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Server Economics vs Real Life Economics
Now this has got to be among the top topics discussed in Teamspeak, with people bickering about how low the prices are (or how high), and how to fix it using basic knowledge of the economic principle (infinite demand, with finite resources). So here is my shot at explaining why the Piratecraft economy cannot simply ‘be fixed’ from one day to another.
Fair warning, this is my opinion so don’t get your pirate ships in a twist.
It’s been a long time coming, so here we go!What is economics? Can I eat it?
Sadly, economics is not a food you can eat, rather, it’s the whole reason why you can buy food.
Definition: “the branch of knowledge concerned with production, consumption, and transfer of wealth”.
In other words; it’s how money and trade work. When you go down to the local shop or /warp shops and buy something, that’s thanks to economics (it’s a great subject, I recommend studying it).Similarities between real life economics, and Piratecraft economics:
- Infinite demand – People always want stuff, whether on the server or in real life, and those ‘wants’ don’t have an end. If only I had 47 beacons… If only I had Cysteen’s balance… etc.
- Near-infinite resources – Oxygen, dust, or grains of sand are pretty much infinite, likewise is dirt. On piratecraft; dirt, sand, ores, but that aren’t perfectly infinite
- Labour – people work on here, and get paid most of the time. You do a job > you get more money > you have more money to spend on goods > you buy stuff. Simple.
- Finite resources – Diamonds, elytras, Chaileys; you won’t find many of those, usually. (Diamonds are tricky as the world is very big, so there is almost infinite of them)
- A market – A shopping centre, or /warp shops and Aeos Island. Sellers sell and buyers buy.
- Infinite resources – Wood in both worlds
- Infrastructure (roads, shipping lanes, etc) – We have warps, tp’s, actual roads too.
There are quite a few more, but that’s what I consider the most important ones.
Differences between real life economics, and Piratecraft economics
This is for what the real world has, that Piratecraft does not: (Deep Breath)- All resources are finite – You can’t have infinite ruby necklaces, but you can have infinite cobblestone
- Severe time lags – On Piratecraft, we can just teleport to one another (if you have the rank), and buildings are constructed quickly. In its simplest terms, there is no such thing on here as ‘delivery time’, only the time it takes to create the item.
- Regional resources – You can find any resource almost everywhere on Minecraft. I don’t need to travel to Russia to find iron, and go to hell and back just to get specific wood. It’s all close together, and this is pretty darn significant.
- Job limitations – just because you can’t build doesn’t mean that you won’t build; anyone can, anytime they like, with whatever they like. Yes we have builders (cough cough me), but I don’t build much for people, only occasionally.
- We don’t have a government, or a government system. The server (moreover Godsdead) acts more like a bank rather than a government that allocates resources. Those who know what a 3-sector economy is will know what consequences this has, I’ll add a picture below.
- Very few regulations, limitations, rules, taxes, etc etc. We can trade whatever we want, whenever we want. This is not the same thing as server rules. For piratecraft, no staff is telling us: “you may only sell X amount of these objects per week, and you must pay me $5 for everyone you sell”. The only thing that comes vaguely close is the rent on the shops.
A 4-sector economy is shown below, for a 3-sector economy, ignore everything highlighted. The consumers are the buyers, the businesses are the sellers who rent the shops, the bank is the server’s own money (where the money comes from when you first join, where the money goes when you rent a shop, the thing that sells elytras).
Before I continue to bore you, I’ll get onto the interesting partHow the server economy works
The basics:
We have supply and demand in the real world; the thing that regulates prices. Consumers (those who buy) want as much as they can without spending much, whereas producers want as much money as they can, without producing too much. Where the two meet is called the equilibrium, where each side gets just what they want. Just imagine the price of pizza as diamonds, and the quantity of pizza the amount up for sale:
The nerdy part:
Now, in the real world, goods can be either ‘elastic’ or ‘inelastic’ depending on their demand. For example, an elastic good is one where the price rises/falls a tiny bit, but the consumers are ‘oh hell no, I’m not paying that’, or ‘hell yeah, I just saved 1 cent’.
For an inelastic good, even a large change in the price of the good won’t have much effect on how much is demanded. The phone company Apple is a great example with this; Apple phones are in high demand, yet Apple keep increasing the price more and more, but the amount sold barely changes. See diagram below.
Almost all goods on Piratecraft are ‘elastic’: a small change in price will usually have a large affect on the amount sold (there are exceptions). If potions suddenly increase in price by around $1 overnight, that will probably put people off buying them. Why? Because there are so many other shops selling cheaper potions, and it’s really not hard to make your own, it just takes time (the true currency of the server).The common suggestions:
A common argument used by players to encourage sellers to increase their prices, so that things like diamonds don’t go for $4 anymore. Yes, it works in the short term, but in the long term? It’s debatable. It’s hard to regulate – there is nothing stopping anyone from putting prices rock-bottom. You can’t stop them after all.Another common answer is to lower shop prices. This is good news and bad news – more people making money and selling items, however also more people selling, increasing competition and pushing prices even lower.
What we could do:
We need to increase demand for buying items, rather than people getting their own stuff. My suggestion would be to encourage far more advertising in the shop area on the forums, get more people using the shop website, or even better, having some sort of ‘shop chat’ whereby you pay a fixed price for advertising on the server. Messages would appear in some sort of dedicated shop chat that advertises people’s shops and goods. I am aware that this could be very difficult to implement.
The way custom items, swords, and elyras are sold was a brilliant idea, as it took money out of the economy and into the ‘server bank’. I’d like to see a few more of these things go on sale at some point. It gets people spending (which is good).
Fact is, we don’t need more shops, we need more buyers, and then prices will automatically rise. Aeos island worked well, because it was governed by the community, for the community. /warp shop is on its way there, but at a much slower pace.
Why the economic principle is so hard to apply to Piratecraft:
Its’s hard to apply demand and supply, even aggregate demand and aggregate supply to a world where almost everything is infinite, anyone can go anywhere, and have anything. I find it extremely intriguing. Yes ok, people like Cys are extremely wealthy, but she spends money too you know!Conclusion
If I haven’t bored you enough already, I could go on for pages upon pages upon pages. But I’ll spare you that. We are very fortunate to be able to teleport around, and create player owned shops on here, it’s a real privilege. I remember back in the day of player owned shops when diamonds would go for anywhere from $15-$10 per diamond, and over time, as mending and other new features were implemented, the value of items decreased. Plus, I haven’t even talked about sieging and raiding on this server…At the end of the day, it’s not what we do, but it’s what Mojang decides to do. Smelting armour for nuggets; yay, now the price of iron and gold fell. But we as a community can still voice our opinions, and change things such as not introducing that ‘totem of undeniably the most op item for a survival server’ thing.
Thanks for reading!
I do study economics, but it’s really hard to simplify it all down to try and make people understand it. Its like me asking you: explain how a computer works, in a few sentences. Except the computer is a giant social science, and the sentences must be clear yet detailed enough to understand for younger people.I’d love to hear your opinions on the matter, suggestions, or why I’m clearly bad at everything I do.
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