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Economic Theories

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  • Economic Theories

    Economic Theories

    Classical School Economic Theory believed that people who acted in their own self-interest produced goods and wealth that benefited all of society. It's believed that governments should not restrict or interfere in markets because they could regulate themselves and, thereby, produce wealth at maximum efficiency. Classical theory forms the basis of capitalism

    A second theory known as Marxism states that capitalism will eventually fail because factory owners and CEOs exploit labor to generate wealth for themselves.
    Marx believed that such exploitation leads to social unrest and class conflict. To ensure social and economic stability, he theorized, laborers should own and control the means of production. While Marxism has been widely rejected in capitalistic societies, its description of capitalism’s flaws remains relevant.

    Keynesian Economics, describes how governments can act within capitalistic economies to promote economic stability. It calls for reduced taxes and increased government spending when the economy becomes stagnant, and increased taxes and reduced spending when the economy becomes overly active. This theory strongly influences U.S. economic policy today.

    As you can see, there are three very different approaches to regulating and stimulating an economy, so it is very difficult to get it right, especially in a virtual world with a closed economy

    On the UO Evolution shard we use a mix of all three. We allow capitalism to thrive between players, they make goods, create vendors and set pricing. It's survival of the fittest and is based on supply and demand

    We also allow for players to practice Marxism. Laborers can own and control the means of production as well as become totally self-sufficient and self-reliant.

    The shard administrators practice a bit of Keynesian Economics to promote economic stability, by controlling the gold sinks, holding public auctions, regulating evolution dollar flow, vendor stone pricing, scarcity of top rare items, and frequency of events to prevent inflation and stablize pricing.
    UO Evolution "The Game Has Evolved"

  • #2
    The Three Types of Economies:

    1) NPC-to-player economy involves the flow of goods and services between NPCs, players, and resources.

    2) The second economy is the exchange between players.

    3) The third economy is the exchange between players and Admin/donations

    The addition of vendors has significantly improved the player-to-player economy.
    The vendors can not auction or haggle to find ideal prices, they will sell only at the prices assigned by their owner. Vendors can not buy goods and thus players can not accumulate goods while offline.

    Player-controlled vendors are scattered throughout the world attached to player’s houses. Player vendors have variable pricing based on supply and demand. The search time and cost to find vendors is high and creates a true market experience where a player can 'bargain hunt'

    Vendor stones, created by the Administrators help set a 'price ceiling' to prevent price gouging when goods become too scarce or rare or a player has a monopoly on the market

    Auctions help set the pricing of goods, based on the highest price a community will pay for an item
    UO Evolution "The Game Has Evolved"