intermediary goods is a way to have the strategic ressources U mentionned fit in this eco model.
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Since marks doing the economic model i'll let him decide.

Without wanting to open an historic debate: Athens imported mostly raw ressources selling finished goods (and economic competition also fostered the Peloponnesis war - in Thucidyde explanations of it)
Later the Romans, Hanseatic cities or Colbert's factories achieved the same and changed their trading and technical know-how into profit (in a preindustrial environment).
-----
I'm not saying it can't work before preindustrial time periods, however, these cities must already have viable resources to get at and even so until industrial time periods none of these lasted for more than 100 years. Also they could only be near costal areas, only rivers or along trade routes with other places in big cities because in small communities it would be impossible for such to happen and have any kind of impact.

"That may be going a little too far. FE what if there just ins't enough swords able to be produced that a civ thinks it needs in a given round. Their inventory would then still be negative."
No if there isn't enough swords prices of swords will dramatically rise (lest gov does sthg) and the utility function will tell how much are bought. If the province has a trading agreement with a province producing swords and demanding less of it or not enough wealthy to bid as much for it than ours then we will get our swords. In the end a price is found and all swords are sold- inventories are zero.
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Ok what I'm saying is that just because there is a want, there is not always a way. My order for swords may just be too unrealistic for to be produced, even if every nation could produce them for me. Assuming i have trade agreements with every nation and assuming that's all the effort they put it into making swords (which won't happen) there is still only a maximum the can produce in a given time frame (and were also assuming they make no errors and don't have to scrap anything). Not to mention we're ignoring the possiblity that they can get enough raw materials to create them and can get enough man-power even fully operating to peak capsity at 100% population creating swords (which we know won't happen).

Now another point. Surplus. Yes there will be surpluses, its inevitable. Esp it ness for food to reduce the risk of famine. Also there will be surplus of military items during peace time in many cases, in addition there will be surplus of consumer goods, though for the most part we don't have to worry about too many of these.

OK but it could be a good default model - the player is free to modify it which is realistic.
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Actually its not even default. Free Market is the invention of the 20th century. Until then there were other standards, most notably the gold standard which was the norm for over a milenium.

I wasn't precise enough: Military material doesn't mean units it is the output of the mil industry.
Thus to produce 1 regiment of musketeers in 1600 U would need for example 1 unit of level "Y" war material. Once the unit is created of course it will be able to improve to become equivalent to a seven year war prussian elite guard in 1750. Though I think maintenance cost should be high to reflect the costs associated with that.

[Mark_Everson]

Hi Jamir:

Welcome to the Clash Project

I don't have much time right now, but I will try to give you a quickie answer. Essentially, the issues you talk about are undoubtedly important, but in a game I think you have to cut corners. To still get the flavor of different types of goods, without a huge amount of baggage, the current economic model uses Specials. Because of the way Specials work you can have a way to trade some types of good like cloth, for other more generically modeled goods. IMO this gives you the essence of what you are talking about, without needing to break down production into different types. With the Specials as they work now I think we get most of the important effects fairly cheaply in terms of gameplay cost. However, since we haven't done it yet, it's impossible to say for sure if the flavor of what we have now is right, and is the right balance between realism and playability.