On the Economic Schools of Thought

Report by the Royal Treasurer Intefiqer Rehusa

While for most of the known history there had been no standardized economic systems, with every ruler deciding how to manage the economy on an individual basis, according to the needs of the given situation, over the millennia two dominant models emerged, of which one or the compromise between the two is used by most of the civilized countries. Of course, I can only confirm this to be true to civilizations in our relative vicinity, I cannot comment on what exact economic models are being used in India and China, or whatever the recently discovered civilizations of the distant continents of North and South Khonsmia are doing. Yet I am rather sure of the economic systems in the tri-continental area, from Elam to Mycenae and from Hatti to Punt, which is what I will focus on in this report.

The two dominant schools of economic thought are the Phoenician school and the Ur school. They stand in direct opposition to one another, as in their pure form they profess completely different ideas, which means both of them cannot be adopted simultaneously, but a mix of both can be taken – though usually with one of them still dominant the other. I will now proceed to shortly describe both schools and their modern definitions before describing how each country applies them to their economic systems

Phoenician School of Economics

The Phoenician school, its followers often referred to as Phoenicianists, naturally takes its name from the region of Phoenicia and the cities there, which were the first to formulate this practice and spread it throughout the civilized world. In essence, the Phoenician school advocates for very limited, if any, government intervention in the economy. This means that it is highly opposed to high taxes, tariffs, trade restrictions, protectionist policies, and other economic interventionist measures. Phoenicians have always been a highly individualistic people and always opposed to any sort of government overreach – even their own – and so it is not difficult to imagine why such a system emerged there. While there is no exact date when such a system was formulated, it seems to have been in effect in Byblos and the other Phoenician cities from the first time we have met the Phoenicians and started trading with them, that being over a millennium ago. Of course, over the centuries the system was standardized and improved, which allowed it to spread much further than just the initial collection of cities.

Now, one might say that this system was not an invention of the Phoenicians and is just the original state of human civilizations, and while this may seem intuitive, I would highly disagree with such an assessment. In fact, I would go as far as to say that this is the exact opposite of the economic systems used in the first settlements. In the primitive communities there is a lot of “government” overreach – that government being some tribe leader or an assembly of the elders in most cases. In such communities, everything is communal. Everything is taken by the leader or leaders and only then redistributed according to how the leadership feels it should be distributed. The crops are taken and redistributed, as are the gathered fruits, and the hunted game, and the caught fish, and so on. In effect, this makes for a 100% income tax. There is little opportunity for self-gain and only possibilities for improving the community’s welfare as a whole, and that’s already with the assumption that the tribe leaders know what they are doing, which is far from given. This is the complete opposite of the Phoenician system, which prioritizes the individual and gives everyone – in the pure form of the model – what they earned, nothing more, nothing less. Everyone makes their own bread, so to speak.

Some may say that this is a very selfish system, and it indeed is, but I do not see an issue with it. Being selfish is the natural state of humans, as everyone is inherently selfish to some degree, and so this system acknowledges this design given to us by the gods, instead of trying to unnaturally change it and bend the universe to one’s will, which rarely works out as intended. In the bygone era of priest-kings and strongmen army-leading warlords, this system could not have emerged, as the rulers obviously did not want to relinquish the income they could gain by taxing their subjects as much as possible, and so continued the course of the hunter-gatherer or farmer villages. However, the Phoenician civilization had and still has a massive portion of its population in the crafting and trading sectors – due to a combination of factors, such as wide access to the sea, plenty of wood for their ships, and other highly valuable materials at their disposal – which are inherently more fluid and individualistic than hunting or farming, and so the old method of taxing everyone and then redistributing the resources simply would not work. A new system emerged and took hold, and the results of that speak for themselves – while Phoenicians never had an empire for themselves, really nothing more than city states which were eventually integrated into our Commonwealth, the per capita Gross Domestic Product and the standards of living are always the highest there from all known civilizations, which was further confirmed during Phoenicia’s brief period of neutrality and factual independence during the OFK-EC War.

Of course, the pure form of the Phoenician system is very difficult to achieve, as a government still needs at least some revenue, and so some taxes are still needed. However, those taxes are rather low, and sometimes even negligible to the taxpayer. The current local government in Retjenu has lower local taxes than its counterparts in Kemet or Kush (the federal taxes going towards our capital are the same in all three regions still, of course), continuing the Phoenician tradition and even extending it to the Canaanite and Amorite lands. For comparison, Retjenu currently has a local tax rate of 5%, while Kemet and Kush have 10% and 13% respectively, in addition to the 10% federal income tax. Retjenu also has many tax exemptions, mostly applied to attract skilled foreigners and have them establish businesses there.

Some followers of the Phoenician school advocate for some other taxes as well, but only ones which do not inconvenience the citizens too much. This includes some low tariffs – though still much lower than the average in other countries, so that trade with the given country would be preferable – various fees and tolls to be collected when appropriate, and taxes on land. The last one is especially important in Phoenicia and other regions, mostly city states, where space is limited and people are plentiful. This works, because the landowners are incentivized to build on their land – be it housing, industry, or shops – to make the land as profitable as possible in order to offset the tax. In the end it leads to more immigration, more jobs, more consumption, and so more revenue for the government. However, this method would not work in larger states in most cases, as they still have a very prominent landowner class composed of nobles, as is very much the case here in Kemet, who would be vehemently opposed to such a tax. This would, after all, force them to build something more on their land than just personal villas and unproductive farms converted from slave plantations.

Other than taxes, government revenue can also come in the form of profits from government owned resources – forests, copper, tin, silver, or gold mines, fisheries, hunting grounds – or industries, such as weapons manufacturing. Ironically enough, this can sometimes result in these states selling weapons to countries which would eventually conquer them. However, government industries in the Phoenician based countries are often more profitable, as the citizens are more interested in starting and running their own businesses, while the government hires immigrants for whom a lower wage is often acceptable. Finally, there can be some more unique revenues, such as tourism or the sale of new inventions to other countries.

All of this, however, can still often not make up for the loss of lowering income taxes, which means that the government spending must be limited. This means healthcare, firefighting, and policing being mostly or exclusively provided by companies, with the exception of palatial quarters, wealthy neighborhoods, and government owned lands and industries. In effect this leads to higher mortality and more crime, though in reality even the most hardline Phoenicianist governments usually provide full city coverage in regards to firefighting and policing, as the additional expense is deemed worthwhile due to the possibility of the entire city burning down or crime making it an unattractive destination for foreigners. Any sort of welfare measures, however, are usually sacrificed, as everyone is expected to make enough by themselves, no matter the situation. Old, young, unemployed, or disabled, that does not matter. Either you earn enough yourself, or you pray to the gods. The Phoenicianists do not believe in any sorts of payments to the people, unless they are directly working for it.

As for foreign policy – that can depend. While an expansion campaign would most certainly require some sort of temporary increase in taxes, it is technically possible to maintain a Phoenician approach to economics even in a large empire, provided it is peacetime. The First Assyrian Kingdom and the Babylonian Empire are examples of this approach working. This does require fortunate geographic positioning, so that there would be few enemies around and few entrance points which would need to be garrisoned, as the Phoenician school does not allow for large military spending, other than temporarily hiring some mercenaries. The internal population is usually not a problem, as the Phoenician model goes hand in hand with a liberal approach to governing subjects, so the chance of a revolt is low, but external forces can crush an unprepared state very easily. We saw what happened with the Kassite Kingdom – it had probably the most Phoenicianist economic system at the time, even if an inefficient one – and it crumbled with little resistance to the Elamite and Assyrian invasion, due to the fact that the Kassites had a comparatively tiny army and few garrisons on the borders (of course, the Kassites’ ethnic policies on who could join the army made this situation even worse). There is also the fact that the citizens of a Phoenicianist state tend to not be very loyal to anything other than money, and so while they wouldn’t revolt for the right to secede, they also wouldn’t defend the country from foreign invaders. Again, this was demonstrated very well in Karduniash, with the Elamites marching almost uncontested and the Assyrians were only resisted due to the fact that they were violating all the points in the Knossos Conventions simultaneously and openly committing a genocide.

Overall, as you can see, the system has its positives and its negatives. It suits city states rather well, as well as countries which are situated in a secure position, and it prioritizes the individual. There is also the debate on how the gods approve of this system, but that is not for me to say, I will leave that to the priests. Yet in any event, it does limit how much the government can earn, and in turn how much it can actually do. There is a reason why Egypt conquered the Levant and not the other way around, and the pyramids couldn’t have been built while fully adhering to the Phoenician model. This leads me to the second economic school of thought, one to which I’ve alluded already when explaining the origin of the Phoenician system.

Ur School of Economics

The Ur school is, as I mentioned, the complete opposite of the Phoenician school. It prioritizes the government and focuses on making it as powerful as possible, as the core belief of this school is that the ruler knows best and can optimize the economy much better than the free market can. While for political actions few doubt that there can be a better governing system than a single absolute ruler (possibly with the addition of an advisory council), few apply this to be the case for economics as well, which makes the Ur school a distinct and even fringe possibility, rather than the default option. Economics requires much more participation from the public and so the Phoenicianists leave it up to the people and the market to figure out, but the advocates of Ur reject this and place much more importance on the government in this matter.

I did mention how the primitive societies in effect were very government dominated, but there is a reason why this system is called the Ur school. In the primitive societies the government dominates mostly out of necessity, but, as time goes on and the society evolves, the community grows, more resources become available, and eventually people are able to start providing for themselves, rather than fully serving someone else. Cities expand and start trading, more jobs become available, and so more opportunities for individualistic work appear, which transforms the economic system into at least a mixed system, if not a mostly Phoenicianist one. Full government control is, as I said, not natural at all. It is not stable and eventually returns to the equilibrium of a freer market-based system. Some, however, reject this notion and choose to try to bend the universe to their will in order to control the market themselves, with everything that entails.

One such man was king Ur-Nammu of the Third Dynasty of Ur, also known as the Neo-Sumerian Empire. He ruled about a thousand years ago, taking the throne in Mesopotamia after the fall of Akkad and the following Gutian invasions, managing to reunite Mesopotamia rather quickly and expand it nearly as much as Sargon of Akkad did. He was succeeded by his son Shulgi, who continued his father’s work, and the two in total ruled for about seventy years. However, after them followed a succession of short-lived kings, each seeing the empire contract and suffer both foreign invasions and internal rebellions, until eventually there was no empire anymore, barely a century after Ur-Nammu took the throne. This would seem like a rather unremarkable dynasty and a footnote in Mesopotamian history, if not for those first two kings. Ur-Nammu did something unprecedented – he completely rejected Phoenicianist thought (what could have been called Uruk thought back then, due to Uruk following a similar system to the Phoenician one and having been the first prominent kingdom in Mesopotamia) and centralized the economy. Such a reversal of economic trajectory and such a scale of centralization had been never seen before, which makes Ur-Nammu the pioneer of this system, named specifically after this dynasty and its capital. Followers of this school are also often called Ur-Nammuists or Ur-Nammu-Shulgiists, to also account for Ur-Nammu’s son. Most people don’t go searching for inspiration further in the dynasty though, seeing how rather irrelevant and unsuccessful the later rulers were.

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Now, for the specifics of what Ur-Nammu actually did. Some records have been lost to time, naturally, and some more are kept secret in Assyrian and Babylonian archives, thus not giving us a full picture of the situation, but we still know enough to make a conclusion. Ur-Nammu’s regime taxed its population quite heavily, and often would seize the entirety of the produce. The residents thus had little or possible even no income and so had to rely on the government for redistribution of resources. And the government did do exactly that, both on a regional and personal scale. Resources were redistributed from the capital to other cities, and in each city distributed to the population from the city center or some central storage. This included bread, beer, oil, some meat, and cheese, but that seems to be the extent of it. Thus, the citizens could survive, but actually thriving would be much more difficult. It’s difficult to estimate how efficient this system was, but I would say that it had to be at least semi-working during the reign of the first two kings, as they actually managed to reunite Mesopotamia and hold it together for some decades, though even in its most “perfect” state the system would fail some classes of people, who would not be happy with this redistributionism in any case. One reason why this system held for as long as it did might be due to the prior Gutian invasions of Babylonia, which ravaged the lands and left most people destitute. Thus the Ur regime was acceptable to most peasants as they were guaranteed to have their most basic needs, while there remained few nobles and other large landowners to protest this change. However, once the region recovered and the people grew richer, as well as new wealthy regions were added to the empire, people weren’t satisfied with this system, eventually leading to its collapse.

Of course, this is only my theory, I am not a historian and so cannot be absolutely certain of what caused the Ur regime to collapse. Military men, for example, often say that it collapsed because of its weak army foundations and so the state was conquered by barbarians and foreign states – we do after all know that the state was fighting Elam in its last days. However, I would still say that the economic system was an important factor in the collapse, as a strong united Mesopotamia simply cannot be bested by any other civilization, except our own, and so there had to be internal issues for the Ur Dynasty to succumb to the Elamites and the barbarians.

Yet despite this dynasty’s failure, and no other major kingdom attempting to truly replicate this model emerging in the following millennium, some people still cling to this system, and it saw a resurgence in popular thought in the last couple centuries. In essence, what these Ur-Nammuists believe is almost always the complete opposite of what the Phoenicianists believe – they want high income taxes, if 100% ones, high tariffs, little if no trade, as the system doesn’t really function on a monetary basis, protectionism, isolationism, no migration, as that would disrupt the redistributionism, all industries being fully controlled by the government, all people working directly for the government, and no companies being permitted. Some modern advocates for the system also propose higher measures of welfare, such as benefits for the unemployed and the old, as well as government provided healthcare. Others, however, want all this spending towards creating a massive army and strong bureaucracy so that the kingdom could expand and conquer neighboring states, while also making sure the population is subdued and doesn’t revolt.

In any event, the individual in this system is sacrificed for the supposed welfare of the community and the state. It would probably look more impressive on the map than a state following the pure Phoenician model, but there is the question of how efficient such a system actually is. If it can’t hold for longer than the reign of two rulers, then it might just be running off the initial momentum of the founding of the kingdom, and not have any stable foundations. And, of course, there is also the question of whether the gods would approve of people being used in such a way, with any agency stripped away from them and being forced to rely on the government for even the simplest matters. Again, I will leave that up to the priests to decide. I will admit, the system can have its uses, such as in the case of war, or recovery after war, in states where the standard of living is so low that the people are starving, isolated states which do not wish to participate in the global community, and in times when some great projects need to be done, which couldn’t be achieved under the Phoenicianist system.

One might even argue that the economic system used by some of our first rulers, such as those of the Third and Fourth dynasties, resembled the Ur system and that allowed the great pyramids to be built. And while the Old Kingdom might indeed have had some more interventionist measures than we do now, I disagree with the assessment that it was an Ur-Nammuist system. These building projects affected only a small portion of the population, as most continued with their usual work as before, and even those who did work on the pyramids did it only for a season, got paid for their labor, and returned back home. The great pharaohs did not force them to work on these projects, and they compensated everyone for the work they put in. It was just like hiring a mercenary unit, except for construction rather than war. The argument that the pyramid building was extremely exploitative, in the way of Ur-Nammu’s projects, is false, as it is mostly the twisting of historical facts by either Ur-Nammuists who want an example of a functioning state following their school of thought, or even hardline Phoenicianists who believe that any government-led project must be inherently exploitative. The fact is, that we simply adopted a healthy mixture of both systems, which allowed us to achieve what we did, without having to resort to either complete lawlessness or totalitarianism. I will not go in detail about the mixed model, because it is just that – taking some aspects of the Phoenicianist school, and some of the Ur school, in varying proportions, and so can result in many slightly different systems. In fact, most current civilizations utilize some sort of a mixed system, which is what I will discuss now.

Economic systems of current civilizations

The current known civilizations utilize some form of mixed economics, though usually leaning towards the Phoenicianist model, especially now that we are at peace and a new major war seems rather unlikely. Of course, there are a few civilizations which use a pure Phoenicianist system or something close to it.

This includes the aforementioned region of Retjenu within our Commonwealth, with the Canaanites and Amorites rather happily adopting the proposals of the Phoenicians, though our federal taxes and regulations imposed on the region push it somewhat closer to a balanced model. I believe that to be the right course of action, as Retjenu, occupying most of the Levant, is in a position too strategically important for us to be left completely to its own devices and so they must heed our guidance here to make sure our borders remain secure and we have enough funding for an adequate army and fully staffed garrisons along the way to Kemet.

Alashiya also utilizes a system rather close to a true Phoenician one, with low taxes and a massive focus on immigration and business creation. This makes sense, since the island doesn’t really need an army, navy, or any fortifications, being completely surrounded by allied nations, and so can afford to have this system. The king Huzaru also wants to increase the population of his realm so that it would be more competitive with the fellow OFK countries, and in the short term this can only be done through immigration. Yet the island is pretty small and eventually there will literally be no space left there, so the growth is limited, which may force the leadership to change the system to something more sustainable in the future.

The Kingdom of Punt, being a coastal country, leans towards the Phoenician school as well, but that may just be due to necessity, as the country has a rather poor agricultural potential and instead relies almost solely on trade and manufacturing – similarly to Phoenicia itself. The country is also quite decentralized and not as advanced to have extensive tax collection methods, so the Ur approach may not be possible at all. After all, the state doesn’t even have clearly defined borders, with most of it being a border with various barbarian tribes, while the rest borders our eastern desert. However, as time goes on and the state centralizes and expands towards inner Afrika, it may adopt a more Ur-Nammuist model.

The Mycenaean Confederation has a mixed system, though that is only the average, as it is composed of over a dozen small kingdoms, each of them being autonomous in internal matters. This makes it hard to determine the economic system of the whole country, as kingdom can adopt anything from a pure Phoenicianist to a pure Ur-Nammuist model, though usually there is moderation in either case. Kingdoms like Crete and The Isles put more trust in the free market, while those including Laconia and Achaea have economies which are more government led. Overall, this averages to a slightly more Phoenicianist system, and the wanax Tirynthius (as opposed to his now defeated and crippled brother Hecataeus, a true Ur-Nammuist, even if he wouldn’t admit it) himself is a follower of the school, even if he cannot make all his subordinate kings follow this model.

The Kingdom of Hatti is much more centralized and so could be considered a state following the Ur school more closely, especially with its focus on always maintaining a massive army and lots of fortifications all around. However, similarly to the case of Punt, Hatti is not so technologically advanced to collect all these revenues efficiently and has a low population density. This would ironically enough make it one of the best states to avoid authorities in, with plenty of forests and mountainous areas to hide in.

Finally for the OFK, the Mandate of Amurru uses a mixed system imposed by us, as we need enough taxes from there to reconstruct the region and prepare it for potential independence. This is the same mixed system that we use here in Kemet, a healthy balance of freedoms and necessary restrictions, trade and self-sufficiency, and taxes and benefits. This makes for one of the best standards of living while also not stifling innovation, which I believe will lead us to winning the cold war against the Eastern Coalition. The region of Kush also uses a similar system to Kemet, though Harsiotef imposes higher taxes there and continues the policy of redistributing some former slave plantations in order to make the region recover from the war quicker.

As for the EC, the countries there are leaning much closer towards the true Phoenicianist system on average. Babylonia, Dilmun, and Magan are almost fully Phoenicianist, even more so than Alashiya or Retjenu, as the actual governments there barely have any control over economics. Dilmun and Magan are literally controlled by the companies, the results of their recent civil wars during the OFK-EC War, and while Babylonia does have a traditional king, he is now often considered barely more than a puppet to the dozen or so of the largest companies in the country. These three countries are currently the richest per capita, but we will have to see whether this will hold for long. Already, we can see a lot of dissatisfaction from the populace, which feels too exploited by the recently emergent megacorporations. The Mesopotamian Freedom Front and its worryingly rapid growth is just one result of this. The MFF is also a hardline Ur-Nammuist organization, and not just an anti-slavery one, probably not coincidentally. While the situation may look fine on papyrus, in reality these states may be much more fragile than they appear and could crumble at the start of the smallest conflict.

Assyria is an interesting case, since it utilizes both systems to a pretty high degree. It has high taxes and some serious restrictions and labor protections, as well as welfare measures, while also applying massive tax breaks for certain groups and having a rather business friendly environment, as one would expect for an EC country. This may be due to the Assyrian Revolution being led by two groups with almost completely different economic views: the illusive Hanodeen Mahiru of the merchant guild, a true Phoenicianist, and the current queen Ninsina Ishtarhisnu, who led the underground women’s resistance group known as the Disciples of Ishtar – a group known for its radical Ur-Nammuist-Shulgiist views. Ninsina is after all the leader now though, and so the latter approach dominates more, though one can also easily imagine see the alternative scenario where Hanodeen took the throne instead and instituted a system very similar to one in Babylonia. This may still very well happen, depending on who the future leaders of Assyria are.

The Kingdom of Elam also has a mixed system, one reminiscent of our own, though leaning towards the Phoenicianist school just a bit more it seems. Elam and Egypt are very different societies, but I suppose being the leading great power of the respective alliance makes a country take on such a system, as both the necessary economic growth and military power could not be achieved in any other way.

And lastly, of course, there is the case of the Lullubum, which I would still hardly call a civilization, much less one with any idea of what an economy is. Despite Zubani’s claims that the country is modernizing, I find that hard to believe, and it still seems to be a backwards barbarian realm, even though we are not allowed to say that officially anymore. There isn’t much of a coherent economic system to be found, other than what the warlord wants to do at the given moment. One could say that his inner circle and allies get the full Phoenicianist treatment, while the conquered tribes are subjected to full Ur-Nammuist exploitation, that meaning the full seizure of all their wealth, and the people themselves as well, as they are then sold as slaves to the Babylonian megacorporations.

This concludes my report, as I cannot comment on any other regions, due to them either being fully populated by barbarians or being too far away for certain analysis. But overall, from what we can currently observe, the Phoenician school and its free-market approach seems to be the dominant system in the civilized world, with the Ur school only influencing a rather small portion of the economic system in some countries, while being followed only by fringe movements in others.