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[Adamfostas]

For a (long) explanation of this, see this paper by Paul Krugman:

http://web.mit.edu/krugman/www/ricardo.htm

For a TL;DR version:

Trade makes everyone richer because different places have different advantages.

What does this mean for Dwarf Fortress? It's quite simple. Right now, fortresses can do anything that anyone else in the world can do just as well as them. They can grow crops above and underground as well as anyone else, can fish and hunt just as well as everyone, and mine and produce metal goods as well as anyone else. Within a few years of your fortress being set up, exports from a typical fortress overwhelm the wealth of their trading partners. Except for a limited range of location-specific goods like flux or plaster, you gain little advantage from trade.

This doesn't make sense. Creatures that live underground shouldn't be able to produce aboveground crops in a tiny patch of land more cheaply than aboveground creatures with fields and fields set aside for production. At least, there should be some kind of production modifier that makes trading these goods worthwhile. Similarly, the bins and bins of cloth the elves bring should have greater value than they do; clearly they can produce cloth more cheaply than dwarves, and this needs to be reflected in prices and usefulness of trade.

When Toady gets to working on the economy in greater depth as part of the caravan arc, this idea - differing values of production for different areas, depending on geography, natural resources and the skills of the populations involved - is crucial to delivering an economy that makes sense. Even the vast dwarven halls of Dirtfall, my current fort, should be reduced to trading with the elves to receive something they can't make as cheaply themselves; having one fortress beat the entire world's economy in this way seems odd.

Parts of this are covered in some Eternal Suggestions - e.g. 226 - and in several threads, such as:
http://www.bay12forums.com/smf/index.php?topic=96858.msg2787781#msg2787781
http://www.bay12forums.com/smf/index.php?topic=104428.msg3087580#msg3087580
However, this is broader than its component parts, and refers more to the mathematical underpinning of trade and the way in which the eventual markets function. Like trade specialisation, comparative advantage may require specific code to make it work.

[Kogut]

"and mine and produce metal goods as well as anyone else" - it was changed with revamp of minerals to encourage trade. It is quite rare to have access to sand and clay. So, after Caravan Arc we may see introduction of even bigger diversity between sites.

[Adamfostas]

"and mine and produce metal goods as well as anyone else" - it was changed with revamp of minerals to encourage trade. It is quite rare to have access to sand and clay. So, after Caravan Arc we may see introduction of even bigger diversity between sites.

Indeed, this is a step in the right direction. There is a difficulty around volumes of goods, though - traders appear to insist on bringing the same types of goods regardless of whether they've been bought in the past and regardless of comparative advantage. Eventually I'd hope the elf trying to sell me his wooden kneecap protectors would realise that the dwarf completely encased in steel probably won't be interested.

[NW_Kohaku]

Oh boy, opening up with Krugman.  I can see the Neo-Classicists who try to paint all Keynesian thought of every worthwhile economist in the past half century as a delusion spread by the "evil" Krugman getting ready to swarm already.

OK, first, it's probably worth bringing up a basic link to Comparative Advantage itself, because Krugman isn't talking about what Comparative Advantage itself, but the reaction to it.

Anyway, this is basically all the stuff that Toady does want to address already.  The only question, really, is how.

The single biggest problem is that caravans are just too tedious, manually intensive, and just don't supply you with enough materials to replace internal manufacturing.

A major portion of the problem is the silly amount of value multiplication done for the quality of goods you produce.  Dwarves can very easily hit legendary, and pump out goods worth 5 or 12 times the value of the other things they are trading for.  There is also the problem of raw materials and finished goods - finished goods are often worth 10 times as much as the raw material that makes them, so players often just import the raw materials and export the finished goods.  That, alone, means you can import goods for the raw material value, and then sell it back for up to 120 times the raw material value.

Of course, the notion of importing the raw materials and exporting the finished goods at massive profit is realistic.  That's what nations like Japan were doing to get so rich off of nations like Australia - Australia had plenty of natural resources they weren't developing themselves for a long time, but were willing to sell their resources to the Japanese, who would gladly buy their resources, turn them into finished goods, and then sell them back for a massive markup. 

However, Australia recognized the problem in its trade deficit, and took steps to correct it, and started developing its own industry.  Of course, doing that indelicately opens up the can of worms of protectionist trade policies...

In order for these sorts of things to work, however, in the same way that hamlets are set up to provide food to cities, labor camps (which may just be hamlets, as well,) need to be set up to provide other materials from the places that they exist.  Current willy-nilly settling of land will result in plenty of types of goods that are completely untapped, while others are overtapped.

Beyond that, there are not enough actually divergent types of goods to trade in.  Nearly all stones are basically the same, so why worry what you quarry?  All wood is basically used for the same things, too. No metal but iron, maybe copper and bronze (tin) really matters.  Glass and ceramics?  They don't do anything wood and stone don't do already. 

Without reworking the way the internal economy works so that people actually NEED these different kinds of goods, it makes no difference.

Toady has talked about how he intends to make farming much harder for dwarves so that they must import food from humans and elves.

So what if dwarven farms are nerfed?  They still have turkeys producing tremendous amounts of eggs with no feed requirements, and their leather makes clothing. 

For comparative advantage to work, you need goods to cost more for a given culture to produce them.  Until we have the internal mechanics of having to pay dwarves for their work again, this can only make sense in terms of how much labor it takes to make a good.  Elves must somehow produce a good with less labor than a dwarf does... but there is nothing in the game that does this.  Every good takes the same amount of labor to produce - one harvested raw material, and one step in a workshop.  In fact, the act of using the trade depot is more work than any other single industry.  The "cost" (in the only currently meaningful definition of the term - effort and time on the part of the player) of trading itself is greater than the "cost" of just making it yourself.

Anyway, DF needs two major economy overhauls - one internal to the fortress, and one external. 

The internal mechanics of the fortress are even more bare-bones and silly than the external one.  (The internal economy was such a mess that it basically was just removed entirely.)

Basically, the work that has to be done to make any of this make any sense is more monumental than most people realize. 

[NW_Kohaku]

Actually, the more I think about it, the more I am thinking of the ways that even Comparative Advantage cannot be properly modeled in the current game, because the ways that the player views costs are completely different from the way that the game might value costs.

I suppose I should thank you for an unintended spark of idea to rant about, Adamfostas.

The problem really comes down to the player costs, not the dwarf costs or economic costs.

[thisisjimmy]

I very much agree with NW_Kohaku.  This is something that Toady will improve, but how to actual accomplish that is complicated.

There's also challenges in balancing fun gameplay with more realistic economics.  For instance, you don't want to cripple the player too much if there happens to be an unlucky distribution of resources.  It could lead to the game feeling unfair and frustrating.  Doing this right will take careful design and balancing.

[NW_Kohaku]

Perhaps I should rewrite my previous statement, so that it actually more directly goes up against the problems in applying Comparative Advantage to DF, since I was obviously rambling a bit while I was mentally masticating the meanings of the post as I typed...

At its most basic level, Comparative Advantage is about using free trade as a means of maximizing productivity for everyone involved in the trade routes.

At a basic level, economics in a consumerist society means that people want more stuff, and the more productivity there is, the more stuff there is to divide out between all the people.  So long as people want more stuff, productivity always has a place. 

The problem is that Fortress Mode never lacks for productivity.  There are no goods to distribute out to your dwarves, there is no consumerism, there is only having enough to survive, and then just sitting on your fort and trying to see how long you last.  Maybe building a big monument or fighting something more difficult, but basically, all you need is to not starve and have clothing and weapons.  Everything else is just a waste of time and effort and FPS to produce or import anything.

It's this fundamental problem that pushed me to write this old thread, although I've been gearing up to rewrite it lately.  Basically, there is a critical lacking feature in the way that fortresses simply do not consume enough resources to justify the sorts of divisions of labor we see or economic models we want.

[Astramancer]

Yes, basic living should use about as much resources (in terms of dwarfs and player effort), but that should only be the beginning.  Make all those toys and bins and bins and bins of rock encrusted rock crafts should have some use other than vendor trash.  For one, I'd like to see more than just elves snub their noses as certain materials.  Also they should have quotas of certain kinds of things.  It's silly that you can trade a caravan nothing but XXXgoblin sockXXX and get anything you want.  But this would (hopefully!) have to result in an interface change, or at least let caravans take things off when you try to trade "we don't need that many rings" without affecting the caravan's 'mood' and make them flee from being given too many bad deals in a row.  This would make the caravan requests more important, because they wouldn't just give an un-noticable price multiplier on goods you're not even going to trade, but would dramatically increase the cap on what they're willing to take.  If you want to buy out the caravan, you're going to have to pay attention to what they want!

And add a new stockpile type:  Caravan Requested Objects.  The types of objects that are allowed would change whenever the liaison makes new requests, but you would still be able to disable specific things (like if the liaison asks for steel swords and you're in the middle of arming all of your dwarves -- you're probably not going to trade steel swords!).

[Silverionmox]

This would require more traders than just caravans - setting up a bazar where both outside merchants trickle in, set up shop, show their wares and your dwarves can buy trinkets, for example.

The price of transport should also be calculated. Logs and stones are typically not traded long-distance, except on special request... for which you'll pay a premium. These things are heavy. Traders prefer stuff with small mass, volume, bulk and high preservability and profit margins. Like cut gems and high quality cloth.

Clothes weren't traded long-distance because you needed a tailor to fit them. Should the one-size-fits-all nature of DF's clothes mean that they are traded. I think not. It would still be difficult to determine what kind of clothes would be needed. In addition, importing cloth and have your dwarves go to the tailor for most of their suit at once will save much hassle and FPS loss, I think.

[NW_Kohaku]

Yes, one of the things I've been pushing for a while has been the notion that you just automate the trading entirely.

See this thread on taverns and fairs and caravans.

You simply say "I will trade up to 200 mugs per year for any price above x per unit", and then leave it to the dwarves to automatically carry out your requests.

If you don't have to manually punch each and every single friggin' "buy this" button yourself, the Player Costs of trade would plummet, and trade would become something worth actually doing again in select circumstances.

Of course, the fundamental problem of a lack of consumerism remains.

Ninja'd: Yes, Silverionmox, that's basically the same sort of thing I'm thinking of with regards to just setting up a "tavern" and a "trading post" or some "shops" and just letting business go on without any manual oversight.

[ravaught]

Beyond that, there are not enough actually divergent types of goods to trade in.  Nearly all stones are basically the same, so why worry what you quarry?  All wood is basically used for the same things, too. No metal but iron, maybe copper and bronze (tin) really matters.  Glass and ceramics?  They don't do anything wood and stone don't do already. 

This is a huge issue. Unfortunately, I think it is even a bigger issue because it stems all the way back to worldgen. Raw materials have three main criteria for value: Rarity, Acquisition Cost, Usefulness. Of these, only rarity is absolute, but it would need to be tracked during worldgen. For non-renewables, ideally, it could be a simple multiplier based on tracking the total raw materials created at worldgen. Rarity based value would be inversely proportional to the percentage of total goods. (i.e. An item that made up 1% of the total available material would be worth exponentially more than an resource that made up 10%.

The second would be ease of acquisition, which also could be tracked at worldgen by tracking what Z-level the materials showed up at. Resources at lower z-levels would be worth more because they are harder and riskier to acquire.

The usefulness metric is based on how many unique methods their are for using an item. For example, kalonite can be used as a building material, a source for porcelain, and it is magma-safe, which makes it ideal for use in any construction near magmas. By assigning numeric values to classes of uses, and multiplying that by the number of unique uses, and summing the results, we could get a rough idea of a usefulness value.



For example:

Kalonite: Magma Safe = 3, Masonry = 1, Rock Crafting = 1.5, Pottery = 2, Trade = .5; 3+1+1.5+2+.5= 8; 8*4=32, So kalonite would get a 32% bonus to it's value.

Bituminous Coal = Fuel Source = 3, Smelted to Coke = 2; 3+2=10;10*2=20%


Both Items are easily acquirable, so they would each get a multiplier of 1 for acquisition cost.

Kalonite is common as a layer stone: 1 multiplier     = Total Value Bonus 32%*1*1=32%
Bituminous Coal is rarer as a vein mineral: 3 multiplier = Total Value Bonus 20%*1*3= 60%

Of course, these numbers would fluctuate from world to world based on the worldgen resource populations, but the underlying mechanics could be true across the board. If some form of counter was used as well that ticked down everytime a raw, non-renewable resource was consumed you would also have a value set that change based on total world availability at any given point. So, as you continue to build forts in the same world, the values for materials could be drastically different.

Without reworking the way the internal economy works so that people actually NEED these different kinds of goods, it makes no difference.

I think Demand is a better word than need here. The system for this is already partially in place in part with the thoughts/happiness system, starvation, and violent deaths. However, this ties in nicely with dealing with manufactured goods. Tying in with the other post I made today, tracking the wants of your civilization as a whole based on the thought system that is already in place would be a good foundation for varying the values of manufactured goods, and even food items, based on the people in your fort.

Toady has talked about how he intends to make farming much harder for dwarves so that they must import food from humans and elves.

Not sure if it should be more difficult or if there should simply be less variety.

Every good takes the same amount of labor to produce - one harvested raw material, and one step in a workshop. 

While true, this is misleading. For example, glazed pottery requires many more steps.
Gather Clay
Gather Glaze material
Make Item
Glaze Item

Similarly, metal items take more steps, at least until you get to magma forges, because you must harvest and convert the fuel prior to smelting the metal prior to crafting the item. So,
1 Charcoal + 1 Coal= 3 Coke:
1 Coke + 1 ore = 2 Bar:
1 Bar + 1 Coke=1 Item

Total Cost: 3 Combines + 1 Coal + 1 Ore
Returns: 1 Coke + 1 Item + 1 bar

This of course assumes that you are not making higher end metals which require more than one smelting combine to produce, in which case you are adding at least two more steps, consuming one more raw material, consuming one more coke, and ending up with a different value of bars.

These things are all quantifiable and can be easily added in as multipliers. Setting up a system for value is not hard, it is just tedious and requires extensive testing and tweaking. But that is what Toady has us Guinea Pigs... I mean players for.

Anyway, DF needs two major economy overhauls - one internal to the fortress, and one external. 

Agreed!

[Adamfostas]

Oh boy, opening up with Krugman.  I can see the Neo-Classicists who try to paint all Keynesian thought of every worthwhile economist in the past half century as a delusion spread by the "evil" Krugman getting ready to swarm already.

To be fair, it's difficult to for neo-classicists to complains about Ricardo, given that he's pretty 'classic'. They may as well complain about Mr Smith.

OK, first, it's probably worth bringing up a basic link to Comparative Advantage itself, because Krugman isn't talking about what Comparative Advantage itself, but the reaction to it.

Thank you for this link, which I should've given. Almost all of your post is along lines with which I would agree, so I'll just focus on a couple of particular points.

For comparative advantage to work, you need goods to cost more for a given culture to produce them.  Until we have the internal mechanics of having to pay dwarves for their work again, this can only make sense in terms of how much labor it takes to make a good.  Elves must somehow produce a good with less labor than a dwarf does... but there is nothing in the game that does this.  Every good takes the same amount of labor to produce - one harvested raw material, and one step in a workshop.  In fact, the act of using the trade depot is more work than any other single industry.  The "cost" (in the only currently meaningful definition of the term - effort and time on the part of the player) of trading itself is greater than the "cost" of just making it yourself.

There's at least two options here: simply lowering skill acquisition rates and hence the length of time the workshop step takes, or adding in additional player input through multiple steps for a particular type of labour. The latter would add to micromanagement, which isn't necessarily bad - this is DF, after all - but may prove annoying. The former would slow down the early game considerably, but could push the player into focusing on a stronger division of labour, which can only help to personalise the dwarves. It's important to recognise that the biggest cost to the player - at least in the early game - is that of opportunity, and imposing additional opportunity costs makes decisions more difficult, and hence more interesting.

The problem is that Fortress Mode never lacks for productivity.  There are no goods to distribute out to your dwarves, there is no consumerism, there is only having enough to survive, and then just sitting on your fort and trying to see how long you last.  Maybe building a big monument or fighting something more difficult, but basically, all you need is to not starve and have clothing and weapons.  Everything else is just a waste of time and effort and FPS to produce or import anything.

This is literally true - but to be fair, everything in a sandbox game is a 'waste of time and effort'. Dwarf Fortress is effectively a toy for grown-ups, and it would be unfair to understate the value of play when it comes to big monuments or similar. Of course, this is value to the player, rather than within the game itself.

In order to add the latter, we could consider the social structure that DF is attempting to emulate and consider how that could cash out within the context of comparative advantage. Nobles currently undertake an interesting form of rent-seeking which places heavy demands on the player and relatively smaller demands upon the fortress's economy; a couple of extra ballista parts won't hurt a fortress's supplies overmuch, but may be a faff for the player. There is very little reason for any dwarf to service nobles' demands at all, beyond the slight risk of catching a stray punch during a tantrum.

If we could ramp up their rent-seeking behavior in some way, we could increase demand for goods and hence the scope for the economy, in advance of any consumerist-driven change to the game. There are various possibilities, such as nobles now demanding a hoard (i.e. a room full of chests in which they store a percentage of the fortress's output, which can't be used by anyone else), which is pretty dwarfy. They could select retainers - dwarves whose only responsibility it is to look after the noble's needs, fetching and carrying and so on - thus diminishing the workforce.

Of course, you'd need a cost to not supporting nobles in this way to make it work, and the obvious one is to assume that nobles get their rent-seeking privileges from their traditional feudal function: organising the military. If only nobles can appoint militia commanders ("Urist McPriceyPants has knighted Urist HoleyPants"), then the player is forced to meet their whims unless they resort to exclusively using traps. This would go part of the way towards raising demand; the richer the fortress, the more nobles you can attract.

Basically, the work that has to be done to make any of this make any sense is more monumental than most people realize.

This is true. But getting it right would provide a free-of-charge economic simulator to everyone, which is worthwhile even outwith a fun game.

[NW_Kohaku]

The problem with a notion like "deep minerals are more valuable" is that, aside from spoilers, not much actually appears in the deep that doesn't appear near the surface, except for diamonds, maybe a few other gems, and some types of stone that are basically the same as any other type of stone.

You could basically limit it to "creatures and "plant life" that only appear in the third cavern," and it again raises the question as to why people would pay more for floating guts guts than they would pay for something less disgusting to eat.

The only thing that makes sense is Nethercap Wood, which has a unique and extremely valuable property associated with it, although vanilla does nothing to particularly capitalize upon this property.

In Supply and Demand, one of the most key (and often overlooked) aspects of Demand is the concept of Replacements.  A Replacement is anything that can do the same job as another good.  If horse meat is very rare, you might think it is expensive, but if people prefer a cow meat steak, and cows are common and cheap, and there is no reason to eat horse meat instead of cow meat, then horse meat can never be more expensive than cow meat.

Your formula on usefulness is also mistaken on this front, and doesn't model the elasticity of demand, but really, this needs an entirely different thread to focus upon accurate modeling of Supply and Demand.  This is about trade.

Another thing I really want to get into is the difference between fortress costs and player costs, but again, that's a matter of another thread...  I need to start writing some of these before I get buried...


Ah, Adamfostas just wrote something, but I'll post this as if he hadn't and read and respond later.

[NW_Kohaku]

There's at least two options here: simply lowering skill acquisition rates and hence the length of time the workshop step takes, or adding in additional player input through multiple steps for a particular type of labour. The latter would add to micromanagement, which isn't necessarily bad - this is DF, after all - but may prove annoying. The former would slow down the early game considerably, but could push the player into focusing on a stronger division of labour, which can only help to personalise the dwarves. It's important to recognise that the biggest cost to the player - at least in the early game - is that of opportunity, and imposing additional opportunity costs makes decisions more difficult, and hence more interesting.

While it is true that the game needs to make creating legendaries more difficult, this is wholly beside the point - the time it takes to train up a legendary is largely irrelevant, since the rest of the world basically doesn't get to make every single civilian in their city a legendary the way that we do almost automatically if we just keep a fort running long enough.

Likewise, I don't know about you, but I already will set a dwarf to just one labor in just one specific workshop making just one or two specific products for the rest of their lives, so it's not like the labor force can get more divided than it already is.

Additional micromanagement is just trying to add more problems to solve a problem - it's only going backwards.  What the game needs to do is remove the micromanagement, so that the player can focus upon the real decisions that need to be made in the fort.  Making a player decide between whether or not doing the things they know is good for the fort based on how much of a pain it is for them, personally, to do so, is like saying "let's make the game about the player deciding whether they want to lose horribly or make the game an insufferable chore until they decide to quit on their own". 

The real problem is that there really are no opportunity costs, except in the first season of the game.  Once you have established a farm, basic living quarters, and basic defense, you have accomplished the only necessary tasks in the game.  What the game needs to do is extend the number of things it takes to make a stable fortress out so that those opportunity costs actually matter beyond the first hour of play.  What we're playing now is basically a sandbox where we either mod in more and more difficult things to fight for the simple thrill of fighting something harder, or else making completely pointless megaprojects that we make for the thrill of making something.  The "game" is over when you can feed and secure your dwarves.

In order to add the latter, we could consider the social structure that DF is attempting to emulate and consider how that could cash out within the context of comparative advantage. Nobles currently undertake an interesting form of rent-seeking which places heavy demands on the player and relatively smaller demands upon the fortress's economy; a couple of extra ballista parts won't hurt a fortress's supplies overmuch, but may be a faff for the player. There is very little reason for any dwarf to service nobles' demands at all, beyond the slight risk of catching a stray punch during a tantrum.

If we could ramp up their rent-seeking behavior in some way, we could increase demand for goods and hence the scope for the economy, in advance of any consumerist-driven change to the game. There are various possibilities, such as nobles now demanding a hoard (i.e. a room full of chests in which they store a percentage of the fortress's output, which can't be used by anyone else), which is pretty dwarfy. They could select retainers - dwarves whose only responsibility it is to look after the noble's needs, fetching and carrying and so on - thus diminishing the workforce.

Of course, you'd need a cost to not supporting nobles in this way to make it work, and the obvious one is to assume that nobles get their rent-seeking privileges from their traditional feudal function: organising the military. If only nobles can appoint militia commanders ("Urist McPriceyPants has knighted Urist HoleyPants"), then the player is forced to meet their whims unless they resort to exclusively using traps. This would go part of the way towards raising demand; the richer the fortress, the more nobles you can attract.

Part of the problem is that Unfortunate Accidents are too common as it is... by making nobles MORE demanding, you're only begging for players to set up magma-safe noble's rooms with indoor heating. 

Players reject that portion of the game as it stands - it needs to be presented to them in a better way.  This is a large part of why I was going on about the Class Warfare suggestion, since that would make the entire fortress start making demands as a natural extension of gameplay. 

They view nobles as an unecessary burden placed upon them for no benefit they can see, but if they see the increasing demands that are placed upon them as an escalation of challenge, originating from doing well in the game, and with the reward of advancing their own creation further upwards from "dank hole" to "shining, triumphant Mountainhome", it becomes something they would more actively seek to accomplish.

In other words, use the carrot, not the stick.

[thisisjimmy]

Do you have a list of specific suggestions on what could be changed?

Here's what I gather/think:

• Stone is much too common and too useful.  The quantity that can be mined should be drastically reduced and it should have greater drawbacks as a building material.  Maybe increasing the time it takes to make items out of stone would help.
• Food, of course, is too plentiful once your industry is set up.  The food industry should require more dwarf labour, more land, and have smaller yields.
• Labour is far too plentiful.  Fewer dwarves should migrate to the fortress by default, and dwarves should generally work more slowly.  Critical industries, like food production, should require a greater percentage of the population.
• There should be more resources with unique abilities. Things like pitch that can be used to make flaming bolts.
• To encourage trade, some resources should be rare at the player's embark location and some products should be difficult for the player to produce.
• There should be a greater military threat to well established fortresses.  Without any threats to survival, the only cost to anything is ultimately the player's time.  Pressure to survive forces the player to play strategically.  Making trade more important would help here because it could force the player to come out and defend the caravans.
• The above should be done in a way that makes the mid and end game harder.  New players have a hard enough time as it is with the early game.  Therefore, things like a miner's initial digging speed should not be slowed down.