Work-Standard Analysis of Second Life (Pt. I of II)

The Virtual Economy of an MMO is shaped by its developer and player base. To implement Production for Profit/Utility and pay for the costs of running the MMO, the developer would constantly introduce new Incentives to get the player base to spend their Kapital. A Fiat Currency, employing “Currency Substitution” that backs its Value with Hard Fiat Currencies like the US Dollar, British Pound, or Euro, facilitates the movements and Kapital and Schuld between developer and player base. On its own, this Fiat Currency established by the developer is essentially worthless. By pegging its Value to the Hard Fiat Currencies, the developer has a Fiat Currency on par with the Hard Fiat Currencies.

At the time of this writing, the most sophisticated manifestation of the Virtual Economy is Second Life, a 2003 MMO whose Virtual Economy relies on the Linden Dollar (ISO designation “LD”). The Virtual Economy was intended from the ground up to be a Market/Mixed Economy, where Kapital Accumulation is split between the developer, Linden Labs (legally known as “Linden Research, Inc.”), and its player base. What is really interesting about the Linden Dollar is that despite being a digital currency, its stable Value has been relatively stable after the Great Recession. Yet the Value’s fluctuations before, during and after the Great Recession implies that LD operates on a Floating Exchange Rate. The extent to which it ‘floats’ is dependent on the USD Value.

The economic activities of the “Virtual Market/Mixed Economy” in Second Life are primarily centered around the player base. Barring the Premium Subscription fee, which functions akin to a Flat Taxation Rate (‘flat’ because everyone pays the same amount in Kapital), Linden Labs does not conduct economic activities in the same sense that a Council State or Corporate State normally would in a Planned/Command Economy. Going by the concepts and ideas outlined in The Third Place (1st Ed.) and Work-Standard Accounting Practices (1st Ed.), the apparent absence of a “Public Sector” is accentuated by the presences of the “Private Sector” and “Foreign Sector” within the Virtual Market/Mixed Economy. On the one hand, there are the economic activities of privatized commercial firms operated by the player base. And on the other hand, offline privatized commercial firms external to Second Life form much of the Economic Foreignization that occurs in the Virtual Market/Mixed Economy.  

The closest equivalent to a “Public Sector”–if it can even be called one, is the actual digital infrastructure owned and operated by Linden Labs and the presences of various non-profit organizations external to Second Life. When the player accepts a Premium Subscription, they receive a Stipend of Kapital from Linden Labs for their own purposes. “Virtual Charities” and “Minimum Wage” also exist. Additionally, attempts were made since the mid-2000s to establish an “Virtual OECD-Type Student Economy,” applicable to the tertiary educational levels of existing OECD-Type Student Economies, but those efforts did not materialize. With virtual land, the Linden Dollar, and various privatized commercial firms run and operated by the player base, a “Virtual Fractional-Reserve Banking System” was able to emerge in the forms of a “virtual real estate market” and a “stock exchange” as two Financial Markets.

Since Second Life functions on servers connected across a grid system, the “virtual real estate market” revolves around the ownership of those servers and the plots of virtual land within them. In 2006, a Chinese woman living in West Germany, going by the handle “Anshe Chueng,” managed to yield $1,000,000 USD. This fortune was made possible because of the Linden Dollar being backed by the US Dollar and because of her instrumental role in formalizing the “virtual real estate market.” Today, she continues to sell virtual real estate in Second Life on an official website.       

The first and only Financial Market catering to Stock LCFIs was established in 2007, several months after Business Week ran its article on Anshe Chung. The World Stock Exchange (WSE) represented an attempt in Second Life to establish its own Financial Market for the player base. The lack of regulations and legal protections against hacking and theft were what ultimately led to the concept becoming impractical. This explains why, in the 2020s, no legitimate Financial Market exists in Second Life.  

Given the implications of Virtual renditions of Neoliberal institutional actors, one has to seriously wonder why there have not been suitable political governance structures yet. With Linden Labs proving to not act as a reliable Parliament or as an Authoritarian (as exhibited by certain Social Media platforms on the WWW, which is beyond the focus of this discussion), one would have to assume that the player base is expected to self-govern in some manner. Political parties did emerge at one point in Second Life, all of them with their own perspectives. The two main parties were the “Nation Party” and the “Platform Party.”

The Nation Party: Those who believe that Second Life is a ‘world,’ a ‘nation,’ or a ‘country,’ and should be treated as such which includes the formation of a government.

The Platform Party: Those who believe that Second Life is client-server software owned and operated by a private company and should be treated as such.

Barring those parties, a genuine attempt was made at trying to establish self-governance. The Neualtenburg Projekt, a city-state spawned from the desire for self-governance, resulted in the establishment of the “Confederation of Democratic Simulators.” The organization and its official website on the World Wide Web continue to exist as of this writing.

From the standpoint of the Work-Standard, what Second Life has demonstrated is that, if the Student Economy is paired with the National Economy (as argued in The Third Place), then the Virtual Economies of MMOs are to be paired with the Digital Economy. The WWW and its opposing rival, the National Intranet, feature Digital Economies. With Virtual Economies capable of hosting economic activities that can be transferred back to the Real World via the National Economy and Student Economy, a shared conception of Currency serves as the vehicle.   

Here, the real question, as presented by the LERE Process and the concepts of Digital Arbeit and Digital Geld, is this: how does the Digital Arbeit and Digital Geld of a Virtual Economy translate to the Actual Arbeit and Actual Geld of a National Economy? And if Parliamentary Democracy and the OECD-Type Student Economy have both failed to materialize among the MMOs of the WWW, how would Council Democracy and the SSE fare in the National Intranet and its Social Forums?   

Categories: Politics

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