If you’ve ever taken an economics class — or possibly even if you haven’t — you’ve probably encountered the notion of the “invisible hand” that guides the economy toward (theoretically) beneficial results if actors are left free to pursue their own interests. This concept is usually credited to the Scottish philosopher Adam Smith, though its application in economic thought has diverged quite a lot from his original usage.
Don’t worry, I’m not going to take us down the rabbit hole of economic theory. (Not least because I recognize I’m wholly unqualified to do so.) I mention the invisible hand only by way of leading into our actual topic here, which is the extent to which the economy of a given society is or is not consciously controlled through top-down measures like government intervention.
The capitalist societies many of us live in like to trumpet the virtues of a free market. Don’t regulate business! Let the law of supply and demand reign, raising prices where supply is low and/or demand is high, and lowering them when the reverse is true! Let individuals pursue their own economic interests without hindrance! This will, in theory, produce the greatest market efficiency, as the lack of interference allows everything to attain a natural equilibrium.
In practice, of course, this turns out to produce all manner of problems, from the exploitation of workers to the degradation of the environment to the production of low-quality goods. As we’ve all too frequently discovered the hard way, some amount of intervention is usually necessary to prevent the use of toxic chemicals, destructive fluctuations in price, and other things we consider societally undesirable regardless of their market efficiency.
Historically, price fluctuations of that sort have often been a matter of grave concern for rulers, especially when they apply to key staples. Letting supply and demand be the sole driver for grain prices is a good way to make a famine worse, as profiteers race to line their pockets at the expense of others’ lives. Governments have also been known to regulate the prices of anything sold to the government, like metal for weapons or horses to carry soldiers and supplies, regardless of whether that makes a fair deal for the seller or not.
But economic control can go well beyond a few bits of official price-fixing. There are a dizzying array of measures available, far more than I want to attempt to summarize here; instead, let’s take a look at the other end of the spectrum.
It’s possible to have an system that is very tightly controlled. A planned economy is one where somebody is explicitly in charge of deciding who should produce what, which resources should be spent where, and what the overall goal of the system is at any given moment. In modern times we associate this fairly strongly with communism, though in truth it’s vastly more complicated than that, with many fine gradations of how much planning there is, which sectors of the economy it applies to, and so forth.
And it’s older than you might think! Many societies in the ancient Near East and Mediterranean appear to have been what anthropologists term palace economies, or sometimes temple economies depending on the nature of the institution in charge. (I’m not sure to what extent the traditional economy of the Haudenosaunee resembles this model; the brief descriptions I’ve heard sound similar, but “brief descriptions” are as far as I’ve gotten on the topic.) Under communism, much or all property is held in common ownership and distributed in a theoretically fair and equitable manner; under a palace economy, much or all property belongs to the ruler, and is distributed to his subjects as he sees fit.
This doesn’t necessarily mean that all crops and livestock and so forth are literally brought to the palace and then sent out again (though in a small enough city-state, that might not be too far off the mark). Instead it means that the government takes a very interventionist role in controlling and redistributing wealth — a role justified on the grounds that the central power is the most well-informed body, and therefore the most capable of making efficient and effective decisions.
But just as with a pure free market, this can end in all kinds of problems. Those ancient Near Eastern palace economies were hardly models of egalitarianism; strangely, the most “efficient” and “effective” distribution always seemed to be one that heavily favored the social elite, while leaving the peasantry struggling in abject poverty. Similar problems have plagued communist societies, especially as they scale up in size. While full-bore central planning might well be extremely beneficial when done properly, “done properly” requires a degree of omniscience, omnipotence, and omnibenevolence as yet unattained by human beings. And even when something like an artificial intelligence is put in charge, as happens periodically in science fiction stories, that’s usually prelude to discovering that one or more of those three characteristics is not actually in play, and what seemed like a utopian system is anything but.
So that leaves most societies somewhere in the middle, leveraging a mix of regulations, price controls, subsidies, tariffs, and so forth to try and steer the economic ship. And while there are exceptions — the works of Daniel Abraham and Seth Dickinson come to mind, and I’m sure there are others — most speculative fiction isn’t going to concern itself too deeply with the nuances of economic policy. As with other specialized subjects, if you intend to make this the centerpiece of your story, 1) you probably already know a fair bit about it and 2) you’ll probably be aware of what additional research, if any, you need to do.
Even if your story isn’t focused on such matters, though, hints of it may creep in around the edges. If you need a cadre of impoverished people to start rioting, you might stop to consider why they’re impoverished: is it because the laissez-faire policy of the crown has let changing market conditions drive them into penury, or is it because governmental control is forcing them to sell their products at a loss? In either case they’re still angry and rioting, but even just a touch of concrete detail will make them seem less like [Insert Angry Mob Here] and more like real people with real grievances and demands.