We economists' contributions to society usually involve taking interesting topics and make them either boring or incomprehensible. Edward Castronova, associate professor of telecommunications at Indiana University, does neither in his book "Synthetic Worlds: The Business and Culture of Online Games."
Castronova devotes his book almost entirely to the genre known as "Massively Multiplayer Online Role-Playing Games" — "MMORPGs" for 'short'. EverQuest and World of Warcraft are probably the two most popular of these games, which involve creating a character that interacts in a fantasy universe with hundreds of thousands of other people. Gamers in MMORPGs chat, fight battles, trade items, learn crafts and skills, etc., perhaps as if they were an extra in a "Lord of the Rings" or "Star Wars" type movie who got to swing a sword or pilot a starcruiser, but also sat around a tavern sometimes and worried about what color shirt he was wearing.
In his introduction, Castronova describes the growing number of people playing these games (I am not one of them, but many of my friends — and a few of their parents — are):
If we indeed experience a gradual migration of human consciousness into the synthetic universe, we will have a growing need for economic, political, social, and cultural expertise to deal with the difficult issues that arise.
Fulfillment of this need, however, is hampered by the opinions of many intellectuals, who won't believe that whatever is happening in video games could be of any importance.
An aspiring doctoral student forwarded me a thesis proposal in which the main research question was simply, "What are MMORPGs?" Since such a descriptive question seemed, to me, subpar for PhD-level work ("What are automobiles?"), I pressed for an explanation and was told that the student's major professor had required it.
But these fantasy games have been rapidly breaking out into the "real world," carrying significant implications:
Each synthetic world has a play-money currency inside to facilitate player-to-player transactions. These currencies have begun to trade against the dollar in eBay's Category 1654, Internet Games. Many of them now trade at rates higher than those of real Earth currencies, including the yen and the Korean won.
The commerce flow generated by people buying and selling money and other virtual items (that is, magic wands, spaceships, armor) amounts to at least $30 million annually in the United States, and $100 million globally.
As the technology continues to improve, a new generation of people will swell the ranks of online gamers, and policy makers must be aware how this will affect society. Should these online transactions be monitored or taxed somehow? What would stop a money launderer from buying thousands of gold pieces on eBay, using them to buy a rare sword in a game, and then turning around to sell the sword for cash?
Castronova gives an example of a computer hacker who facilitates the theft of an in-game item that can be sold on eBay for $1,000 or more. Clearly, someone has been unjustly deprived of an object carrying significant value. But what if that same item was lifted by an in-game thief, who chose to train and develop his "pickpocket" skill subject entirely to the rules set by the game's developers? Should the "real world" get involved to ensure justice is served? Cases like these are not unusual in Korean courts, but how will our legal system react?
"Synthetic Worlds" is a fascinating insight into a phenomenon most people are only vaguely aware of. By seeking to understand these games, society will not be caught off guard by the wide-ranging effects of this important technological advance.
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