FCI versus NPC versus CCP

If you are a farmer in a video game called Real Life, FCI is your buyer of last resort

If you are a farmer in a video game called Real Life, Food Corporation of India or FCI is your buyer of last resort. It will purchase your produce at minimum support price, even if private traders are offering lower rates than that. If you roleplay as a farmer in any other video game, there is non-player character or NPC to save you. 

I came to know about this after devoting several days to production of virtual apples in games other than Real Life. I knew players desperately wanted those apples to feed their virtual horses, which would then transport users around the virtual space. Virtual apples, like real gold, have value, because the other is ready to pay that value. In fact, what’s so real about gold? You can’t ride it to office, you can’t eat it. It’s virtual as well.  

Okay, back to apple harvesting: it was so much fun that everyone produced a lot, increasing the supply dramatically. In other words, apples ceased to be scarce and became worthless. I started to feel what a Real Life farmer goes through when the free market punishes overproduction. Maybe I should have listened to that dog-like humanoid. “In San d’Oria (a nearby virtual city), there’s a lot of horse breeders. There’s always a need for apples for horses, so grow them. There’s never enough supply. It’s basic economics,” he said. “But don’t sell too many at a time, that’s too much and the price will go down. Just sell a few at a time. Sell cakes in Bastok the same way, or silk thread in Windy.” “Whoa. You must study economics!” “Nah, I fix pipes,” he replied. “Never went to college.” 

According to that humanoid, there were still baking and silk-thread opportunities. But little did it relieve me to learn that. I specialised in apple farming. Why should I switch to baking cakes? That would mean huge re-skilling costs (time, virtual money, learning stress). 

Thankfully, most games have an FCI parallel called NPC, to stave off such distress induced by free markets. Acting on behalf of game makers, NPC merchants offer minimum support prices on virtual goods even when traders offer much lower rates. This helps virtual farmers stick around in the game, and makes them think twice before switching over to another game. The best part about NPCs are their minimum prices, which cover just about anything. So even if I take dead rat soup to an NPC trader, he will stand ready to pay a support price, even if no private trader will.

Such virtual economics heroes stand in contrast to the free-market approach of Eve Online, a space-age virtual reality. Its economy features player-created institutions, from companies and stock exchanges to casinos and banks. One of the earliest and biggest was Eve Intergalactic Bank, which started offering deposit services, insurance, loans, escrow accounts, financial planning, and advice on share purchases and other investment opportunities in 2006. Its interest-bearing savings accounts offered an attractive alternative to zero-interest accounts of the game’s system. Deposits poured in, and the start-up quickly ballooned into a huge institution. After six months of operations, the bank’s CEO announced he had grown tired of his job and had decided to steal the firm’s assets. He claimed to have stolen about 790 billion ISK, the game’s currency. That’s $170,000, going by the exchange rate at that point. There was nothing the players could do, no authority they could turn to. Eve Online’s maker, CCP Games, said it would not intervene in free markets; it would not act as a lender of last resort to refund the bank. Contrast this with Yogi Adityanath writing off loans worth Rs 36,359 crore for 21.5 million UP farmers on Tuesday. Anyhow, the virtual bank collapse did not convulse the virtual economy because markets knew the errant lender would be allowed to fail by CCP. They knew CCP was determined not to encourage errant entities to become too big to fail. They saw the event as a correction, not a crisis. Fast forward to 2008: Real Life markets had priced in bailouts for everyone as the US government went about saving financial firms throughout the year. But panic ensued when an even larger financial firm (Lehman Brothers) was allowed to collapse by the US government. Lehman caused the markets to convulse only insofar as the traders were surprised that it was allowed to go bankrupt. Investors (in Real Life or Eve Online or any other virtual world) panic when they can’t tell what’s going on.  
 

ashish.sharma@bsmail.in