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 simple ‘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 to eat.

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 of /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 paid > you have more money to spend on goods > you buy stuff. Simple.
• Finite resources – Diamonds, elytras, Chaileys; you own’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 center, 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 for it), 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 other people, only occasionally when my wallet is a little light.
• A government – We don’t have a government, or a government system. The server’s own money (including Godsy’s). 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. We can trade whatever we want, wherever we want. This is not the same as the server rules. For Piratecraft, no staff is telling us: “you may only sell X amount of these items per week, and you must pay me $Y 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 household are the buyers, the firm are the sellers who rent the shops, and the Financial Institutions (banks basically) is the server’s own money (where the monet 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 part.

 

How the server economy works

The basics:

We have supply and demand in the real world; the thing that regulates prices. Consumers/households (those who buy) want as much as they can without spending much, whereas producers/firms 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 price of pizza as diamonds, and the quantity of pizza as the amount up for sale:

The nerdy part:

 

Now, in the real world, good 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 now, I’m not paying tht’, or ‘hell yeah, I just saved 1 cent’. The consequence is that the quantity demanded increases/decreases much more than the price, relative to each other.

For an inelastic good, even a large change in hte price of the good won’t have much effect on how much is demanded. The tech company apple is a great example of 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 good on Piratecraft are ‘elastic’; a small change in price will usually have a large effect on the amount sold (there are exceptions to this). If cobblestone 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 cobblestone, and it’s really not hard to get. For potions, and increase in $1 will likely have a similar effect, just to a lesser degree.

 

The common suggestions:

A common argument used by players is to encourage sellers to increase their prices (so that diamonds don’t sell for $4). Yes, it works in the shot term, but in the long term? It’s debatable. Its hard to regulate – there is nothing stopping anyone from putting prices rock-bottom. You can’t stop them really.

Another common answer is to lower shop rent prices. This is good news and bad news – more people making money and selling items is great, however also more people selling, increasing competition and pushing prices evern 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 sign 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 this feature would be difficult to implement.

The way custom items, swords, and elytras 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, along with ships. Its getting people to spend (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

It’s hard to apply demand and supply, even aggregate demand and aggregate supply to a wold where almost everything is infinite, anyone can go anywhere, and have anything. I find it extremely intriguing. Yes ok, people like Cysteen 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-$20 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, and how it relates,,,

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.

<p style=”text-align: center;”>Thanks for reading!</p>

 

I do study economics, but it’s really hard to simplify it down to try and make people understand it. It’s like me asking you to explain how all parts of a computer work, 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 audiences.

I’d love to hear your opinions on the matter, suggestions, or why I’m clearly bad at everything I do. Another ship post should be out sometime next week.