Virtual Economics
- Article: Lehdonvirta, V. (2005) Virtual Economics: Applying Economics to the Study of Game Worlds. Proceedings of the 2005 Conference on Future Play (Future Play 2005), Lansing, Michigan, October 13-15.
URL = http://www.hiit.fi/~vlehdonv/documents/Lehdonvirta-2005-Virtual-Economics.pdf
Discussion
Yanis Varoufakis:
"Ten years ago, the metaverse was already up and running within gaming communities. Valve’s games had already spawned economies so large that Valve was both excited and spooked. Some digital assets that had previously been distributed for free (via the game’s drops) began to trade for tens of thousands of dollars on eBay, well before anyone had thought of NFTs.
What if the prices of these spontaneously lucrative items and activities were to crash? That was what kept the people at Valve awake at night. You can see this from the email with which I was approached: ‘I have been following your blog for a while… Here at my company we were discussing an issue of linking economies in two virtual environments (creating a shared currency), and wrestling with some of the thornier problems of balance of payments, when it occurred to me “this is Germany and Greece”, a thought that wouldn’t have occurred to me without having followed your blog’.
My reasons for getting involved were many. One was the prospect of studying an economy as an omniscient researcher: Since I would have access to the full data set in real time, I did not need statistics! Another was the lure of playing ‘god’; i.e. being able to do with these digital economies things that no economist can do in the ‘real’ world, e.g. alter rules, prices, and quantities to see what happens. Another objective was to forge empirically supported narratives that transcend the border separating the ‘real’ from the digital economies.
What did I learn back then? The key insight was that observed behaviour utterly demolished some key neoliberal fantasies: Barter does not give way to sound money, in the form of some digital gold simulacrum. (Nb. We established that various goods/items vie for dominance as numeraires, without ever dominating.) Selflessness is always present (evidenced by substantial doubly anonymous gifting). Social relations emerge (even in these faceless digital worlds) which then ‘infect’ prices and quantities in a manner that bears little connection to the neoliberal view of exchange values formed in a political and moral vacuum.
Today, a decade later, it is clear that gaming communities like the one I studied at Valve have been operating as fully-fledged metaverses (to use Zuckerberg’s term). Gamers were drawn to them by the game but, once ‘inside’, they stayed to live out a large part of their life, making friends, producing goods for sale, consuming entertainment, debating, etc. Zuckerberg’s ambition is to insert his billions of Facebook non-gamer users into a Steam-like digital social economy – complete with a top-down platform currency that he controls. How can I resist the parallelism with a digital fiefdom in which Zuckerberg dreams of being the techno-lord?"
(https://metacpc.org/en/crypto-blockchain/)