SL Market a threat to RL governments.

Knowing a little about how real-world governments behave, I do think there are people in SL who are funded by governments, because SL is an excellent example of a truly free-market that needs no government regulation.
Contrary to what some people say (and the person who started "A free market SL" thread may well be one of these govt-plants trying to sneak socialist govt into SL disguised as free-market reform) SL is by far the least-regulated, most capitalist free-market on Earth.
Say you're a king (or oppressive government) who's sofar done a good job in convincing your subjects that they can't live without your control and taxation (leeching) but suddenly you notice that another nation, right next door to you has no oppressive government. It's just gotten started, so it hasn't really had time to prove itself superior to your own system and the people of your country know little as yet about it, but are slowly learning. The king, knowing that the people really don't need him and knowing that eventually this new nation will grow into something great, his people eventually seeing the truth and overthrowing him, is compelled to stop this new country from really taking off. He'll try to get a civil war started there, or he'll do anything to try and make it an oppressive nation like his own, through all sorts of guile and subersive techniques.

SL has just gotten started and it has a tremendous potential. I'm sure some governments are aware of that now and the danger posed by it...

...

I would actually agree with the statement above, save for the SL-interactive portion.

But usually such oppressive governments ensure that their people aren't on the internet in the first place.



A contrary thought: gaming as the opiate of the masses?

How many level 87 paladins are going to bother fixing their real life, when they have castles and maidens aplenty, orcs to conquer and rivals to quash for only $14.95 a month?

So much that is covered by law and police in real life is built into the program in Second Life. I can leave my stuff lying around, because no one but me can pick it up and take it away. I can't be killed or maimed. I can't be animated without my permission. Etc.

About all that is left for a "goverment" to do in Second Life is arbitrate petty annoyances like grey goo and name calling. Some think a governement should also dictate taste ("zoning" and such, but I hope it does not come to that.

Second Life is a game. To equate what it does with what a real life government of even the smallest country must do is fanciful at best. Unless everyone in real life starts flying, no longer needs food, healthcare or shelter and finds sitting on camping chairs to be a rewarding and fufilling career choice, I think RL governments aren't going to lose much sleep.

I just need to reiterate: you are saying (not even implying) that RL governments are actively trying to create socialist government in SL for fear of what may occur in RL if people can exist in a virtual capitalist free market.

um..
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..yeah.

nonetheless, welcome to the SL forums, you will certainly fit in well with some of the other great economic minds here.

SL is not a free market capitalist economy. There is no way for capital to be invested, i.e. no stock market. Without a way to enforce contracts between residents there can't be a market economy, free or otherwise. At best SL is a proto-capitalist currency based economy. There is no stock market to raise the capital that makes an economy "capitalist" and there is no way one could be created. On the business side there is no way to enforce contracts or protect copyright or intellectual property. On the consumer side there is no way to invest your money in a business, or any way to even evaluate the investment opportunities. And there is no way to enforce truth in advertising rules, heck there are no truth in advertising rules.

I know a lot of people in the forums like to think SL is some sort of big free market utopia, but it ain't none of that.

Actually, there is a young and evolving stock market, the Metaverse Stock Exchange!

And just what would the penalty be if the owner of the business traded on that exchange cashed out and left? Does the MSE require traded companies to report their earnings or other financial data? There are no enforceable contracts in SL. No contracts means no corporations means no stable business climate. It means that the MSE is as ephemeral as any other "investment opportunity" in SL. Without enforceable rules there is no real "economy."

ding ding ding -- we have a winner!!!!!

Err, what ?

I'm not really sure. There was some good discussion on this at the most recent State of Play conference, during the "Stock Markets in Virtual Worlds" panel. A lot of the time on this panel was spent discussing us specifically, and this question as well as many other common questions were explored. The webcast archive is worth watching if you're really interested in learning more about what the penalty may be.



Yes, of course. Cyberland does this at shareholder meetings currently, but they'll also be on the new Cyberland website. There will a meeting soon too as we just closed a quarter. You're more than welcome to keep an eye on the press releases and stop by!

There's currently no way to audit these reports though. We're exploring ways that may make sense and plan to suggest them to Linden Lab. We don't know if our suggestions will be implemented, but we're trying to construct them in ways that are of benefit to all businesses and not just our own.




But there are notarized contracts! Irrefutable proof of agreements! The automated in-world service that does this is called Nota Bene, check it out here. This is definately a step in the right direction! Big things like stock exchanges or virtual contract enforcement don't just happen overnight. They evolve, a little bit at a time.

When I became a resident a little over a year ago there was nothing like this amazing device. There's also a seperately operated mediation service there. While this is not currently useful to specifically ENFORCE contract breach, you can elect to use it to MEDIATE contract dispute. You can place your desire to use this service and be bound by the decision right in your contracts, prior to notarizing. This provides even more irrefutable proof that the other party is a deadbeat if they fail to comply with the decision of the mediator.

I think that within another year, and probably WELL within, there will be some acceptable level of enforcement of virtual contract breach. This will likely be handled more by residents than LL. I'm confident that some will step up to the plate with a workable solution soon, as this is a natural evolution of the virtual economy.



All I can say to this is that it's been working very well for us for over 6 months now. While forum nay-sayers sat around and debated why capital markets just can't work in SL, I went out and DID it. 6 months later I can happily report that while there is still a long evolutionary road ahead, and several issues uncovered that I didn't even consider beforehand, DOES work in SL. It does exactly what it should do, and it does a pretty good job of it.

Of course virtual investing is not for everyone, especially in its infancy. It sounds like you're probably among that number, and there's nothing wrong with that. As you've correctly pointed out there are risks involved with virtual investing which are clearly disclosed. As an aside though, before the Enron scandal IRL, I wonder if Cyberland or Enron would have been categorized as the greater risk. I say this to illustrate that the same risks are there IRL. The SEC and all of the regulation which is present IRL is not the wonder drug to cure all capitalist evil that some of the "OMG its unregulated!" crowd on this forum seems to think. Bad people will still do bad things regardless.

This is not to say that MSE doesn't need regulation. We would of course comply with regulation and are delighted when we have the chance to participate in processes which help to bring about and foster regulation. I have a strong belief that ANY ORGANIZATION holding themselves out to be "a bank", "a stock exchange" or any other large scale "financial institution" where public virtual investment funds are involved should be compelled to provide an acceptable level of disclosure if they wish to operate in the Second Life environment. I also believe that these organizations should be compelled to submit to an acceptable level of auditing, whenever this ability becomes available.

Regardless of what MSE or any evolving regulartory bodies do in our goal to protect investors to the greatest extent possible though, I'm sure that sadly, there will still be scandals from time to time as the market grows, as I've illustrated above with the RL example of Enron. It happens IRL and there's NO reason to assume that it will never happen here. All that we can do is, as is done IRL, work hard to find as many ways as possible to minimize this risk. At the end of the day though, for any reward in life, we take a risk.

How about an Enemies-list built into the game which prevents you from buying anything from, or selling anything to the offender or any of his alts, if that's possible?

The CEO of the company doesn't know what the penalty would be if he cashed out his investors $L and left the game? Penalties in RL are used as deterrents to bad behavior, if you don't know the penalty there is no deterrent.





First off Shaun, I'm not trying to make your company sound bad, I'm just trying to point out the logistical barriers in SL to having a real market economy. Not knowing the date and time of your next quarterly meeting is one of those barriers. Not being able to audit reports is a huge problem. No sensible investor would invest in an enterprise where he didn't have the ability to have the reports independently audited.






But there are no penalties for violating agreements. Proof of an agreement is useless if there are no penalties for violating the agreement. And I'm not talking about "virtual" contracts, I'm talking about real contracts. The money in SL is now "real" but no other aspect of the economy is, and the way the system is set up, it doesn't look like LL wants to implement procedures to make it so.



I don't need irrefutable proof somebody is a deadbeat if he's already ripped me off. I know he's a deadbeat. And since I can't post it in the forums that he is without violating the TOS, and since LL won't do anything about it, what good does having proof do me?



Residents in SL don't have the power to do this. The rules set up by LL restrict the ability of residents to police the actions of other residents, while LL refuses any policing responsibilities themselves.




It has worked because you have behaved honestly and ethically. But my point is, there are no penalties for those who don't behave so. In RL it's often difficult to decide who to trust even knowing the real names and addresses of people, even knowing there are courts and police and jails for criminals. Heck, in SL it isn't even a crime to rip somebody off. LL sees it as just another dispute between residents.



It's not VIRTUAL investing, it's REAL investing. REAL money is used. The risks are not disclosed at all. No one knows the real names of the people they're investing with, no one knows their criminal histories, their qualifications or even where on the planet they live. If Cyberland went the way of Enron, would Shaun Altman be indicted and face a lengthy prison sentence? Nope. Heck, with the current rules he wouldn't even be kicked out of SL. Could the Cyberland investors sue you in court and have your assets taken? Nope, they don't even know where such assets might be, if there was a court in the first place.



All this is easy to say in light of LL's publicly stated hands off approach to business in SL. They have made it very, very clear that they will not intervene in any way. There will be no regulation from LL. Period.




Your comparison of RL and SL businesses is absurd. From an investment standpoint the two cannot be compared. If Enron had been an SL venture, its owner would still be playing in SL, free to start another "investment opportunity." The people who were bilked out of their $L couldn't even rate him negatively or post threads naming the business or individual. And LL would stand by and watch it all.



Investing in SL is like going on vacation to a foreign country and handing cash over to a complete stranger on the street. "But he promised he'd invest it for me!" No accountability, no enforceability, no redress of any kind at all.

There a million reasons why anything won't work but all it takes is one to prove that it will.

Keep Fighting the Good Fight, MSE!

Keep those blinders on Jamie! SL is a free-market capitalist utopia! Yes it is! The fact that there is no real capital, and no real market shouldn't deter you! Ayn Rand Lives!

I'm well aware of the contents of the panel video archive that I've suggested. Have you had the chance or inclination to watch it? Philip Linden, lawyers, economists, etc explore this and other issues.



We work as fast and as productively as we can. This is not a RL job for any of us, and we all have other RL and SL obligations beyond procuring financial gain as well. All of us at the MSE and Cyberland are sorry to learn that our inability to schedule meeting dates months in advance and cast them in stone is unacceptable to you as a virtual investor. Scheduling when we all can fit it in has worked well for us and not hindered operational performance thus far. My main concern is always for operational performance, but I do wish that days came with more hours. Wanna help? We're always hiring!

I agree with you completely that not being able to have an external audit performed is an issue, and as I've said it's one of many issues that we're exploring solutions to. Please see my previous post for more information on that.

I'm also aware that you aren't trying to make our virtual companies sound bad. I think that we just approach the world from different viewpoints.




No problem, you've got that capability already. Form RL relationships with your SL business partners. Write up your contracts. I'm much more interested in exploring the emerging new frontier of virtual worlds and virtual business. I'd like to see just what CAN be accomplished with regard to in-world proceedures and mechanisms for enforcable governace WITHIN the Second Life (maybe the broader "metaverse", as it emerges) environment, without the need for external interferances, hassles, etc.

This is the basis of my virtual economic experimentation. I have a very low threshold for sitting around and talking about why things just can't work. When I previewed the MSE site to a few people before launching it and subsequently opening it up for discussion on this forum, I got more than one instance of, "This will never ever work because blah blah blah etc etc!". There will always be nay-sayers, and nay-sayers are always right without exception; if you think you can't do it, YOU'RE RIGHT! Why count yourself among their numbers?

I think that these problems CAN be solved! What I'm interested in is getting out in the trenches and working towards solutions. I want to do my part to push the virtual economic envelope as hard as I can, in every direction I can think of, and see what comes of it. I don't really see any impassable peaks in anything you've posted, just some obstacles. I'm confident that as likeminded people continue to come together and work towards solutions, we can get past these obsticles.




This is one problem that needs to be worked on. I don't think it's unresolvable. It will simply take work, creativity and cooperation to pass this obstacle. The first steps in this direction have already been taken via the notary and mediation processes.

I don't think it's possible or even desireable for LL to provide us with a "magic button", which will solve all problems when pressed. I believe that it's up to us to shape the world into what we'd like it to be, much as we've done and continue to do in RL without the benifit of any "magic buttons". In instances where this shaping requires LL's cooperation, I think it's also up to us to put together solutions that are workable, present those to LL, and hopefully work with them to arrive at a conclusion that makes sense for all residents.

This is how change happens. Slowly, deliberately and persistantly. Sitting around and complaining about the way things are is no way to solve anything. To borrow from a forum signature that I really like, "You must be the change you wish to see in the world".

You can sit around this forum and lecture about the way things are today all you want. I've been guilty of this myself from time to time, but speaking generally, all of the people involved in MSE and Cyberland choose the harder road for the sake of tomorrow.



It is an interesting paralell and illustrates my point: bad people will still do bad things regardless. What we must accomplish is to provide acceptable deterrants, as well as better mechanisms of "proof".



This is not true. A fictional element of game currency is used. The only paralell is that you may, at your discretion, (and only until such a time as LL exersises their right to alter or remove said fictional game currency) choose to extend the right to another to USE your fictional game currency in your place. You may do this either for free (with the pay button) or for a fee which you set yourself (LindeX). The appearance that fictional game currency is "real money" at first glance doesn't make it so.

This is an area where I'd like to see a change. Don't shoot the messenger. I don't make the rules, I only contemplate what's wrong with them and how they may be improved.



Yes they are. We do perfer to seperate our real lives from our second lives, as I'm sure that you do too. However it is made abundantly clear that this is a high risk activity. I do believe that I've gone as far as to vastly OVERSTATE the risks. Have you bothered to review the MSE site?

As far as qualifications go relating to Cyberland directly, if you had bothered to inquire rather than making some rediculous blanket statement that "NO ONE KNOWS", lol, you'd be aware that all of the directors been involved in the virtual land market for quite some time prior to coming together on this project. In fact, many people DO know.

Many people elect to talk with one or more of us and learn more about Cyberland and its directors prior to purchasing Cyberland stock on MSE. We're always thrilled to talk with them and usually recommend that they hold off and come to a shareholder meeting to learn more about what's going on prior to investing. Due diligence is an important part of any investment, real world or virtual.



Interesting questions. Again I'll defer to the webcast archive in which these issues and others were explored by experts. I'm not an attorney.



It carries a little bit more weight when it comes from one of the people who are actively working on proposals to improve this situation. Take that however you want to though.





On one hand you want to talk about the importance RL contracts, RL money, indictments, seizures, prison etc. On the other hand you want to call comparisons to the paralells between SL and RL absurd. I'm curious, in YOUR ideal world, what would the SL business/economic climate be like 1 year from today?