Two economies existing side by side

[Jeff the Green]

I kind of want to do away with buying magic items in a game coming up. I came up with the idea that magic items basically exist outside of the normal economy: you will, barring extraordinary circumstances, never be able to find someone willing to give you a magic item for gold (or vice versa). You can get them from nobles, governments, churches, and the crafters themselves for doing them favors (i.e. quests). This will allow there to be cash-poor yet effective warriors and for me to give my dragons Smaugian beds without suddenly letting my players take over a small country with the items it'd buy.

The problem is that I'm pretty sure economics doesn't work like that. There are favor economies and there are cash economies, but I've never heard of them existing side by side and don't think they would easily. Is there a way to force them to? I'd rather not accidentally make any econ majors bleed from the ears on hearing my description.

[AMFV]

I kind of want to do away with buying magic items in a game coming up. I came up with the idea that magic items basically exist outside of the normal economy: you will, barring extraordinary circumstances, never be able to find someone willing to give you a magic item for gold (or vice versa). You can get them from nobles, governments, churches, and the crafters themselves for doing them favors (i.e. quests). This will allow there to be cash-poor yet effective warriors and for me to give my dragons Smaugian beds without suddenly letting my players take over a small country with the items it'd buy.

The problem is that I'm pretty sure economics doesn't work like that. There are favor economies and there are cash economies, but I've never heard of them existing side by side and don't think they would easily. Is there a way to force them to? I'd rather not accidentally make any econ majors bleed from the ears on hearing my description.

There are many games that work this way, they have equipment as a status or level based thing, where you don't actually buy equipment you can just get it if you the appropriate level whatever thing it uses. Off the top of my head WoD works that way, nWoD at least, D20 Modern does (and that should be easy to backport if you're playing 3.5) I think there are others but I don't recall them off the top of my head.

[hymer]

A suggestion:
Magic is finicky. If a permanent (non-cursed) magical item is bought or sold, it becomes inert (as a conscious decision made by a god, preferably, to screw over any rules lawyers). It may be possible to make exchanges of gifts, but these are specific ceremonies that do not lend themselves well to bartering, and need to be conducted at first meetings, for example.
When in doubt, it becomes inert. Merchants of all kinds want nothing to do with magical items professionally.

[Kelb_Panthera]

There's really only couple of ways to make magic items unavailable for purchase, since you're absolutely right that economies don't work that way.

A) Magic items only work for the person they're made for. Since they only function for their proper owner and it's a non-transferable matter, the items have virtually no value to anyone else.

B) Magic items are so rare as to be priceless. If each and every item is worth so much that no nation could reasonably afford to buy them and the name, location, abilities, and general appearance of each piece is a well known then they could only reasonably be transferred from one owner to another under extraordinary circumstances. Note: I strongly recommend -against- this approach. Mundanes need a lot of magic items to keep up with the game's expectations for what their numbers should look like and what capabilities they should have. This option will drastically increase the gap in power between mundanes and casters that is already inherent to D&D 3.5.

C) Buying and selling magic items is a capital crime and all magic items are registered. This won't actually prevent magic items from interacting with a normal cash economy but it -will- make having a magic item very dangerous if you can't explain who gave it to you and why in great detail and show the change in registration. This one's got some story hook potential but it will require a very peculiar history and a somewhat heavy handed government to explain adequately.



I'm sure there're others but I can't think of any off the top of my head.

[TuggyNE]

The problem is that I'm pretty sure economics doesn't work like that. There are favor economies and there are cash economies, but I've never heard of them existing side by side and don't think they would easily. Is there a way to force them to? I'd rather not accidentally make any econ majors bleed from the ears on hearing my description.

Yeah, I don't think it works that way. Generally, once people settle on the idea that you can convert "value" into intermediate representation, they are eager to use that for as much as possible. Now, granted, there's a certain niche of very low-end goods or services that you can expect to be traded at least partially by favor (back-rubbing between siblings, or the like), but what we're talking about is a sort of mish-mash between collectibles, high-end weapons, and precious metals trading, none of which are characterized by favor economies.

What I'd recommend instead is to come up with some inherent and inalienable resource that individual characters possess, like essentia perhaps, which is strictly limited but grows with character level, and is the only thing that can keep most magic items functional. Items that would normally be vastly more expensive instead require more of this resource continually to function, so lower-level characters would find it difficult or impossible to power.

That, at any rate, is the idea I plan to work into my system some day, with the further wrinkle that the same resource is used for actual free-form magic, so caster-analogs have to choose between innate and equipped magic: no free lunch.

[Cespenar]

If the players would get the magicals by doing favors, why not vice versa? They could get favors by donating them to whatever institution they'd like, and then they'd pay back by helping the group in various ways.

For example, a church can send in a retinue of paladins to help the group in an undead/demonic battle. A government can condone their next crime if they ever commit one. A noble can open many social doors. A sage can offer free Identifys and Knowledge checks every time they visit him.

In short, they'd make allies.

[Coidzor]

Are you familiar with Frank & K's work in this vein?

[JeenLeen]

Is this game D&D 3.5 or a similar game?

If so, I've had a couple ideas, partially based off stuff read here.
Idea 1: Characters have a 'whatever' (essentia was mentioned above) that allows them to use only so many magic items. You could also fluff it as the item themselves are mundane, but a character can charge them with power. It's a time-consuming ritual, though, so although it would let players swap magic items during downtime, it won't let you suddenly change in the middle of a dungeon.
This effectively makes magic items a non-currency thing, but you can only use so many 'gold' worth (according to DMG/Magic Item Compendium) of magic items according to your level. (Note that this gets tricky for expendables like potions and scrolls.)

Idea 2: Magic items are rare, but the circles you move in make them fairly available. (In other words, DM gives you access.) Might take some favor-trading or allies, but you can essentially buy magic items. Maybe you trade favors, or maybe it's dragon scales or the dragon heart that's actually worth the trade.
Note: I feel this breaks verisimilitude a bit. At some point, a dragon's horde of gold is big enough to trade for magic items to some noble.

Idea 3 (variant of #1): making magic items requires a special item that is used as currency. Maybe combine with items can only be made for a particular person, so you need this to make the item. Your friendly church or spellcaster guild is willing to imbue you.

Note that some of the above can make magical loot useless. Whether this is pro or con depends on you and your group.

If you're not using D&D, then (for most systems I've seen) it becomes easy. You could have players just have access to a certain degree of mundane equipment, either based on their level or something like a Resources background or just what makes sense based on their backstory & allies. Magic items are found rarely, or only traded. Perhaps the magic world is somewhat segregated from the mundane (very not D&D, but like oWoD); some magic-users would want money, but most want currency that the higher-ups care about, such as favors or other magical items.

[LibraryOgre]

In several OSR and related games, there's the assumption that magic items are part of the economy BUT they're less like goods and more like Art Objects, with no fixed price and extremely limited availability. Sure, you can buy a print (scroll, potion; objects that are of art, but not art themselves) at a pretty standard price, but the details of craftsmanship, creation and reputation between two otherwise identical items (swords +1, staves of the magi) are such that you can't really walk into a store and buy one... they wind up in an art-style market where details are important and can radically swing the price.

From an adventurer's perspective, this makes every magic item a quest, and Identify enough for the thing you're going to use, but Legend Lore a necessity for that which you're going to sell... not knowing the history of an item limits its value.

[CombatOwl]

I kind of want to do away with buying magic items in a game coming up. I came up with the idea that magic items basically exist outside of the normal economy: you will, barring extraordinary circumstances, never be able to find someone willing to give you a magic item for gold (or vice versa).

The problem is that unless you harshly restrict the creation of such items, it will make no sense whatsoever. I mean, if all magic items are gifts of magic from on high, and only the gods can craft such weapons... well, yes, absolutely people will maintain a death grip on them. But if all you need to do is take some levels in wizard and pick up the right feat in your bonus feat slot... why wouldn't wizards be willing to work in exchange for labor? Even if most of them thought they were too important and powerful for it, some of them would no doubt be in circumstances desperate enough to make a labor-for-gold arrangement sound good.

I understand no magic shops (why would anyone run one? It's practically begging to get robbed), but not being able to hire a wizard to craft an item for you? That doesn't make much sense unless wizards in in some very unusual position of power simply by virtue of being a wizard.

You can get them from nobles, governments, churches, and the crafters themselves for doing them favors (i.e. quests). This will allow there to be cash-poor yet effective warriors and for me to give my dragons Smaugian beds without suddenly letting my players take over a small country with the items it'd buy.

... How are governments stocking their magic item armory if they can't buy the items? Do they enslave magic users and force them to do little but craft items? Do they forcibly conscript anyone who can do magic, and require it as part of their yearly duties? How do they control the spellcasters, who will eventually gain the ability to reshape reality according to their whims? Do they kill them before they reach a certain level? That sets up a pretty grimdark life for spellcasters, and certainly there would be elements who would resist such treatment.

Why not just have the smaugian beds as the goal of the adventure, as in the hobbit? Changing the magic item economy, especially in games like D&D, can often have some severe problems for challenge ratings and such. A lot of games with magic items implicitly assume that a certain amount will be acquired over the course of an adventure.

The problem is that I'm pretty sure economics doesn't work like that. There are favor economies and there are cash economies, but I've never heard of them existing side by side and don't think they would easily.

Look into the dual-power approach to anarchism for an example of how modern gift economies function in conjunction with modern capitalist economies. But unless every spellcaster is ideologically committed to excluding themselves from the capitalist economy, there's no way to justify the situation you describe.

Is there a way to force them to?

Sure, if the state will crush those dirty spellcasters with an iron boot. But it's a bit harder to explain why there aren't any spellcasters resisting that state, or why freedom/chaos-aligned gods aren't granting powers to clerics that resist the state. Maybe you're willing to have a spellcaster rebellion... but that still makes it hard to explain why they wouldn't trade labor for gold. Maybe you just add a 3rd level spell--"Transmute Rock to Gold"--that makes gold valueless to any spellcaster who can take the feats that would let them do the crafting? Why they wouldn't use that to wage economic warfare I don't know...

I'd rather not accidentally make any econ majors bleed from the ears on hearing my description.

Their heads will explode. Maybe you just tell them to live with it, in the same way that people tell physicists to stuff it at the table.

If I were absolutely dedicated to doing this, I would establish a Magic Item Cartel. It buys up any magic items that people make at anything even approximating a reasonable price, then resells them at five times what they paid for them. It makes the price so astronomical that you'll need a smaugian pile of gold to buy them. Let the cartel hunt down any spellcasters who set up shop independently.

[JeenLeen]

If I were absolutely dedicated to doing this, I would establish a Magic Item Cartel. It buys up any magic items that people make at anything even approximating a reasonable price, then resells them at five times what they paid for them. It makes the price so astronomical that you'll need a smaugian pile of gold to buy them. Let the cartel hunt down any spellcasters who set up shop independently.

A similar idea I saw someone else post was to have each 'magic shop' be a person who works for an inter-dimensional/planar company. The person doesn't have any items on their person, but will use the company's communications items to place the order.

For your scenario, the company doesn't care about gold. It has plenty. It cares about favors or other items of power. The scarcity of what's available is up to you (you decide the company's stock), but the scarcity of how much the player's can buy is basically 1 quest/favor per item.

You can easily make this a cartel if you want to, muscling out competitors. But perhaps there are others (so you can trade with nobles, the church, independent wizards), but the trade might well be 'one dragon horde' for a +2 sword, not a dragon horde for items worth that much in gold according to the DMG. The 'Company' doesn't mind some competition, but they are willing to hire casters who want to work for them, and usually their favors/materials/protection/etc. makes it worth it, so most choose to work for the Company for their own good. (Again, if you want a cartel, just add quotation marks around 'protection' and 'their own good'.)

[Jay R]

The idea of magic items as an economic commodity is too ingrained into the rules of 3E and later versions of D&D. If a large number of people can make items for only tens of thousands of gold pieces, then they will be bought and sold.

I am very much in sympathy with your goal. In my games, magic items will never be sold. That's why I don't play modern D&D.

To make them unsalable, you need to make production much less common, and make the items themselves much less common. If a king has fifteen magic swords, he will sell one or more for other things. If he only has one magic sword, he won't.

You can only increase the price past the level in which money will be used by reducing the supply, or increasing the demand. That's basic economics.

Ways to reduce supply include making it impossible for mid-range wizards to make them, making the supplies near-impossible to get, or increasing the non-monetary cost of manufacture. (If making a magic sword caused a permanent loss of 1 CON, there would be fewer made.)

The ease with which mid-range casters can make magic items in 3E or later, combined with the WBL assumptions, forces the conclusion that these items will be bought and sold.

[Red Fel]

What I'd recommend instead is to come up with some inherent and inalienable resource that individual characters possess, like essentia perhaps, which is strictly limited but grows with character level, and is the only thing that can keep most magic items functional. Items that would normally be vastly more expensive instead require more of this resource continually to function, so lower-level characters would find it difficult or impossible to power.

This. In fact, I read someplace in the forums - although I don't remember where or who posted it - that someone had come up with a mechanic by which the concept of WBL was less an expression of financial value of goods, and more the amount of power a PC could safely harness. As a result, even if magical goods were available, a character couldn't simply deck themselves out in all the enhanced finery they could afford. They had only a certain amount of total enhancement value they could wear at one time, and so they had to budget - not budget in terms of finances, but in terms of enhancements - for what they would use.

Or, if I recall correctly, the excess of untamed magical energy would blow them to smithereens.

That, I think, is probably your best option, short of divine fiat or personally-attuned magic items.

Divine fiat remains an option, however, if your world is a Church-dominated setting. One option is to use a Pragmatic Relic or similar concept. Basically, magic items are explicitly empowered, not by the arcanists who craft them, but by deities, and retain their power solely by the continued beneficence of said deities. A magic item that is sold or exchanged without that deity's permission becomes inert, as per Hymer's suggestion. Alternatively, some deities - such as those of Strength or War domains - might recognize the laws of conquest, and permit one who has bested the rightful owner in trial by combat to claim the item as spoils.

Another option is the drawback - give every item a bonus and a malus. No magic items exist, short of artifacts, that don't have some kind of penalty proportionate to their power. Thus, most people don't want to use them, simply out of an unwillingness or inability to pay that penalty. Note that this doesn't make these items entirely unmarketable, it simply means most people won't trade in them.

Short of imposing limits on the PCs, really the only way to do it is to make the items unmarketable - that is, make them worthless if exchanged. It's not a question of a separate economy, but of removing the object's inherent value. And that's just it - even a de-powered +5 Vorpal Longsword is still a masterwork longsword. There's still a market, unless you do something that explicitly prevents it from being marketed.

[Bucky]

You could also have the reasons be solely cultural. Item owners might be highly insulted by any offer of money. There might be some superstition, common knowledge but incorrect, that buying, selling or stealing magic items curses them somehow.

Or you could just make the economies literally separate. Only one society - say, the Fae - knows how to make new magic items. And they don't particularly care about outsider money. Of course magic items outside the society exist, but are scarce beyond their actual value. So if you want a magic item, the only way to get it in a cost-effective manner is to bargain with the Fae for it.

[jedipotter]

The problem is that I'm pretty sure economics doesn't work like that. There are favor economies and there are cash economies, but I've never heard of them existing side by side and don't think they would easily. Is there a way to force them to? I'd rather not accidentally make any econ majors bleed from the ears on hearing my description.

Dare I say America, and the Western World have both these economies side by side. See you can do things the normal way: ''work hard'' and ''save money'' and ''buy what you want''. Or you can do things The Other Way. If you want something, you can find someone who has it or is willing to get it for you for a favor. Lots of nobles, governments, churches, crafters and rich folk need things done, but they can't do them themselves. Not necessarily illegal, but a lot sure walks the gray area. But often they just need something done and they don't want to be directly connected to it.

[Jlerpy]

I personally favour the "magic items are too rare for anyone to be able to afford to buy" option.
This does have the downside of not working with the balance issues of D&D, but that might be related to why I don't run D&D.

[TuggyNE]

To make them unsalable, you need to make production much less common, and make the items themselves much less common. If a king has fifteen magic swords, he will sell one or more for other things. If he only has one magic sword, he won't.

No, that just means the price is higher. Reliably getting some good to the point where it is literally beyond purchase is … extremely non-trivial. What's more, it mostly requires that the item be of extreme strategic value. It doesn't matter how rare a +1 sword is, even if there has only ever been one: it's not that amazingly better than a regular sword, so it will merely be very pricey. But, in desperation or greed, chances are someone will be willing to sell it if you offer enough.

Now, if there are literally only a dozen or so magic items, all of substantial power (100000gp equivalent) or better, than you might get something like that. Maybe. (Obviously, this cannot be hacked into 3.x in any practical way, so it's not really a practical solution.)

This. In fact, I read someplace in the forums - although I don't remember where or who posted it - that someone had come up with a mechanic by which the concept of WBL was less an expression of financial value of goods, and more the amount of power a PC could safely harness. As a result, even if magical goods were available, a character couldn't simply deck themselves out in all the enhanced finery they could afford. They had only a certain amount of total enhancement value they could wear at one time, and so they had to budget - not budget in terms of finances, but in terms of enhancements - for what they would use.

Or, if I recall correctly, the excess of untamed magical energy would blow them to smithereens.

That's what Tippy uses, yeah. I find it a bit annoyingly clunky, but I suppose it's a simple enough solution to hack in.

Dare I say America, and the Western World have both these economies side by side. See you can do things the normal way: ''work hard'' and ''save money'' and ''buy what you want''. Or you can do things The Other Way. If you want something, you can find someone who has it or is willing to get it for you for a favor.

Usually, from my knowledge, the favors are used not to actually exchange goods or services, but to pick who gets the contract for X. In other words, there's still millions of dollars floating around: the favor is only there to point it in the right direction.

That doesn't help you any here, of course, since the goal is not to get some profitable contract that you can reasonably fulfill about as well as anyone, but to get some extremely valuable item for free. That's … not something that sounds plausible, sorry.

[Socratov]

I personally think it's matter of specific items. The lower the the cost, the more common they are. Also, consider that in a big city lots of gear is made because there are simply more people around who can afford them. Adventurers are in my opinion rarely the biggest fish in the pond. The party is just the ones who are living the story as it were. I think magic items are tradable as long as they aren't tailor made to a person's wishes and demands. Then they should be crafted for the person they are intended for. I can fully imagine an old aventurer keeping a couple of items and selling the rest so he can sit back, relax and live comfortably until his time runs out.

[TheStranger]

I think you're pretty limited in how to achieve a stable non-cash trade in magic items. As people have said, if magic items have value, and gold has value, it's pretty hard to stop people from trading one for the other. Hymer's suggestion might be the best one, really - some kind of fluff reason that magic items can't be bought or sold. How much you want it to break the 4th wall is up to you.

[DonEsteban]

What I'd recommend instead is to come up with some inherent and inalienable resource that individual characters possess, like essentia perhaps, which is strictly limited but grows with character level, and is the only thing that can keep most magic items functional. Items that would normally be vastly more expensive instead require more of this resource continually to function, so lower-level characters would find it difficult or impossible to power.

This. In fact, I read someplace in the forums - although I don't remember where or who posted it - that someone had come up with a mechanic by which the concept of WBL was less an expression of financial value of goods, and more the amount of power a PC could safely harness. As a result, even if magical goods were available, a character couldn't simply deck themselves out in all the enhanced finery they could afford. They had only a certain amount of total enhancement value they could wear at one time, and so they had to budget - not budget in terms of finances, but in terms of enhancements - for what they would use.

Or, if I recall correctly, the excess of untamed magical energy would blow them to smithereens.

That, I think, is probably your best option, short of divine fiat or personally-attuned magic items.

But that doesn't solve the problem, does it? It would certainly influence the value of magical items, but they would still be valuable and not inherently untradeable. Unless, of course, giving away items would harm you. Which leads to a whole new problem. Now you wouldn't kill the dragon to take his stuff, but instead take the dragon's stuff to kill him!

Nah, as much as I would like to see a solution, I don't think there is any that isn't either very clunky or just requires players to agree on it out of game.

[TuggyNE]

But that doesn't solve the problem, does it? It would certainly influence the value of magical items, but they would still be valuable and not inherently untradeable. Unless, of course, giving away items would harm you. Which leads to a whole new problem. Now you wouldn't kill the dragon to take his stuff, but instead take the dragon's stuff to kill him!

If you don't want magic items to be for sale at all, that technically won't work, no. But if all you need is the ability, as the OP said, for "there to be cash-poor yet effective warriors and for me to give my dragons Smaugian beds without suddenly letting my players take over a small country with the items it'd buy", then it works fine: having lots and lots and lots of money will not help you much unless you have the magical capacity to use all the items you could buy, and similarly, unless you are so absurdly poor you cannot afford to invest in or be loaned the most minor charms, you are likely to be at least reasonably effective even with considerably reduced wealth.

Basically, you bring it down to the point where most ordinary people could, in theory, afford most of the equipment if they so desired it, but it isn't especially useful for them, or is perhaps not usable at all. At that point, an adventurer might have an unusually large investment in gear, certainly, but only by a factor of 2-5 times as much as a town guardsman or burgher, rather than being orders of magnitude richer than the five nearest earls combined.

[Lord Vukodlak]

Sometime ago I had an idea similar to what you purpose. It would have gone like this.

Magic items(except potions) instead of being priced in gold would be priced in Chrysm Measures.(Chrysm being the raw material used to craft magic items). So a +1 Longsword would cost 315gp for the physical sword and 2,000cm for the magical component. And perhaps a little extra gold for the casters living expenses.

The idea being PC's could still buy or trade magic items normally but having a few magic items didn't immediately translate into being super wealthy. It of course has the problem of WHY can't you trade magic items for gold other then "because" but as a mechanic it should work and it really does create two economy's side by side.

[Drachasor]

Hmm, the original post brings to mind Indulgences. There you had a single supplier (the Catholic Church) and what was supposed to be based on merit quickly got corrupted.

I think the only way you could get this sort of thing to work is by making it part of how magical items function. Hmm, but I think you'd need some sort of subsystem to make this work well. Lots of ways you could potentially design something like this.

But sort of fundamentally changing how magical items work, you just aren't going to remove them from the economy. Cash-strapped families and nobles will sell them. Crafters who need money will make them. Etc, etc.

Though, I think if you really want to lessen the magic item economy, a first step would probably be baking in a lot of the bonuses that are more or less mandatory. A little attack bonuses, a lot of AC bonuses, and some ability bonus, etc, etc. Though that's a lot of work in and of itself (since you'd likely need to change spells too).

[Jeff the Green]

Yeah, I was kind of expecting this to be the case. I'll still keep the Appraise/Knowledge/Gather Information check rules I came up with for handling favors since they work fairly well for those cases when they might be offered a favor rather than gold (because that's so gauche), but I'll have to keep gold tied to magic to keep the other things running the way I want. Oh well.

Thanks anyway, guys.

[Coidzor]

Hmm, the original post brings to mind Indulgences. There you had a single supplier (the Catholic Church) and what was supposed to be based on merit quickly got corrupted.

I think the only way you could get this sort of thing to work is by making it part of how magical items function. Hmm, but I think you'd need some sort of subsystem to make this work well. Lots of ways you could potentially design something like this.

But sort of fundamentally changing how magical items work, you just aren't going to remove them from the economy. Cash-strapped families and nobles will sell them. Crafters who need money will make them. Etc, etc.

Though, I think if you really want to lessen the magic item economy, a first step would probably be baking in a lot of the bonuses that are more or less mandatory. A little attack bonuses, a lot of AC bonuses, and some ability bonus, etc, etc. Though that's a lot of work in and of itself (since you'd likely need to change spells too).

A number of VoP fixes do that already, IIRC, or at least lay some of the groundwork for you, and there's that Conan d20 stuff that used to get brought up occasionally as an example of partially baking those things in.

[Talya]

In 3.5, magical items require experience to craft.

Experience is a metagamey thing that doesn't translate well to being described as an in-world resource, but what if you changed it?

Instead of experience, maybe magic items are created by "soulstuff." Think Skyrim, where the souls of other creatures are used to power enchanting magic.

Now, what if you could sacrifice a little bit of your own soul - translating to experience - during magic item creation, rather than going out and collecting the souls of other creatures? Only, you're a shopkeeper in a town, you're not adventuring. So you only have a limited supply. Where are you going to get the soulstuff you need? Maybe you have a way of taking it directly from a willing donor. You might need to play with the cost, you might need to do away with the "experience is a river" thing to prevent players from catching up. Oh, and magic item creation, at this point, becomes commissioned only - there are no shops full of items, so the PC must wait for the crafting to be completed, rather than grab products off the shelves.

No amount of Gold is enough to supplement this -- gold can't buy you more soulstuff, easily. (Oh, one could invent various scenarios where it would, but they'd be rare and often evil and illegal -- making them excellent subplots themselves.) Now you have two parallel economies...with two commodities not being easily exchangeable.

[Grek]

Are you familiar with Frank & K's work in this vein?

This. Their answer is essentially "Making magic items (beyond a certain quality) requires stuff like souls, pure elemental essences, chaos emeralds, hopes and dreams. The sort of person who has the ability to go to travel to the Elemental Plane of Fire and scour the Flame Pits with enchanted jars so that they can harvest Magic Smoke does not care about your piles of gold. If he wanted more gold, he could mug an efreet and get three wishes worth of gold."

You end up with three tiers of the economy: Turnip tier (in which you can't own anything worth more than ~200gp, or orcish raiders would have already stolen it from you), Gold tier (in which you can buy things for money and can rob peasants with impunity) and Wish tier (in which you buy things for Balor skulls and can rob banks with impunity).

[jedipotter]

Usually, from my knowledge, the favors are used not to actually exchange goods or services, but to pick who gets the contract for X. In other words, there's still millions of dollars floating around: the favor is only there to point it in the right direction.

That doesn't help you any here, of course, since the goal is not to get some profitable contract that you can reasonably fulfill about as well as anyone, but to get some extremely valuable item for free. That's … not something that sounds plausible, sorry.

Your thinking of two near equals for a contract. Think more of a wider gulf.

Example: Half Orc Krog wants a good magic sword. As his job as a cook at Meat on a Stick only pays two copper coins a day, he can never afford one. Halfling Hayden has plenty of horses, and plenty of them are sick with horse flu. There is an herb that cures it, grown only in the far off town of Ponl. Hayden can't go himself, and has no real other way to place his order. But enter Krog! It is so simple: Krog braves the wilderness, and brings back the herb. Hayden's horses are saved, and all he need to do was get a magic sword for a half orc.

This is the underground, favor economy. And America is full of it. Real world example: My dog sitter. She was a young girl who liked to read and I live in a house full of books. I needed someone to let the dog out before I got home....and enter the girl. She stopped over right after school, let the dog out, and took her payment in books. She got the whole Xanth collection from me, as well as all the Dragonlance and Dragonriders of Pern. It worked out great.

[AMFV]

Also an important side note about the WoD example, magic items are classed under an entirely different merit, which is "Artifacts," I think having different economies is more complex than having magic not necessarily be available to everybody that doesn't pay extra for it, just up the cost of magics.

[Mastikator]

The price of magic items already do exactly what you'd want them to do in any 3.5e D&D game. A single +1 longsword for 2000gp? That's enough to buy a small army for a few months. There's no way that +1 to hit and damage is worth more than a small army.
As such, you can never find a buyer for a magic item, and a clever player would never spend his vast resources on tiny insignificant bonuses instead of building an empire.