When we were kids, a popular past time was to pit famous sportsmen against each other and conjecture who would possibly be superior. For e.g. how would Tendulkar fare if he played baseball – would his cricket skills be a strength or a liability? In fact just the other day I saw a serious discussion on ESPN where the commentators argued for over half an hours as to who would win if Ali ever fought Tyson when both were in their prime. Of course this is a completely hypothetical fight and could never take place but is still valuable because it reveals the Ali’s and Tyson’s strengths and weaknesses.

But when libertarians enter such a conversation, they say Ali and Tyson are fine but the real questions is what would happen if Superman fought Tyson. You are a little puzzled because you know that Superman is a fictional character – he never existed and never will – you point that out to libertarians and their response is – aah that’s a different issue the real issue is who is superior – we’ll worry about the details of reality later – after all you are doing the same thing creating a hypothetical fight between Ali and Tyson who will never fight each other. You then point out that Ali and Tyson both existed and it is an interesting exercise to see who would have won. The libertarian response is – screw Ali and Tyson they’re both weaklings compared to superman. Why he could take them both on with his little finger.

The argument then degenerates into discussion of how Superman’s laser bolts and superhuman strength would crush Ali and Tyson. How Superman could fly circles around them (literally) and would always win the fight. You are at this point (remember libertarians continue to argue that this is an academic discussion) forced to concede that Superman would indeed win a fight against Tyson. Libertarians then crow with delight and say see we told you so – our Superman could kick Tysons ass – why are you still arguing for Tyson to which my response is “emm…because Tyson is real and Superman is a figment of your imagination.”

In conclusion there is no way in which I can win an argument against a libertarian – because he has a hundred examples to show the system I support is weak and riddled with flaws and I can never show that his system is the same – mainly because it never exists so there is no way to say if it is better or worse. In fact it is always easier for libertarians to ‘prove’ their point because their system has never existed and in all likelihood never will.

However, as an academic exercise we can continue arguing whether Superman’s lasers are more powerful that Tyson’s left hook (and I’ll tell you right now that it is).

There is one potential area in which libertarians can ‘prove’ their point (though not in the real world unfortunately but in cyberspace) and I’ll write a post about that later.

One field that I have been following closely is the world of MMORPGs (Massively Multiplayer Online Role Playing Games) especialy ones like Ultima Online (UO) which have robust well established economies.

When UO started up EA decided that a complete free market economy was the best idea. Players would produce good and be free to sell them to the highest bidder (some transactions took place within UO while others took place in the real world for e.g my boss at work spent US$50 for a virtual sword which he bought on ebay which he could use in the game). Things seemed to go well for a while - the market was flourishing but slowlt but surely things began to fall apart.

As more and more new players joined the UO economy, they found there was no way for them to compete with the older players. The older players had already hogged all the best spots and put up massive castles and charged outrageous rents. In a bold move, the creators actully created a couple of new continents (something which is easy in cyberspace) to accomodate the new players - but this was not a long term solution.

A long term solution was eventually found to keep the economy stable - guess what it was - nope it was not deregulation and libertarianism it was in fact taxation and subsidies for the poorer players.

The rich players now had to pay a tax for their wealth and this was passed on to the poorer players in the form of a subsidy (to get them started certain items would be cheaper for them and as they gre richer the subsidies became less and less and eventually they had to start paying taxes).

There is still a lot of inequality but the solution seems mutually acceptable to rich and poor players alike. The rich don’t mind paying the taxes now because in the long run it actually helps them get richer because it creaes a market for their goods - its no use if you’re the richest man on the block and everybody else is too poor to buy anything from you. the poor love it because it gives them a chance to at least get a foothold in the economy.

A classic example - the same models are also true for the Sony game Everquest which also went through a similar economic crisis - and htey too started with the model that the unconstrained free market was the best. But given enough time and population, they found that some sort of controls became mandatory.

If libertarians want to at least begin to experiment with their ideas I suggest they set up their own MMPRPG and try to run it on libertarian principles - my guess is that it won’t make it past the first month without crashing and burning (much like the Libertarian Party in the US which is in eminent danger of going bankrupt and were recently evicted from their party HQ - and they want to run the country - they can’t even manage their own party and pay their bills on time).

We all know that Libertarians can’t put forward their policies in the real world - but at least give it a shot in the virtual world - but I think the EQ and UO expereinces show that its not even going to work there - as I said in earlier posts - a fine personal philosophy but diastrous when applied to more than a few individuals.

“In many ways, the in-game economy is similar to a real world economy – goods and services are traded to mutual advantage and are mediated in currency or barter. In other ways, the economy is very alien; for example, some commodity prices are determined by a robotic simulation of business profit motivation. These quirky rules will be described in Chapters 3 to ensure that the reader appreciates the entire economic environment of the game.

The economy is highly planned by the game designers; this includes everything from the possible items which can be manufactuered to the rules which govern supply and demand. However, the economy did not behave as expected in many ways. It is these failures and the resulting redesigns which are most interesting and which we will examine in detail in Chapter 5.”

See that? That’s four characters attacking a dragon for cash. Very much like how a real economy functions. There non player characters too:

Human NPCs serve an extremely important role within the economy of UO because they are permanent. That is, real players disconnect to go to bed or (heaven forbid) to go to work and are therefore not online the majority of the time. NPCs provide stability – an NPC shopkeeper will tend his store 24/7 and thus ensure players of a constant source of critical goods and services.

No, a virtual economy of this kind is definitely not comparable to real world economies. Instead, I suggest you evaluate ideas based on the extent to which they are libertarian in spirit.See if a more libertarian idea works better than a less libertarian one.

Yup anybody can kick Superman’s (Libertarianisms) ass and they do all the time in the real world - only in the comic book world (on Yazad’s blog) does superman appear to be doing well (manily because eerybody here believe’s he’s real). Why Nader’s Leftist Green nutcases get more votes than you guys ever did.

The game host and the participant have different goals. The host wants a high rate of immigration (new customers); when the game failed to attract and absorb a satisfactory number of immigrants, the host saw this as failure. But evidently the first players were satisfied, if they continued to pay to maintain their position in the game.

Libertarians do not want to “run the country”, though some seek election because it may be the only way to protect the country from being run.

Nor does the LP speak for all of us. Many libertarians always thought the LP was a bad idea, and many more (including me) dropped out circa 1996 because of corruption in the central office.

. . . fun and realism are frequently at odds. The game designer’s difficult job is to balance the two.

Where realism is sometimes actively avoided, we should not expect reality to be accurately modelled.

In the real world, most people advance in the beginning of their lives through relatively unskilled work. The institutions which provide this kind of work are highly developed in the real world and almost non-existent in UO.

So it’s no wonder that newcomers have a hard time.

I wonder why the world is not designed to grow continuously (either at the edges or by inflation) in proportion to population.

A synthetic economy is an economy existing in a virtual persistent world on the Internet, such as a MUD or massively multiplayer role-playing game. The largest synthetic economies are currently found in massively multiplayer online roleplaying games (MMORPGs), such as EverQuest, Ultima Online, Dark Age of Camelot, and Lineage. Synthetic economies also exist in life simulation games such as The Sims Online. An economy can be said to exist in these virtual worlds whenever the following five conditions are met:

Persistence – The software maintains a record of the state of the world, regardless of whether or not anyone is using it.
Scarcity – Users must expend time, money, or some other resource to obtain some of the desirable goods and services in the synthetic world.
Specialization – Users must be able to obtain at least some of the goods and services they desire from other users.
Trade – Users must be able to transfer goods and services to and from other users.
Property Rights – The world must record that a given good or service belongs to a certain user, and the code must allow that user to dispose of the good or service according to whim.
These conditions embed users in an environment characterized by choice under scarcity, specialization of skills and production, and gains from trade with other users. Choice, scarcity, specialization, and gains from trade are at the core of the class of problems studied by contemporary economics.

Synthetic economies perform useful resource-allocation and entertainment roles within MUDs. They also interact with the Earth economy. US dollar markets for synthetic-economy goods, currency, and services may be observed at online auction sites such as eBay (search “Ultima Online”, or “DAoC” for Dark Age of Camelot) and other auction sites. Some game developers claim that such auctioning of virtual items for real-world money is in violation of the end user’s license, for example eBay has dropped EverQuest auctions at Sony Online Entertainment’s request.

According to standard conceptions of economic value (see the subjective theory of value), the goods and services of synthetic economies are endowed with real value. The value of a good is determined by its users, and is measured by their willingness to give up resources to obtain it. MUD users are willing to devote both time and Earth currency to obtaining synthetic goods, making these digital assets as real as any assets on Earth.

The largest synthetic economy is Lineage based in South Korea, claiming to have four millions users. The location of its online market, if it exists, is unknown.

(Yazad: URL converted into a link)

Take a look at the real world. By any objective parameter, the most succesful economy, the United States is also governed by the most libertarian constitution. That counts for a lot more in my extremely realistic viewpoint than what can be “proved” or not “proved” in simulated ones.