An interview with

Edward Castronova

author of Synthetic Worlds: The Business and Culture of Online Games

Question: You’re an economist. Why are you writing about virtual worlds? Economics is a real-world concern, isn’t it?

Edward Castronova: In virtual worlds—or synthetic worlds, “virtual” having lost much of its meaning—only the icons around which human interactions flow are nonreal. The interactions themselves are as real as any we have outside synthetic worlds. When six soldiers take out a machine-gun nest at Fort Bragg, the machine gun is real and the teamwork is real. When the same six soldiers take out a dragon in a synthetic world, the dragon is not real but the teamwork is. In synthetic worlds, the things we trade may be fantastic, but the process and value of the trade is real.

If supply and demand work the same way in ancient Athens, modern Manhattan, and fifteenth-century China—and they do—then they operate the same way in any fantastic environment we could create. From the standpoint of a fifteenth-century Chinese fisherman, modern-day Manhattan is equivalent to FutureLand—a world of miracles. Yet both environments have economies, and they both operate according to the same principles.

Go ahead and accept the premise of the question, that economics is a real-world concern. That’s the easy part. The hard part is realizing that the things going on inside these video games are also the real world. In terms of human interactions, these places are real.

Question: The stereotypical user of massively multiplayer online role-playing games (MMORPGs) like EverQuest, Ultima Online, Lineage, and World of Warcraft is an adolescent male with pallid skin from spending all his free time in front of a computer screen, who lacks social skills and should not be allowed to handle weapons. How far from reality is that?

Castronova: I’ll use the same rhetorical strategy again: I invite the reader to go ahead and accept the easy premises; wait until you see the strange conclusions that follow. The easy premise: because these synthetic world environments so thoroughly immerse people, let’s agree for the sake of argument that everybody in them is a boy who spends all his time in front of a computer. And no, it does not give him a tan (or much risk of melanoma, let’s not forget).

What about the social skills and the weapons? Fact: these are online massively multiplayer games. Implication: playtime is social. These are environments with thousands of users. They’re designed so that users must get together on joint projects, in groups that range from brief pairings all the way to miniarmies of eighty to two hundred people that retain cohesion for hours at a time. If you want to succeed in this environment, you’d better be a good team player. Social misfits need not apply. If you are a social misfit, in fact, I would recommend that you start playing these games; unlike contemporary society (cf. Bowling Alone), doing things in groups is encouraged and frequent rather than discouraged and increasingly rare. You could learn how to thrive socially much more quickly in synthetic worlds than the real world. So, no: videogamers are not the local nerds any more.

As for weapons—if I am handing out the right to carry a concealed weapon, I think I’d rather rely on a social characteristic—like managing a two-hundred-person organization for a few years, as most “guild leaders” in these places do—than something arbitrary like “has a driver’s license from Texas and has not killed anybody yet (that we know of).”

Question: How fast is usage of these games growing? Do you think that will continue?

Castronova: Growth rates are exponential; the number of new games is doubling every eighteen months. For years I had been expecting a backlash and collapse, thinking that the market would eventually be tapped out on the demand side. I mean, really—how many people want to spend all their time in a fantasy environment? Yet demand growth has persisted through a period where it seemed almost certain that there would be too much supply, too many new games, and too rapid capacity growth. Instead there have been blockbuster successes, like World of Warcraft, which entered a completely saturated market in November 2004 and built a base of four million subscribers, apparently many of them new to the genre.

Question: MMORPGs have currencies and economies: virtual goods are manufactured, virtual services are supplied, and virtual money changes hands. How far does the virtual economy of an online game resemble a real economy? Where do the two blur or intersect?

Castronova: As process, there is no distinction that I can see between “virtual” economics and real economics. Things are scarce. Production technologies allow scarce things to be made into consumer goods. Consumer goods get sold and used. What’s weird is that (a) the things being made are a little strange at first—magic wands instead of diamond rings, gold pieces instead of Yen—and then (b) the fact that everything is a construct of some designer, an aspect that has policy implications.

As for blurring or intersecting, again there’s no big surprise from the standpoint of standard economics. Given specialization of inventories and needs, trade follows. Some people have more synthetic world items than they want. Others have fewer than they want. Of course the two economies blur. Why wouldn’t they? If laws, barbed wire, guard dogs, and prison terms don’t stop traders from trading, why would they even pause over some alleged line between “real” and “virtual”? That line gets asserted over and over, but it’s a misleading step. It gets ignored by everyone who actually uses cyberspace on a daily basis. That includes YOU, dear reader—are you actively keeping conscious right now the fact that you’re reading a Web site and not a magazine? Of course not. The fact that it’s a Web site changes some things, sure, but not that much. You’re still reading something my editor asked me to write. And the relationship between him, and me, and you, is what’s really driving your experience right now. The “virtual” isn’t playing much of a role; it’s the relationships that matter.

Question: What are some more of the real-world consequences of MMORPGs?

Castronova: Right now, these are minimal. The phenomenon is too small as of yet. But for those involved, social relations are changing. There are some people who are losing friendships (even romantic pairings) on the outside and changing them in for better ones (in their view, anyway) inside. In Asia, we are starting to see some court cases involving theft of synthetic goods. Synthetic world economies are beginning to alter some business plans of established firms; for example, the business model of Microsoft’s X-Box 360 involves sales of virtual items. The Korean government has established public policy positions with respect to the rights of players. And of course, video games in general are starting to pop up in the agendas of U.S. politicians.

Question: Do the economies or governance of MMORPGs yield any lessons that could be applied to the real world? Does the EverQuest economy do some things better than our own?

Castronova: A game like EverQuest prompts a policy economist to reflect on the following question: What would our economy look like if it was designed to be—not efficient or rapidly growing or equal, necessarily, but just plain fun? In fact, why isn’t economic policy design aimed at producing fun? I can’t seem to get my mind away from these questions, and yet I can’t resolve them, either, because the implications are hard to handle.

Question: You focus on MMORPGs throughout your book, but clearly you are also interested in synthetic worlds that are quite different from EverQuest and games like it. In the book you say: “I do not know if we will all live in synthetic reality, but we certainly will find it becoming a much more important part of daily life.” How do you see synthetic worlds being used? What possibilities interest you?

Castronova: To “live in” synthetic reality would be to have a pod existence, as in the Matrix, where we would get all of our sensory input from some kind of simulation. That’s an extreme vision; it has to assume we will no longer feel the need to touch each other. I guess it is kind of scary to think that they may indeed come up with sensory devices that actually lead us all to such a state of affairs, and voluntarily at that. But who knows?

Let’s take the technology as is—a screen, a character in a persistent environment, you move your body to move the virtual body and then see and hear (but not taste or feel or smell) what happens. That application, if extended widely using the technology we know about now, would probably be used instantly by those born after 1990 to communicate with one another, all the time. Where teenagers now keep twenty-seven instant messaging conversations going at once, in twenty years we will be seeing everyone aged forty and below constantly jumping in and out of synthetic environments, running multiple characters all over the place, and basically living a half-real, half-virtual existence all the time. It will all seem completely normal, of course. And maybe the interfaces will get so simple that you just press a couple of buttons, talk, and wave your hands around. In that case, I could see my mother-in-law (an eighty-year-year-old Sicilian grandma) getting together every day with her large (to say the least) extended family in a virtual living room.

Finally, I can see a forest of unruly and unstoppable little worlds that breed in peer-to-peer environments, hundreds if not thousands of alternative spaces, each one with a slightly different take on what “fantasy” means, all of them collectively creating a powerful condemnation of the social and economic and political and relational assumptions of the “real” world. Because sometimes when people go off into cyberspace, the problem is with them, but other times it is with us, with the games we have made out here, games that some people, perhaps many, perceive as boring or stupid or unfair. When people exit a system, there’s been some kind of a problem. How do we know that those who are about to leave us, quite possibly en masse, are the source of the problem? Will game designers figure out the right way to build a society before the U.S. government does? I don’t know, but it seems to me that this technology offers a powerful Petri dish for testing out different kinds of societies. What if somebody out there develops a magic formula, a better place for humans to be? Why would anyone stay here?

Question: You’ve proposed the creation of an academic center for the study of synthetic worlds. What would such a center try to accomplish?

Castronova: It would try to develop some sense of the policy options in this space, try to parse out the opportunities and the risks. It would develop educational applications. It would develop the following research idea: If we built a series of comparable synthetic worlds, couldn’t we unleash slightly different policies in each one? It seems to me that this would be an unprecedented opportunity to study human behavior at the social level. No one has ever been able to study such things before, not in this way, not using the tried-and-true experimental methods of the natural sciences. Imagine how a few well-designed experiments about socialism in 1870 might have affected world history. We have a lot of pressing questions about societal behavior right now—human population response to disease, for one example; community response to natural disaster, for another. These things could be directly studied in synthetic worlds; without them, all we have is pure theory, and historical data (in which policy causality is basically impossible to untangle). The idea would cost $20 million to $50 million, but it would also dramatically improve business as usual in a large chunk of the university.

Edward Castronova
Synthetic Worlds: The Business and Culture of Online Games
©2005, 344 pages, 1 line drawing, 4 tables
Cloth $29.00 ISBN: 978-0-226-09626-1
Paper $18.00 ISBN: 978-0-226-09627-8

For information on purchasing the book—from bookstores or here online—please go to the webpage for Synthetic Worlds.

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