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#ActualBarefootPhilosopher

Posted 01 September 2013 - 01:14 AM

"Would automation (no matter how advanced) still make this a huge pain? I don't see this very often in games. Using gold seems to be the norm since it mimics our real life. However, in a virtual world we don't have all the real world issues like physics... So you would think that some level of automation in virtual trading would make this an attractive option as brings communities together and removes gold farmers and all the other issues related to currency."

 

I hope you don't think I'm being patronizing, but the idea that money's value has to be derived with reference to a commodity is a common misconception. Even the period where the Gold Standard held sway was very brief and gold comprised only a portion of money being employed in the world economy. Like today a great proportion of economic transactions were facilitated by credit contracts mediated by banks and other financial institutions. 

 

Political economy and video games are both particular interests of mine and your topic provides a great opportunity to contribute to a discussion that relates to both of them. I have a idiosyncratic perspective on political economy that isn't shared by the majority of orthodox economists, but many are beginning to swing in the same general direction due to recent developments in economic history scholarship.

 

The suggestions of the commentators of on this thread all appear to be premised on the basis of a barter economy. According to the revelations from the hithero mentioned scholarship, after two centuries of investigation by anthropologists and sociologists, no one has been able to find an society where its members conducted economic transactions based on barter.

 

"The problem, as Caroline Humphrey (an anthropology professor at Cambridge) observed, is that “no example of a barter economy, pure and simple, has ever been described, let alone the emergence from it of money; all available ethnography suggests that there never has been such a thing”.

http://www.duej.co.uk/wordpress/op-ed-economic-myth-no-1-before-money-people-bartered/

 

Its totally understandable why its so hard for people in the modern age to conceive of economic relations that differ to the impersonal, distanced ones that so pervasively define how we relate to one another today. 

 

The nature of money has always been and continues today derives from social relations between people and manifested in a complex array of cultural practices based upon trust, obligation, gifts, debts, credit, and even love. The majority of people prior to the modern age lived in communities where they know each other and could easily assess whether people were trustworthy or duplicitous, reliable or capricious, stingy or generous. It was only when societies reached a scale and level of complexity where former tight social bonds between people loosened that formalized economic relationships such as debt/credit contracts became necessary.

 

"All people, urban as well as rural, tend to lend each other things. They do this even when the benefits to such helpful behavior are not immediately apparent. In small communities, people lend their tools and their time to each other. While they may expect reciprocity in the future, they do not explicitly write a contract to formalize it. Such co-operation is a form of insurance. You help out when you can afford to do so, and you call upon your neighbors when you find yourself in need.

When people started living in large communities like Uruk, they began to live with strangers as well as friends. It may have been possible to know everyone in a large farming village, but not in a vast city such as Uruk. What were once implicit agreements among neighbors now became explicit, contractual agreements among strangers. When everyone had the same profession and skills, neighborly help could always be repaid in kind. But when people developed different professions it must have been difficult to maintain neighborly reciprocity. Urban societies still needed cooperation, but limits to familiarity with fellow inhabitants, and difficulty with quantifying the units of such cooperation meant that people required more formal ways to insure a return on their helpful efforts."

http://viking.som.yale.edu/will/finciv/chapter1.htm#steps

 

One of the core features of the nature of money is its use as a unit of measure. Units of measure is a definite magnitude of a physical quantity that is arbitrarily decided upon and standardized with the agreement of a community. Units of measure like the mina and shekel evolved out of counting systems used by Neolithic communities of the Near East and codified by the governments of Mesopotamia. They were both units to measure quantities of physical commodities like grain and livestock and abstract values used in accounting. In ancient times, intermediary materials like silver were only used when trading across vast distances needed to import goods needed by the Sumerian temples, because the materials weren't available in their own territories. 

 

What level of technology is there in your game? Is it a primitiive economy that relies on handcrafted products, one in which artisans employ technology like small scale foundries or spinning wheels to produce their goods, or is there a possibility for players to utilized powered machinery to mass produce them? I'm not a MMO player myself so I'm not aware whether that's even a consideration in MMOs crafting systems. Sorry but I can't help think about virtual economies in real world terms. For me a tradehouse, bourse, or exchange only makes sense to me in terms of an economy that allows large scale production and distribution. To me an economy that is premised on small scale, primitive production and distribution would be better served by relying solely on NPC or player managed market stalls or traveling merchants who the player can conduct trade with. Or even allow players who know each other to lend goods/commodities to each other whether with the expectation of return or not. It should be up to them.

 

If the transactions must be formalized why not invent your own currency without any reference to Gold? I mean its legally allowed in real life, why not in a game? Various individuals and organizations minted private token currencies in medieval-early modern Europe, which were used by people without access to the scarce commodity moneys issued by the State until very recent times. You could even implement a full fledged player managed finance system where they can run their own banks and issue credit and debt. The MUD Shattered World has successfully done so for going on 10 years and the developers have managed to curtail excessive monetary gyrations by acting as the central financial authority, just like the world's Central Banks.

 

"Money enters the economy by players loaning money to purchase items, usually property. These loans are typically secured against the property in question and the bank owner determines interest rate and risk; of course the banks themselves are also tradable commodities. An important aspect of the economy is that wizards participate as if they were players if they want to offer coins as a reward or buy items already existing in game (this also restricts unlimited item creation)".

http://www.shattered.org/economy_print.html

 

I've also heard that CCP's Eve Online features a fully functioning player run financial system. 

 

Hopefully I've managed to provide some valuable food for thought for anyone willing to read my voluminous post.


#1BarefootPhilosopher

Posted 01 September 2013 - 01:08 AM

"Would automation (no matter how advanced) still make this a huge pain? I don't see this very often in games. Using gold seems to be the norm since it mimics our real life. However, in a virtual world we don't have all the real world issues like physics... So you would think that some level of automation in virtual trading would make this an attractive option as brings communities together and removes gold farmers and all the other issues related to currency."

 

I hope you don't think I'm being patronizing, but the idea that money's value has to be derived with reference to a commodity is a common misconception. Even the period where the Gold Standard held sway was very brief and gold comprised only a portion of money being employed in the world economy. Like today a great proportion of economic transactions were facilitated by credit contracts mediated by banks and other financial institutions. 

 

Political economy and video games are both particular interests of mine and your topic provides a great opportunity to contribute to a discussion that relates to both of them. I have a idiosyncratic perspective on political economy that isn't shared by the majority of orthodox economists, but many are beginning to swing in the same general direction due to recent developments in economic history scholarship.

 

The suggestions of the commentators of on this thread all appear to be premised on the basis of a barter economy. According to the revelations from the hithero mentioned scholarship, after two centuries of investigation by anthropologists and sociologists, no one has been able to find an society where its members conducted economic transactions based on barter.

 

"The problem, as Caroline Humphrey (an anthropology professor at Cambridge) observed, is that “no example of a barter economy, pure and simple, has ever been described, let alone the emergence from it of money; all available ethnography suggests that there never has been such a thing”.

http://www.duej.co.uk/wordpress/op-ed-economic-myth-no-1-before-money-people-bartered/

 

Its totally understandable why its so hard for people in the modern age to conceive of economic relations that differ to the impersonal, abstracted ones that so pervasively define how we relate to one another today. 

 

The nature of money has always been and continues today derives from social relations between people and manifested in a complex array of cultural practices based upon trust, obligation, gifts, debts, credit, and even love. The majority of people prior to the modern age lived in communities where they know each other and could easily assess whether people were trustworthy or duplicitous, reliable or capricious, stingy or generous. It was only when societies reached a scale and level of complexity where former tight social bonds between people loosened that formalized economic relationships such as debt/credit contracts became necessary.

 

"All people, urban as well as rural, tend to lend each other things. They do this even when the benefits to such helpful behavior are not immediately apparent. In small communities, people lend their tools and their time to each other. While they may expect reciprocity in the future, they do not explicitly write a contract to formalize it. Such co-operation is a form of insurance. You help out when you can afford to do so, and you call upon your neighbors when you find yourself in need.

When people started living in large communities like Uruk, they began to live with strangers as well as friends. It may have been possible to know everyone in a large farming village, but not in a vast city such as Uruk. What were once implicit agreements among neighbors now became explicit, contractual agreements among strangers. When everyone had the same profession and skills, neighborly help could always be repaid in kind. But when people developed different professions it must have been difficult to maintain neighborly reciprocity. Urban societies still needed cooperation, but limits to familiarity with fellow inhabitants, and difficulty with quantifying the units of such cooperation meant that people required more formal ways to insure a return on their helpful efforts."

http://viking.som.yale.edu/will/finciv/chapter1.htm#steps

 

One of the core features of the nature of money is its use as a unit of measure. Units of measure is a definite magnitude of a physical quantity that is arbitrarily decided upon and standardized with the agreement of a community. Units of measure like the mina and shekel evolved out of counting systems used by Neolithic communities of the Near East and codified by the governments of Mesopotamia. They were both units to measure quantities of physical commodities like grain and livestock and abstract values used in accounting. In ancient times, intermediary materials like silver were only used when trading across vast distances needed to import goods needed by the Sumerian temples, because the materials weren't available in their own territories. 

 

What level of technology is there in your game? Is it a primitiive economy that relies on handcrafted products, one in which artisans employ technology like small scale foundries or spinning wheels to produce their goods, or is there a possibility for players to utilized powered machinery to mass them? I'm not a MMO player myself so I'm not aware whether that's even a consideration in MMOs crafting systems. Sorry but I can't help think about virtual economies in real world terms. For me a tradehouse, bourse, or exchange only makes sense to me in terms of an economy that allows large scale production and distribution. To me an economy that is premised on small scale, primitive production and distribution would be better served by relying solely on NPC or player managed market stalls or traveling merchants who the player can conduct trade with. Or even allow players who know each other to lend goods/commodities to each other whether with the expectation of return or not. It should be up to them. If the transactions must be formalized why not invent your own currency without any reference to Gold? I mean its legally allowed in real life, why not in a game? Various individuals and organizations minted private token currencies in Europe, which were used by people without access to the scarce commodity moneys issued by the State until very recent times. You could even implement a full fledged player managed finance system where they can run their own banks and issue credit and debt. The MUD Shattered World has successfully done so for going on 10 years and the developers have managed to curtail excessive monetary gyrations by acting as the central financial authority, just like the world's Central Banks.

 

"Money enters the economy by players loaning money to purchase items, usually property. These loans are typically secured against the property in question and the bank owner determines interest rate and risk; of course the banks themselves are also tradable commodities. An important aspect of the economy is that wizards participate as if they were players if they want to offer coins as a reward or buy items already existing in game (this also restricts unlimited item creation)".

http://www.shattered.org/economy_print.html

I've also heard that CCP's Eve Online features a fully functioning player run financial system. 

 

Hopefully I've managed to provide some valuable food for thought for anyone willing to read my voluminous post.


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