Manasa Kashi is a first-year Economics student at JSGP, and a member of the Editorial Department in Arthaniti. When not writing, she can usually be found baking, eating, or singing along to the guitar.
Credit: Hongqi Zhang via ArtStation
Game of Thrones, the beloved medieval fantasy series based on the books by George R.R. Martin, has it all: magic, war, dragons, and judicious plot holes. It follows the never-ending succession crises on the fictional continents of Westeros and Essos, grappling with themes of morality, entitlement, and honor. For many fans, the fascination with the series arises from the deeply layered worldbuilding, extensive enough to allow the exploration of abstract ideas – such as, what makes an effective ruler?
In this article, I will examine the question from an economic perspective, focusing on the reign of the first king we are introduced to - Robert Baratheon I.
I have tried to make this article accessible for both people with limited knowledge of economic concepts, as well as of the canon of A Song of Ice and Fire or A Game of Thrones. I will also be sticking closely to the text of the novels rather than anything from the shows, for the simple reason that there is more to examine. However, even casual watchers of the show will recognize the names, places, and events mentioned.
Baratheon’s Background
Crowned after a bloody coup that displaced the previous dynasty, Baratheon reigned in relative peace until his eventual death fifteen years later. However, it is clear from others’ observations that he never enjoyed ruling; “Some men are like swords, made for fighting. Hang them up and they go to rust.” [Jon I, ACOK]. Instead, much of the actual governance of the realm was delegated to his “Small Council” of advisors, including his Master of Coin, Lord Petyr Baelish – who took on what was essentially the role of a finance minister.
The kingdom of Westeros runs on an agrarian feudal system, meaning essentially that a series of landlords and lords collect taxes from the peasant class in exchange for protection. The manufacturing sector of the economy is very small - consisting largely of luxury goods for the lordly class such as fabrics and furniture - and would more be classified as artisanal work. The primary unit of currency is a gold coin called the “dragon”, and appears to be ubiquitous enough for foreign trade as well.
Debt and Fiscal Spending
Lord Eddard Stark, the arguable hero of the first season of the show, notes early on that “[Baratheon’s predecessor] left a treasury flowing with gold”, so we can safely assume that he came to power with a solid surplus of funds. But fifteen years on, Stark finds out that the kingdom is “more than six million gold pieces in debt.” [Eddard IV, AGOT] So what took place in the intervening years?
The first point to note is that Baratheon was well-documented as a lavish spender. “Robert Baratheon had always been a man of huge appetites,” Stark remembers [Eddard I, AGOT]. Certainly, it should be clarified that some of the expenditure was political in nature: feasts and tourneys were an important tool to project power and stability. This was especially relevant for a ruler whose ascent to the throne was seen as somewhat controversial, but there is evidence to suggest that Baratheon took it further than was necessary.
It is clear that by the time of the story’s opening, Westeros is being run in a state of massive deficit - spending money that it did not possess to begin with. This is not an unusual situation. National governments today regularly go into debt to fund development and production of infrastructure that is likely to increase productivity in the future. In fact, most if not all modern nations are in some debt, ranging from Singapore’s $250 billion to the United States of America’s $19 trillion.
This all comes down to a simple relation between government spending and taxes. In general, the funds that a government has come primarily from the taxes levied on its citizens. It would follow then, that to increase spending, one would have to raise the tax rate. But the issue that arises here is that when taxes go up, demand goes down, and supply typically follows - leading a downward spiral in the economy.
Added here is the additional constraint of this being a feudal economy, where increasing taxes at the lowest level becomes difficult without decimating the peasants, because of the largely fixed nature of agrarian output. And Baratheon’s council was rightly hesitant to increase the rate of taxation upon the lordly class because of his already precarious position on the throne.
So without taxes, the only other avenue remaining to the crown was to borrow - and they borrowed heavily, from a multiplicity of sources. The question that has to be asked here is whether the money was being put to good use or not.
Money Markets
We hear that Baelish “…Paid the king’s debts in promises, and put the king’s gold to work…The golden dragons bred and multiplied, and Littlefinger lent them out and brought them home with hatchlings.”
Indeed, this is the very philosophy that underlies modern money markets today. Currency in bonds and banks are very rarely allowed to stagnate, and are instead “put to work” in the form of loans and other profit-making investments. The money we deposit into banks very rarely remains there, and much of it is typically in circulated in the economy in the form of loans.
We see later that Baelish was indeed properly performing some very sophisticated financial operations including buying up debt of various lords and hoarding grain in a rapidly stagnating supply economy to drive up prices. However, such actions would likely be quite limited in scope given, once again, the primarily peasant driven agrarian nature of the economy.
The crown’s revenue does seem to have increased over time, however, and Baelish’s machinations did provide a boost to the nascent production economy of Westeros. We know that the port cities of Westeros are doing better than ever, and that craftsmanship in the capital has gone up. However, the economy has not been altered in any fundamental way.
Debasement and Inflation
“[Baelish's] gold is made from thin air, with a snap from his fingers.” [Tyrion III, ASOS]
What the earlier passage also provides, along with the one above, is an allusion to what was most likely the major source of the crown’s new income: debasement.
In the modern context, debasement becomes increasingly complicated because of the intricacies involved in national reserve funds and international exchanges. But because we are considering what is essentially a medieval economic system, debasement here refers to the literal debasement of coinage, i.e., the melting and dilution of gold dragons with less precious metals, such as copper or bronze.
Debasement basically allowed for the creation of wealth out of thin air, producing more dragons with which to satisfy Baratheon’s exorbitant government spending. The issue is that the dragons are then no longer actually worth as much as a dragon, and the increased supply of money in the economy reduces the purchasing power of each dragon - resulting in inflation or even hyperinflation, where money loses value at a dangerously high rate. As a modern example, Germany’s experiment with reducing the value of its marks to pay back its debt in the aftermath of World War I led to a crash of its stock market in just a few short years.
In Westeros, the effects are admittedly unclear, as the ensuing economic crisis was subsumed by a cross-continental four-way war. But we do see that inflation has been unusually high in the preceding decade than in the ones before, with costs of food, grain, and horses going up.
Baratheon to Blame?
“..All this business of coin and crops and justice bores [the king] to tears,” a member of the Small Council says, “so it falls to us to govern the realm.” [Eddard I, AGOT]
Feudal kings, like the ones in this series, did not always take a hands-on approach to governance. Baratheon himself more or less accepted the decisions of his Small Council with very little oversight. So, while one could not say that it was his decisions that led to the state of Westeros’ economy, it was all certainly done in his name.
Baratheon wasn’t the worst king the throne had ever seen - a bar cleared easily by virtue of the fact that he never had anyone flayed or burned alive, as his predecessors occasionally did. But it is clear that his lavish spending habits paired with neglect for actual governance allowed the economy to collapse into a state of deep debt and inflation, the effects of which resonated all through the succession war that broke out soon after his death.
His mistakes lay not in the borrowing of money – as established earlier, but in its utilization. Had there been more investment into infrastructure and development through avenues such as making trade routes more accessible or assisting growing industries, the economy would have expanded organically. It would have been able to keep up with natural inflation much more easily, as well as have produced a class of taxable manufactured goods that paid for the debts incurred without necessarily resorting to debasement. In short, had the finances of the kingdom been managed better, a much greater potential for economic transformation could indeed have been realized than was the case.
Ultimately, though, his effectiveness or ineffectiveness mattered very little. Peasants would have had an unpleasant few years under Baratheon, but unlike democratic systems of rule, he was never going to be held accountable for his choices in governance. As long as the high lords were kept happy, his position as King was secure from close to everything other than outright regicide.
After all, as Lord Eddard Stark once said, “All justice flows from the king.”
References:
Blanchard, Oliver. Macroeconomics. 6th ed., Pearson 2017.
Martin, George R.R. A Game of Thrones. Voyager Books, 1996.
Martin, George R.R. A Storm of Swords. Voyager Books, 1998.
Martin, George R.R. A Clash of Kings. Voyager Books, 2000.
Comments