Hi, everybody! This topic is one of my favorite things to read. Personally, I think that the best model for them would be a blend of capitalism and socialism, with... No, wait, that's my own personal opinion about real life!
I mean a blend of capitalism and government industry. Well, as I was about to say, it's really kind of up to Toady One. That is, whatever type of economy he thinks the dwarves should have.
If he goes along the "Capitalism" route, I think that he should simply include some sort of stack-combining thing, as suggested in the thread about having literal "piles" of wood per tile. That would allow dwarves to simply carry about a stack of coins, recombining it back into their coffin when it got too full and so on. Also, if there are issues with "too many coins needed," well, then, perhaps we need to tweak the values. Looking at how this sort of thing is dealt with/naturally solves itself in real life would be useful. Economist, anyone?
If he goes down a sort of "Capitalism Combined with Central Gov't Industry" route, then I think that the solution for "don't make steel toys" is: They'd have to buy the steel! Just adjust the price of steel to be rather high, then buy steel from the traders. We
are talking about economy and trading, right? When a siege is coming... Well, that's not a usual situation. Obviously, make a temporary ban on using steel for anything but weapons or armor! That's what would really happen.
I think that accurately modeling fourteenth-century economies would be the goal, perhaps changed somewhat to account for them being
AWESOME DWARVES. That's what would motivate dwarves, what would naturally evolve from what would happen in the earlier years... It would be totally awesome to have economies actually "evolve" over time, but Toady One, as previously stated, is a human. He doesn't have a thousand years to code.
Also, the above "Capitalism" idea would apply to "Capitalism Combined with Central Gov't Industry."