Yanis Varoufakis saw the answer to Greece’s euro crisis in computer game economy

30 Ιουλ 2015

Yanis Varoufakis’s Plan B was weirder than we thought. The former Greek finance minister’s alternative to Greece remaining in the euro was to introduce an online tax settlement platform and parallel payment system to replace paper money.


   The Greek government would pay its bills in virtual chits, exchangeable for euros, according to a plan that Mr Varoufakis had revealed in a conference on July 16, but that was reported only in recent days. Under the plan, companies would pay employees in chits, and the government’s online tax system would work as a clearing house for digital transactions.
   Perhaps it is not surprising that the Greek prime minister, Alexis Tsipras, said no to this half-baked scheme. After all, he had a country to run, and residents of rural Greek islands might find paying for the essentials of daily life with digital chits a little impractical.
   But in Mr Varoufakis’s employment history, there is a clue as to why he thought this was a good idea. In March 2012, he was hired as the in-house economist of the games company Valve. Valve is widely credited with having revolutionised how people pay for games - a digital payment system.
   Steam, which allows consumers to buy and developers to release games, was one of the videogame world’s first and best “platforms” - what the tech world calls online marketplaces. But Valve also created economies within videogames. Players of Team Fortress 2 (TF2), a Valve game, inhabit an economy based on the value of hats.
   They spend time on TF2 servers crafting and trading digital items, which they can also buy for a small cost from the Steam store. Keys, digital items used as a unit of currency, allow for a rough exchange rate to be worked out between real money and the effort spent on making digital goods. Most of the items traded by players are hats. Players can put hats on their digital avatars. This is why Valve’s in-game economy is called the “hat economy”: there are a lot of hats. Because TF2’s rules - from its physics to its economics - are designed and recorded, Valve’s digital economy generates a very large amount of data.
   One website, TF2 Spreadsheet, shows players what the exchange rate, priced in keys, for various game items is. For example, you can buy some digital earbuds, which will be worn by your avatar, for about 20 keys.
   Steam’s marketplace works like any other financial marketplace. Currently, buyers are willing to pay US$2.46 for a key, while sellers are offering one for $2.48. That’s a bid-ask spread, or difference, of two cents - yes, Valve’s digital economy even has bid-ask spreads.
   Valve knows how much time users spend crafting items of various in-game monetary value, which makes it possible to work out the wage rate from various crafting activities. If a player spends 45 minutes making an item worth two keys, and one key is trading at $2.47, then the player has been working at a wage rate of $6.59 per hour.
   In 2011, an analyst estimated the economic value of goods in the TF2 marketplace at $50 million. That wasn’t the money in Steam’s bank account - just a snapshot of the value of economic activity on the Steam marketplace, in the same way that the Dubai Financial Market’s index market capitalisation yesterday was Dh140 billion.
   Because Valve makes the rules, it can change the total number of goods in the economy (both the economy’s total output and its money supply), and the prices of these goods. In particular, by changing the price of new goods injected into the TF2 economy, Valve can affect the rate of return on crafting activity. Or, to put it another way, Valve could play with the economy’s interest rate, much like a central bank.
   So Mr Varoufakis was hired as Valve’s central bank governor, charged with overseeing TF2’s hat economy. In this job, he managed a digital payments system and online settlement platform. And he oversaw the trading of digital keys for digital goods and services at real prices denominated in dollars.
   Clearly he was impressed by the possibilities of the digital economy. While employed by Valve, he wrote on his blog that the digital tools the company had built heralded nothing less than a new economic order. This new order would be characterised by “the eradication of distribution and marginal costs, the capacity of producers to have direct access to billions of customers instantaneously [and] the advances of open-source communities and mentalities”.
   He wrote that “these fascinating developments are bound to turn the autocratic Soviet-like [corporate, governmental] megaliths of today into curiosities that students of political economy, business studies … will marvel at in the future, just like schoolchildren marvel at dinosaur skeletons at the Natural History Museum”.
   Three years later, as Greece’s finance minister, faced with his country’s ejection from the euro zone, Mr Varoufakis drew up plans to introduce the trading of digital chits for taxes, goods and services at prices denominated in euros. In short, Mr Varoufakis’s planned solution to Greece’s euro crisis was to bring Valve’s hat economy to his country.
Πηγή: thenational.ae
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