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[GoblinCookie]

Yup, gem/large-gem coins make sense alike metal coins. I think some rare shells used to be a sort of coins in some ancient civilization.

Money is just another merchandise, but it is special due legislation, as you are noting.

However, you missed to factor in one essential issue-solving ability of coins. Imagine a snake oil salesman selling you a wonder-paper, which will cure all your issues of hauling heavy and big load back, which is equal in value of goods you just sold to very hostile negotiating partners, who will certainly go to war  with you very soon. Like Dwarf-Goblin trades. The wonder-paper the snake oil salesman is pushing on you are traveling bonds and in border of in-civilization trading legislation can legitimize those. However in between-civilization trading, you do not have such legitimacy. Your trade partners may try paying with glass coins for your goods. Valid in their civilization, but utterly useless in yours. This is why modern fraction value monetary system is so depended on having foreign currencies in their treasuries, as reserve.

So, what ingame raw materials, have highest value for their weight and size, if not precious metal bars, gems and diamonds? Imho, inter-civilization trade should even ignore coins and what civilization assigned them for value. In inter-civilization trade such coin should be worth only as much as the material they are made of. So coins=bars and bars=coins really. If you couldn't smelt the coins into bars, then there wouldn't be a point in trading in them. Then I would suggest only metal bars, gems and limited in production items like large gems and artifacts.

Isn't oil and other raw resources traded on modern day goods stock exchanges? Isn't metal like oil in Dwarf Fortress currently? A strategic resource and commodity. Gems maybe rare and more valuable, but are gems a strategic resource really? Can army survive without gem-helmets, gem-shields, can embark survive without gem-tools and diamond cutters? I think they can.

I think value should be phased out and replaced with quality.  This number determines the priority of two items that meet the same demand and can be modified by % according to different tastes, it is otherwise ignored.  If there are two chairs, the entity will bid for the highest value chair (from it's perspective), it should not however ever trade away it's food for a sum total of chairs of a greater value as is presently the case.  Really in Real-Life, value is just 'the amount of money I can trade that for', not something that actually exists as the basis of anything. 

While regular items may be used as money, regular items are not considered money unless designated as such.  Paper for instance is entirely valid as an option for money, but at no point does the civilization simply treat the value of money and the value of paper as the same.  Instead the civilization takes some of it's surplus paper and then marks it in the game as 'this paper is money', same with gold or whatever.  It does so when it does not have anything else to do (all demands that it can meet are met) and it works because it will trade money for anything else that it has a demand for, including potentially paper to make more money with.   

Inter-civilization trade should work either by barter or by acquiring the currency of another civilization in order to buy goods (including your own currency) that they have.  Money of other civilizations has no value to it's own holder, it is simply acquired so as to get things from those of that civilization.  The logic used for foreign currency, is exactly the same as a third-party trade in general, where an entity gets something that it does want itself but a third party wants in order to get the things it wants from that party.

I guess you are right about my non-English perception. From my point of view tariff is not a tax. Tariff is more like a ticket. Usually payed on some bridge or gate, you need to pass through. Drop the coin <bang!> and gate opens before your car to drive on. For example in DF currently you pay some value of goods with merchant caravan, as gift to mountain home, to have then the mountain home with its currently useless monarch moved to your embark. This is from my point of view an already working entire complete tariff system in DF and still no economy system on horizon.

In English it is not from your point of view, it is according to your (wrong) definition.   

What you are describing is called a toll.  This may be considered a tax if the government is the one charging the toll, which generally was the case in Feudal times.  Tolls are another example of the interplay between the trade economic system and the taxation economic system, which complicates things.  AIs work best when there is only one system that is nicely sealed away, the more other concurrent AI system there are going on the more complicated things get. 

[Sarmatian123]

We both agree on inter-civilization barter. It makes more sense then free trade currently employed in modern world. We cleared the lost in translation meaning of toll/tariff. Yes, it can be a form of tax, but also a fixed sum or a flat rate tax as well. Toll/tariff in this way is already created and used in DF during play to move mountain home around. We agree how valueless are coins without a need for foreign currency reserve.

We certainly do not agree on definition and handling of strategic resources.

Food is strategic resource in modern world. Not in DF. Caves always can provide farm land and wood land and some at least murky pool water. You are convinced you could turn abundance on every embark of these resources into their sparsity. Enlarging food consumption. Enlarging plot size requirement. Making farming more labor needy then shepherding is. In real life herding animals is more labor requiring then farming btw. Putting wall around pasture in DF alike in real life removes a lot of labor necessity with animal herding.

Logs are resource, which could be strategic alike food. Specially in mountains or on ice embarks. Beds? Yet again caverns are striking back with under ground trees and first caravans don't even trade in logs.

Water could be a strategic resource. In real world, there is always some depth on which natural water aquifers always appear. You could require water for alcohol production. Aquifer can delay players digging for adamantine and lava for longer time. Digging metals, flux stone and gems out of aquifer is a tricky business. Digging deeper could present issue with high temperature instead of water aquifer, but heat is not radically rising when you dig and lava flowing up in stone does not automatically melt the stone either or overheats it. Methane gas aquifer could provide more efficient stop for deep mining, but you need to introduce ventilation pipes into DF. It would look like this in layers: soil - stone - water aquifer stone - methane aquifer stone - lava - hell. Are current deep caverns impossible due missing pressure and missing ventilation?

Metal is currently abundant in DF due smelting bug. Wafers in value of 1/10 bar for other metals then adamantine could fix this bug. Metal alike logs, food and water/alcohol is currently strategic resource in DF, because of hostile environment with FB and sieges. Even if metals are abundant, alike gems they are not infinitely generated.

Gems are not strategic resource. They are not needed. Their only value is weight-value ratio and their rarity, which is limited and comparable with availability of metal ores.

Strategic resources in modern world are also oil, gas, energy.

We agree that Treasury Vault, shops and different civilizations' trading depots and caravan transformation from traveling shop into moving goods logistic will be needed in economy release and definded together with it. Whenever it comes in far far future away.

Though Treasury Vault could appear already together with joining stacks mechanics and work more or less like kitchen does right now. Though what defines Treasury Vault? It could be location based on zoning with assigned Dwarven treasurer, special "treasury workshop" and special container "safe". Though delaying it for economy release makes sense as well. I would wait however with that until location-room definition in DF gets little more improved. Currently when I have 20 master quality A-instruments, 20 master quality B-instruments and so on... I can NOT individually assign particular master quality instrument to a given location. So there is some polish left to be done to location interface at least. Introducing locations for farming and shepherding could be an idea. Location for an elaborate silk farm makes sense too.

I think value should be phased out and replaced with quality.  This number determines the priority of two items that meet the same demand and can be modified by % according to different tastes, it is otherwise ignored.  If there are two chairs, the entity will bid for the highest value chair (from it's perspective), it should not however ever trade away it's food for a sum total of chairs of a greater value as is presently the case.  Really in Real-Life, value is just 'the amount of money I can trade that for', not something that actually exists as the basis of anything. 

While regular items may be used as money, regular items are not considered money unless designated as such.  Paper for instance is entirely valid as an option for money, but at no point does the civilization simply treat the value of money and the value of paper as the same.  Instead the civilization takes some of it's surplus paper and then marks it in the game as 'this paper is money', same with gold or whatever.  It does so when it does not have anything else to do (all demands that it can meet are met) and it works because it will trade money for anything else that it has a demand for, including potentially paper to make more money with.   

Regular items are considered as money, only because of their strategic resource value. Cave-less mountain embark may have urging need for importing food and logs, while regular forest embark without metals may have urging need to smelting 500 metal chairs in lava.

The quality consideration does apply to artifacts, but for regular items you have no option to order production of only master quality beds, which then you can order only master quality encrusts. Workers cold require to use more materials to achieve that quality, but then it would need depend on their skills and workshops do not allow to just train skills without using excessive amounts of materials and without creating in this process entire mountain of sub quality products. There is also no way to remove encrusts, just to redo them.

What is higher quality really? Just a more fancy item. The only way you would go for more fancy items is, if you have extra resources you can waste, or if you making a collection for some sort of museum. Higher quality does no strategic resource impact. It is basically useless artistic aesthetics. If you are on Sahara, even if this high quality item comes with high price tag, you rather need water and you value water more then this almost-artifact quality item.

Sorry for my strategic resource rant...

[GoblinCookie]

We both agree on inter-civilization barter. It makes more sense then free trade currently employed in modern world. We cleared the lost in translation meaning of toll/tariff. Yes, it can be a form of tax, but also a fixed sum or a flat rate tax as well. Toll/tariff in this way is already created and used in DF during play to move mountain home around. We agree how valueless are coins without a need for foreign currency reserve.

We certainly do not agree on definition and handling of strategic resources.

Food is strategic resource in modern world. Not in DF. Caves always can provide farm land and wood land and some at least murky pool water. You are convinced you could turn abundance on every embark of these resources into their sparsity. Enlarging food consumption. Enlarging plot size requirement. Making farming more labor needy then shepherding is. In real life herding animals is more labor requiring then farming btw. Putting wall around pasture in DF alike in real life removes a lot of labor necessity with animal herding.

Food is in the real-world both abundant and ubiquitous.  You can grow food of some sort in most places, the tricky part is the amount of work that is need to do so; indeed in modern times you can actually grow food in space.  The problem with the dwarf fortress situation is not that there is abundant food, but that the work needed to extract said food is trivial compared to reality and the amount the dwarves eat is also too small.  This means that the ability to employ the labour power of the entire population on tasks other than producing food results in a superabundance of other items despite the fact that the actual production of those items per person is pretty realistic given the time-frames we are dealing with in fortress mode. 

The choice of farmingVSherding is basically the choice as to whether to have more people overall but less surplus per worker or fewer people overall but more surplus per worker.  You can feed more people in an area by farming, but it takes more work to farm than to herd animals.  Since more surplus per worker means a greater % of soldiers, herding societies in RL were able to defend themselves against and even conquer farming societies, despite the fact they are outnumbered. 

Logs are resource, which could be strategic alike food. Specially in mountains or on ice embarks. Beds? Yet again caverns are striking back with under ground trees and first caravans don't even trade in logs.

Water could be a strategic resource. In real world, there is always some depth on which natural water aquifers always appear. You could require water for alcohol production. Aquifer can delay players digging for adamantine and lava for longer time. Digging metals, flux stone and gems out of aquifer is a tricky business. Digging deeper could present issue with high temperature instead of water aquifer, but heat is not radically rising when you dig and lava flowing up in stone does not automatically melt the stone either or overheats it. Methane gas aquifer could provide more efficient stop for deep mining, but you need to introduce ventilation pipes into DF. It would look like this in layers: soil - stone - water aquifer stone - methane aquifer stone - lava - hell. Are current deep caverns impossible due missing pressure and missing ventilation?

Metal is currently abundant in DF due smelting bug. Wafers in value of 1/10 bar for other metals then adamantine could fix this bug. Metal alike logs, food and water/alcohol is currently strategic resource in DF, because of hostile environment with FB and sieges. Even if metals are abundant, alike gems they are not infinitely generated.

Gems are not strategic resource. They are not needed. Their only value is weight-value ratio and their rarity, which is limited and comparable with availability of metal ores.

Strategic resources in modern world are also oil, gas, energy.

We agree that Treasury Vault, shops and different civilizations' trading depots and caravan transformation from traveling shop into moving goods logistic will be needed in economy release and definded together with it. Whenever it comes in far far future away.

Though Treasury Vault could appear already together with joining stacks mechanics and work more or less like kitchen does right now. Though what defines Treasury Vault? It could be location based on zoning with assigned Dwarven treasurer, special "treasury workshop" and special container "safe". Though delaying it for economy release makes sense as well. I would wait however with that until location-room definition in DF gets little more improved. Currently when I have 20 master quality A-instruments, 20 master quality B-instruments and so on... I can NOT individually assign particular master quality instrument to a given location. So there is some polish left to be done to location interface at least. Introducing locations for farming and shepherding could be an idea. Location for an elaborate silk farm makes sense too.

Strategic resource is a relative term.  Some resources are more essential than other resources, my idea is to make a stack of item-types based upon how strategic they are, food and drink are the most strategic resources, meaning they are the first thing the entity seeks to obtain whether by production or trade while things like gemstones are the last item they seek to obtain.  You can do without a bed but you cannot do without water, but most people would consider furniture a strategic resource.  You will therefore trade your bed for water therefore if the situation occurs, gems are therefore a strategic resource, simply one of very low priority since they valued because they are pretty rather than because otherwise you die. 

Money is special in that it is the only thing that has no strategic resource value.  It is therefore what economic entities seek to acquire when they have met all demands and will therefore trade it for anything else that is actually in demand, since things higher up in the list are trade for things lower down in the list.  Since unlike with other the items the demand for money is infinite, the economic entity will always seek to acquire more of it's own money FOREVER, this means the economy does not stop when somebody has got everything they want.  I say it's own money, not foreign money which is only sought when it can be traded for something it values, including it's own money. 

Regular items are considered as money, only because of their strategic resource value. Cave-less mountain embark may have urging need for importing food and logs, while regular forest embark without metals may have urging need to smelting 500 metal chairs in lava.

The quality consideration does apply to artifacts, but for regular items you have no option to order production of only master quality beds, which then you can order only master quality encrusts. Workers cold require to use more materials to achieve that quality, but then it would need depend on their skills and workshops do not allow to just train skills without using excessive amounts of materials and without creating in this process entire mountain of sub quality products. There is also no way to remove encrusts, just to redo them.

What is higher quality really? Just a more fancy item. The only way you would go for more fancy items is, if you have extra resources you can waste, or if you making a collection for some sort of museum. Higher quality does no strategic resource impact. It is basically useless artistic aesthetics. If you are on Sahara, even if this high quality item comes with high price tag, you rather need water and you value water more then this almost-artifact quality item.

Sorry for my strategic resource rant...

Cave-less embarks are not presently a thing, though it is a thing I look forward too. 

Quality is not value, which is being phased out.  It is only ever used when there are two objects that meet the same demand, so if we have a worse chair and a better chair, both of them for sale the entity will bid for the better chair first.  If they are outbid for the better chair, then they will settle for the worse chair.  If someone for some strange reason outright offers them a better chair for a worse chair then they will make the trade. 

Quality is intended to smooth out a problem with the economic model I am proposing.  The problem is what happens when we have two items that are of the same function, but one item is clearly better than the other.  Quality should really depend upon the potential uses of the item, this means that a lot of items will have a decorative quality and a functional quality, items like gemstones would only have the former value. 

[Sarmatian123]

Food is in the real-world both abundant and ubiquitous.  You can grow food of some sort in most places, the tricky part is the amount of work that is need to do so; indeed in modern times you can actually grow food in space.  The problem with the dwarf fortress situation is not that there is abundant food, but that the work needed to extract said food is trivial compared to reality and the amount the dwarves eat is also too small.  This means that the ability to employ the labour power of the entire population on tasks other than producing food results in a superabundance of other items despite the fact that the actual production of those items per person is pretty realistic given the time-frames we are dealing with in fortress mode. 

The choice of farmingVSherding is basically the choice as to whether to have more people overall but less surplus per worker or fewer people overall but more surplus per worker.  You can feed more people in an area by farming, but it takes more work to farm than to herd animals.  Since more surplus per worker means a greater % of soldiers, herding societies in RL were able to defend themselves against and even conquer farming societies, despite the fact they are outnumbered. 

I think you heading in right direction with farming, but success of herdsmen over farmers is based rather on mobility aspect. So this is not way of life, as much, as mobility which were winning those wars. There is a story I heard about Persian invasion on Sarmatian tribes in Eastern Europe's steppes. Sarmatians did not have cities, but one capitol city, which Sarmatians burned and abandoned themselves. The Persian huge army pursuing fleeing Sarmatians had extreme issues with supplies and logistics. For months Sarmatians were simply watching gigantic Persian army and moving away when it got too close. Entire campaign was fought out without single engagement. Persian army eventually got so demoralized that their king bitterly had to give up his ambitions of the conquest.

Herding could be even larger issue in manpower then farming, if only animals required more pasture, grass/trees regrowth would slow a bit, particularly on freshly uncovered dirty soil. Farming of regular grass to create food supply for pastured inside of fortress animals would be a new option. Creating off-site herding locations (instead of farming locations) in some unused part of grid around embark, would then make more sense too. Though Dwarven shepherds would need to be able crossbowmen-hunters too, to be able to protect animals. Hunting locations though logical, but through DF mechanics some wild species will eventually become extinct due hunt. Combining hunters with shepherds into one location could create a continued supply of leather, meat, wool, bones and cheese, which could be useful for economy simulation programming behind curtains.

Strategic resource is a relative term.  Some resources are more essential than other resources, my idea is to make a stack of item-types based upon how strategic they are, food and drink are the most strategic resources, meaning they are the first thing the entity seeks to obtain whether by production or trade while things like gemstones are the last item they seek to obtain.  You can do without a bed but you cannot do without water, but most people would consider furniture a strategic resource.  You will therefore trade your bed for water therefore if the situation occurs, gems are therefore a strategic resource, simply one of very low priority since they valued because they are pretty rather than because otherwise you die. 

Money is special in that it is the only thing that has no strategic resource value.  It is therefore what economic entities seek to acquire when they have met all demands and will therefore trade it for anything else that is actually in demand, since things higher up in the list are trade for things lower down in the list.  Since unlike with other the items the demand for money is infinite, the economic entity will always seek to acquire more of it's own money FOREVER, this means the economy does not stop when somebody has got everything they want.  I say it's own money, not foreign money which is only sought when it can be traded for something it values, including it's own money. 

Food and drink are not strategic resources. They could become, in right conditions like in caveless mountains or in huge population hubs, a strategic resource. Else food and drink are first needs products. Furniture, rooms and social locations you need to maintain long term sanity of Dwarves are not strategic resources. Of course you may hit magnetite with marble right away, have plenty of trees on surface to burn for charcoal. You still would go for steel weapons + leather armor for reasons. Still, final goal for ultimate weapons and armor would be adamantine, which is a metal. This is resource you want then to put your 10% aluminium and 25% steel tax on, because its military application makes it automatically a strategic resource.

I think here the most sense is putting items in their urgency categories like, survival goods 1st (food, drinks), strategic goods 2nd (metals, leather, coal/lava, construction materials), comfort goods 3rd (furniture, toys, instruments) and trading goods 4th (all other finished goods).

Accumulation of coins, as a form of saving for future purchases, makes sense. I agree. So long needs (survival, strategic and comfort) are covered. Though there is no need for individual Dwarves to keep their individual coin stashes, so long they are members of the embark. Treasury Vault location could be in a way an embarks central bank for all coins storage. Also having worth of bank in coins as fortress value instead of total fortress value makes better bait for talkative FB or sieges putting payout demands. More money in, more sieges and monsters after its contents. Plus thieves and spies. Not to mention, protecting it would also require to train ever larger contingent of fully professional soldiers. Could all civilizations in the game unite to make one huge invasion to loot the bank? Though lag would be insane and currently traps are too good too. Oh well. If DF could use multiple cpu and graphic card for math... this could be insane.

Cave-less embarks are not presently a thing, though it is a thing I look forward too. 

Quality is not value, which is being phased out.  It is only ever used when there are two objects that meet the same demand, so if we have a worse chair and a better chair, both of them for sale the entity will bid for the better chair first.  If they are outbid for the better chair, then they will settle for the worse chair.  If someone for some strange reason outright offers them a better chair for a worse chair then they will make the trade. 

Quality is intended to smooth out a problem with the economic model I am proposing.  The problem is what happens when we have two items that are of the same function, but one item is clearly better than the other.  Quality should really depend upon the potential uses of the item, this means that a lot of items will have a decorative quality and a functional quality, items like gemstones would only have the former value.

Still, we should have mechanisms in DF, to skill up Dwarves without producing mountains of products and to repeat jobs until master quality item is produced. Actually master quality has use in combat. It enhances items to next level in their material capability. So maybe I was wrong, claiming it is only aesthetics. Like well forged katana for Samurai. Then, it only adds value to trading goods and with trade priority downgraded for self sufficiency first, then it is mere aesthetics.

I see where you are going. Like cheap green glass pump being traded for bronze pump and then used by happy Dwarf to pump LAVA. Function > application (material???) > quality. Right on.

[GoblinCookie]

I think you heading in right direction with farming, but success of herdsmen over farmers is based rather on mobility aspect. So this is not way of life, as much, as mobility which were winning those wars. There is a story I heard about Persian invasion on Sarmatian tribes in Eastern Europe's steppes. Sarmatians did not have cities, but one capitol city, which Sarmatians burned and abandoned themselves. The Persian huge army pursuing fleeing Sarmatians had extreme issues with supplies and logistics. For months Sarmatians were simply watching gigantic Persian army and moving away when it got too close. Entire campaign was fought out without single engagement. Persian army eventually got so demoralized that their king bitterly had to give up his ambitions of the conquest.

Herding could be even larger issue in manpower then farming, if only animals required more pasture, grass/trees regrowth would slow a bit, particularly on freshly uncovered dirty soil. Farming of regular grass to create food supply for pastured inside of fortress animals would be a new option. Creating off-site herding locations (instead of farming locations) in some unused part of grid around embark, would then make more sense too. Though Dwarven shepherds would need to be able crossbowmen-hunters too, to be able to protect animals. Hunting locations though logical, but through DF mechanics some wild species will eventually become extinct due hunt. Combining hunters with shepherds into one location could create a continued supply of leather, meat, wool, bones and cheese, which could be useful for economy simulation programming behind curtains.

Mobility is really strongly related to what I was talking about.  If you need a greater proportion of your population to work in order to survive, then you are necessarily less mobile than you would otherwise be because your forces have to periodically go back to work, or to put it another way you cannot afford to maintain your forces on the field indefinitely, which is pretty much what you are describing in your example with the Persians.  Since the forces the farmers are able to field permanently are small, the herders win despite their overall population being smaller. 

The herders lose not because they are defeated militarily by the farmers but because the population density farming areas grows to the point that it is no longer possible for them to transition into herding area, since there are just too many people.  This is why despite how the Mongols conquered a large chunk of the world, that whole area did not end up living like the mongols, there were just too many people. 

Food and drink are not strategic resources. They could become, in right conditions like in caveless mountains or in huge population hubs, a strategic resource. Else food and drink are first needs products. Furniture, rooms and social locations you need to maintain long term sanity of Dwarves are not strategic resources. Of course you may hit magnetite with marble right away, have plenty of trees on surface to burn for charcoal. You still would go for steel weapons + leather armor for reasons. Still, final goal for ultimate weapons and armor would be adamantine, which is a metal. This is resource you want then to put your 10% aluminium and 25% steel tax on, because its military application makes it automatically a strategic resource.

I think here the most sense is putting items in their urgency categories like, survival goods 1st (food, drinks), strategic goods 2nd (metals, leather, coal/lava, construction materials), comfort goods 3rd (furniture, toys, instruments) and trading goods 4th (all other finished goods).

Accumulation of coins, as a form of saving for future purchases, makes sense. I agree. So long needs (survival, strategic and comfort) are covered. Though there is no need for individual Dwarves to keep their individual coin stashes, so long they are members of the embark. Treasury Vault location could be in a way an embarks central bank for all coins storage. Also having worth of bank in coins as fortress value instead of total fortress value makes better bait for talkative FB or sieges putting payout demands. More money in, more sieges and monsters after its contents. Plus thieves and spies. Not to mention, protecting it would also require to train ever larger contingent of fully professional soldiers. Could all civilizations in the game unite to make one huge invasion to loot the bank? Though lag would be insane and currently traps are too good too. Oh well. If DF could use multiple cpu and graphic card for math... this could be insane.

Trading goods are not a separate category.  All items which are excess to demand are put up 'for sale' as trading goods, what economic entities are trading is all surplus goods 'in general' for the lowest good on the list first.  Once they get to the end of the list, then they start putting up a demand for *their own* civilizations money.  They are not demanding money in order to trade, they are demanding money as the penultimate good that is demanded.  They then sit on the money, possibly putting in treasury buildings along the lines you are describing.

The clever trick here is that because money is always the last item on the list it will always be traded for anything in demand lower on the list.  However the demand for money is also infinite, while the demand for other things is finite.  What this does in effect is mean that production does not grind to a halt once a particular entity has met all it's demands, it will continue to produce things for others provided they are willing to offer them their civilization's money in return.  Inflation is effectively modeled by how the will trade all the money they have for a single in-demand item, which can be a lot of money. 

Still, we should have mechanisms in DF, to skill up Dwarves without producing mountains of products and to repeat jobs until master quality item is produced. Actually master quality has use in combat. It enhances items to next level in their material capability. So maybe I was wrong, claiming it is only aesthetics. Like well forged katana for Samurai. Then, it only adds value to trading goods and with trade priority downgraded for self sufficiency first, then it is mere aesthetics.

I see where you are going. Like cheap green glass pump being traded for bronze pump and then used by happy Dwarf to pump LAVA. Function > application (material???) > quality. Right on.

The main advantage of this mechanic is that means you can outcompete other economic players while meeting the same demand.  The reason to split quality up is that qualities have a priority.  Firstly you will try and acquire the best possible sword for the purpose of killing people (the function) value and then you will go for the prettiest sword.  So if you can offer someone a sword that is equally good but prettier over one that is just as good but uglier they will accept the former but a warrior will not accept a worse sword because it is prettier. 

Better materials are represented by an increase in the quality values for the relevant factors.  A steel sword is considered to have higher functional quality so a warrior will prefer it over a copper sword, but it's prettiness value is the same.

[Sarmatian123]

Mobility is really strongly related to what I was talking about.  If you need a greater proportion of your population to work in order to survive, then you are necessarily less mobile than you would otherwise be because your forces have to periodically go back to work, or to put it another way you cannot afford to maintain your forces on the field indefinitely, which is pretty much what you are describing in your example with the Persians.  Since the forces the farmers are able to field permanently are small, the herders win despite their overall population being smaller. 

The herders lose not because they are defeated militarily by the farmers but because the population density farming areas grows to the point that it is no longer possible for them to transition into herding area, since there are just too many people.  This is why despite how the Mongols conquered a large chunk of the world, that whole area did not end up living like the mongols, there were just too many people.

In economy.
Farming is a seasonal production activity, which produces a lot of food surplus and leaves lots of free time in other seasons for other activities. This is why farming societies reach higher level of development, higher population and so on over herding communities. The way to make farming continuous production activity is through use of green houses and artificial sun-light. Inhibiting factor for herding animals is, that this activity requires far larger area from farming for continuous productivity and gives particular challenges during winters/summers depending on climate. Modern industrialization of herding is also an ethical dilemma about animal treatment with enclosures. Herding is better from farming only in one aspect, that this food production you can bring with you in most of places and basically that's it.

In warfare.
Wars are often won by such factors like mobility, which doesn't exclude that farming societies with static defenses also were winning wars over herding communities like China did before Genghis Khan thanks the Great Wall. Particular success in war and superiority on battlefield of horse people like Scythian/Sarmatians for example over farming people was fact of their excellence in metallurgy and use of cataphract, a slower version cavalry, but in a way also a moving wall of metal. Another feature for "mobile wall" was extensive use by Scythians/Sarmatians of wagons, both for transport of goods, and as defensible mobile homes. Even early Slavic peoples' architecture in medieval settlements ("grods") in Eastern Europe was in a form of defensible wagon circles, there instead of wagons were used houses.

In DF.

Farming makes more sense for static fortress mode Dwarves, while herding makes sense for moving around Dwarven armies and Dwarven adventurers for sustenance reasons. Without introduction of horses for use by Dwarves, mobility is currently a Goblin advantage. On bright side for Dwarves usage of wagons is bringing slower mobility for Dwarves, Elves and Humans, which also in a way provides advantage of a moving wall, which Goblins do not have, unless they also start sending trading caravans.

[GoblinCookie]

In economy.
Farming is a seasonal production activity, which produces a lot of food surplus and leaves lots of free time in other seasons for other activities. This is why farming societies reach higher level of development, higher population and so on over herding communities. The way to make farming continuous production activity is through use of green houses and artificial sun-light. Inhibiting factor for herding animals is, that this activity requires far larger area from farming for continuous productivity and gives particular challenges during winters/summers depending on climate. Modern industrialization of herding is also an ethical dilemma about animal treatment with enclosures. Herding is better from farming only in one aspect, that this food production you can bring with you in most of places and basically that's it.

There is a difference between industrialised mechanical farming and the primitive form of farming that prevails for most of history.  Under modern farming conditions, a similar situation applies as historically did for herders, which is a small number of people can produce a massive surplus.  The difference is that farming (regardless of technological level) allows a larger amount of people to be sustained in a smaller area than herding does.   

The problem is that for most of history, the amount of surplus is less, or to put it another way while I can feed a larger number of people, not as much of what they produce is left over as is left over when I herd animals.  The total amount of food is greater, but the amount of surplus per person is less.  It is a tricky concept to grasp I admit, more food but less food surplus VS less food but greater food surplus.

In warfare.
Wars are often won by such factors like mobility, which doesn't exclude that farming societies with static defenses also were winning wars over herding communities like China did before Genghis Khan thanks the Great Wall. Particular success in war and superiority on battlefield of horse people like Scythian/Sarmatians for example over farming people was fact of their excellence in metallurgy and use of cataphract, a slower version cavalry, but in a way also a moving wall of metal. Another feature for "mobile wall" was extensive use by Scythians/Sarmatians of wagons, both for transport of goods, and as defensible mobile homes. Even early Slavic peoples' architecture in medieval settlements ("grods") in Eastern Europe was in a form of defensible wagon circles, there instead of wagons were used houses.

Because the farming societies have more people, they can contend with herding societies under the right conditions despite having less surplus PER PERSON.  Strategic mobility is however as already discussed, a function of surplus.  The less people I need to work, the longer I can keep folks on the field, hence the more mobile my army is. 

In DF.

Farming makes more sense for static fortress mode Dwarves, while herding makes sense for moving around Dwarven armies and Dwarven adventurers for sustenance reasons. Without introduction of horses for use by Dwarves, mobility is currently a Goblin advantage. On bright side for Dwarves usage of wagons is bringing slower mobility for Dwarves, Elves and Humans, which also in a way provides advantage of a moving wall, which Goblins do not have, unless they also start sending trading caravans.

Herding does not make sense at all in present DF.  That is because the amount of work needed to grow plants under the technological level is not represented in the game.  Meat is also heavy but has no greater nutritional value than cabbage leaves, so adventurers do not do well to herd animals for meat, they don't want meat.