"Game of Thrones" is fantasy. However, often overlooked is the fact that author George R.R. Martin’s fictional medieval world is driven by cold, hard economic realities (the occasional dragon notwithstanding). The characters are constrained by limited resources, low productivity and the laws of supply and demand. Here are seven questions answered that explain the economics of the Seven Kingdoms. 

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1. What drives the economy of Westeros? 

For all its magic, Martin’s world is rooted in plain dirt: Simple agriculture and the extraction of raw commodities like gold, silver or iron drive the Westerosi economy (read more in A Beginner’s Guide To Precious Metals). Much like Europe in the Middle Ages, Westeros is essentially a pre-industrial economy operating within a feudal social structure.

The peasants – or smallfolk, as they’re called in the Seven Kingdoms – farm land owned by the nobles; the nobles take a share of the crops, sell them to other smallfolk for profit, and then collect taxes on top of all that. In exchange, the smallfolk receive some measure of protection and stability. However, not all of Westeros runs on an agrarian basis. On the Iron Islands, which have harsh weather and poor, rocky soil, the native Ironborn scoff at farming (their motto: "We do not sow") and even at the concept of lawful commerce.

In addition to fishing, a considerable percentage of Ironborn support themselves by piracy, raiding neighbors and passing ships. In general, manufacturing plays a very small part in the economy of Westeros. The few well-known manufactured products are rather simple and include wines, nutmeg-scented candles and linen.

2. Which region in Westeros is the wealthiest?

As anyone in the Seven Kingdoms can tell you, “A Lannister always pays his debts.” The richest region in the Seven Kingdoms was generally recognized as the Westerlands, home to House Lannister and its gold and silver mines. But that was before House Lannister lent millions to the crown and then found its gold mines had tapped out. A fertile and temperate region called the Reach, historically ruled over by House Tyrell, is the bread basket of Westeros, which appeared to be fast eclipsing the Westerlands in both wealth and power until (spoiler alert) the last season.

In the world of “Game of Thrones,” seasons are unpredictable. Winters may last for up to 10 years, which would surely mean widespread famine. But even even during winter, it rarely snows in the Reach. That means the region would likely be able to grow at least cold weather crops and support some livestock. When most of the Seven Kingdoms is blanketed in snow for years, the supply of food will be low and the demand for the Reach’s agricultural products will be very high, which will drive up prices. With winter coming, the Reach stand to grow in wealth and power (for whoever ends up ruling it) dramatically.

3. Who are their trade partners?

Fine Myrish carpets, sumptuous fabrics, intricate lace and priceless Valyrian steel blades – the finer things in Westeros all seem to come from Essos, the continent across the Narrow Sea. Westeros seems to lag both technologically and economically behind its eastern neighbor, which may partially explain how all seven kingdoms came to be ruled over by the Targaryens, a minor family from Valyria in Essos.

Unlike unified Westeros, Essos is composed of many independent and powerful city states, each with its own government, language and culture. Westeros has the most international trade contact with the so-called Nine Free Cities of Essos. Each of the townships has its own bank, but by far the most powerful is the Iron Bank of Braavos. This mysterious financial institution has operated in the black for thousands of years, accountable only to approximately 1,000 shareholders and the bottom line. It is, in fact, something like a modern-day corporation.

In contrast, Westeros does not have a single bank; its kings must borrow from the Iron Bank.

4. Why was Tywin Lannister afraid of the Iron Bank of Braavos?

The Iron Bank of Braavos combines the power and reach of the International Monetary Fund, the ruthless cunning of the de Medicis and the ethics of Goldman Sachs (GS). Its motto is, “The Iron Bank Will Have Its Due.” King Robert Baratheon ran the Seven Kingdoms on a huge deficit by first spending down the budget surplus left by the Targaryens and then borrowing millions from House Lannister, the Iron Bank of Braavos and the Faith of the Seven. 

After his death, the crown passed to Queen Cersei Lannister and her sons Joffrey and Tommen. Having placed a line of golden-haired Lannisters on the Iron Throne, patriarch Tywin Lannister found himself holding three million golden dragons (the largest unit of currency) in uncollectible debt against the throne and also suddenly liable for the millions the throne borrowed from the Iron Bank of Braavos.

Once the Iron Bank thinks a borrower may default, it simply funds a rival power and collects both loans from the rival after it emerges victorious. As explained in the fifth book of the series, “A Dance with Dragons,” “When princes defaulted on their debts to lesser banks, ruined bankers sold their wives and children into slavery and opened their own veins. When princes failed to repay the Iron Bank, new princes sprang up from nowhere and took their thrones.” 

5. Why did Cersei stop the kingdom’s payments to the Iron Bank? 

Because she is not very good at playing the game of thrones. 

6. Why hasn't Westeros had an industrial revolution? 

Westeros may blame its lack of technical advances on its unpredictable winters and its faith in magic to solve problems (fire-breathing dragons obviate the need for inventing nuclear bombs). However, the Nine Free Cities of Essos have a thriving artisan and small manufacturing sector, while facing the same unpredictable seasons and also embracing magic. The real reasons Westeros remains technologically backwards is its lack of a financial services sector.

Without a single bank on the entire continent, would-be entrepreneurs and small artisans can’t obtain the capital to either start or grow a business. The lack of a financial sector also removes an important stabilizing pillar of society – a class of wealthy and influential lenders, merchants and business owners who do not want their interests disrupted by constant war. In the Free Cities of Essos, military attacks (for example, by marauding Dothraki hordes), are routinely met with negotiations and payments for peace instead of war.

In “A Dance with Dragons,” Tyrion Lannister recalls that his implacable (and now dead) father Tywin held the Free Cities in contempt for fighting, “with coins instead of swords.” 

7. Who funds the Night’s Watch?

The brotherhood of the Night’s Watch has guarded the Wall for 8,000 years. It is meant to be independent from the Seven Kingdoms and politically neutral, like Switzerland or a United Nations peacekeeping force in Antarctica. To truly be neutral, the Night’s Watch requires its own income, and it once had that. The Watch owns and administers a huge tract of land just south of the wall called the Gift, which the brothers farm and which also contains several tax-paying villages. Over the years, raids by the Wildlings have driven villagers south and out of the Gift, thus reducing the Watch’s income

In the past, the Night’s Watch boasted 10,000 men in black and 19 castles along the wall, but the force has now dwindled to about 1,000 crows with only three of the 19 castles manned. By the time of “Game of Thrones,” the Night’s Watch is nearly broke. With a dwindling smallfolk population and few brothers to farm the land, the Gift probably produces very little income.

It’s unclear how the Watch supports itself or how individual brothers pay for brothel trips to Mole’s Town. Like any nonprofit, it probably derives a good deal of its operating budget from cultivating wealthy donors. In the first book of the series, Night’s Watch First Ranger Benjen Stark, who is Ned Stark’s younger brother, visits Winterfell essentially on a fundraising mission, and Ned gives him many horses to take back to Castle Black and likely some currency as well. Ned later implores King Robert to financially support the Night’s Watch.

The Watch also partially funds itself by membership recruitment. Many of the brothers are lowborn criminals who join to escape punishment for their crimes. As the Watch is a lifetime commitment, and they don't draw salaries, they are sources of free or slave labor. Others are the younger sons of highborn families, disgraced nobles or bastards like Jon Snow. Recruits from such wealthy families likely come with a donation for the organization as well as assets like horses and quality clothing, armor and weapons. They may also receive regular remittances from their families and some or all of this may contribute to the Night’s Watch operating budget. 

8. How will the Night’s Watch survive? 

As Lord Commander of the Night’s Watch, Jon Snow recognizes that the organization desperately needs to produce more income and to do that, it needs laborers and tax-paying citizens. He embraces the Watch’s age-old enemies, the Wildlings, as a perfect immigrant tax and labor base. Much like one of the great noble families, the Night's Watch is engaged in a battle for its survival. And just like these families, it must adapt or perish — a fact which Jon Snow instinctively understands.

In the book "A Dance with Dragons," Jon Snow is trying to transport the Wildlings across the Wall when he encounters Tycho Nestoris from the Iron Bank of Braavos. Jon takes advantage of the chance meeting to negotiation a loan to support the Wildling refugees over the winter. His plan is to populate the nearly empty Gift with the rescued Wildlings and generate enough revenue from their farming and collected taxes to pay back the Iron Bank as well as fund the Night's Watch.

The Bottom Line

Westeros faces many challenges, but one of its main problems is its low productivity and an underdeveloped economy. Rulers like King Robert Baratheon, who once said, "Laws are a tedious business and counting coppers is worse," lose at the game of thrones by failing to understand that it is those lowly coppers (pennies), and not steel, that girds the throne.

To improve its economy, Westeros needs new leaders who prioritize productivity and sustained economic development over lavish jousting tourneys and wars for title, land or honor. The kingdom must also develop a more open educational system, invest in manufacturing and technology, and introduce basic financial services.