Ch.164Economic Criminal (1)

The origins of this incident can be traced back to the exact moment when a small-scale market economy was introduced to the village.

Fundamentally, in this medieval fantasy rural village, the economy operated on a self-sufficient basis where people made what they needed themselves. Even as time passed and economies and industries developed elsewhere, that was a story of advanced cities, not here.

Just because financial products emerged and monetary economies took root in major cities doesn’t mean that currency-based economies would extend to the most remote backwater villages like frontier settlements.

While guilds formed in cities and collusion and division of labor factories emerged, why would rural folk buy such items?

Most goods were either made through versatile home craftsmanship or created by the village blacksmith or carpenter. At most, villagers might reluctantly purchase items unavailable locally from traveling merchants at inflated prices.

In an era where monsters and bandits suddenly jumped out from bushes along the roads, it wasn’t as if robust distribution networks were springing up everywhere.

And the problem that occurred this time stemmed precisely from this point.

As far as I know, there exists a fundamental difference between craftsmen of the “city” and those of the “village,” even if their work appears similar.

City craftsmen are true specialists who have mastered specific technical fields—professionals of this era. Through collusive “guilds,” they monopolize the value of their skills, functioning more as secondary producers who sell goods in cities.

Village or rural craftsmen, on the other hand, are less merchants selling goods and more power holders who wield the strength of “skill” within their small community.

Typically, these individuals maintain their local reputation based on their skills and establish themselves as pillars of the village community.

….Of course, rural village craftsmen are mostly carpenters, masons, blacksmiths, and brewers. And even then, they’re generally just neighborhood technicians rather than masters of exceptional skill.

Naturally, skilled craftsmen would prefer to do business in cities where they could earn more money, rather than living in rural areas where they might be subtly rejected if they couldn’t penetrate the inner circle—unless they were village craftsmen for generations.

Still, rural craftsmen are like medieval jacks-of-all-trades who’ve adapted to their limited circumstances by learning various skills…. but that’s not the important part, so let’s move on.

Anyway, in this situation where craftsmen’s positions and roles varied according to their environment, the craftsmen in our frontier village resembled the latter type.

Based on the power of their specialized skills, they were exempt from the mandatory simple labor required at the village level. Instead, they had to work in relevant occupations in the village according to my “orders” as the representative of governing authority—a special situation.

Of course, there were various reasons why once-skilled craftsmen and artisans from cities migrated to this village where they had to work under orders….

Usually, they either entered into contracts to settle personal debts or received benefits such as monopoly rights at the village level.

Therefore, like everyone else, they didn’t receive wages but enjoyed better treatment while engaging in more specialized work.

The blacksmith and assistant repaired and reprocessed metal tools, while the carpenter and architect—in this era, carpenters often doubled as architects, though exceptions existed—processed timber to make furniture and constructed buildings.

Additionally, hunters initially filled the security gaps in the inadequate village before eventually supplying meat and leather, while the stable keeper and shepherd tended to the village’s communal livestock and received considerable respect.

However, as time passed, the situation changed from what it had been.

If the village, which had been under construction, was previously operating under a planned economic system following central control, the reorganized village eventually developed some form of market.

I laid the foundation for the village economy to take root by distributing farmland to each resident, reducing mandatory labor from six days to two, and relaxing various prohibitions to allow for autonomy.

Of course, in this situation where I had created a foundation for them to earn money, I couldn’t continue providing all benefits for free as I had when they were merely following orders.

While I previously obliged villagers’ requests by having artisans fulfill them, now these craftsmen were full-fledged free people with the right to an economic foundation and compensation for their labor.

I even calculated their previous labor before land distribution and paid them with a sort of credit currency, ensuring that villagers wouldn’t starve immediately.

Thanks to this, they not only avoided hunger while developing land and growing rye and beans, but could also participate as day laborers when I needed additional manpower, earning wages.

….In reality, due to the shortage of actual currency, there was no physical money, and these wages and salaries were merely numbers written next to names.

Nevertheless, this successfully established the foundation for a monetary economy, and as many welfare policies ceased to be free, people began paying these virtual currencies (tentatively named) to artisans for services.

And from here, problems began to emerge one by one in earnest.

For instance—

‘Tax issues, I suppose. ….Sigh.’

There’s one thing that should be noted—among the benefits provided to frontier villages is tax exemption for several years.

When you’re starting from scratch, establishing human settlements in empty spaces and protecting the village from external threats, could a frontier village possibly succeed if taxes were collected?

Obviously, the answer would be negative, which is why, at least in our domain, frontier villages are initially exempt from taxes.

However, this only applies to “cultivation tax,” “head tax,” or even “livestock tax.”

Income from selling goods—somewhat equivalent to “income tax” in modern Earth terms—is not exempt.

Why is that the case? There are many reasons.

Some nobles under my father played around with tax exemptions, got caught, and were executed, after which the practice disappeared. Another reason is that in frontier villages, where communal living is a prerequisite, product sales weren’t expected to occur.

To be frank, our village is unusually wealthy and affluent due to special circumstances, but the vast majority of frontier villages spend their first year hunting and gathering before finally having the capacity to begin farming.

Naturally, they would have to endure at least a year of tribal-level living, and in this atmosphere, it’s more surprising that anyone would have the capacity to make and sell things.

In fact, in rural areas, barter with tangible value still predominates due to the shortage of currency. Even our village would probably still be using a rationing system if I hadn’t employed the trick of virtual currency.

Yet in this situation, our village established an economic system by introducing currency, albeit through bookkeeping numbers, and thanks to this, artisans began trading using this currency, forming a proper market.

But…. the real problem started here.

The market formation itself aligned with my intentions, but the issue fundamentally stemmed from my forgetting about the “income tax” aspect.

When income is generated from product sales, taxation is an obligation, not a choice, under most circumstances. In other words, regardless of whether I want it or not, this is a “duty” I must implement as the ruler of this village.

After some contemplation, I realized that this shouldn’t actually be a major problem.

Looking back, since all economic activities were conducted through “ledgers,” tax matters could be resolved through reasonable compromise.

‘….Right?’

Thinking about it, even now they occasionally devote labor to purposes other than personal profit at my request, so I could simply reframe this from “requests” to something like tax-substitute labor.

When the village’s formal trade begins in earnest later, we can start reforms then. So instead of taking something separate for this, I intended to let the situation pass.

In fact, this was also because a more severe problem had arisen than not collecting the few pennies of tax from the village….

“How many times is this now?”

“….Already the fourth time, my lord.”

Namely, financial crimes—frankly speaking, fraud—that inevitably arise during the formation of a market economy.