Dehumanizing Ponies, Part Seven - Pony economics · 11:57pm Jan 29th, 2014
This blogpost evolved out of a discussion I was having with my good friend Kaorin.
Economics is a tricky thing. Strictly, it has nothing to do with money and everything to do with wealth. Which is to say, value. Nothing has intrinsic value; all value is assigned by people. In the middle of the desert, a kilo of water is more valuable than a kilo of gold. Most of what we take for granted about the economy or money are actually conveniences that have evolved either due to state control or as a way to sidestep natural limits of value trading.
Let's consider banks. Banks got their start by being a legitimate origin for an IOU, rather than taking the person at face value. They've become more than that now of course but that's mostly because of state monopolies on currency and banking regulations. So let's ignore that. Banks also lend money, because where people used to go to the local rich guy in their community if they needed money, and because they were part of the community the rich person knew whether it was a good idea or not he'd decide on the basis of knowing the person. When you get lots of people together, that's harder, so an institution takes it over because it can absorb the risks.
Ponies on the other hand are more communal than humans. I won't say socialist because that implies obligation correlating to personal ability which I don't think is either true or reasonable, but given that the natural size of their community is much smaller than for humans, you don't need to have institutions solely to take care of these things. Let's consider medium size projects: a pony wants to build a house, for example. He tells someone like, say, Pinkie Pie, or Mayor Mare, and a bunch of ponies show up, build the house, and it's done. That's not actually free because the expectation is that now he has the obligation to do what he can when similar situations come up.
Given Friendship and so forth, ponies have a stronger biological drive toward this cooperation and cultural inclusion than humans do. They also have a biological compulsion toward doing what their cutie mark says to do, and they'll be as a culture goal oriented. That doesn't mean that they don't have luxuries, certainly! But it means that they'd only ask for community help if they had a strong goal in mind, since that's the only thing that would appeal. And it's not like the community is obligated - if they don't believe it's a good idea, they won't pitch in.
Let's also consider trustworthiness. For humans, if someone shows up and wants cash (or help) to build a bridge, there's a lot of checks to go through first. But for ponies, you can just see if they have a bridge-building cutie mark. And remember, following the cutie mark is a biological compulsion - it would be pretty much impossible to not try and fulfill the stated goal as best they could. Which means, like for ruling, you have automatic signalling of how you should treat the pony.
Investments in general are required when an entrepreneur doesn't have sufficient capital. Since in Equestria all any entrepreneur needs to do is appeal to the community and it will get done (or not, if their skills/talents aren't up to it), that's not going to arise as a dynamic. Even for the very large projects such as railways, private industry would suffice to get them built. And if it's something really, really big he can always go to the Royal Sisters, who probably have the greatest personal wealth of all ponies. Either because they've owned enterprises for forever or just due to gifts to the Throne. (And I expect gifts to the throne are a sort of low-level competition/point of pride. Luna and Tia likely redistribute the largesse immediately and that's what's expected, but still the point is to give what you can. Never more than you can though.)
Speaking of, I doubt there's much of anything in the way of taxes. Probably, in fact, none. We see a minimal Guard and no standing army, and very little in the way of bureaucracy standing between the Sisters and the public. After all, they're immortal so there's not much need to accumulate any sort of training cruft or the like. And if communities are generally self-governing as suggested, then there's very little to enforce. Even within a community, you don't need taxes to support things like hospitals or fire services. You merely need someone who's capable of coordinating ponies that would be otherwise unaware of the general needs of these things. Like, say, a Mayor.
(Aside, I doubt the Throne is a force or law monopoly - outside of basic things like treason, I would imagine each town keeps its own legal code, with agreements between ponies and deferment to an arbiter if there's no agreement on something. The Sisters would be the ultimate arbiters.)
Between communal projects, lack of investment infrastructure, and the goal-driven society, you'd see very little in the way of the hyper-rich. Some ponies would be more wealthy than others, but without mechanisms that reward accumulation of wealth directly and a direct goal-orientation for ponies you wouldn't see the sort of feedback loop that creates enormous wealth disparity (I won't get into how that happens, it's really out of the purview here). So even your aristocrats probably aren't that much more wealthy than anypony else. (In fact, historically most aristocrats weren't wealthy, just connected)
Remember, hypercompetence is dependent on cutie mark, which while it can be family-based (like the Apples), is not guaranteed. You won't get dynasties that, because they can afford better education and the better connections, always end up more wealthy because they have better options. The cutie mark determines that, so it could be that Fancy Pants had a parent who was an airship designer or whatever, but he's in the fashion industry, so he's not ever going to really be able to take that business over.
So there generally aren't many mechanisms that would result in extremely large companies or the hyper-rich. The people that can or could build enormous companies would run into a lack of interest due to cutie-mark drive and ultimately wouldn't be able to really pass it on dynastically. Rarity's cottage industry is almost certainly commonplace for how ponies work overall - there's little in the way of huge factories or mass produced goods, simply because few people get an "assembly line worker" cutie mark.
This does have downsides. Lack of standardization, for example. This is probably another reason why they haven't advanced so quickly - replaceable parts and economies of scale have had a huge influence on the products we use every day, and that just wouldn't be present for ponies. And without something like the Sisters and their level of influence and ability to call for collaboration, absolutely huge projects (like a railway to the Crystal Kingdom) would be difficult. But their roads aren't paved and they don't need the same amount of infrastructure we do for most things, so there's far less pressure to organize on that scale.
That bit in Equestria Games where Shining Armors says that Ms. Harshwhinny must know tons of princes and princesses suggest to me a level of governance in-between individual towns and the Sisters. The title prince or princess originally meant leader of a principality after all. Also Filthy Riche's Barnyard Bargains are suggested to be an Equestrian wide chain. So businesses expanding beyond local cottage industry isn't unheard of.
Interesting thought. I think there's a fair bit of in-show support for the idea that the wealth gap doesn't tend to be very great among ponies too. I mean consider Filthy Rich, whose name and cutie mark both suggest that he's among the wealthiest of ponies, that in fact his talent may well be accumulating money. Yet he lives in Ponyville, where we've seen no sign of huge mansions, and his daughter attends public school along with all the other fillies.
This does bring a topic to mind I hadn't thought of in a while... that because of the cutie mark compulsion and in direct relation to how wealth doesn't provide greater opportunities a la higher education, that Equestria probably very heavily utilizes an apprentice system once you're past the general education level. Once you discover that you're good at selling things, you'd find a merchant or reseller (Filthy Rich, for example) to apprentice under. Children who happen to develop a talent/mark that is related to their family work (like the Apples) would of course pick up the 'family trade' but (for the sake of argument) say Apple Bloom discovered she was good at making clothes, she'd naturally end up falling under Rarity's direction.
Featherweight would, if arrangements could be made, apprentice under Photo Finish or one of those tabloid photographers, as another example. And this would be where having good connections would make a huge difference in how far in he world you can go with your Mark, regardless of your personal wealth.
But how is the money managed? It has to come from somewhere to go somewhere else. Firstly, it has to be made. How would the amount of money that's circulating controlled? You'd need an institution for that. And just like hospitals such an institution has to be constantly paid, so the ponies that work there, be that three or two hundred, can buy food, since they invested their time in controlling the money instead of working on a farm or such a thing. The administration can be as miraculous as it wants, without resources it can't work on the long run.
A large project like the rails needs also a not too small amount of coins, and without taxes the only real source is to create new money or get it from private investors. The latter would also be in the need to actually get the money for this from somewhere. This is not possible without having an income that is significantly larger than the Apple family's. In The Best Night Ever Applejack wants to earn money to repair the barn, or a new one, I can't remember. Fact is, hard working as she is, the income that renders saving up for a single barn necessary is far below an income that allows to invest into a whole new rail system.
The other option is to create new money for it, what would raise the amount of money circulating, ending up lowering wealth in the most cases.
I see that you don't want to look at the money system too closely, but as it gives the ability to individuals to trade almost everything it somehow is tied to wealth. The only real option I see as a solution for such grant projects is the biological drive towards cooperation. There could be some special fonds to which only those contribute that actually can, without screwing the investors.
If economics are bound that closely to biology and determination the amount of circulating money should be low and not changing it's real and relative value much. There is the question of currency, though. We see a cherry being prized between one and five coins, what makes the coins really unworthy. In a village that guarantees your survival you wouldn't give much for a single cherry. Not even as a Fluttershy. There is, of course, the possibility that this prize includes the wage of the trader, farmer, engine driver and, perhaps, a certain amount that's refunded to the investors of the rail system, what could be the farmer in the first place, allowing him (again) to pay workers that she couldn't pay before.
The question is, what did those ponies before? Did they agree to work for only the smallest wage? With a low money value, a low money wage can turn out as a relatively high real wage. This also adds some possibilities to beggars and vagrants like Trixie. Those, once again, would have a significant lower wealth than ponies like Fancy Pants or Filthy Rich.
And their wealth has to come from somewhere. You of course can be right when you say that it pays off way less than it does in our world to save up large amounts of money, given the lack of complex institutions that profit from liquidity.
Hmmm. And additional thoughts. We know money exists and is very likely there to grease the social wheels of trade since it is a lot easier to convince someone to help you do something with a physical promise of 'anything they want' versus just what you're skilled at, and it does get thrown around regularly, but it is entirely believable that wealth is measured more in what you possess and can acquire. Still, there's a level of idle rich that implies something beyond simple connections or having done lots of favors. Perhaps knowing or employing a large number of ponies with infrastructure skills, so when someone needs a bridge built and they can't find a bridge-builder pony on their own, they know who to go to. Fancy Pants specializes in knowing ponies, for example, and is probably as influential as he is because he can get things done. I could see Diamond Tiara or Silver Spoon leaning that way if they grew up and mellowed out... Diamond Tiara's father knows a lot of people through his business and even if she isn't cut out to taking it over herself, she could use her dazzling appearance and influence (again, for the sake of argument
) to rise up the social and economic ladder/haystack similarly.
1772736
Actually you don't. We tend to think you do because we're all used to operating under central banking, but there's absolutely no need for a single centralized currency.
Creating new money doesn't create wealth, which is what you actually need. Most railroads early on in US history were set up by private individuals, and state-created railroads were done at a huge inefficiency.
Monetary theory is also terribly complicated and I didn't want to get into it. I could, but suffice to say so long as there is sufficient currency for the bulk of transactions (which would be low-value transactions) you don't much need it for extreme transactions.
I didn't say it guaranteed your survival, I said for the projects that required more investment than a pony has immediate capital (such as building a house, or stuff that we'd cover with insurance), communal drive would cover it. There's a big difference!
I'd imagine it's mostly capitalistic, where labor value determines wage. Given hypercompetence and specialization, every pony has an extremely high labor value. Since wealth creation is non-zero-sum, it's entirely possible that any cutie-mark-related wage is going to end up being fairly high.
Wealth comes from labor, and ponies are very good at labor.
Until you try that and realize the pony with a bridge on her butt is an HR manager whose skill is "building bridges between employees and management".
1772763
Well, given cutie-mark drive it'd be sociopathic to misrepresent your cutie mark, so outside of the mentally ill it wouldn't really be a problem.
1772761
Wait, so what you're saying is that a coin can have a different value in Ponyville than in Dodge City? I indeed have problems to imagine that, but wouldn't that render trading impossible? The problem I was talking about is how the amount of circulating influences the labour market. I try not to let this drift into a deep, whozzly monetary discussion, but the only way to render such an institution useless is to set a fix amount of circulating money, as it is with the Bitcoins. If I remember right, those are limited to a maximal amount that can circulate simultaneously. In Equestria such a thing wouldn't make sense as it would block development even harder. It even would be smart to slowly raise the amount, as ponies barely would expect high pay offs from savings anyway.
What also partly contradicts your statement "creating new money doesn't create wealth." It can't directly effect wealth of course, but higher resources mean more possibilities, new jobs or more traded wage-goods, etc. If I remember right private investors came with a fairly amount of savings from their European companies, what gives us a source. Here, efficiency raises with competition and loose law suits. They surely paid next to nothing to the rail workers, and had enough human resources to not worry about that. Lower wages mean higher profit but also less qualified workers. Luckily building railways isn't a too complicated job. The immigrants, however, had an essential need for income. With the cooperation aspect alone you have to calculate a lower efficiency at a pony's construction side.
As for the village thing, I was not referring to what you said earlier, but I made a new example, referring to the scene we see in the show where Fluttershy bargains with the trader. In your example communal drive surely is an factor non-existent in our world. In calculations, I think this could be described as a cost lowering effect that itself is a factor for the lack of institutes that profit of liquidity. It also would be a factor for the deflational tendencies.
Regarding the labour value I have to agree that the average would be rather higher than ours, given the (biological) determination. However, this also lowers competition, what should end in lower wages again. It somehow would be normal for them to be that qualified. Yet, it could be enough to ensure the broadest labour supply.
1772763
Don't be silly. They would be called pr-managers. And somehow I doubt that such would exist in Equestria at all, as there seems to be a lack of multinational companies. Or any larger companies at all for that matter.
1772780
Understood, in the context of these posts. I meant mainly that if you needed a bridge built, you couldn't go rounding up everypony with a vaguely construction-related-looking cutie mark and expect to get anything accomplished. Cutie mark adherence is only meaningful internally, to the pony bearing it; from the outside, cutie marks mean absolutely nothing, save that the pony with a cutie mark has discovered something they're good at. Flim and Flam, for instance, both have apple cutie marks.
1772873
How much does milk cost in New York? How much in MIlwaukee? Price differences are not only natural, they're expected.
More money only means higher liquidity, not more resources.
They paid them pretty well for the time, but that's neither here nor there. The point is that private, not state, investment has been the origin of most things pre-central-banking.
Why should it? Communalism isn't socialism. Do you expect a discount from a store if your friend is working there? Same thing. Even if such a cost-lowering effect existed it'd be the equivalent of an import tariff.
Wages =/= wealth. Certainly, some labors are more valuable than others, but there's no need for the lowest-valuable one to be below a living wage + some luxuries, given specialization and hypercompetence.
1772874
And Flim and Flam had a cider machine. Sure, they were couched as con men, but they were doing apple related stuff. What would be more likely is that if you had a construction project you'd ask for ponies, and those with the proper cutie marks would be driven naturally toward enlisting (or more likely, would have already formed a community and possibly company for it).
This hadn't occurred to me before, but it's incredibly important. It goes a long way toward improving equality of opportunity. It's true for humans and ponies both that if you're not competent, you won't go very far, but for humans who can take over daddy's business, they don't have to be able to go far.
Fancy Pants still gets the advantage of his father's money to start up his venture, but he has much further to go to success than if he had a junior VP position waiting for him as soon as he got out of b-school.
1772929
Not only that, but pure-bureaucracy positions such as "vice president" are going to be a lot less in evidence since there isn't a need for an institution to cover for weaknesses in communication and competence. Plus, who's going to take the VP position when their cutie mark is telling them to go build aircraft or whatever? Only business-cutie-marked ponies, and without a robust financial market to begin with they're few and far between.
1772919
Ah, I thought you wanted the Equestrian coin being treated as a different currency in Ponyville than somewhere else.
As for the second one, I don't think I can go further into this without getting into quantity theories and such things. More money can mean more jobs, what should mean more wealth.
And I think now you are overrating central banks. They may gave the pure ability into a state's hands to crowding out the private sector, but where no profit can be gained the private sector won't do anything in our world, and hence the state has to take certain sectors on the long run. Not because banks make it possible. If anything, the Equestrian state wouldn't be needed because the private sector doesn't seek for profit as the most important factor.
Point 4: I certainly wouldn't. But you make it sound like I could get such a thing if I was a pony living in Equestria. That, or I don't get the idea of the whole house building example. The local people helping would lower the wage-receiving labour on this construction side, what would lower the cost of the house and the transferred money.
I'm glad we're at least saying the same in point 5.
1773018
Well, if no profit can be gained by it, it shouldn't be a business. It should be a charity. Not something state run. States are incapable of turning profits and have little incentive to be particularly efficient. Central banks are a government-supported monopoly of banking and currency that provides a direct way to futz with the market and thus screw it up. If it's not obvious, I'm Austrian and not Keynsian.
The point is communalistic endeavors would 1) Replace the loan structure that we use by spreading it out to a community obligation rather than a specific monetary debt and 2) Only be used for such things, since it's voluntary on the part of those offering the labor. They'd only participate if they felt you'd "earned" it.
1773038
Damn, but Keynes so sexy. Building something like a road (and maintaining it) is for example is something that the private sector wouldn't take over without charging the common herd for it. The state would incur debts for that, what would be okay as this money goes into the private sector again, somehow transferred from savings via taxes into the circulation by creating added value. I think we can stop here, as generations before us tried to solve this.
For the second part I didn't mean this cost reduction to sit on a fixed value. It surely would differ for each individual, but at some point you could calculate with this help, much farther than you could in our world, where maybe some friends would be all the free help you get.
1773095
Eh. Statism, cronyism, communication, and capitalism are all intertwined in a nasty way in our history. As much a fan as I am of pure capitalism I think ponies have a biological bias toward more communalism (biologically- and socially-enforced) than humans do. But they'd be less likely to build bureaucracies and large states.
1773150
That is right. Still, there is Equestria as a sovereign state, also the Crystal Empire, with queens and a palace. Sombra once ruled as a tyrant, and in the same way I can see the royal sisters act. On the opposite ending, of course, spreading their influence to help the ponies the best they can. Also when it comes to wealth... one way or another. The ponies themselves may not urge for such a state to exist straight away, but as long as it's good it should be accepted. And whether such help comes from the state or the commune, the principle stays the same.
1773188
Taxation is theft, states can't be good. By NAP ;) Ahh, philosophy.
But this isn't that sort of argument. If anything, I expect something closer to the religious "tithe" where it was not a required (legally-enforced) payment but a socially pressured one. Give what you can, not what we tell you we must.
1773194
It is just too tempting to make some sort of good-weather tax in Equestria. But seriously, I had an argument some days ago how world peace would be a radical view. And I could imagine the sisters, especially Celestia, to be a bit more aggressive in their whole Friendship is Magic politic. This could be reduced to such a tithe, maybe some kind of voluntary public charge, and yet it would be above what ponies may would see as necessary.
Another aspect I think is important for their psychology and the self-reflection in a possible state is the interaction between earth ponies and pegasi, where the latter control the weather what allows the earth ponies to grow the food both need. What you described as a miracle -that they mingle like they do- may also could be an effect of evolution, like a mutated food chain or something. This also could actually make an administrative state (and some bureaucracy) important. And for me who knows weather as an overly complicated mechanism, that requires a comprehensive administration.
Suddenly, good weather also can be counted as a service, playing into wealth itself, but not for an individual, but a whole region. They may would, in those natural herds, calculate more directly in local groups than we do.
1773264
Well, it's a caste system. It's the fundamental biological duty of pegasi to control the weather. And unicorns to do...something (now that they no longer control the sun and moon). Obviously wealth flow comes into it somehow (Dash can clear the sky in ten second flat, how valuable is that?), but if you look at Winter Wrap Up for example, that's a definite communal effort. But all the teams seem to be relatively local, and don't just do weather duty. It wouldn't be hard to make a weather co-op that ponies buy into. And coordination between higher-up weather teams? Well, that's probably more egalitarian than hierarchical.
The economy system in Equestria is another thing that seems utterly inconsistent in the show. We see clear examples of capitalism in many episodes, but at the same time we see communal efforts like the winter wrap up in the eponymous episode, or the Equestria disaster proofing in It's About Time. On top of that values seem to vary wildly between episodes; two bits seem to be the standard amount of money exchanged for anything small, and gem values seem to be utterly chaotic.
In other words, as with technology, the only way I see to have a consistent economy in Equestria is to create an alternate universe and specify it's economy from the ground up. This blog post has some interesting ideas, though I can't really subscribe to many of them due to the differences in how I imagine cutie marks working.
1773264
In the real world we have some similar services. Police, firefighters, and a fair number of other services that benefit society as a whole and whose value to a single individuals can't be easily determined (or that the society decides is too important for individuals, choosing to divide the bill among the whole of society rather than risk individual persons lacking access to it).
1774576
For what it's worth, capitalism is actually the natural state of any economy (value for value). It even describes dynamics of relationships. However, there are many shades and variations and constructs between "I'll give you five bushels of apples for five bushels of pears," and "I'm buying a thousand bucks of Apple stock."
Equestria as I describe it would be more anarcho-cap, moderated by the communal drive and the herd-instinct dominance of the Royal Sisters.
That said, yeah, it's difficult to glean any relative or absolute values from the show's canon.
This leads to an interesting question about the economies of at least the griffons, zebras, and donkeys. after all, none of them have cutie marks. By your well stated arguments, I'd suppose factories and standardization would, if they were to occur, come from one of these species, and as their mass produced standardized items are traded to equestria, ponies trade back with incredibly high quality things that are a result of ponies with cutie marks doing what they need to do.
1774747
Almost certainly. Equestria would be like mid-to-late-17th-century Switzerland in how its economy worked (agriculture + super high quality artisans), avoiding actual industrialization entirely. You could also point to the US 'offshoring' labor jobs but since ponies would lack the financial infrastructure for that sort of thing it's unlikely they'd be involved in other species' businesses. They'd simply trade.
1774688
Not sure your apples for pears example applies that well to capitalism - I'm not an economist, but AFAIK capitalism requires some resource that is easily portable, can be stored for a long time, and has great liquidity. It doesn't need to actually be money, as far as I know, but I don't think pears or apples qualify.
Also, it would have been interesting if you touched on the existence of coined currency in your analysis. While bits seem to be made from precious metals, and thus to have intrinsic value, their existence and the way they are exchanged without extra checks seem to suggest there is some central organization responsible for coining them in standardized denominations.
BTW, there is an interesting example of favor based economy in the real world: online communities, where actually sending over small amounts of money isn't worth the expense and effort. Users that help others tend to have a far easier time asking for help in turn. FiMFiction itself seems to have some of this happening.
1774845
Nope, capitalism doesn't require money. It only requires a voluntary exchange of goods. Keynsians are the only one who try to impose more and it isn't a self-consistent theory.
Coins also don't need a central authority to mint them, despite what we see these days. Only a trusted one. Generally the cost of debasing small currency is higher than the value gained from doing so, and if there's only a single denomination, or a very few, the various minting centers would probably cooperate on standardizing and you wouldn't worry overmuch about counterfeiting.
This is a fundamental dynamic of communities in general, but today's neighborhoods aren't communities because they aren't interdependent. Online communities are all voluntary and culturally connected so they're a better model of how communities used to work pre-industrialization.
1774860
While I agree that getting coins minted and accepted locally doesn't need a central authority or organization - it has happened time and time again in the real world, after all - I do believe that getting them to be readily accepted across a large geographical region does require some degree of centralization. Bits are readily used by the population of Ponyville and Canterlot in the show, and as far as in the Crystal Empire in the first chapter book, with no other competing form of currency shown (apart from gems, but I don't think they count in this specific regard). So, who can get such a standard to be accepted over such a wide area?
Also, like you said yourself, debasing small currency tends to incur a cost. Who foots the bill?
The idea of decentralized minting centers does have merit, but it would, IMHO, require a central entity to make the standard accepted and handle the costs. That, or else some quite good explanation for how they managed to develop a widespread standard and how they finance themselves; I find the idea of a central entity far easier to believe.
1776493
See also, gold, salt.
If I wanted to speculate why canonically bits are universally accepted, it's because they represent a "bit" of some semi-rare/valuable material. Over a minimum of one thousand years of stability there's plenty of time to stabilize around standards, all it takes is communication.
I meant counterfeiting small currencies (or clipping/dusting/shaving, all these things) tends not to be worth it so it's not an issue. Minting it is a whole different kettle of wax.
Most standards have evolved from decentralized parties wanting to interoperate. It isn't until recently in history that it's been handed from the top down.
1773150
I think bureaucracy would be present in Equestria, since they need some way to coordinate their control over the environment. Pegasi control the weather across a nation. Although on the local level it's probably not much more than consulting with area farmers to decide on a good rain schedule, we've seen that weather is manufactured in cloud factories. We only hear about Cloudsdale, but if we follow your ideas about Equestria's decentralization, there's likely a pegasi cloud city with attached manufacturing facilities for each region of Equestria. I think they must at least plan out their climate to some degree.
Weather Control is likely one of the few things which falls under the Sister's control.
1784251
I'm sure they plan it out, but just like for example computer manufacturers plan out standards and even materials used, they can do it by just communicating with each other. I'm not sure what the Sisters would have to say about the weather outside of playing arbiter if there was really a resource scarcity issue that couldn't be solved.
Equestria appears to have a mostly free-market economy (from the evidence, considerably freer than that of modern America) moderated by a strong sense of communal responsibility (which they would probably see as Generosity and Kindness) in aiding those who suffer misfortune. The social mechanism ensuring such behavior from the rich and prominent would be fame versus infamy: a rich pony who helped her poor neighbors in time of need would gain status by so doing; a rich pony unwilling to help his poor neighbors in a crisis would be judged to be stingy and unkind, and other ponies would be less willing to deal with her when they had other alternatives.
Some system of taxation or tribute must exist in order to support the shown large governmental infrastructure, such as the Palace at Canterlot, associated administrative establishment, and the military, air-naval and naval establishments. However, taxes are probably fairly low by modern standards, probably somewhere around 1-10% depending on the current national situation (higher in times of major wars or other severe crises, lower in normal times). The Realm may also possess estates whose profits are used to help support governmental operations: that system was common in 18th century Europe and earlier.
There is almost certainly a financial system (banking, investing etc.) enabling large private projects such as building railroads, ships and major stores. This is probably not as well-developed as our own system, for various reasons including the lower level of technology (they have to keep all their records as written or at most typed copies, and inter-municipal communications are mostly slower and with much lower bandwidths than are possible today).
Though Equestria probably doesn't have a lot of Royal monopolies, one very obvious one would be the minting of coins. There would presumably be official mints and assay offices run by the mints where prospectors, miners and mining companies would go to have their precious metals converted into official currency. They would then either take the currency or bills of account (the origin of our paper money) signifying ownership of such currency; in the latter case they would probably deposit the bills of account in banks which would be able to invest the wealth to produce profits which could then be distributed to account-holders as interest.
Equestria is a world highly rich in precious metals and gems, to the point that I suspect there is some organic or geologic-analogue of organic process drawing up the precious metals and growing the gem crystals. There have been various explanations for this. The one I like is that mined ores and potential gem-bearing rocks are refined or grown in the fields by rock farmers who arrange them to exploit the magical currents from ley lines.
Most businesses are probably still family single-proprietorships or partnerships; they may or may not have developed the joint-stock corporation and its elaborations such as trusts and the like. Business appears to be fairly competitive, limited by the normal laws against force and fraud but not otherwise much regulated. There is less temptation to impose heavy regulations because Pony culture is less violent: there wouldn't have been rioting as severe as that which accompanied our own Industrial Revolution.
Speaking of which, the Industrial Revolution has clearly been a fairly recent thing, no more than a century or so old. My reason for believing this is that the rail network is as yet obviously incomplete: there are many rail connections that obviously should be built that haven't yet been constructed. We've never seen how employment works in a big company because the episodes focus on small-town shops and farms, but I'd guess that it's straight contract-wage hiring there. However there is probably a traditional system of apprentice-journeypony-mistress still surviving -- there was in our 19th century, after all.
1772555
It's definitely a society with shallower status hierarchies than our own; as Daetrin suggested in one of his earlier posts, status may be less about mere dominance and more about a mutual acknowledgement of leadership in return for assistance in crisis. It seems to work that way for Twilight Sparkle in Ponyville: were Equestria a Human aristocracy, that town would probably be her part of her demense. Instead, Twilight's treated almost like anypony else save when the horseflop hits the windmill, and when that happens everyone turns to her for leadership. (Admittedly, Twilight is of all the Princesses both the most recently acknowledged one and the one least interested in display; she's the only one who doesn't yet have an actual palace).
One thing to remember is that in an aristocratic society, there are two kinds of status: that deriving from birth/manners and that deriving from wealth/competence. Prince Blueblood has the first kind; Filthy Rich the second kind. One can have impoverished nobility or gentry; or wealthy commoners. What often happens in these cases in Human cultures is marital alliances.
1772724
Which shows the importance of personal connections: in that case Rarity would be more likely to accept Apple Bloom as an apprentice because AB is a friend and the sister of a good friend, than she would some random stranger. This makes a lot of sense in an apprenticeship system, though, because an apprentice normally has a very personal relationship with his master. It's more like having a new parent than merely getting a new job.
1772761
Stated in economic terms, the degree of self-knowledge and increased ease of other-knowledge resulting from cutie marks reduces the information costs to both employers and employees of correctly assessing talents. This means that almost everypony is working in a field for which he or she is well-suited, vastly increasing their productivity. as compared to a system in whcih they are merely working in fields at which they are merely adequately competent.
The whole cutie-mark system, which is of course impossible for humans, is one of the reasons why Equestria is such an attractive society.
1773332
I've tended to think that the unicorns do most of the manufacturing of goods, since their telekinesis gives them the fine motor skills to manipulate tools and materials. Fluttershy's "freaky knowledge of sewing" aside, Rarity is a prototypical example of what unicorns do for pony society.