Week 3 Journal

Economists that believe that virtual worlds have an independent economy clearly do not understand how virtual worlds operate. It is true that markets within virtual economies are set based on a free trade, open-market initiative, therefore setting prices within the cyber world and between cyber and offline depending on fluctuating supply and demand. However, we cannot compare the market size for virtual worlds with real worlds based on currency exchange or mere volume of trade, because the standards that apply are completely different.

For instance, on World of Warcraft(WoW), users are allowed to make up to 10 avatars, some of which can even exist on a single server, although they cannot be logged in at simultaneously. This is just one example that shows that the population and total GDP generated in a game is incomparable to that of the real world. Game developers also conduct certain “events” giving out free money (such as the dancing podium or louging chairs in SL that earn you free money if you stand/sit on them for a long time). In real life, money is rarely earned by lounging around.

Without the people offline that are operating them, games are nothing. If no one logged into SL, it would be dead. That is why virtual worlds inevitably reflect interactivity with the offline world. Product placement ads in online games are already a widespread practice in Asia. Online shopping malls have begun to adopt virtual 3D malls,incorporating in a pseudo-game environment. Shoppers can “walk around” a boutique, click on an item on the display rack, and pay for it, through mobile phone or credit card. If someone buys something at this store, whose economy will it count for?

While some may argue that SL is more “fair” than the real world because anyone can script, people who don’t have the scripting ability but have the money, don’t have to spend hours and hours of their time [time, which is priceless] doing the scripting. Why do people in sweatshops in China play games around the clock for a few dollars a day to build a character on WoW? A person with $200 can buy that character and save two months of sleepless nights.

Thus said, perhaps we should question ourselves whether or not the majority of the people living in virtual worlds are only there for the sake of making the second lives of the minority others a better place. That sounds like real-life economics to me.

[Feedback from Gene]

Your last line, I think, captures my resonse to what you’re saying. Economies are fundamentally about scarcity and the need to trade among individuals who have access to different resources and/or value those resources differently. Your observation that there is no “independent” virtual economy is fair enough, but today there is no such thing as an “independent” economy anywhere, except maybe N.Korea (you would know more about that, I’m sure). The fact that a person can have multiple avatars just means that person can theoretically be more “productive,” right — not that there are really 10 different people? As for giving away free money, that happens all the time, and it has consequences for these virtual worlds, namely inflation. There isn’t a VW out there that doesn’t suffer from inflation and therefore needs some kind of cash sink to get rid of excess currency.

Time is definitely money — consider what that might tell you about the subject of this class. Where is all this time coming from for people to be participating in a non-monetary creative economy?

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