“The wealth of bourgeois society, at first sight, presents itself as an immense accumulation of commodities,”1 says Marx, and perhaps nothing could be truer of virtual societies as well, as we often find them in online games. The starting point for Marx is the commodity, which as we know he divides into use-value and value, but here we have already hit a problem. Use-value is what it always is in the Marxian tradition, and it makes no difference whether it satisfies virtual or “real” wants, but the normal answer to the problem of value is somewhat different. That we can transact use-values and therefore find them comparable in some way is what leads Marx to conclude, quite famously, that their equation “signifies that a common element of identical magnitude exists in two different things … Both are therefore equal to a third thing, which in itself is neither the one nor the other. Each of them, so far as it is exchange-value, must therefore be reducible to this third thing.”2
This “third thing”, according to Marx, is labor. But where is this “common element” in virtual economies? What is the substance of digital value? How can we measure its magnitude? Marx goes on to tell us that,
“This common element cannot be a geometrical, physical, chemical or other natural property of commodities. Such properties come into consideration only to the extent that they make the commodities useful, i.e. turn them into use-values.”3
Against this we may argue that all virtual commodities in an online market are naturally digital, and that this is true whether we take their use-value into account or not. But since we necessarily use them specifically in a virtual context, from the standpoint of a virtual economic actor their digital nature alone does not affect their utility any more than a commodity’s utility is affected by its “real” nature in the “real” world. In this regard, Marx’s basic argument still holds, but it forces us to think about how we deal with virtual economies in the first place. Some work has already been done on the interaction between virtual video game economies and the real world profits of the developers that make them, but there has not been significant study of the virtual economies themselves — especially not from a Marxian perspective. It only seems right that in an investigation like this, we must tackle the theory of value, but the anatomies of virtual economies are too fundamentally different for us to treat them as having prices determined by labor-time. Indeed, how can we speak of labor-time where the entire realm of production is nearly always missing, or at best only partial?
This brings us to a more substantial question. Why were these worlds constructed this way? An all-too-easy answer is that it makes the most sense, considering the fact that players are unable to participate in virtual labor on their screens without simply pressing a button to craft a sword or cut down a tree. In its more complex formulations, this will sometimes amount to a mini-game of sorts, but this never approaches the function of real human labor in the extra-virtual economy. But why would this make the most sense? The all-too-easy answer gives way to an all-too-inevitable conclusion: this presentation of the virtual economy is almost precisely the presentation of neoclassical economics in its own attempt to grapple with the allegedly “real” world. The possible intersection here between an ideological theory of economy and, in turn, its ideological reflection in video games is a particularly interesting one.
Yanis Varoufakis, famously an “erratic Marxist” and former financial minister for Syriza’s left-wing Greek government, tackled almost this exact issue while working as “economist-in-residence” with Valve, and his comments are worth quoting at length:
“Digital economies, like Steam’s exchange platform, come closer to Adam Smith’s concept of an economy that sprang from a penchant for pure exchanges. People meet up online, enter into mutually beneficial trades with minimal other social obligations to one another, bear no debts (monetary or social), and walk off with whatever item they managed to acquire (via bartering) without any need to maintain a ‘relation’ with the person they bartered with. An economy created as if in the image of Adam Smith?”
Not quite. The exchanges that we observe on Steam are not exactly pure. As readers have perceptively remarked, many exchanges are highly impure. People simply use Steam in order to unload onto others items from their backpack that are surplus to requirements. Often, they will accept remarkably low ‘value’ in return. Value equivalence, a prerequisite for trading-proper, is simply absent. But then again, this is how trade began and continued to be practised for thousands of years: People sold goods that they produced, or gathered, over and above their ‘planned’ (i.e. needed) volumes. It is not that they produced these goods in order to exchange them (the very definition of a commodity being a good produced in order to be traded) but, rather, they sold the quantities that ended up being surplus to requirements. It is no exaggeration to suggest that, until the rise of industrialisation and market societies, less than 5% of goods produced were commodities. So, until a couple of centuries ago, most trade happened because of unexpected, or unplanned, surpluses: very much like those in the TF2 [Team Fortress 2] economy!”4
This is extremely interesting, especially when we return to the question of a virtual value theory and consider Smith’s conclusion that “[t]he real price of everything, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it.”5 In virtual worlds, the amount of work required to produce an item can coincide with its cheapness, but it also generally coincides with the intention of the developer. Items which can be crafted by newer and lower-level players are going to be among the cheapest. This, taken with the amount of virtually necessary labor-time, might come close to something that looks similar to Marx’s own value theory. Smith continues by saying,
“What is bought with money or with goods is purchased by labour as much as what we acquire by the toil of our own body. That money or those goods indeed save us this toil. They contain the value of a certain quantity of labour which we exchange for what is supposed at the time to contain the value of an equal quantity. Labour was the first price, the original purchase-money that was paid for all things. It was not by gold or by silver, but by labour, that all the wealth of the world was originally purchased; and its value, to those who possess it, and who want to exchange it for some new productions, is precisely equal to the quantity of labour which it can enable them to purchase or command.”6
This is clearly incoherent in virtual contexts. Despite differences in virtual markets, money does not generally arise in these economies after long periods of exchanging labor and products of labor until we settle on some regular equivalent like gold or silver. On the contrary, money, labor, and its products usually appear simultaneously in these markets, with users often starting with a small amount of gold, a few cheap items, and a basic skill set for labor. The TF2 barter economy, having more in common with the Smithian telling of market history than most other virtual economies, should provide some sort of verdict. As Varoufakis notes,
“no item emerges as a common currency, a numéraire. Our close study of the TF2 economy revealed that there are times when different items are traded most frequently in different periods. If one item had ‘evolved’ into currency status, that item would have been the most traded all the time. Confounding my expectations that keys would play that role in TF2, Steam trading data shows that there are five or six items which alternate as currencies. How come? Why does one item within the TF2 economy not evolve into a currency given that everyone’s (trading) experience would improve (in terms of ease of ‘closing’ a mutually beneficial trade)? One possible explanation that the preceding discussion is pointing to is this: Because Steam trading, at least of TF2 items, are instances of impure exchanges; that is, trades that are not fully guided by the principle of trading items of equivalent subjective values. Norms of the social valuation of one item relative to another, beliefs of what one is ‘entitled’ to expect to receive for some valuable item (as opposed to what one actually would be happy to receive in exchange for that hat), expectations of a continued social relationship between buyer and seller – all these ‘impurities’ would, if indeed present, prevent the evolution of one item into the role of common currency.”7
This punches a large hole in the Smithian view, and even the usual Marxian view, when applied to virtual economies. There are, however, other games which tend closer to this economic legend, such as Diablo II, which essentially operated as a barter economy. The game actually had a pre-established in-game currency— gold —but it had problems. There was a maximum capacity for gold that you could carry, making certain expensive in-game transactions impossible, pushing players toward newer forms of currency. Over time, people settled on Stones of Jordan, referred to as “SoJs” by Battle.net players, as the primary alternative currency for player-to-player exchange8. SoJs were valuable, which meant that when equated with other high-end items, they could often be traded in single digits, rather than in large quantities of some less valuable item, and they were also small, so people could carry them easily without having to worry about taking up too much space in their inventory slots. There were sub-currencies, like Perfect Skulls, which for a time operated similarly to silver in the history of the precious metals, with gold being dominant, but they eventually gave way over time.
After numerous patches which worked to remove duplicate items, SoJs began to lose their status and went back to simply being expensive rings which were now being valued in terms of other, more reliable item-currencies. Today, the dominant currency is Runes, which were enhanced in later patches, making them more valuable, and after paralleling SoJs for a time as an alternative currency. This development, despite being somewhat truer to the Smithian story than what happened to the TF2 bartering system, is also in a sense its complete reversal, pushing people away from the established currency of gold, and toward commodities. Gold, which was effectively a state-decreed currency from the start, along Chartalist lines, was surpassed by items that were dropped in-game, before that was halted by further action of the state, in this case, the developers, who were also becoming keenly aware of the external markets developing on sites like eBay, where players were looking to make “real world” money by selling their virtual accounts. The Smithian historical view, whether it was ever true of history or not, does not apply here so simply, especially not where the invisible hand of the market is crushed by the visible hand of the developers.
It is clear from all of this that a “labor theory of value” of any sort cannot sufficiently explain underlying currency and price mechanisms in virtual economies. An obvious obstacle is the gap between the historical emphasis in the Classical and Marxian schools and the instantaneous or “impure” emergence of pseudo-commodities in virtual economies. A historical view cannot do the job where a history doesn’t exist, so an ahistorical theory is necessary. Perhaps no theory could be better than that which is willing to “assume a can opener”,9 as this is precisely the manner in which these products arise, i.e., out of thin air when it becomes necessary for them to exist. This sort of logic wholeheartedly accepts the fetishistic perspective, where commodities are believed to possess no history and simply exist as if they always have, ready for exchange and consumption. It is a superficial view, but one that has dominated the study of economics in advanced form for over a century. Neoclassical theory makes an enormous yet intentional error in abstracting from basically every relevant aspect of society in the determination of price and the inner-workings of economies generally, so that the rational individual (or user) might interact with the world as a Robinson Crusoe. The ideological implications are obvious and well-documented, but that is not true for the ways in which this problem intersects with online economic agents in virtual marketplaces. Studies of virtual economies at the level of these economies themselves and of the economic theory that goes into their construction (consciously or not) hardly exist, especially from a heterodox perspective.10 At best, one might find a work in sociology that aims to talk about video games with some Marxish rhetoric, treating them as is typical of all other forms of media being criticized by these sorts of thinkers, but a serious treatment of video games themselves, and in particular the way the economies within them function and reinforce assumptions about how economies work in the “real world”, simply does not exist in worked out form.
Perhaps the reason for this is that these economies are so obviously unlike our own that a comparison between the two seems laughable, but that in itself would take these economies at their word as very constrained markets with few if any hindrances, rather than understanding that these economies are created by people with economic ideas in mind. It is clear from all of this that we cannot use the Classical-Marxian analysis to explain virtual economies, as these are not truly capitalist modes of production in the first place, but that isn’t to say we cannot approach the subject — and especially the relationship between these synthetic worlds and mainstream economic theory — with the Marxian critique in our pocket.
At the same time, we cannot deny that the ahistorical nature of neoclassical theory and, by extension, the virtual economies as presented in video games, are themselves historical products. The implementation of markets in MMOs has been uneven but, in the end, hegemonic. Despite Varoufakis’ comparison of the history of capitalism to the history of TF2 exchanges, this does not tell us anything about the historical development of economic forms in video games as a whole. What happens in a particular game is not the entire story. That would be akin to ignoring the uneven and combined capitalist development within individual countries, ignoring everything before and outside of that country’s form of capitalism.
In truth, there are many types of virtual markets, each related to a complex history of experimentation in video game economies. Trial and error, by developers and users, played a large part in the implementation of economic mechanics of online games. Many of those mechanics were not successful, doomed to fail from the ignorance of their designers and/or the activity of their players, but many others still exist today, albeit often in revised form.