Sponsored By
Guillaume Thoreau, Blogger

July 11, 2014

10 Min Read

In the so-called real economy, conventional wisdom teaches that poverty is the regrettable consequence of either economic circumstances — the economy endures a structural shortage of money, or is confronted with shortage of jobs — or moral deficiency — people’s morality or cultural biases prevent them from accruing wealth. Racism and other prejudices are looming in the corner, ready to show up in the guise of Economics.

In a free-to-play game economy, disdained by many as an aggressive way to extort money from players, no game publisher would consider letting their people starve off and move away to greener pastures as the sensible thing to do. Drying up the flow of currency into the system, or denying constant and ever-renewed opportunities for players to take an active role in the game economy would be considered as particularly ill-advised.

Of course the analogy has some limitations. First, a game economy piggybacks on the real economy to transfer actual dollars from players to publishers. Publishers need to keep the game economy fluid, and players affluent and happy enough so that the transfer of real dollars can actually occur at a sustainable rate.

Secondly, in a game economy, impoverished players can always convert real dollars into in-game currency if they want to keep participating. In the real economy, it may seem impossible for impoverished members of the society to convert other assets into currency, simply because they don’t have any other assets, or because the assets and skills they own are not monetizable in the current state of affairs.

Notwithstanding these two limitations, let’s talk more about two interesting theories for solving the current economic woes, and compare them with how they are already successfully implemented in freemium games:Complementary Currencies and Universal Basic income (UBI)

Complementary currencies create firewalls between distinct sectors of an economy so that the difficulties of one don’t impact on the others.

The Euro crisis illustrates this quite well. Put very simplistically, Greece is currently not able to repay its debt because it doesn’t generate enough Euros to do so. Thanks to the strict rules of the Eurozone, the Greek government is not allowed to inject more Euros into its economy to enable consumption of basic products and services (of which there is no shortage). So, on one hand, you have a shortage of currency, and on the other hand you have an abundant supply of goods and services that cannot be paid for by a large fringe of the population. Not because they have nothing to trade in absolute terms, but because the only currency they are allowed to use in the exchange of is out of reach.

Complementary currencies are designed to prevent that kind of situation where poverty is created ex nihilo from artificial shortage of an abstraction: Money. If the EU allowed the Greeks to pay for all basic purchases of food, personal care and housing with a complementary currency (not convertible to Euros) it would bring back to life an economy that exists beyond the Euro, and that has been asphyxiated by its artificial depletion. This is true because there is an actual abundance of food needing to be eaten. Hair needing to be cut. Books needing to be read. Elderly people needing to be taken care of. Houses needing to be inhabited, and so on… All of these trade opportunities are real, regardless of the availability or not of Euros. But as I tried to show, their realization is artificially inhibited by a local shortage of Euros.

Game publishers learned these lessons a long time ago through experience: they created complementary currencies for each economic “sector” in their games. Each currency is used to trade different kinds of goods, services and assets. They carefully monitor inflation and create “sinks” so that money always irrigates the system evenly.

Here is a common pattern for complementary currency distribution in games:

  1.  Silver coins buy perishable goods, like temporary bonuses and power-ups. Player earns them through labor — I mean, game play — and they buy improved and more rewarding experiences. Silver coins are easy to come by, and quick to spend. Silver coins can’t be converted into another currency. Silver coins are also designed not to be hoarded: they must circulate as quickly as possible to prevent players using them as status symbols.

  2. Gold coins buy non perishable goods, like accessories, or privileges like extended time, shortcuts, cheats. Mainly vanity stuff. Gold coins are given away on merit, and can be purchased with real money. Sometimes they can be converted into Silver coins.

  3. Energy buys actual game play. Players spend Energy to participate, and earn it back only when they win or pass a level. Energy is replenished automatically with time, unconditionally (it’s the Basic Income part). Even with low skill, but a bit of patience, players can stay in the game forever. If they are not patient (and the publisher will attend to that!), they are cheerfully invited to trade real money for Energy.

Each currency erects a firewall between different economic sectors of the game, allowing publishers to fine tune and control their economy for maximum return. But in games, “maximum return” is always understood as a function of players’ happiness and sense of accomplishment within this closed economy. Players are not morally or physically trapped in a game, they can leave — migrate! — at a moment’s notice, so publishers have an imperative obligation to keep their wealth creators prosperous and stimulated.

The question then is: why should the “real” economy be any different, if not for lack of imagination and excess of moral prejudice?

Universal Basic Income

The emancipatory Unconditional Basic Income (UBI) is defined by the following four criteria: universal, individual, unconditional, high enough to ensure a dignified existence and participation in society. An Unconditional Basic Income or a “Citizen’s Income” is a guaranteed income, given to all in addition to any other income they might receive. By advancing equality and economic participation while enabling simpler welfare systems, UBI leads to a fairer and more efficient society.

European Citizens’ Initiative for an Unconditional Basic Income

The idea behind basic income is that people do create wealth. Not just certain categories of people: all of them. This is true because wealth is not a measure of assets, but ultimately a measure of human activity. Human activity produces wealth in many forms: goods, food, service, constructions, ideas, knowledge, art, entertainment, care, love, you name it. Their value can only benefit other humans, and be transferred to them. Money is just a medium that translates their value into a convenient abstraction that fluidifies exchanges when required. But, really, money has no existence of its own, it is not a thing people make.

For me, money is like blood irrigating the body, it’s a flux. Flowing blood allows vital exchanges between billions of cells in a sustainable cycle of co-dependancy. Blood must be evenly distributed and in constant flux in order to maintain a healthy organism. Blocked or accumulated, blood will impeach cells to deliver their full potential, to great danger for the whole organism. In that sense, the whole economy of the body aims to ensure a constant and sufficient supply of blood to each cell in order to thrive.

The industrial era invented salaried jobs to allocate money in exchange for much needed human labor: productivity was low and needs, immense. Today, productivity is immense and needs must be “synthesized” to justify an ever increasing production. From being a mean to being an end, it took 150 years for jobs to acquire the status of a dogma that is now even morally reprehensible to contest. According to the dogma, having jobs is the only legitimate way to get— “Make”, mind you!—money, thus, the logic goes, production must be increased to create jobs, and to fight poverty.

But the fact is that XIXth-century-style jobs are disappearing quickly due mainly to technology: productivity increases at such a pace that less human labor is required to produce far more! With jobs scarcity comes unemployment, with unemployment comes poverty and other calamities.But it is only because jobs are considered the sole morally legitimate source of money that unemployment creates poverty. While jobs continue to evaporate, however, wealth is still being created in increasing quantity thanks to dramatic productivity gains allowed by technology, and to our seemingly relentless urge, as humans, to produce wealth in all its forms.

Poverty is a societal outcome
we tend to analyze as a moral issue,
instead of a design flaw.

In games, players don’t need to show tokens of morality and skill in order to participate in the economy. Having a healthy and happy population in the game economy automatically multiplies opportunities to generate and transfer value to the publisher. The publisher’s job is to devise mechanics and opportunities to turn people into happy wealth creators, and to convert a substantial part of this voluntary human activity into real-world value (money).

Business savvy and good game design taught game publishers this simple equation: More People + More Happiness = More Wealth.

To increase the rate of conversion, you need a numerous, active and happy population of players. In all logic, it seems insane to impoverish and harass players to the point of not being able to participate in the economy. Poor and unhappy players would do the only thing in their power: make trouble or migrate. Two avenues that impoverished people tend to follow in real life too — at considerable risks for themselves and for their home countries — and a societal outcome we tend to analyse as a moral issue instead of a design flaw.

That’s the reason why all free-to-play games provide players with a steady and unconditional Basic Income. They don’t have to earn it nor claim it. Most of the time this UBI is allotted in Energy, which is the currency that buys participation in the economy.

Furthermore, someone who doesn’t participate will accumulate Energy over time as an incentive to return and continue participating. This is somewhat the opposite of our real world approach, where people who do not have jobs, voluntarily or not, are punished by being deprived of the basic means to participate again.

The amount of Energy players can own, whether by waiting long enough or through continuous winning streaks, is generally capped in most games. Again, Energy cannot be used to buy anything else in the game. It means that patience and hard “work” reap similar rewards in terms of right to participate, but not when it comes to consumption potential: decent living conditions are guaranteed, but superfluous things and status symbols can be acquired if these are priorities for the player. It also means that laziness, inadequacy or lack of skill are not punished: everybody gets an equal and unconditional right to participate in the game economy, increasing, as a beneficial side effect, opportunities for the game publisher to collect real money out of a very fluid cycle of in-game money.

During my tenure as UX Design manager at Electronic Arts, I was amazed at how deeply insightful game designers are, how they translate observations of the real world into virtual ones. But are these worlds really more virtual than the real one? When it comes to the economy, money and human participation, they should probably not be considered as fundamentally different.


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