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Reckless Extrapolation

February 6th, 2003 · No Comments · Uncategorized

From an article on Slate on the economics of online worlds, specifically EverQuest:

What may be most striking about Norrath is that the virtual market doesn’t require a powerful government. Norrathian economic life, conducted in PP or dollars, proceeds without laws stipulating the terms of exchanges, regulations dictating who can participate in various activities, or authorities enforcing contracts. There are no monetary or fiscal policies to manage demand and prices, and no safety net… Many of our own government’s current policies—progressive taxation, securities regulation, social insurance—are aimed at offsetting some form of inequality. If EverQuest is any guide, the liberal dream of genuine equality would usher in the conservative vision of truly limited government.

My initial response to this sentiment was “Are you on crack?

Many economic laws exist to support the idea of a contract between parties. If you look at EverQuest, or any online gaming world, you’ll notice there are no contracts. People transact business in immediate exchanges. Suckers who agree to be paid at a later date for goods find themselves longing for a “powerful government” to punish the weasel who skips out on their end of an agreement. There are no lines of credit in these online worlds, and almost no loans, except between close friends. Most economists would agree that the availability of credit is important in a healthy economy, but it is impossible to do with out laws to protect creditors.

Laws regarding commerce and markets may exist to deal with inequalities, but a lot of them deal with making people honor their obligations. In online worlds, either you find people do not engage in transactions involving trust, or the game world has tools engineered into the game to support the transactions.

The author of the slate article fails to realize that virtual worlds have laws built into them. That’s the strongest possible form of government. You can’t even be robbed in many of these game, because the game doesn’t allow it. That’s not limited government, that’s government you cannot escape from.

I’m not saying that’s a bad thing in the game, but it shows complete ignorance of how these games work to miss that they are essentially perfect dictatorships, where the dictator of the world decides the laws of nature. I played in an online world where players couldn’t even give items to each other during the early releases. A market economy didn’t develop until the designers of the games added features to support it.

So, please excuse me if I chuckle at anyone who holds up an online world as a shining example of a conservative economic vision realized. If anything, online worlds are examples of completely planned economies where all inputs and transactions can be controlled, and nothing more than that.

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