Dan Hunter points us to a work analyzing advanced economic systems in online game systems, by Bart Stewart, a regular commentator at Terra Nova. Terra Nova: Economic Stages of MMOGs. In his paper hosted on Terra Nova, Stewart compares the classic stages of development of non-virtual civilization and the corresponding technologies that make them possible. He then describes possible implementations in virtual worlds that would have comparable effects. In Stewart's analysis, he sees many virtual worlds riding somewhere in the Pre-Industrial stage of Mercantile (circa M.E. 1400) or Commercial Economy (circa ME 1600) and offers his thoughts on what is necessary to take them further.
The two biggest achievements for which he looks are enforceable contracts for future performance and the ability for players to create and add their own content to the virtual world.
(read more below the fold)
If we skip the not-fun grit of life in the Industrial Economy (circa ME 1800) we stand at the threshold of the Service Economy (circa ME 1900). "A Service economy depends on specialization, on there being someone willing and able to to do for you those things you can't or don't want to do for yourself," he writes.
That step, he says, awaits the development of enforceable contract rights: "The single most effective feature MMOGs could offer to enable the Service stage of economic activity is automatically enforced player contracts. Player contracts enforced by the game itself would allow players to engage in economic activity beyond the one-time personal deal available from prehistory days onward."
With a slight nod, Stewart passes over the possibility of contracts made and enforced by other than the hard coded mechanics of the virtual world: "letting players act as lawyers would be a cool feature in a MMOG. Personally, I see no way to allow this without opening up massive levels of 'legal' griefing, but that may be just a failure of vision on my part."
Stewart's view is the default position of virtually all those whose work I've seen in my shallow study of this field. However, I have also begun observing emerging experiments in consensual governance, contract formation, collateral security and enforcement with dispute resolution.
One of those is in the form of the player town of Neualtenburg, in Second Life, a democratic republic form of municipal government creating a simulation of a modern Bavarian city. The experiment, now a year old, includes equity ownership of virtual land rights, zoning and activity controls, digitally signed deeds incorporating restrictive covenants and municipal finance through the issuance of bonds. So far, the experiment has been succesfull enough to produce publicly disclosed financial statements and tenative plans to expand the player town by acquiring additional server space from the virtual world's operators, with additional bond issuance to interested investors.
The emergence of this phenomenon is perhaps the result of Second Life embracing what Stewart called "the most difficult challenges in multi-player game design: figuring out how to let players add content to the game." Second Life's experiment in doing that has involved its giving up a large part (but not all) of the control of the intellectual property in player creations, and allowing the creation of towns by players who bring new creative products and services such as those in Neualtenburg.
I suspect that as we explore further, we'll find additional instances emerging. Whether the experiment will succeed is yet to be seen, but in the meantime, it promises to be an interesting ride.
Posted by dougsimpson at December 3, 2005 02:03 PM