Economists define money as a medium of exchange and a store of value. One logical consequence of this is that there must be an actual mechanism to exchange value. This mechanism by which stores of value are exchanged is called a market. As markets exchange value they distribute that value among market participants. In our modern industrialized world money markets are the main market. However, markets are not the only system for distributing value. Another means of distributing value is brute force (such as a war); another means of distributing value is democracy.
At least in theory, modern capitalist democracies are democracies first and capitalistic second. Democracies deploy markets to achieve specific social ends in the same way they deploy armies to achieve specific social ends. One difficulty with this social arrangement is that markets work most efficiently when they are free from outside intervention. We take it as a democratic given that people have a right to petition the government for a redress of their grievances. But the people’s grievance is often that capitalistic markets produce results which harm them. Thus governments are pressured into a market intervention that erodes efficiency and undermines the reason that a market was deployed in the first place.
When social groups petition their governments for market interventions that favor them economists call this behavior “rent seeking”. The “rent” in rent seeking is merely a historical term and doesn’t have anything to do with renting a flat or car. Another name for rent seeking is “privilege seeking”.
Evidence of Absence
The most interesting aspect of rent seeking in Warcraft is its almost total absence. Let me be clear here. Players are always complaining about nerfs and demanding buffs to their class. This is indeed privilege seeking. But there is extremely little movement by players to prod the developers into giving them an advantage in the in-game market for good and services.
One example of rent seeking that springs to mind is the recent reaction of players regarding the new disenchanting option in dungeons and raids. Many players with toons with the enchanting profession claimed that it would seriously impact their ability to charge for disenchanting and thus impact their ability to make money. After a significant amount of complaining Blizzard announced that they would restrict the disenchant option to parties that already had an enchanter in order to “protect the importance” of the enchanting profession.
This example of successful rent seeking is a rare occurrence. There are certainly a great many interventions by Blizzard in the in-game market: the establishing of the Inscription profession, dual specs, and even the prospecting of epic gems which caused titanium prices to skyrocket. Yet none of these market interventions were done because players demanded them. The Greedy Goblin discusses all sorts of types of anti-competitive practices that players attempt to engage in from monopolies to cartels; behavior that would be illegal in our non-game world. Sometimes these anti-competitive practices work and sometimes they fail but I have yet to see any serious effort from players to get Blizzard to intervene to stop it.
Capitalism and Democracy
For those who think that game markets offer useful insight into real world markets this situation begs for an explanation. Given the power and ease by which developers could dole out market favors it’s shocking that there is so little pressure by players to do so.
The obvious answer is that players don’t advocate for market interventions to the extent they do for class interventions because they value class changes more than market changes. Players don’t advocate for market interventions because markets in Warcraft operate successfully without those interventions. There is no need to demand intervention because the markets successfully address their in-game needs, as opposed to class mechanics which don’t.
What’s interesting about this answer is what it implies about rent seeking in capitalist democracies. Economic theory argues that rent seeking imposes net social costs on society. Yet the lesson from Warcraft is that rent seeking actually creates net social benefits. When markets work effectively to address social needs people don’t seek market interventions; the demand for government interventions is a signal of market failure. There is nothing instinctive about rent seeking any more than there is something instinctive about citizens petitioning government for a redress for their grievances.
Seeing rent seeking and subsequent government interventions in markets as an economic positive allows us to grasp that the reason government interventions take place is not because capitalistic monetary markets are weak but precisely because they are too strong. Weaker monetary markets reduce rent seeking and allow those markets to operate efficiently and effectively to meet social needs. That’s what’s happening in Warcraft. The interesting economic lesson from Warcraft is that less capitalism produces better capitalism.
22 hours ago