e-notes

Yet another fascinating Terra Nova discussion, this time on social structures called 'guilds' in various multi-user online games. Some guilds at least appear to be based around communal forms of exchange and coordination of in-game resources, while those games offer rudimentarily instituted market exchange alongside. Which, as one commentator astutely put it, raises Coase's original point (see ' The Nature of the Firm', 1937): These islands of 'direction' survive only because the cost attached to alternative forms of resource coordination (such as auctions, in-game monetised exchange or barter) is higher.

So far so good. Not much insight can be gained from a truism (assuming, as Coase does, that the selective forces of in-game competition are strong enough to weed out inefficient forms of organisation).

A perceptive economist was quick to note that surely, the inefficiency (of guild survival, measured against the non-Coasean yardstick of perfect markets) must be due to missing credit markets (i.e. lack of efficient inter-temporal exchange). And there is of course a point to that. Credit markets don't work well in games for the same reason that monetised markets don't work well there either: games lack efficient in-game evolved property rights regimes, either because the company that owns them has programmed coercive force out of the game, or because it has programmed coercive force as the raison d'etre of the game (eternal war fare, which, as has again been astutely observed, disrupts orderly market exchange).

Given that markets are essentially trading places for well-defined and enforced property rights, as Coase has been so insistent to point out, one would indeed expect guilds to persist.

Posted at : May 24th, 2006 - 10:46 am
Filed under : Notes
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