CAPITAL in eRepublik

Day 2,847, 21:52 Published in USA USA by Silas Soule

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Just in time for Labor Day...



CAPITAL in eRepublik



I. INTRODUCTION.





eRepublik is a somewhat sketchily detailed, obliquely realistic setting that is ripe as rain for something, anything really, which is too strange to believe.

The uncanniness of the ninth part of its denizens, who are, allegorically speaking, sinking into a cosmic cesspool in a synchronized swim with the George McCready Price's of karmic history, you know, that idiot-Canadian huckster who made up for his total lack of scientific training with an unbridled enthusiasm for ignorance, it is THAT eerie e-spookiness of magic unrealism what permits a goober like me free access to claim a laser-like, Dajjal-slaying insight regarding the serious topic before us, to wit: e-economics.



Some things in this e-life are unequivocal.

We all know that e-adulterers, for example, will spend 30,000 years in the e-afterlife climbing a tree of metal thorns while giant, fiery, razor-toothed women devour them. And that people who eat animals will go to a purgatorial slaughterhouse on an unpleasant planet not too far from Tralfamadore, to be crushed over and over again into a fine emerald-soylent pulp, until they can manage at long last, through mindful means, to undo the consequences of their actions and be reborn as a multi of one of Ajay Bruno's lesser minions ten or twelve hundred times, before being able to re-enter the realm of respected players.



e-Economics is less so. The discipline has a childish passion for mathematics, as well as a tendency towards purely theoretical and highly ideological speculation, at the expense of historical research and inter-disciplinary rigor.

Luckily, I come from a long line of journalists, poets, alcoholics, white-witches, space-travellers and Frenchmen for whom economists are not highly respected. In my family circles, economists, despite their charms, are required to set aside their contempt for other disciplines and their absurd claim to greater scientific legitimacy, despite the fact that they know almost nothing about anything, before being granted a place at the table.






We cherry-pick those parts of political economy that are convenient to our world view. We all do this. Left, Right, Center. Because cherries are yummy.




Baroque refers to a lack of emptiness, to a departure from structure and rules, an extraordinary plenitude of disorienting detail.

America, the continent of symbiosis, mutation, mestizaje, has engendered and embodied this spirit for millennia, with it elaborate Aztec temples and its poetry of flower and song, its rituals of communal expression, its poet-rulers and elaborate coyote stories erected and relayed on the rolling music of drums that assembles friends far and wide and calls them, calmly, relentlessly, rolling on down the river forever, to the law of the flowers.

Nothing recalls the smoke and rain, the destroyed temples, the great councils, the exultation of vanished pride, fortune, majesty, praise and power but this, here, this written page. Nothing else. The actual, detailed, profound, glorious, perfumed New World of endless forests and flowers is all but forgotten and ignored in the annals of Old World officialdom.




And so, yes, it is just and right to begin with too much of too little. To begin with remembering the last times of the men of words, those poet-philosophers who demanded from the peaks of their elaborate and mighty pyramids: "Does man possess any truth?"

And yes, now let us begin with the caretakers of the Peaceful People, the Hopitu, who still ask all of us in this Fourth World, each year, as we start our retreat once again for the cycle of the Soyal, as winter approaches, as they have been asking us since time immemorial: "What shall we sing?"









II. BOB BAD-TOOTH

Although there are many other antecedents, the explosion of the idiocy known as modern e-economics can be traced to the foundational catastrophism of the Right Reverend Bob Bad-Tooth. This crusty old Angler-curmudgeon opposed the view of the ancient game designers who saw game-play as improving and in principle perfectible.

He thought the growth in players greediness and horniness was indefinitely greater than the power of software to produce subsistence for them, and thus predicted that there must be a divine balance of equality in alimentation, wherein players' ever-growing appetites would be kept in check, inevitably and divinely, by misery and vice.

To his credit, Ol' Bob Bad-Tooth was actually one of the Guardians of the Universe, and so had seen all this happen before on his home planet of Maltus, and so he opposed all assistance to the poor and encouraged in high tariffs in order to encourage planetary production rather than reliance on extra-terrestrial imports.

On the theoretical plane he once suggested to the Bucharestik-Kabal, Our Illuminated Founders of the e-World, Wholly Be Their Memes, that a type of "overpayment" arises due to unearned capital assets such as land, patents, corrupt practices for owners; or in the form of pay raises due to political action for workers, and that such monetary suchness is a form of economic surplus that arises naturally from rational stewardship of the "hard goods" on hand.

An illuminated notion to noodle, perhaps, which indeedy did lead to much more noodling along those lines, as we shall see as we dig deeper into the question of distribution.



But Bob Bad-Tooth is best remembered for promoting the foundational concept of Old World economics, which essentially boils down to the idea that too many mouths to feed will lead, one way or another, to a balls-up fucking catastrophe all the way round. As well all know, that went on to became the foundational mythos and leading storyline of the eRep Labs game designers.

The Geniuses of Bucharest only needed to mix in a smidgen of hyperactive nationalistic Clauswitzian nostalgia to such a Bad-Tooth Stew in order to create the neo-fascist damp puddle of eRepublik. Dedicated readers will remember that I have mentioned this many times in my remarkable writings, so I won't belabor the point. It boils down to a deadly irrational fear of there being too many disagreeable Frenchwomen in the world.


So. That's how it began. A brilliant religio-scientistic theory that chaos and misery can only be halted by massacring the poor. And the French.




An incident on Maltus.



III. RICKY RICARDO

Ricky Ricardo was a Cuban big band leader-turned-economist who was a contemporary of Bob Bad-Tooth. Like Bob, he had virtually no facts at his disposal, but, being from a Jewish-Portuguese family doing business in La Habana, nonetheless had an intimate knowledge of all aspects of capitalism.

His background made Ricardo a good bit less of a prejudiced asshole than Bad-Tooth, who was, after all, an uptight Wasp of the highest order. But it is fair to say that Ricardo was equally as willing as ol' Bob to claim economic super-prescience of the superlative kind, despite the fact that his only real claim to fame was marrying a very funny and highly-opinionated red head.

Ricardo was obsessed with the idea that land rents would increase unendingly and astronomically. Basically, he pushed the Bad-Toothian hypothesis to its next logical conclusion. He reasoned that an ever-growing population of players would tend to make land increasingly scarce relative to other e-goods.

The Law of Supply and Demand (TM) then implies that the price of land will rise continuously, as will rents paid to landlords. Thus landlords will claim an ever-increasing share of the national wealth, impoverishing all others and causing massive disequilibrium.







The famous economist and his wife, soon after convincing eRep Labs to forego allowing private ownership of land in eRepublik. He was convinced that only ever-increasing taxes could prevent radical disequilibrium, and so encouraged the Founders to assume that all lands in all countries was owned by the State.





Of course, Ricardo was completely wrong about the details. He missed the whole "industrial revolution" thing, which made his entire theory about the alimentary imperative being tied to the land a moot point.

Subsequent econo-magicians have argued that in fact it was that very same Law of Supply and Demand (TM) which is what ameliorated the "scarcity principle" inherent in Ricardo's eco-riffs. It is a simple and convincing theory, after all: that if the supply of any good is insufficient, and its price is too high, then demand for that good should decrease, which should lead to a decline in its price.

For example, if the price of both real estate and oil prices rise, then logically, as any good economist will tell you, people will just naturally move in droves the countryside and enthusiastically take to traveling about by bicycle, or both.




Hmm...


In fact, like Bad-Tooth before him, Ricardo was on to something. He just missed out on prognosticating the particular details. In fact, as we have observed, supply and demand in no way rule out the possibility of large and lasting divergence in the distribution of wealth linked to extreme changes in certain relative prices. It CAN and DOES happen.

The real question with Ricardo (as with Bad-Tooth) is: Are we required to "roll the dice"? Is this shit, these Bad-Toothian / Ricardoian catastrophes... inevitable?











IV. CARLOS MARQUES

About 50 seasons after Ricardo's sigh of relief that eRepublik would not, after all, descend into the chaotic madness of Farmville, once the game was actually up and running, then it became clear to all the young chappies that the real problem of the day was not going to be rural misery, after all.

It was the misery of the industrial proletariat. Low wages, long work days, endlessly logging-in to click, click, click, click, click-fuckety-click. Popular "fictional" articles emerged, like Les e-Miserables and Oliver Twist-and-Shout, exposed the horrors of child labor to a wide audience, while theorists like the SFP's Frederick Engels published in-depth analyses of the problem in special forums dedicated to topics like The Condition of the Working Class in Scrabmanic e-America.

Wages stagnated while profits grew. It was a simple as that. Even without aggregated national statistics, it was obvious. The first anarcho-communist movements began to develop all over the New World. The bankruptcy of the system seemed obvious not only to the outright rebels, but even to many of those with their hands on the levers of the machine.

In the heat of the excitement of the uprisings, Carlos Marques penned a dramatic poem predicting that the development of modern industry produces its very own "gravediggers" of the bourgeois system, and that its fall and the victory of the international proles were equally inevitable. He then went on to labor over a voluminous treatise justifying that conclusion, proposing the first "scientific" analysis of capitalism and its collapse.





The famous book by "Marx" (sic) which proves that an alien race of shape-shifting-velociraptors called the Rotflchildes dominates the human economy by means of dark magicks and addictive fast foods.




Like Ricardo, Marques based his predictions on the internal logical contradictions of the system. Rather than a self-regulating system that reaches equilibrium according the "Hands" and "Laws" of Smith and Says, and like Ricardo he looked at the price of capital and the principle of scarcity as fundamental in an equation where capital was primarily industrial (machinery, factories) rather than landed. What he "discovered" was that not only is there no limit to capital accumulation, but that the system lives and breathes on an ever-increasing rate of return on capital, and thus a never-ending concentration in capital's share of the national wealth.

The Marquesian apocalypse is based on this concept. It predicts either a diminishing return leading to deadly conflict between capitalists, or a grotesque over-concentration of national wealth in too-few hands, leading to a workers revolt. (Or both.)

This scared the crap out of the Lords of eRepublic, and so the very existence of a class of "workers" was calmly and slowly removed from the game before it could become problematic.


And like Ricardo and Bad-Tooth before him, eventually it became clear that Marques had hit on some interesting ideas, but was wildly wrong with his predictions of doom and gloom. Wages eventually began to increase. Technological progress, the development of social-democratic, socialist and anarcho-syndicalist e-communes, steadily increasing productivity and massive Keynesian interventions by the Admin all combined to serve as a counterweight to problems of accumulation and concentration of private capital.

In other words, Marques was correct that the capitalist system tended towards disequilibrium, but he vastly underestimated the variety of means by which players would be able to consciously modify and constrain those excesses.

He asked some very interesting questions. His insight into the problem of "infinite accumulation" synchs rather interestingly with virtually all of mankind's serious religious traditions, for one thing. Which is interesting but not particularly helpful.

At what level of concentration does private capital become destabilizing? Has the apocalypse simply been postponed?







Apocalypse Postponed Installation, Nadim Abbas




V. KUZNETS

The flip side of American Baroque is North American Economic Theory. We might say that economists' traditional fondness for catastrophizing gave way to an similarly excessive fondness for fairy tales.

Simon Kuznets was the first economist to actually gather a good deal of data and at least pretend to make an analysis based on facts rather than logical deductions and a kind of sociological systems analysis.

His monumental study of shares of upper income groups in income and savings looked at the USA over 35 years, from 1913 to 1948, relying mainly on income tax returns and estimates of national income. Regardless of the (are you surprised?.... incorrect) conclusions that he drew, Citizen Kuznets had the remarkable insight to understand that it is these two data points that really matter if you want to undertand the problem of the disambiguation of wealth: national income and private capital.

What does a nation produce? And who gets what as a result?

In his writings, it is clear that Kuzets was aware that the compression of high incomes in the USA during this period was artificial. There was a major economic crisis and two of the most expensive and existentially-challenging wars in the nation's history. The rich drew down their assets to help pay for it.

But what he presented to the powers that be was a theory, which came to be called the "Kuznets Curvature", in which inequality is said to follow a "bell curve". That is, it gets worse before it gets better. It's a nice, neat, magical theory. Ronald Reagan adored it. His minions and successors still do.

It is also, as we have seen, increasingly so, since 1980, and despite the utmost importance of Kuznets contributions to the science of economic data collection, dead wrong.


The Geniuses of the eCarpathians have studiously avoided instantiating Kuznetsian forms of analysis in the New World. The actual numbers on national production, and especially on the private accumulation of capital and the rate of return on the same, are treated as, alternatingly, "unknowable" and "state secrets".

It is a happy path for oligarchs everywhere to let the Reaganauts and Friedmanites "own" economic theory and, most importantly, to keep it theoretical.




The future, according to a 1930 painting. Obviously, the future is located in Colorado...





VI. MORE KUZNETS, and r > g

What is the share of ownership, in terms of a percentage of total national wealth, of the top decile of a nation's population? How has it changed over time? And what does it mean when that share increases? And if top managers (public and private) set their own remunerations in a time when the curve is trending sharply upward, how can anybody trust that system is not being rigged?


We can ask such questions now knowing that they are good, scientific questions. This is how we understand the ACTUAL distribution of wealth in a country. We know that there are a large number of rational means to ameliorate the negative impacts of over-concentration. So getting these numbers right is akin to understanding the nation's (or the planet's) economic health.





One more equation to consider: r > g

r is the average annual rate of return on capital. This refers to profits, dividends, interest, rents and other income from capital itself, expressed as a percentage of its total value. If you think of it as "unearned income", that is not too far off. Official r in eRepublik is quite low, since no mechanisms exist in-game for banking or investment, and land more or less does not exist.

There is a black market for such services, so it exists, but is difficult to measure. Most of what is visible is actually at the State level. And this is worth pondering. Due to the mechanisms of the game, the State is in fact the only major Corporate entity in the game that has the ability to generate a return on capital. In particular, taxes on incomes and rental agreements with other States.



g is the annual growth rate of a nation's economy. "A nation's economy" refers, basically, to its total income, which can be thought of as synonymous with the total productivity of the nation.

In an economy that is at equilibrium in terms of income and wealth distribution, the rate at which g increases should be in synch with the rate at which r grows. When r > g over an extended period of time, and especially when r is growing considerably more rapidly than g, then a problem is developing.

Whether that problem will reach apocalyptic proportions, and what to do about, is a political and social (and perhaps even spiritual) question. Economics has never been any good at answering what to do about income inequality and so on. It hasn't even been very good at predicting when the problems would occur or how bad they would be.







Now we live in an age of extraordinary access to information and the tools to analyze it.
Applying that kind of science to e-science would be quite interesting.








XOXOXOXOXOXOXOXO,
PQ









SONG of FRIENDSHIP


We are come here only to know one another,
Only on loan have we come to the New World.


For the love of god, let us love one another.