How Robert Baratheon destroyed the economy of Westeros in Game of Thrones

An alternate (and very nerdy) theory to the war of five kings

For fans of HBO’s Game of Thrones, it is commonly held that the controversy over royal succession, following the regicide of King Robert, was the main impetus for the series of wars that later ravaged Westeros. While this certainly fueled tensions amongst the lords with a claim to the iron throne, I believe that there was an underlying loss of confidence in the economy that: (1) led knowledgable insiders to believe that regicide was an optimal strategy, (2) reduced the benefits of union and decreased the cost for houses to rebel, and (3) created a social instability that made commoners more open to political upheaval. 

The king's excesses require an ever larger horse

King Robert's economic policies

King Robert, like many medieval chieftains, was a profligate spender who indulged in the lavish and whimsically excessive. He had assumed the throne in King’s Landing at a time of budget surplus and ample gold reserves. However, by the time the show catches up to Robert, he had wasted away his treasure and was financing his vices through debt and dubious accounting.

As a result of the financial mastery of Little Finger, revenues had increased about ten fold during King Robert’s reign. While we don’t know for sure, it is safe to say that the increased revenue was neither a result of exemplarily economic growth nor increased bureaucratic efficiency in tax collection. It is therefore likely that the resultant cash windfall was the result of higher taxes—and of course, debt. With winter coming and crop yields falling in the North, along with a likely fixed-sum tax (I assume a medieval society lacked the technical proficiency for progressive tax collection—i.e. a farmer owed X barrels of hay rather than X% of his production), the higher real rate of taxation would have lead to an increasing and disproportionate financial burden across the seven kingdoms (a farmer in the North was producing Y and being taxed X. In winter, he produces Y – W and is taxed X).

Along with King Robert’s reckless fiscal policy, the monetary situation made things doubly bleak. We know that the Lannister gold mines had run dry and the economy was being flooded with creditor’s cash. It is a safe bet that Tywin Lannister was busy debasing the gold supply (diluting the amount of gold in a given coin)—to maintain the appearance of ample gold reserves and news of his exhausted mines quiet—and as a result destroying the currency as a unit of account in the marketplace—new coins are worth less than old coins because they contain less gold, and consumers, because of money illusion (people think of prices/wages in nominal rather than real terms), experience great difficulty in pricing goods and labor appropriately in the short run. 

Inflation: it looks the same, but is worth less and less.

The increased government demand for resources (for the lavish festivities, etc.), financed by debt and high taxation, and backed by a depleted gold supply, was likely driving up consumer prices and deflating the exchange value of the currency—making goods ever more expensive at home and cheap foreign alternatives ever more expensive to import. 

Stagflation in Westeros

Stagflation occurs when prices are going up and economic activity is going down. This is the dire situation likely faced in Westeros in the run-up to the War of the Five Kings. 

Why was economic activity likely going down? In feudal societies, the vast majority of workers are agrarian. Without increases in productivity, and we are aware of none on Westeros, farmworkers produce an amount that is constrained by their hours of labor and the weather conditions. Due to the coming of winter, we can assume that crop yields were down. We also know that farmers needed to give a fixed amount of their yield to their local lord. As farmers retained less of the yield of their production as profit, they would become less incentivized to supply their labor—as the opportunity cost of leisure was lessened by the substitution effect (keeping less of what you produce is in effect a decrease in wage, making work less attractive—within a set range of incomes). This would compound the weather’s effect on crop yields and lead to a dramatic reduction in economic activity. 

To make matters worse, the gold-backed currency was being debased to accommodate government spending. Why does this matter? With less being produced on the farms, the increase in money supply couldn't possibly be representing the underlying economic activity (there was too much money for too few crops!). This means that the price of goods was rising (inflation) and because people weren’t producing as much, their real (rather than nominal) wages were decreasing.

To add to the misery, exchange in the cities would also likely be decreasing. The debasement of the currency would have led to arbitrary income redistribution across local debtors and creditors (old nominal debts can be paid back with “cheaper” new money) and made lenders increase the interest on their new loans— further diminishing economic activity through reduced investment. Inflation would have also made trading more complex as merchants lost faith in the value of the currency (how would the blacksmith set the value of a sword if he doesn’t know the value of the currency?). In all likelihood, merchants would resort to a barter economy, reducing taxable income, and further inflaming the fiscal crisis in King’s Landing.

All in all, a dire situation that to any observant lord was unsustainable.

Calculating Revolt

With farmers and merchants squeezed by falling output, increased prices, and increased taxes, the tension on the streets would have been palpable. In calculating the decision to revolt— beyond those who had a personal vanity in assuming their place on the throne—lords would have considered the following factors in deciding whether to go to war:

SWOT analysis for the decision to revolt

Excluding the houses with a personal claim to the throne, which have a different calculus, the SWOT analysis, in my opinion, favors removing King Robert, and after his removal, going to war with the Lannisters.

Why would the Lannisters initiate the removal of King Robert and invite the likely rebellion that would follow? First-mover advantage. Sensing the impending economic disaster, and their own complicity as house of the queen, the Lannisters calculated that their best chance at continued survival was to remove King Robert and seize the levers of power (strategic bridges, city guard, royal fleet, etc.) before an opponent could— providing them with a strategic advantage.