Do the people of Westeros understand money

[Widow's Wail]

Do people know what a Price is as we know it today? Can you say the price of 'something' is 8 pennies, if you pay 7 it is not accepted and if you pay 9 you will get a change of one penny exactly. There are many places where a pot of gold and a fist full of coppers is used as a unit of currency.

Can the characters know how to calculate profit margin as we know it today? Even among the smart nobility, say Tyrion or Tywin. Take the decision to enact the dwarf's penny tax scheme, which couldn't possibly generate more than a few dozen dragons per day. 

From what I understood all transactions look like bartering even when currency is exchanged. it is kind of "you gave me some coin take this item"  not like "wait a minute I spent this much for this and that, you must at least pay me a certain amount for me to make a profit". 

 

 

[TheThreeEyedCow]

If it's anything like medieval England then even their bookkeepers would use terms such as scores or hundreds instead of exact amounts. I think Westeros is about there in terms of commerce and accountancy. It's just a much less accurate thing. 

And yeah, peasants would usually barter with whatever they had. Coins, services, goods. It's worth whatever a person will pay. And if you can't haggle then you're probably in for a bad time. 

[Mat92]

Well most people only have resources or their services/time to offer as a trade in return for more resources like food, as opposed to money. 

 

Wealth is something that people are aware of, but this is a society where it almost 100% depends on the family you were born into. If you’re a lower house or regular common folk, money is something you’re going to get used to not having a lot of pretty quickly, without much aspiration on getting a tonne more.

 

So I think the “value” of money is a lot lower than how we see it, as opposed to food and resources in Westeros. When a war comes or a harsh winter, they’d rather have food than money. And don’t forget certain resources vary from region to region.

 

Therefore bartering is probably a lot more beneficial to them than items with a set economic price.

 

[Aline de Gavrillac]

They have denominations.  A golden dragon is worth more than a silver stag.  A silver stag buys X amount of goods.  A golden dragon buys 10X of the same amount of goods.  They understand the value of money relative to the goods and services it buys. 

[broken one]

I recall Dunk discussing prices of transport by a ferry through the Gods Eye with an innkeeper. He remembered that some years ago a price for a person had been X pennies and for a horse Y pennies and since then the prices increased to Z and W (he even thought to himself something like "everything is more expensive nowadays").

Dunk is an illiterate commoner, so it seems people of Westeros  understand prices pretty well.

[Foot_Of_The_King]

This is a stand up bit. 

[rotting sea cow]

see here for the typical ratios

Now, money is much more than the simple value of things. It seems that Littlefinger was doing some "quantitative easing" with the crown reserves

 

[CAllDSmith]

I'm gonna answer this part by part. 

On 4/18/2019 at 2:27 PM, Widow's Wail said:

Do people know what a Price is as we know it today? Can you say the price of 'something' is 8 pennies, if you pay 7 it is not accepted and if you pay 9 you will get a change of one penny exactly. There are many places where a pot of gold and a fist full of coppers is used as a unit of currency.

No they don't for multiple reasons, most importantly because that's not actually how prices work. It's how they work in modern America due to the fixed-price system in place, but not how they actually work according to economic principles. For example, according to economic theory the last seat in a movie theater or on a plane, or the last burger at a fast food restaurant should cost more than the first one because of supply and demand. This doesn't happen in America today for various reasons, but it very much happens on Planetos due to the technological nature of the setting. Dany's chapters actually do the best to answer your questions about prices. 

When Xharo tries to trade ships for a dragon, Dany makes it clear that in her mind 1/3 of all dragons in the world is worth 1/3 of all ships in the world. There is also haggling over prices in many informal and formal situations. Dany haggles with the Good Masters of Astapor over how much she can pay for so many thousands of Unsullied, paying not in coin but in goods and ships. There are some places where prices are treated as standardized, but that is typically during a famine when the seller has almost all the power such as in the pre- and post-siege King's Landing where the merchants have the power to set exorbitant prices on food (a gold dragon for a side of beef if I recall correctly.) but they are also aware that such predatory behavior can lead to being murdered. 

On 4/18/2019 at 2:27 PM, Widow's Wail said:

Can the characters know how to calculate profit margin as we know it today? Even among the smart nobility, say Tyrion or Tywin. Take the decision to enact the dwarf's penny tax scheme, which couldn't possibly generate more than a few dozen dragons per day. 

This largely depends on the noble in question, and how this tax is actually collected. (Presumably inefficiently because it requires the brothel owners to accurately report how many times their whores have provided a service and it's not clear when the money for this tax is collected.) According to the wiki one dragon is 11,760 pennies, which would mean that about two percent of King's Landing's population would have to be prostitutes, and that each prostitute would have to service at least one person a day in order to earn the crown one dragon. At that rate it would take 8,219 years to pay off the crown's principal debt to House Lannister. However, given the high correlation between armies being present and sexual violence, assuming nearly every member of the Tyrell and Lannister army bothers paying for it, they could make about 13 dragons a day, which would mean it would only take 632 years to pay off. 

There is a reason why in 300 years of Westerosi history there has only been one Lannister master of coin, gold mining does not lend itself to actually being good economists. While the concept of buying something for a 209 stags and selling it for a dragon and making a stag in profit can be understood, the concept that even though incomes are at a high expenses are even higher doesn't seem to register. 

On 4/18/2019 at 2:27 PM, Widow's Wail said:

From what I understood all transactions look like bartering even when currency is exchanged. it is kind of "you gave me some coin take this item"  not like "wait a minute I spent this much for this and that, you must at least pay me a certain amount for me to make a profit". 

This is both true and false depending on the circumstance. Coinage is not really a currency, particularly not a fiat currency that we are used to, it's very much a medium of exchange that has both its intrinsic value but also the added value of wealth. This is presumably a horse in the war torn Riverlands is worth one dragon when ninety years earlier during a time of peace it was worth three times that: there's no where to actually spend that gold. The wealthiest country in Planetos (Braavos) uses a currency made of iron, and while the bankers certainly understand the concept of profit most nobles don't because they either don't typically engage in selling goods, or they don't really have a way to calculate how much value they've put into things. However, people who actively have to buy or sell things do know about profits. The Hound and others recognizing the uselessness of the Brotherhood's receipts, though if they actually looked like they were going to win those receipts could develop into a paper currency. Brienne, Jaime, and Cleos also acknowledge when they're essentially being robbed trading their boat for horses, and Thoros recognizes that Tobho Mott was having him pay double for the swords he bought. 

The way the economy works for the ultra-wealthy nobles we deal with is much like the way the economy works for the ultra-wealthy celebrities and dynastic families in America. The value of "the brand" in the relative short term is often more valuable than the profit in the long term. In a couple days I'm going to be putting up a post about just how much this sentiment and other factors are the reason that Tywin really messed up the realm. 

[Lluewhyn]

Double-entry accounting was developed in the Renaissance, so it's unclear how they would view finances in the same way, or at least to the same degree. Obviously, there's got to be some kind of general connection between "This good cost me X amount of money to buy, so I need to sell it for more than X"

Littlefinger's accounting and reinvestment schemes that move money around constantly confuse Tyrion, one of the smartest characters in the series, but that's likely because there was fraud going on.