In the wake of the recession I decided I would look at how stable the RuneScape economy actually is: in basic economic terms.
In this article I will also make comparisons between the greater “Real Life” economy, and RuneScape's economy; and there won't be any math. Finally, this is assuming that the “Standard” economy is free market (not a communism or 'command' economy).
Quoting McConnell Brue (a well known Economy textbook) Economics is “The social science concerned with the efficient use of scarce resources to achieve the maximum satisfaction of economic wants”. He basically says, the maximization of the usage of resources. Everything costs money so nothing is free. Even doing seemingly “free” activities sacrifices opportunity cost. In summary, nothing is free. This holds to RuneScape as well: there is no free lunch.
Now this brings me along to a necessary topic to discuss, a sticky one at that, the trade limits. Real life trading is like giving a free lunch. It would eventually mess up the economy to such an extent that there would be so much inflation that no reasonable player could get anything accomplished. Jagex stepped in and intervened by making summoning and other skills that inevitably sucked money out of the economy.
Another concern people have is about “Money Sink Skills”. Some complain that these skills are annoying because they cost too much, but there is a real issue here. Jagex can't control the money supply in any way but removing money. In a normal economic system there is currency that is backed by the government saying that they will honor it. They can create more money, or take money out of the system, and they can also manipulate how much the banks lend out by changing interest rates. First of all, since they can't change the money supply by adding money they have to take it out.
Secondly, there is no debt in RuneScape. Having debt in a game would never work, because what is RuneScape going to do, foreclose on your house? Without there being loans they can't manipulate interest rates. However, it does stabilize the currency to a certain degree.
Before I finally discuss the GE and how it changes the economy, there are two other huge differences. First off, experience. Experience makes some activities that make no sense, like lowering the value of raw goods when they are turned into processed goods. This turns the economy upside down. I am however impressed at how well it works. One would think that nobody would train these skills, therefore raw prices would crash in unison. As demand and therefore price went down, this should in turn drag down the costs. But Jagex has quests and skill capes, which provide incentives for these goods to be purchased. Thus keeping the skills viable.
Secondly, there is no depreciation. Although people don't think about this, if you buy a car you can't sell it back for what you got it for. (Unless if you are buying a car from Chevrolet now). This makes everything worth purchasing. Going to woodcut for an hour? Buy a dragon hatchet. Going to go to the God Wars Dungeon? Get a godsword. There is no time commitment because of the GE, so goods change hands often and never take wear.
Finally, the root of the article is supply and demand in regards to the Grand Exchange. Generally in a graph, supply and demand meet at a price. Thus giving both sides a fair price. There will be no surplus or deficit, and there will be many transactions. (Surplus being when there is more of a good than is being purchased and deficit being when there is less being supplied than there is a demand for) When price ceilings or floors are applied you generally get a surplus or deficit. When prices are capped there will be a deficit of that item, and when there is a floor there will be a surplus.
When the GE came out it looked like it would settle where any market would. It seemed like whatever people wanted to pay for something the prices would rest at. However, to stop real world trading, this turned out to be a bad assumption. I find it reasonable, but it manipulates the economy in these ways:
- Some items will never sell – Unstrung willow longbows, and willow logs will never sell to anybody who isn't doing you a favor. Sure, people buy them, but there are so many out there, and with the price floor not being low enough people can’t justify buying them.
- Some items will never buy – Party hats are so far outside the range, you need to use other items to buy them.
- Items will be convenient to buy and sell, making it worth to buy items whenever you feel like it – Doesn't mean much.
- People with said items in 1 or 2 are being ripped off via their time spent – If I have a bunch of willow logs, I have to go out of my way to sell them. In a regular economy this would not occur.
Overall, Jagex is doing a good job despite all the flaws in their current system.