Capitalism

As most of you know I play computer games as a hobby (some might say as an addiction). Frequently I play those often maligned games known as MMORPGs or MMOGs (Massively Multiplayer Online (RolePlaying) Games). One of the more interesting aspects of MMOGs in general is the aspect of anonymity ... which is to say that since there is little to no real world repercussions to any given action people will tend to speak or act more freely.

Aside from the fact that it often gives you an unfiltered view of true human nature it also means that people are more apt to speak their minds in regard to politics and economics ... whether or not they have any understanding of the subject. One common such subject is Capitalism.

Specifically the fact that capitalism is to 'blame' for high market prices because it inevitably leads to inflation, profiteering and price gouging. Yup the only reason people put a high price on an item is greedy capitalism (yes I've seen that spelled out in no uncertain terms)

I'm sorry ... but capitalism itself is not to blame for inflation, inflation is a function of devalued currency for a number of reasons ... in an MMO this is most often caused by a higher supply of money into economic system than there is a drain of money out of the system. As the amount of game currency that you can make in a period of time increases so do the prices of items that can be gained in a similar period of time because people will 'price' an item at what they feel is a reasonable compensation for their time invested in obtaining it. Likewise buyers are more likely to spend in higher amounts as they have more money; buying tomorrow for 25 coins what they would only have been willing to pay 20 for yesterday.

Profiteering and Price gouging don't exist, it's an emotional attack on someone making a profit or charging more than a some party (often external to the sale completely) feels that the item is worth. I think I've been through this here before ... if they buyer BOUGHT the item, then, on some level, the buyer felt that it was worth the price asked.

In all transactions it is ultimately the buyer that sets the price; he does this by buying. If he buys at the current price he is telling the seller that it is worth that price to him to have the item now rather than spending the time to find it at a lower price or wait for the seller to offer a lower price.

The seller asks for what he feels that the item is worth ... the buyer can say yes, no, or counter with an offer of their own. If the buyer makes an offer then the seller has the same options. This continues until either the buyer buys the item or one of them decides that the deal is no longer worth the effort and says 'no'.

'But you just admited that the seller can reject an offer, so the buyer doesn't set the price.'

Yes ... the seller CAN refuse to sell at a lower price, at which point the buyer is left with two options: buy or don't buy ... the final choice is always the buyer's.

Capitalism is not responsible for impatient buyers, nor is it capitalism's fault if a buyer is uninformed (buyer beware).

That is not to say that I condone blatantly or purposefully taking advantage of a buyer ... that is fraud and is immoral, but it is a separate issue from the economic model of capitalism. There are ways of dealing with that among the player base, but that is really a discussion for my other blog.

The fact of the matter is ... that the greatest failing in modern capitalist systems is the ignorance of the buyers ... if buyers realized their strength in the system and exorcised it more rather than just accepting the idea of the 'monopoly' of the seller ... that is what creates and drives competition which creates lower and more stable prices. No matter how the buyer feels they always OWN half of the "supply/demand" equation.