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The full economic impact of Smaug can only be understood by recognizing that the dragon's arrival resulted in a severe monetary shock…
January 2, 2013 9:52 AM   Subscribe

The Macroeconomics of Middle-Earth
posted by fearfulsymmetry (63 comments total) 22 users marked this as a favorite

 
As the old joke goes, when the producers of Lord of the Rings were looking for filming locations for a movie about a culturally backward country with a primitive economy that was full of strange looking people with barely decipherable accents they quickly settled on New Zealand.
posted by MuffinMan at 10:03 AM on January 2, 2013 [4 favorites]


Um, I don't think King Thrór was putting that gold to work in the economy via a fractional banking system; I doubt it was in circulation at all. He was simply amassing it. As a result, Smaug's impact is better seen as a natural disaster. There's an initial impact (Dale is destroyed), a rebuilding (Laketown) and lingering side effects (occasional cow or Esragothian consumed)
posted by leotrotsky at 10:05 AM on January 2, 2013 [6 favorites]


the amount of gold coinage Smaug withdrew from circulation represents a significant volume of currency. This would, inevitably, lead to deflation and depressed economic activity.

Smaug also killed a significant percentage of the local population, mitigating this effect. Still, the Mountain held quite a horde and it is likely that the money supply per capita did decrease. However, the author does not take into account the stimulus provided by the need to rebuild. Delving by dwarven refugees would be the backbone of a booming construction industry.
posted by justsomebodythatyouusedtoknow at 10:07 AM on January 2, 2013 [1 favorite]


If memory serves, trade between Long Lake and the Wood Elves was pretty in pretty good shape. For bulk packaged goods, anyway.
posted by jquinby at 10:08 AM on January 2, 2013 [5 favorites]


Oh, also... Who builds a town within the shadow of a fire-breathing dragon, and decides that the proper construction material is wood?
posted by leotrotsky at 10:08 AM on January 2, 2013 [6 favorites]


I'm not sure why the money supply decreasing would have been a problem? Just break up the remaining coins into smaller pieces or use script.
posted by empath at 10:08 AM on January 2, 2013 [1 favorite]


Yeah, the largest part of the hoard simply changed hands from the Dwarves to Smaug and back again. It's not going anywhere.
posted by Tell Me No Lies at 10:10 AM on January 2, 2013 [1 favorite]


I think it's somewhat telling about the state of economics that economists think that they can plausibly describe the causes of entirely fictional economic phenomena using 'real-life' models.
posted by empath at 10:13 AM on January 2, 2013 [13 favorites]


Why does this make me picture an "Antiques Roadshow" style skit set in Middle Earth?
posted by boo_radley at 10:23 AM on January 2, 2013 [2 favorites]


Yeah, the largest part of the hoard simply changed hands from the Dwarves to Smaug and back again. It's not going anywhere.

The treasure stays put (more or less) but Dwarves do produce wealth in the form of arms and tools.
posted by DU at 10:26 AM on January 2, 2013 [1 favorite]


Oh, also... Who builds a town within the shadow of a fire-breathing dragon, and decides that the proper construction material is wood?

Same people who build housing developments on flood plains or cities in tsunami zones or nuclear power plants over active faults. Human memory is spotty at best, and is often muscled out by human hubris.
posted by KokuRyu at 10:26 AM on January 2, 2013 [5 favorites]


leotrotsky: Oh, also... Who builds a town within the shadow of a fire-breathing dragon, and decides that the proper construction material is wood?
Esragothians, obviously. Darwin's 2nd-favorite builders, after the Glass-Tower people of Stony Valley.
posted by IAmBroom at 10:26 AM on January 2, 2013 [10 favorites]


"Well, I gotta tell you, this One Ring you brought me looks like the real deal to me, but I need to ask my expert in Third Age memorabilia from the Gondor Natural History museum".

"....my PRECIOUS!!!"
posted by empath at 10:27 AM on January 2, 2013 [22 favorites]


I think it's somewhat telling about the state of economics that economists think that they can plausibly describe the causes of entirely fictional economic phenomena using 'real-life' models.

It's totally doable so long as your real-life models are using performance capture suits. So the way it would work, see, is you take a real economy, monitor all of the crucial moving parts, then burn it to the ground.
posted by It's Raining Florence Henderson at 10:30 AM on January 2, 2013 [2 favorites]


Who builds a town within the shadow of a fire-breathing dragon, and decides that the proper construction material is wood?

People who want to live in the middle of a lake, knowing that dragons fear falling into large bodies of water. Besides which, Elven garbage gives them effectively a free supply of wood while any other building material would be prohibitively expensive. Middle earth brick production produces levels of pollution so high that only Saruman would consider it, and the only nearby quarry is currently occupied by a dragon.

use script

Moon-letters would make excellent watermarks.
posted by justsomebodythatyouusedtoknow at 10:46 AM on January 2, 2013 [2 favorites]


Who builds a town within the shadow of a fire-breathing dragon, and decides that the proper construction material is wood?

People living in the middle of a lake.
posted by DU at 10:48 AM on January 2, 2013 [1 favorite]


LIsten, dragons are job creators, man! Look at all the smiths and carpenters and gollums etc. that have steady jobs because of Smaug!
posted by Mister_A at 10:51 AM on January 2, 2013 [4 favorites]


Gollum is unrelated to Smaug. They aren't even in the same mountain.
posted by DU at 10:53 AM on January 2, 2013


I hope someone got fired over that error.
posted by DU at 10:53 AM on January 2, 2013 [5 favorites]


Gollum is unrelated to Smaug. They aren't even in the same mountain.

Let's just say that Peter Jackson really took some creative liberties with The Hobbit.
posted by KokuRyu at 10:54 AM on January 2, 2013


Smaug: Life, which you so nobly serve, comes from destruction, disorder and chaos. Now take this empty chalice. Here it is: peaceful, serene, boring. But if it is destroyed... Look at all these little dwarves! So busy now! Notice how each one is useful. A lovely ballet ensues, so full of form and color. Now, think about all those jobs created. Technicians, engineers, hundreds of people, who will be able to feed their children tonight, so those children can grow up big and strong and have little teeny children of their own, and so on and so forth. Thus, adding to the great chain of life. You see, Bilbo, by causing a little destruction, I am in fact encouraging life. In reality, you and I are in the same business.
Bilbo: You're a monster, Smaug!
Smaug: I know.
posted by It's Raining Florence Henderson at 11:03 AM on January 2, 2013 [14 favorites]


Only seen the movie, so forgive my limited knowledge, but one doesn't get the impression that Thror was using his bullion as a central reserve bank. But the big unknown here, assuming that the Middle Earth economy is based on the Gold Standard, is whether Thror's hoard was counted as part of the Monetary Supply. If it was considered part of the supply of gold in the economy, then Smaug's sequestration would be impactful, otherwise its a wash.

I also see Smaug as a metaphor for the crashes that accompany an unregulated accumulation of wealth in the hands of a powerful few. If it was common knowledge in Middle Earth that a large gold hoard attracts dragons, then Thror was blind to history as a result of his growing wealth. The same way the repeal of the Glass-Steagal Act (put in place in response to the Great Depression) set the stage for the 2008 financial meltdown.
posted by dry white toast at 11:19 AM on January 2, 2013 [4 favorites]


Three goddamned pages of discussion on properly recreating recipes and food found in Toilken's books,
posted by The Whelk at 11:20 AM on January 2, 2013 [4 favorites]


By taking gold out of the Middle-Earth economy, Smaug probably accelerated the shift to silver coinage. We are told in The Lord of the Rings that Mr Butterbur had to pay thirty silver pennies in compensation for the theft of the horses from the Prancing Pony in Bree, so it seems that by this time (Third Age, 3018) the shift to silver monometallism was well underway, at least in Eriador. The same thing happened in eighth-century Europe, where the minting of gold disappeared everywhere except Italy, and the silver penny, or denier, established itself as the sole unit of currency.

Mithril is more of a problem, as Gandalf says that Bilbo's mithril-coat is worth more than 'the whole Shire and everything in it', so it's hard to see how mithril could have been mined in significant quantities without a severe inflationary shock to the economy. (Compare the impact of New World silver on sixteenth-century Europe.) Sauron may have had a beneficial effect on the economy by blocking commercial exploitation of the Moria mines, thus insulating Middle-Earth from inflation. This fits with the emerging school of revisionist Middle-Earth history, which sees the War of the Ring as basically a struggle for economic hegemony, and argues that Tolkien's account systematically ignores the imperialist aspects of Gondor's foreign policy.
posted by verstegan at 11:26 AM on January 2, 2013 [36 favorites]


Bilbo: You're a monster, Smaug!
Smaug: I know.
posted by It's Raining Florence Henderson


The extra little bit of Ian Holm-synergy really made that for me.
posted by Strange Interlude at 11:30 AM on January 2, 2013 [7 favorites]


Sauron may have had a beneficial effect on the economy by blocking commercial exploitation of the Moria mines, thus insulating Middle-Earth from inflation.

Sauron didn't have much of a role in denying the dwarves access to Moria. Responsibility for that belongs to the balrog Durin's Bane, an independent evil entity roughly comparable to Sauron but fortunately not much interested in surface-world empire building.
posted by The Tensor at 12:18 PM on January 2, 2013 [3 favorites]


As the old joke goes, when the producers of Lord of the Rings were looking for filming locations for a movie about a culturally backward country with a primitive economy that was full of strange looking people with barely decipherable accents they quickly settled on New Zealand.

Tsk. If that were true it would be set in Wales.
posted by Artw at 12:34 PM on January 2, 2013


Came here for the Discworld jokes. Sadly disappointed.
posted by RonButNotStupid at 12:45 PM on January 2, 2013 [2 favorites]


Only seen the movie, so forgive my limited knowledge...

No. You are not forgiven.
posted by Aizkolari at 12:49 PM on January 2, 2013 [1 favorite]


if it was common knowledge in Middle Earth that a large gold hoard attracts dragons, then Thror was blind to history as a result of his growing wealth.

Like many rulers, he was overconfident in the strength of his defensive forces. Dwarves in Tolkein do a lot of boasting about their exceptional strength and battle ability, even though they are repeatedly beaten by stronger forces such as trolls and dragons in the narrative. One gets the sense that although they were the most badass of all in the past, they are being outstripped by the competition, especially once you get things like orcs. Smaug is a supervillain in that only a Destined Hero can take him down (apparently) which is just too bad for the dwarves since the hero in question was a human not a dwarf.
posted by emjaybee at 1:07 PM on January 2, 2013


Mithril is more of a problem, as Gandalf says that Bilbo's mithril-coat is worth more than 'the whole Shire and everything in it', so it's hard to see how mithril could have been mined in significant quantities without a severe inflationary shock to the economy

In Fellowship Gandalf says that, when mithril could still be produced in quantity its worth was ten times that of gold, sort of like paintings after an artist dies. But, after Moria fell and production effectively ended, its value went up significantly ("now it is beyond price"). Presumably the value of a finished item would be even greater because only the Dwarves knew how to make it into "a metal, light and yet harder than tempered steel," and with the fall of Moria and the only-recently-reclaimed Lonely Mountain, trained Dwarven smiths were probably in short supply.

Alternatively, Gandalf may have been exaggerating the value of the shirt for effect.
posted by jedicus at 1:21 PM on January 2, 2013 [6 favorites]


(whoops: the bit about paintings should go after the next sentence)
posted by jedicus at 1:30 PM on January 2, 2013


What's the canonical pronunciation of Smaug? SMOW-g? Smog?

(and no, I haven't seen the film; there's no cinema here)
posted by orrnyereg at 2:52 PM on January 2, 2013


"au" always has the value of "ow". Sowron, Smowg.
posted by howfar at 2:57 PM on January 2, 2013


Alternately, I studied Tolkien before linguistics by more than a decade, and my mental pronunciation will always be "Sore-on" and "Smog".

I think we have to accept that some adjustments in pronunciation occur in the transition from various Middle-Earth conlangs to English, especially when there are vowels involved in the words and children involved in the reading audience.
posted by Earthtopus at 3:19 PM on January 2, 2013 [1 favorite]


Oh, you did say "canonical." Never mind, then!

(one of my favorite canonical pronunciations is that of Caradhras)
posted by Earthtopus at 3:21 PM on January 2, 2013


And when people pronounce it "Sell-a-born"... ugh.
posted by grubi at 3:42 PM on January 2, 2013


the balrog Durin's Bane, an independent evil entity roughly comparable to Sauron but fortunately not much interested in surface-world empire building.

However, a great patron of percussionists. This fact also explains why no one would set foot around Moria.
posted by ersatz at 4:35 PM on January 2, 2013


And when people pronounce it "Sell-a-born"... ugh.

Wait, that's not right? ...uh, asking for a friend.
posted by orrnyereg at 4:50 PM on January 2, 2013


Tolkien himself pronounced it Smaug, to rhyme with cow. This exact point comes up at 21:30 into "The Hobbit, The Musical", a BBC radio documentary about the first ever staging of the Hobbit, which was in a boy's school in Oxford in the late 1960s. The Tolkiens were GOH for the opening night, and this came out in conversation with them after the show.
posted by Devonian at 4:55 PM on January 2, 2013


Of course, Tolkien was often wrong, too. Tom Bombadil, for example, was well known around Middle Earth to be a really moody fellow.
posted by It's Raining Florence Henderson at 5:12 PM on January 2, 2013 [1 favorite]


I doubt there would have been much noticeable difference. The ruins of Dale (and the commerce/friendship it allowed) aside, the dwarves were just about as insular as the elves. With the added bonus of dwarven hoarding syndrom, I imagine most gold in the dwarven economy would actually stay within the dwarven economy. The local human economy must have suffered some damage due to the loss of their closest and largest trading partner, but by rebuilding in Laketown, they seem to have rebounded pretty well.

Given the massive risks involved in any kind of long-distance export (spiders, goblins, mountain giants, trolls, barrow wights, and so on), I don't really see any logical chance that there would have been any real trade between, say, the Lonely Mountain and Rivendell, or Gondor. What happened in the Lonely Mountain Economic Zone would likely be contained there, with only very isolated trade. Even after the battle of five armies, no one would consider Mirkwood, or the Misty Mountains to be a safe caravan route.

Also, nerditry: The Balrog was not Sauron's equal. Morgoth (Valar) > Sauron and Gothmaug, lord of the Balrogs (Maiar) > standard Balrogs and Dragons = Manwe (Valar) > Eonwe (Maiar) > Gandalf/Saruman/Radaghast (Istari). While Sauron and Gothmaug were roughly equal, Balrogs were roughly equivalent to the Istari, or wizards.

I tried to resist, but I just can't help myself.
posted by Ghidorah at 5:40 PM on January 2, 2013 [1 favorite]


Came here for the Discworld jokes. Sadly disappointed.

When I saw the opening scenes of Jackson's Hobbit, I noticed a female dwarf (in a Ren-fairish sort of wench outfit) among the screaming hordes fleeing in the first scenes, and for a moment, I actually thought: "Wait, that's not right, female dwarfs weren't allowed to dress like women back then!"

Pratchett has done a huge amount for the economy of fantasy. Making Money probably taught a lot of impressionable young people far more about economics than any course or op-ed.
posted by Countess Elena at 5:48 PM on January 2, 2013 [2 favorites]


Damn...

I guess Gandalf was a Maiar after all. Here is my nerd badge. I don't deserve it anymore.
posted by Ghidorah at 5:57 PM on January 2, 2013


Well, here's the thing: not in The Hobbit he wasn't, he was a wizard and that's that, later works, revisionism and silly movies be damned.
posted by Artw at 6:00 PM on January 2, 2013


Three goddamned pages of discussion on properly recreating recipes and food found in Toilken's books...

Just go to Denny's! Duh.
posted by Green Winnebago at 6:01 PM on January 2, 2013 [2 favorites]


Terry Pratchett always delighted in moments in which the manipulation of social protocol allows for the clever to create something out of what was nothing a moment before.

Which I'm pretty sure is basically what an economy is. Especially a modern economy using fiat money.

It might be interesting to compare the economic opinions of a sample of avid Terry Pratchett readers to a sample of, say, goldbugs. Would there be a negative correlation there? Etc.
posted by tychotesla at 6:04 PM on January 2, 2013


"A dollar is a promise to pay the bearer one dollar's worth of gold upon tender, so long as the bearer promises never to actually show up and ask for it."

I have the audiobook so I can't find it for sure, but it's still the concept of money that sticks with me most easily.
posted by Countess Elena at 6:18 PM on January 2, 2013


I guess Gandalf was a Maiar after all.

Nuh-uh, you were right the first time (according to the Silmarillion which I just finished reading day before yesterday). Mithrandir, I believe he was called? Anyway, that's the only explanation that makes sense, looking over the entire Hobbit/LoTR story arc.

(is this why I can't get dates?)
posted by orrnyereg at 7:03 PM on January 2, 2013


Ghidorah, I see that you figured out that Gandalf was a Maiar (as well as an Istari, who were the group of Maiar that became the wizards) but in fact all balrogs are Maiar as well, including Durin's Bane -- not just Gothmog. From the article in the Encyclopedia of Arda that I just linked:

"The Balrogs originated as Maiar, beings of the same kind as Sauron himself. They were primordial spirits of fire that had allied themselves with Melkor in ancient times, and became the most feared of his servants, especially during the Wars of Beleriand in the First Age. Details of their numbers are hard to state with certainty, but there seem to have been relatively few of them - probably no more than seven."

And also, from the article on Durin's Bane (the balrog of Moria):

"In Gandalf, the Balrog finally encountered a being of the same order and power as itself. As the two Maiar faced each other on the Bridge of Khazad-dûm, Gandalf broke the Bridge and the Balrog fell into the depths, but Gandalf too was drawn into the abyss."

So Gandalf and the Balrog were both Maiar and were in fact evenly matched. You were wrong on all counts, I'm sorry to say.

Sorry to be such a huge pedantic dork, but if we can't be huge pedantic dorks about Tolkien of all things then what, I ask you, can we be huge pedantic dorks about? ;-)
posted by Scientist at 7:20 PM on January 2, 2013 [1 favorite]


The question is, of course, which tribe of pedantic dorks is the hugest?
posted by It's Raining Florence Henderson at 7:50 PM on January 2, 2013 [1 favorite]


Scientist, if you want more absurdity, keep going on the article about Balrogs in general. Evidently there is/was a heated argument about whether Balrogs have wings.

That way lies warfare between factions of a highly evolved race of cats over the color of hats at the hotdog stand.
posted by Ghidorah at 8:04 PM on January 2, 2013


(I liked Gandalf's line in the film about there being five wizards: Sauron the white, two blues whose names he couldn't remember, Radagast the brown and himself.)
posted by kaibutsu at 8:09 PM on January 2, 2013


I also liked that. It was a nice little nod to that bit of Tolkien errata.

"Then there are the two blue wizards... do you know, I can't remember their names right now?"

I am aware of the wings/no wings debate. When I was a kid I asked my Dad what Balrogs looked like, and he introduced me to that bit of folkloric argument. However, the depiction in the Fellowship movie is now how I see them in my mind because goddamn that thing looked badass.
posted by Scientist at 11:22 PM on January 2, 2013 [1 favorite]


Part of the problem is that Tolkien's hatred of any sort of population density means that the whole economy of Middle Earth is severely distorted. I guess the massively expanded lifespans make some things easier, but I'm still left wondering who exactly made all the comforts of a country squire that Bilbo keeps in his house. All that crockery? The silver, iron, and brass goods like candlesticks, cutlery, and such? For God's sake, the clocks? The Shire has, what, 200 hobbits in it? The only ones who seem to have any sort of profession are farmers.

As with basically every fantasy world that's followed in his footsteps, there just aren't enough people in Middle Earth to support the large-scale manufacture and trade of high-quality goods. that the author implies are going on constantly, even if, unlike Tolkien, they manage to build a world with professions other than farmer, soldier, innkeeper, and aristocrat.
posted by Copronymus at 7:28 AM on January 3, 2013 [1 favorite]


Copronymus: "The Shire has, what, 200 hobbits in it?"

Heck, no. Bilbo's Farewell Party alone had 144 invitees.

ROTK, The Grey Havens:
Meanwhile the labour of repair went on apace, and Sam was kept very busy. Hobbits can work like bees when in the mood and the need comes on them. Now there were thousands of willing hands of all ages, from the small but nimble ones of the hobbit lads and lasses to the well-worn and horny ones of the gaffers and gammers.
So, canonically, there is in TA 3019 a minimum Shire hobbit population of one thousand, and an implied population rather higher than that. This also discounts the outlying hobbit population that lived in the Bree-land.
posted by Chrysostom at 10:07 AM on January 3, 2013 [1 favorite]


I guess Gandalf was a Maiar after all. Here is my nerd badge. I don't deserve it anymore.

Many that have a nerd badge do not deserve it. And some that do not have a nerd badge deserve it. Can you give it to them? Then do not be too eager to give up a nerd badge in judgement. For even the very nerdy cannot see all ends.
posted by ersatz at 11:46 AM on January 3, 2013 [8 favorites]


Three Nerd Badges for the RPG-kings rolling their fates,
Seven for the Fanfic-lords in their fancies flown,
Nine for MeFites doomed to beanplate,
One for the Google Lord on his pedant's throne
In the Land of Internet where the haterz hate.
One Nerd Badge to rule them all, One Nerd Badge to find them,
One Nerd Badge to bring them all and in the tubes to bind them
In the Land of Internet where we are all Vikings.
posted by It's Raining Florence Henderson at 12:05 PM on January 3, 2013 [1 favorite]


Copronymus: in addition to what Chrysostom points out, remember that Bilbo is basically a one-percenter in Shire terms. Only the very rich and the very poor still live in holes, and Bag End is described as being especially fine. Much is made of the contrast between Bilbo's respectable social standing and the disrespectable nature of his adventure in "The Hobbit"; the only character whose position in the social order seems to exceed Bilbo's is the Thain, master of Took-land. We can thus read the comforts of Bag End as representing the very best the Shire has to offer: perhaps those unlikely items, such as clocks, represent the last, best examples surviving from a long-ago era of prosperity and long-distance trade, from Dale, or from up along the Greenway.
posted by Mars Saxman at 12:06 PM on January 3, 2013


Mars Saxman: "Only the very rich and the very poor still live in holes, and Bag End is described as being especially fine."

Right. FOTR, prologue:
All Hobbits had originally lived in holes in the ground, or so they believed, and in such dwellings they still felt most at home; but in the course of time they had been obliged to adopt other forms of abode. Actually in the Shire in Bilbo's days it was, as a rule, only the richest and the poorest Hobbits that maintained the old custom. The poorest went on living in burrows of the most primitive kind, mere holes indeed, with only one window or none; while the well-to-do still constructed more luxurious versions of the simple diggings of old. But suitable sites for these large and ramifying tunnels (or smials as they called them) were not everywhere to be found; and in the flats and the low-lying districts the Hobbits, as they multiplied, began to build above ground. Indeed, even in the hilly regions and the older villages, such as Hobbiton or Tuckborough, or in the chief township of the Shire, Michel Delving on the White Downs, there were now many houses of wood, brick, or stone.
And in the Hobbit, An Unexpected Party"
The Bagginses had lived in the neighbourhood of The Hill for time out of mind, and people considered them very respectable, not only because most of them were rich, but also because they never had any adventures or did anything unexpected [...] Bungo, that was Bilbo's father, built the most luxurious hobbit-hole for her (and partly with her money) that was to be found either under The Hill or over The Hill or across The Water, and there they remained to the end of their days.
So, yes, only the richest and poorest hobbits still lived under ground. And the Bagginses are definitively rich, particularly after joining with the Tooks.

As a side note, the FOTR prologue goes on to point out:
These [houses] were specially favoured by millers, smiths, ropers, and cartwrights, and others of that sort; for even when they had holes to live in. Hobbits had long been accustomed to build sheds and workshops.
So, we do see non-farming professions mentioned (not to mention Sandyman the miller). That's not to say there's a realistic economy described, but there is mention of hobbits in trade.
posted by Chrysostom at 1:07 PM on January 3, 2013 [1 favorite]


Mars Saxman: Copronymus: in addition to what Chrysostom points out, remember that Bilbo is basically a one-percenter in Shire terms.

OTS!


(related: OM!)
posted by IAmBroom at 2:24 PM on January 3, 2013


You. Shall. Not. Pass...

...legislation raising taxes on Bag End!!!
posted by It's Raining Florence Henderson at 2:30 PM on January 3, 2013 [2 favorites]


I guess Gandalf was a Maiar after all.

I can't believe this has been bugging me, but Maiar is the plural form and Maia is the singular.

posted by ersatz at 2:28 AM on January 5, 2013


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