February 21, 2005

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Aeons ago, Clive Thompson wrote up this humdinger about the economies of virtual worlds — MMORPGs and the like. Because people have begun assigning real-world monetary value to in-game items, the article explained, it’s possible to study these games as if they were real economies.

So we can, for example, calculate the Gross National Product of Everquest, as Thompson’s economist Edward Castronova decides to do — it’s $2,266 U.S. per capita. (“It was the 77th-richest country in the world,” Thompson writes. “And it didn’t even exist.”)

And of course, we can actually profit from our in-game activities, Thompson reports, enough to pull in a six-figure salary or even power a whole company, with 100 full-time staff members.

The 6,200-word article is somehow chock full of fascinating little revelations. My favorite moment is when Thompson points out that Everquest began as a perfect meritocracy, “the world’s first truly egalitarian polity,” making it the economist’s ideal social laboratory. That realization leads to this:

Ultimately, Castronova says, EverQuest supports one of Adam Smith’s main points, which is that people actually prefer unequal outcomes. In fact, EverQuest eerily mirrors the state of modern free-market societies: only a small minority of players attain Level 65 power and own castles; most remain quite poor. When game companies offer socialist alternatives, players reject them. “They’ve tried to make games where you can’t amass more property than someone else,” says Castronova, “but everybody hated it. It seems that we definitely do not want everybody to have the same stuff all the time; people find it boring.” It is a result that would warm the heart of a conservative.

Yet progressives, too, have been drawn to Castronova’s research. Robert Shapiro, formerly an undersecretary of commerce for Bill Clinton, views the economist’s findings as nothing less than a liberal call-to-arms. EverQuest players tolerate the massive split between the virtual rich and the poor, Shapiro tells me, only because they know that this is a level playing field. If you work hard enough, you’ll eventually grow wealthy. In Shapiro’s view, Castronova’s research proves that the only way to create a truly free market is to support programs that give everyone a fair chance at success, such as good education and health care. “This may provide the most important lesson of all from the EverQuest experiment,” he wrote in an essay. “Real equality can obviate much of a democratic government’s intervention in a modern economy. . . . If EverQuest is any guide, the liberal dream of genuine equality would usher in the conservative vision of truly limited government.” In other words, maybe the best way to save the real world is to make it more like EverQuest.

In an article in Legal Affairs, Dan Hunter and F. Gregory Lastowka argue that Shapiro takes the business too far. After all, they say, in the real world, Congress can’t just code away poverty.

And they conclude that the best way to save EverQuest is to make it more like the real world:

You could make a virtual world without the possibility of crime