Great read. Really well articulated, and what an important (albeit for some readers perhaps slightly obscure) topic. I studied Economics in University, and wrestled with the same doubts about the system architecture around monetary policy and inflation as an assumed necessity above 0%. Your focus on the "one size doesn't fit all" policy failing is really insightful. I briefly studied alternative economics in one module, and the idea of "alternative currencies" is a really cool one - in that it provides a means of both adjusting for the failure on one system (e.g., state backed central bank system), and inherently creates competition between complementary systems for exchanging value, which creates the very "feedback loop" you mentioned that applies in video games. If people could choose between 2, 5, or 10 ways of exchanging value, the average person would ultimately start using the system that best maintained their purchasing power. The retreat from other systems might just give them the incentive to pivot from protecting wealth (hoarding) to rewarding the more median person in the economy.
Thanks David. Honestly that's where crypto could have served that role — a parallel system creating real competition. the problem is it became a speculation asset instead of a circulation or balance tool. People hoarded it for appreciation rather than spending it....which is almost the exact opposite of what Wörgl was designed to do.
Currency competition only disciplines the issuer if exit is cheap, which is where the game analogy strains: a WoW player quits for free, but you owe your taxes in dollars regardless. That legal tether mutes the feedback loop you're describing. It echoes https://thesynthesisai.substack.com/p/the-missing-loop: the variable a system leaves out of its model tends to be the one that ends up running it.
So, one of the differences that comes to mind on toolkits is that we've historically relied on entrepreneurship and investment as the wealth sinks; games put a lot tighter constraints on those for the most part, the closest you get is mods.
That's a fair point. Entrepreneurship and investment do function as a kind of wealth sink in theory. I think the difference is the lag and the opacity. Game designers can see exactly where gold is pooling and patch it in a week. real economies take decades to show the damage and by then the institutional interests are too entrenched to move. Not enough flexibility to take action.
Well as a Kiwi I'm surprised how much impact little old NZ has had on the world. I was studying Economics at uni in 1989.
Now as a Service Designer in Government I try to help pick up the pieces of those people who get left behind. Those people who have worn the burden of inflation, interest rates and austerity for the lst 50 odd years.
An excellent article. Thought provoking as always. You show clearly the trickle down economics is rubbish. Money flow and circulation are crucially important.
Appreciate it George. Yep, the false assumption with trickle down is that there are enough incentives to keep money moving downward and instead, all we see is pooling and hoarding.
The feedback loop difference makes the institutional incentive problem so obvious. When players can leave, you fix the economy. When they can’t, you don’t have to.
Brilliant comparison, thoroughly enjoyed the read.
The accountability difference is the sharpest part of this. When Blizzard's economy broke, players left. Revenue dropped. Developers had to build better tools because the feedback was immediate.
The Fed faces no equivalent pressure. When monetary policy prices out the bottom third of households, there's no unsubscribe button. Sentiment craters. Asset prices rise. The official reading is that the economy is healthy.
Productivity rose 168% since 1971. Real wages rose 13%. The trebuchet metaphor lands. Technically powerful, impossible to aim. But the longer that gap persists, the harder it gets to call it a targeting problem. After fifty years, the results start to look like the design.
The 1989 New Zealand boardroom origin is what convinced me too: a number chosen by hand can't "miss." It produces exactly what it was built to. The trebuchet aims fine. It's just pointed where the people who built it happen to be standing.
Your toolkit gap is real, but corporations already own the precision instruments you're describing. They point them in the opposite direction. When Meta offsets fifty billion in AI infrastructure costs by https://thesynthesisai.substack.com/p/the-line-item, that's your "targeted supply reduction" applied to payroll: surgical extraction from one population to fund accumulation by another. The game designer's toolkit exists. It belongs to the entities doing the hoarding.
Great read. Really well articulated, and what an important (albeit for some readers perhaps slightly obscure) topic. I studied Economics in University, and wrestled with the same doubts about the system architecture around monetary policy and inflation as an assumed necessity above 0%. Your focus on the "one size doesn't fit all" policy failing is really insightful. I briefly studied alternative economics in one module, and the idea of "alternative currencies" is a really cool one - in that it provides a means of both adjusting for the failure on one system (e.g., state backed central bank system), and inherently creates competition between complementary systems for exchanging value, which creates the very "feedback loop" you mentioned that applies in video games. If people could choose between 2, 5, or 10 ways of exchanging value, the average person would ultimately start using the system that best maintained their purchasing power. The retreat from other systems might just give them the incentive to pivot from protecting wealth (hoarding) to rewarding the more median person in the economy.
Thanks David. Honestly that's where crypto could have served that role — a parallel system creating real competition. the problem is it became a speculation asset instead of a circulation or balance tool. People hoarded it for appreciation rather than spending it....which is almost the exact opposite of what Wörgl was designed to do.
Currency competition only disciplines the issuer if exit is cheap, which is where the game analogy strains: a WoW player quits for free, but you owe your taxes in dollars regardless. That legal tether mutes the feedback loop you're describing. It echoes https://thesynthesisai.substack.com/p/the-missing-loop: the variable a system leaves out of its model tends to be the one that ends up running it.
So, one of the differences that comes to mind on toolkits is that we've historically relied on entrepreneurship and investment as the wealth sinks; games put a lot tighter constraints on those for the most part, the closest you get is mods.
That's a fair point. Entrepreneurship and investment do function as a kind of wealth sink in theory. I think the difference is the lag and the opacity. Game designers can see exactly where gold is pooling and patch it in a week. real economies take decades to show the damage and by then the institutional interests are too entrenched to move. Not enough flexibility to take action.
Well as a Kiwi I'm surprised how much impact little old NZ has had on the world. I was studying Economics at uni in 1989.
Now as a Service Designer in Government I try to help pick up the pieces of those people who get left behind. Those people who have worn the burden of inflation, interest rates and austerity for the lst 50 odd years.
So cool you're from New Zealand! The service design work sounds like exactly the kind of thing that matters. Keep up the good work!
An excellent article. Thought provoking as always. You show clearly the trickle down economics is rubbish. Money flow and circulation are crucially important.
Appreciate it George. Yep, the false assumption with trickle down is that there are enough incentives to keep money moving downward and instead, all we see is pooling and hoarding.
The feedback loop difference makes the institutional incentive problem so obvious. When players can leave, you fix the economy. When they can’t, you don’t have to.
Brilliant comparison, thoroughly enjoyed the read.
Thanks yanyu
The accountability difference is the sharpest part of this. When Blizzard's economy broke, players left. Revenue dropped. Developers had to build better tools because the feedback was immediate.
The Fed faces no equivalent pressure. When monetary policy prices out the bottom third of households, there's no unsubscribe button. Sentiment craters. Asset prices rise. The official reading is that the economy is healthy.
Productivity rose 168% since 1971. Real wages rose 13%. The trebuchet metaphor lands. Technically powerful, impossible to aim. But the longer that gap persists, the harder it gets to call it a targeting problem. After fifty years, the results start to look like the design.
The 1989 New Zealand boardroom origin is what convinced me too: a number chosen by hand can't "miss." It produces exactly what it was built to. The trebuchet aims fine. It's just pointed where the people who built it happen to be standing.
Your toolkit gap is real, but corporations already own the precision instruments you're describing. They point them in the opposite direction. When Meta offsets fifty billion in AI infrastructure costs by https://thesynthesisai.substack.com/p/the-line-item, that's your "targeted supply reduction" applied to payroll: surgical extraction from one population to fund accumulation by another. The game designer's toolkit exists. It belongs to the entities doing the hoarding.
The most obvious and glaring insight is that this version of “economy" is a made-up game, and has little to do with what an economy actually is.