Okay, so I've been doing some thinking about economics and D&D. Basically, the static prices don't really make sense, nor is medieval era technology really logical given the abilities of even low level mages, clerics, and druids. Also, the currency should be hyperinflated by adventurers coming back with huge amounts of gold. So I came up with the following solution; the world is undergoing the magical equivalent of the industrial revolution.
People are moving out of the fields and into the cities as farming experiences huge productivity boosts due to druidic and arcane magic. A greater percentage of the population is learning magic than ever before, especially those people displaced by more efficient farming. Teleportation circles are being built in all of the major cities, and long range communication is getting easier and cheaper. Standards of living are rising. An increased focus on magical items spurs research and development of new and improved equipment for both mundane and combat oriented uses.
My campaign right now is still at level 1, and the setting so far is relatively low magic. Whenever the players level up, a few years will pass, and there will be small changes to the world to show that things haven't been standing still. Basically, when they're level 1, the shopkeeper will say "A level 3 sword? Amazing!" but when they're level 8 the shopkeeper will say "A level 3 sword? So what?". Mechanically, nothing will change; all prices will remain the same, because the deflationary force (increased production) will be counterbalanced by the inflationary force (adventurers bringing in lots of gold). At the end of the campaign, the world will be a wild place of magitek; near ubiquitous planar transport, aethermills churning out enchanted equipment, floating cities, demon fueled investment schemes, extradimensional apartments, and fireballs of mass destruction.
I need to talk with my players about whether this is something that they would really be interested in, but I think it could be kind of fun - a campaign that spans the whole of human technological development. This way I could also have most of the adventures dealing with things that are new and exciting, unheard of in the campaign world before the players set eyes on it. I also think it would be a little more beleivable in terms of explaining the world. Thoughts?
My only concern about this is that it might draw the focus too far from your players. They should rightfully be center stage and I'm sensing a loss in continuity between adventures with so much time and changes happening.
However that issue aside you could really have a lot of fun with this and high light a lot of the dramas of the industrial revolution. Would the players help the radical Magitek Workers Unions?
D&D 4E pays almost zero attention to "real" effects of economy (the exponential moneys), ecology (encounter stat blocks designed around the PCs), or in fact almost any ...onomy or ...ology 
That's not usually the point. However, I like the campaign setting idea, and how it could be used to work challenge levels and balanced finance without the PCs needing to move location. The PCs won't need to set off for new planes of existence to find challenges, when their own world changes so much around them!
My only concern about this is that it might draw the focus too far from your players. They should rightfully be center stage and I'm sensing a loss in continuity between adventures with so much time and changes happening.
I agree with the others. This sounds interesting, but I would have the same concern mentioned above. I'm asuming you want the actions of your characters to help drive how the world changes - but they basically have 10 encoutners to set something in motion that might take place in the next couple of years - or that time flys past them and they miss out on the opportunity.
Similarly, even with magic to aid them, it would seem rushed to "span the whole of human technological advancement" in just 60 years. There are so many exciting ideas that could be played out in the midsts of it, but the characters will be on autopilot for about 59 years and 11 months of that time.
I think it would be tough for both the DM and the players to make it feel like their actions actually play any role at all other than to clear the dungeon so they can hit the next fast-forward montage.
Right now I'm sort of planning to have the players do sort of a Forest Gump through my (compressed) version of the industrial revolution. The first three levels will focus on a group of radical druids who wish to stop people from consuming meat; the large part of the group wants to do this by force, while a dissenting portion wishes to do it peacefully. The group has a few encounters with them, and then either convinces them to be peaceful or kills the violent ones. The remaining druids then go on to wage a campaign of peace, which basically means helping farmers increase crop production and teaching them druidic magic, which leads to the Agricultural Revolution (and the end of Act 1).
Act 2 would probably focus on the Scientific Revolution, wherein the party is working to help a group of wizards establish an academy. This is complicated by the fact that one of their own is a necromancer, whose abombinations are besmirching their name and causing the crown to withhold funds. They don't know who the necromancer among them is, and the players have to find out - in the midst of attacks by undeads.
So the players influence every major event in the realm's technological progress. I'm also planning on the changes being subtle; after their encounter with the druids, the players might notice a few more people in the cities, and a lot of new construction taking place within the castle walls and outside them. I still need to talk to my players about whether this is something they want; ideally, the theme isn't really noticable until there's a good contrast between, say, the first act and the fourth.
One of the things I think that it might be important to mention is that although the PC's are gaining power and becoming amazingly good with magic doesn't mean everyone is. Sure, the discoveries of the PC's might push the whole of Magic and technology forward but how long will it take for others to duplicate the effects?
I imagine a geometric curve that shows how in common magical effects are.
The PCs are level 1, which puts them just ahead of the commoners. Most people are more powerful than the PCs, but the most powerful people in the world can still only manage level 10 effects (Raise Dead, Linked Portal, Wizard's Sight are all top of the line).
When the PCs are level 5, the average commoner will have access to level 3 effects (Comprehend Language, Make Whole, Tenser's Floating Disk), while the most powerful people in the realm will have access to level 12 effects (Passwall, Shadow Walk).
By the time they're level 20, the PCs will number among the most powerful people in the world, while the commoners won't think it terribly unusual to be using portals from one major city to the next (equivalent to a plane ride today).
This progression is a little bit slower than normal in a comparative sense, but I don't really think that it makes that much of a difference to the player's sense of achievement, especially since I plan to shore it up with social movement and rewards like land, titles, and businesses in addition to magical arms and armor.
I like the idea, even if the execution may be tough. I think the main thing I like about it, is that it does show growth but also keeps the PCs as powerful beings (within their circles anyway).
I like it... Good ideas for keeping your characters central to the magitek growth.
I think it was over 20 years ago that my friends and I sat around for a few days doing a magic/tech think tank. We discussed how, in a world with D&D magic, it would be the technology and how it would grow and become commonplace, beginning with the simpler effects. We really concentrated on how everyday life would be for a society where magic started to become used for conveniences, luxuries and even industry.
We found it pretty easy and very fun to extrapolate and predict the effects that magic would have on society, but we ran into a stumbling block when we started down the road of where is the magic really coming from. In the end we came up with several theories and solutions which worked, making sure to keep things compatable with the D&D magic system.
We had to sit down and really geek out on visualizing a very real world, draw lines of flow and development, structure and society. It was quite fun, and in the end we came up with fantasy campaign "snapshots of magical development" that we still use today. I tend to keep my worlds in the earlier stages, where common magic is still out of the hands of common people. Still, my cities are lit with continual light lamposts and non-magical diseases just don't exist anymore.
There is still something I puzzle over though...
A world where religion is not a matter of belief but of choice - ah thats where things become really difficult to predict...