Intergalactic economies boom in virtual worlds

Some online multiplayer games now have economies as large as a small country – and prestigious economists to run them. Is the virtual world slowly merging with reality?

Giant corporations struggle for control of precious resources, then sell them cheap to price rivals out of the market. Powerful banks and wealthy individuals finance audacious construction projects in the hope of grand returns. Meanwhile, bandits constantly menace honest entrepreneurs.

Is this the colonial era? The Wild West, perhaps? No. It is Eve Online, a massively multiplayer online computer game in which 400,000 dedicated players build spaceships, form alliances and mine moons in pursuit of power and wealth.

But though the world is virtual, its economy is real enough. The value of its money fluctuates constantly, with a running exchange rate against real world currencies like the dollar and the pound. A single virtual spaceship can be worth up to £5,000.

Another online game, Second Life, has a GDP of almost £500 million – similar to that of a small country like Liberia. Virtual economies can suffer from inflation, deflation and even recession. In 2008, a financial panic causing a run on Second Life banks led to one bank losing over £700,000 in players’ money – much like the crash that led to the Great Depression of the 1930s.

To prevent such financial catastrophes, the developers of Eve Online have now hired a team of distinguished economists to run their virtual universe. They are not the only ones: another game developer recently poached a Greek academic from a prestigious university post to run its online economies.

Gaming message boards, meanwhile, are full of players’ tales of how their virtual experiences have boosted real world careers. One man gave up his job as CEO of an Eve Online corporation with over a thousand employees to concentrate on developing his real world business. ‘Once you have managed a virtual corporation that spans the entire universe,’ he said, ‘you can easily manage a real corporation that spans the Earth.’

The game of life

Many people are dismayed by this state of affairs. Millions of people holed up in their dark rooms, they say, alone but for a computer screen, obsessively accumulating goods that amount to nothing but a bunch of pixels. Perhaps if they took this skill and commitment out into the real world instead, they would find genuine success and fulfilment.

But gamers deny that success in a virtual world means failure in reality: exactly the opposite, they say. Online multiplayer games can teach valuable lessons not only about economics, but also about logic, persistence, cooperation and strategic thinking. A disproportionate number of Eve Online players are successful businessmen, they point out – and that is no coincidence.

You Decide

  1. Is playing computer games a waste of time?
  2. If one player in an online game steals another’s virtual property, should they be punished in the real world?

Activities

  1. Draw up a design for a computer game that teaches a life skill of your choice.
  2. Research the concept of inflation and write a brief explanation of how it might happen in a virtual economy.

Some People Say...

“One day, computer games will be as rich and fulfilling as reality.”

What do you think?

Q & A

Great! So I can play computer games all I want?
Not quite. Except for a talented and deeply obsessive few, games are still a hobby rather than an occupation. Other things, such as staying fit and working hard, are far more important.
But still, they’re not just a waste of time?
That depends on your definition of ‘wasting time’. It also depends on the game. The US Army increasingly use military simulations to train soldiers in combat, and are even developing games that will improve troops’ resilience and morale. Games likeEve Online require players to make sophisticated judgements using maths, logic and analytical thinking. But these claims can’t be made for all games, of course.

Word Watch

Massively multiplayer
Massively Multiplayer Online Role Playing Games, or MMORPGs, are complex games based on the internet and involving thousands of players – sometimes millions. Each player controls one or more ‘avatars’ with particular characteristics, which develop skills and abilities and interact.
Second Life
Unlike most MMORPGs, Second Life is set in a world very similar to our own. Players have jobs, houses and clothes. They buy and sell property, meet for social occasions and even attend educational lectures. In fact, the inventor of Second Life argues that it is ‘not a game, but a country’.
GDP
Gross Domestic Product is the standard measure of a country’s economic activity. Every time a transaction is made – be it paying for a chocolate bar or investing millions in a new business – this contributes to the annual GDP. In computer games goods are also exchanged, using money that has a value in the real world; so they can also be said to have a GDP.
Inflation
When prices and wages rise in an economy, the currency becomes less valuable. This is called ‘inflation’, and it can lead to catastrophe. The most famous example is in 1930s Germany, when people sometimes had to transport wheelbarrows full of money just to buy groceries.
Great Depression
In the 1920s America was experiencing an economic boom, with confident investors pouring money into the stock market. But in 1929 it became clear that the growth was unsustainable. Many panicked and withdrew huge amounts of money from the banks, causing a stock market crash that plunged the USA into its longest, deepest recession of the 20th Century.

PDF Download

Please click on "Print view" at the top of the page to see a print friendly version of the article.