I recently listened to Edward Castronova’s EconTalk podcast (hosted by Russ Roberts) on the Exodus to the Virtual World (e.g. Second Life, see here). Castronova’s comments on the rising importance of the virtual world are worth listening to. There are plenty of ideas that relate in one way or another to Austrian economics and freedom. For instance:
- Real people buy and sell land and other things in the virtual world spending real money. Why would anyone spend money to buy land in a world that doesn’t exist? Well, why not? Isn’t valuation subjective? (Artificial) scarcity is necessary in the virtual world because a world without any scarcity would not be interesting in the end. It is because we have to strive for things that we find the quest valuable—even in the virtual world. We shouldn’t be surprised that scarce virtual things are valuable.
- The numbers show that more and more people are “migrating” from the real world to the virtual one. Castronova made the comment that one important aspect of the virtual world is that there are no barriers to migration: people can go in and out without any problem (and the capital costs necessary to migrate, such as having a computer and Internet access, are small). As one would expect, the freedom of movement of persons (whatever that means in this case) is valued by individuals.
- The virtual world could become, to some extent, a competing alternative to real life. Hmmm, perhaps. I think until we have games such as the ones described in eXistenZ or in Cypher, it is hard to see how this could happen.
- Castronova also made the comment that people could perhaps one day vote with their feet and migrate to the virtual world to escape bad politics in the real one. I am not sure in which way this could be true, but that’s an interesting thought.
- Finally, one of the most fascinating reasons why people like the metaverse seems to be (libertarian) social justice. Indeed Castronova argues that because everyone starts on an equal footing in terms of distribution of physical assets (i.e. zero), people seem to accept the distribution of incomes and the allocation of property that result. Game participants are not envious of each other. Some people choose to work and invest more than others, some people are smarter than others, but nobody cares whether this makes the end result more “unequal.” In other words, it is as if the system of natural liberty based on deontological ethics (i.e. a situation is just if the process that led to it is just), as cherished by most libertarians, was a well accepted standard in the virtual world. That’s interesting. It may be true precisely because people know that it is not reality. This may also be a selection bias issue. And perhaps it is too early to tell, the future may see a rising demand for the virtual redistribution of virtual incomes and assets…