Dependency theory and the stipend

Just been wondering, so I'm going to lay out my train of thought and let other people pick te holes in it (which are probably there). Is it true there is now NO income other than that generated between players? If so, won't that lead to a gradual impoverishment of the SL economy as some players gradually accumulate most of the wealth and only recycle it into the economy via GOM etc?

Already I imagine we're on an 80/20 rule in regards to wealth and ownership of it, and I can't imagine the ratio is getting any 'better'.

Now, I'm all in favour of a capitalist economy, but i'm reminded of something I read when studying political theories, in particular, marxist ones.

He theorized the collapse of the capitalist economy as various capitalist would slowly compete each other to death and certain people would end up vastly wealthy while the vast majority were impovrished.

However industrial revolution Europe never went quite that way. Why? Well, those following Marx, in particular Lenin and the 'Dependista' school of Latin America, theorised that the posession of colonies allowed an influx of cheap resources which boosted both rich and poor in the 'northern hemisphere' countries. This was at the expense of the 'southern hemisphere' countries.

Now how does this relate to SL?

Well, if there is no inputting of new wealth into SL, (in SL's terms, no money being printed), what's to prevent us from going the way Marx theorised Europe would go? We have no independent resources pouring into the economy to provide a small boost to everyone, instead, those selling will gradually accumulate wealth and those buying will lose it, becomign an impovrished underclass, running from event to event begging from the money tree (until the revolution comes, when anshe, me, and some others will be first against the wall! )

This has come to my thoughts recently as I realise how well some people are doing and how really, there's little chance (only need to buy so much stuff), or incentive (owning land philathropically gets expensive), to redistribute their wealth. Instead, it gets sent to GOM.

Whats worse, every time a player cancels an account, some money is removed from the economy. Is it possible we're going to see rampant deflation? No new money coming in, some money leaving, and other money just accumulating in the accounts of the few.

Anyway, bit of a ramble. But there you go.

What am I missing?

PC
ps. I think i need a 'fetid' in here somewhere.

Umm... doesn't everyone still get a stipend every week?

L$50 for basic accounts and L$500 for paid accounts assures that everyone has at least a little money to spend every week, even if they don't earn anything else. L$50 isn't much by istelf, but multiplied by the total number of users, it's enough to keep the economy cycling, I would think.

Oh! Good, you're right. Thank goodness the Lindens have given us our own third world to exploit

yes, Pirate, the stipend fuels the economy with additional capital, but also remember than when you sell your lindens in a market like GOM, someone else is buying it. That will often be other SL players. So really that is a recycling transaction rather than a money sink, assuming those bought $L are actually used.

[EDIT: DOH, read your post too quickly. You already pointed this out. Hmmm... do really think people are going to hoard their L$? Interesting phenomenon if that turns out to be the case, but I would be surprised. I would think users would only keep high balances if they need the working capital for big projects/services]

I also feel that as the size of the community grows, competition will grow too. Sure, existing market leaders have an advantage in terms of experience and brand name/market awareness, and sure, the bigger the market the noisier the market until better search tools are released... but even so, i would imagine competition will only increase, not least because the opportunity will increase.

you are right though, that too little currency in circulation will kill the workings of an economy. But that's what LL is for -- just like the US treasury, they can increase money supply at will.

Stipend influences L$ value, but it certainly is not the beall and end all of the economy.

L$ are essentially used as a micropayment system, to allow people with fulltime extra-SL jobs to buy things that they want in SL, and for those who work in SL to provide these thinigs.

Of course, there's a limit to the kinds of things one can create within SL currently, but the envelope of that limit has been pushed quite far.

In any case, Jack, who wants to spend his time socializing in SecondLife, can pay Jill, who makes clothes, the equivalent of USD for her to make him some SecondLife clothes. Whether the payment is directly in USD or via L$, this is the underlying transaction that is going on.

Azelda

Perhaps the $L should move to the Prim Standard. Each $L can be redeemed for a prim.

Or maybe that was a bad US history joke that just dated me.

You decide.

Interesting theory, but without knowing a accurate churn rate for subscriptions its hard to say. Very few PWs would release that info though... Personally I feel its too soon to know how the stipend change is going to effect the economy. Im sure its just as a touchy subject for the Lindens as for the player community. Tuning the economy is one the biggest banes of developing a succesful artificial enviroment. Lot easier to totally screw it up then to make even a minute improvement.

Exactly! My issue is not that some money had to come out of the system, but that the money that came out of the system came primarily from the group that was brokest. I very much worry about the stratification of wealth because if there are, say, 10% of the gaming population who are there to provide service and the 90% there to buy service, what does that do to the interactions of players, not to mention the issue of self-worth if one is only a consumer and thought of as incapable of making a contribution other than buying (both lindens and products)?

I expect to see a slow but definite demographic change in the gaming population, and perhaps this is the desired effect. We shall see!

He theorized the collapse of the capitalist economy as various capitalist would slowly compete each other to death and certain people would end up vastly wealthy while the vast majority were impovrished.

I think the biggest problem with the SL economy isn't the economy itself... it's the expectations that people bring with them from other MMO's. In SL success depends primarily on real world skills. Those that have them will always have the advantage over those that don't. If people view SL as a competition then it will seem terribly unfair. The fact is though that it's not a competition, or a game. Other MMO economies work like a Skinner box. Everyone has an equal shot at the cheese just by pushing the right buttons enough times. SL will never be that way, nor was it ever intended to be that way. It's more like an ala carte buffet.

When GOM and land tiers came along a lot of the beta people flipped a lid at the thought of people being able to buy "status," and others were apalled that anyone would suggest buying L$. With the recent economic changes we're seeing a bit of a repeat of that. Eventually the stigma surrounding buying and selling L$ will evaporate. High earners will be more likely to sell instead of hoard, and others will be more likely to buy instead of feeling pressure to find a way to "get a job" in SL. Right now though there's still a stigma surrounding "money changing" which keeps L$ from circulating as much as they should.

That's my hair brained theory anyway

In a nation of mostly small shopkeepers, why would anyone look down on consumers?

I could be wrong but believe the reference is not to someone look down at, but the consumer itself having a feeling of low self worth because they make no contribution to SL other then spending. In theory I can see the arguement but not in reality. Those that dream of "adding" something "material" to SL, I would think are either already capable builders or those that plan to learn. Quite a few members are in SL specifically for the socail aspects; you can not really put a material value on thier contributions... so how/why should they feel less important?


There is a few people in SL that are precious to me; the highlight of any most my time online is the chance to chat or "hangout" with them. In my eyes, that friendship they provide is worth 1000 times as much as any item Ive ever bought inworld.

I agree with the comments on self-worth but don't see how any change in the economic model (short of rob from the rich and give to the poor) changes the original poster's 4:1 ratio of 'have nots' to 'haves.'

I also don't feel that it matters at all whether someone is manufacturing a product or performing a service. All of our money stays in our little world. I don't take my L$'s to TSO. Whether I am paying for a hooker or buying a car the end result is that someone is being paid for the service of spending time in this world. What they do means little. Purchasing my car does not pay a steel working in Pittsburgh or an assembler in Canada or one of Kathie Lee's sweatshop workers in Central America. It pays the guy who sat there on his computer and linked a whole bunch of pieces together.

I guess what I am droning on about is that I think too much thought is put into what people do (manufacturing vs. service) when IMHO it is all service and since we have no 'foreign' trading partners, it means little. We will always keep roughly the 4:1 ratio mentioned above no matter what model people come up with.

I do think things like self-worth and working towards ways to improve skills of those who want more than a weekly stipend, are worth discussing.

Forseti asked if people are going to hoard their L$? Well I hoard mine while i learn what I need to sell items. I will then use it for buying land. Until then, apart from adding to the tringo pot when i play and uploading textures, I spend nothing.

Alexa

So... where in the real world has Marxism ever been proven correct? And, why are we concerned about it here?

I perform an invaluable service in world. I allow people to bask in my magnificence.