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Home | Mises Library | Do Video-Game Worlds Need Government Regulation?

Do Video-Game Worlds Need Government Regulation?

  • Do Video-Game Worlds Need Government Regulation?
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Tags The EntrepreneurMedia and CultureEntrepreneurshipPolitical Theory

01/15/2016Giuliano Millan

Ever since the first computer game was introduced in 1962, video games have had an ever-expanding role and impact on society. In 2004, video games started earning more than Hollywood’s domestic box offices. With this expansion of the industry new kinds of games have started to emerge.

Recently, massively multiplayer online games or MMOs have seen increased popularity. In many of these MMOs, players are allowed to define their own goals and play in any way they desire. In addition, games such as EVE Online allow players to produce goods which can then be traded in the game world for the game world’s currency and goods. This means that the game takes place in and around a real and functioning virtual economy.

With the increasing popularity of virtual economies, however, scholars and academics have argued that the economies of virtual worlds are not as separate from the real world as they may appear at first glance. The argument goes that virtual currencies can be seen as just a continuation of money in the real world. This interpretation of virtual currencies can be seen when real world currencies are exchanged for virtual world currencies through sites such as Ebay. Increasingly, there has been a call for governments to regulate and implement policies into these virtual economies.

According to Clare Chambers in her article “How Virtual Are Virtual Economies?”:

the legal situation is vastly ambiguous and at best unclear. There is a lack of clear governance, jurisdiction and rule of law. Within this lack of governance and control there is a lack of real world regulation such as price control, taxable assets and income control which would have a benefit for the real world and causes disadvantages to the virtual world.

The argument used for implementing regulatory measures states that if virtual world currencies are a continuation of real world currencies, they must be subjected to real world laws and regulations. It has been stated by the same scholars who call for government regulation that the way in which regulation should be imposed is unclear; however, the notion that government oversight should be implemented in some way should be questioned before it becomes more widely accepted as the norm. Proponents of implementing real world regulations will point to scandals and crises in the virtual world to justify the need for regulation in virtual worlds, but this ignores some basic arguments against regulating.

Aside from the unsupportable claim that price controls, income controls, and taxes would help an economy, why should we trust real world governments and regulations to protect us from virtual world scandals and crises? Real world scandals and crises not only occur just as they do in the virtual world, often times they are caused, aided, and prolonged by the governments whose task it was to stop them. Another point that should be brought up is the existence of choice in a virtual world as opposed to the real world. For instance,

participation in these in-game economies is ultimately a choice, more akin to playing the stock market than to buying groceries. While players exchange their time or money for in-game goods and services, they can just as easily invest their time and money in activities of other sorts, effectively going “off the grid” in a way rarely possible in real life. Unlike participation in the economy of the real world, the choice to participate in a virtual world is entirely voluntary.

Unlike real world economies in which people are unable to totally opt-out, virtual economies are entirely optional. People are free to participate in virtual economies to any extent they desire. This allows game developers to create rules that support the design of the game. In certain games such as EVE Online, part of the appeal is the intentional lack of laws in the world which allows individuals to become pirates, bounty hunters, miners, and more. In Second Life, developers have granted intellectual property rights to players who make items for the game.

Choice in a virtual world presents some very interesting opportunities. Because developers create their own governments and regulations, analysis of which virtual governments’ people choose to live under would be an interesting venture. They can also be used to demonstrate economic laws. For example, the game Diablo 3 can help us understand the causes of hyperinflation. Unfortunately, many of these possibilities for analyzing human action may be limited or eliminated depending on how and whether government regulation is implemented.

Aside from virtual economies being completely optional, another difficulty that arises when attempting to regulate virtual economies is exactly who should be allowed to regulate these economies? Up until now the regulating agencies within virtual economies have been the developers of the games. Unlike the real world which has physical borders that government jurisdiction may be limited to, virtual worlds contain players from many parts of the real world. It’s an international and global marketplace. In addition, why should we assume that a third-party regulator would have better outcomes than the developers of the game itself?

As virtual economies grow larger and their popularity increases, the issue of regulating virtual worlds continues to be a topic of discussion among scholars, while providing a unique opportunity to analyze human action in a unique and interesting way.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
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