The Political Economy of Gamers

Worker Cooperatives in World of Warcraft

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As a Gamer

I grew up playing online games. As a kid, I enjoyed classics like Diablo 2 and Starcraft. In high school, I played Counter-Strike and WoW. In college, I competed at the global 1% of arenas in World of Warcraft: Burning Crusade. During Season 3, I had my Vengeful Gladiator’s Mooncloth Mantle with the rank requirement (back when the game took actual skill). I could trink a 5-point Kidney Shot and Shadow Word: Death the incoming Blind on a 3k MMR rogue. (If that last part doesn’t make sense— don’t worry. Just know that I spent a lot of time in this world.)

Growing up in these online spaces, I had always thought of gaming communities as having a counter-cultural, rebellious and left-wing affiliation. Gamers were outcasts from mainstream society. They stood in opposition to established centers of power. Their status as an out-group meant that everyone was welcome. Years later, internet phenomena such as Gamergate transformed the public perception of these spaces. They soon became exclusively associated with the far right.

However, an analysis of the the political and economic structures of gamer communities often reveals an underlying socialist design. I think many gamers have been socialist and not known it. This essay is a breakdown of the guild and a structural analysis of its political economy: DKP.

Player Organization

Dragon Kill Points is a loot system used by player organizations in massive multiplayer online games (MMOs).

Once you level up and get to the end game content, you're fighting raid bosses that have too much health and deal too much damage for any one individual to kill on their own. To defeat these bosses, players form in-game organizations called guilds. In the example of World of Warcraft: Classic, these groups are generally a formation of forty players who all go into the boss's lair and kill the big dragon.

But here’s where it gets interesting— once you kill the boss, he doesn't drop enough loot for everybody. The boss usually drops around four or five special items and there's no way to split four or five items in forty different ways. At this point, the guild becomes tasked with the highly political decision of how to distribute scarce resources. As you might imagine, within these groups of angsty nerd rage gamers, fairly dividing up the rewards can get very, very complicated.

In economic terms, the guild is engaged in a productive activity (killing raid bosses) and it requires some form of governance to manage the fair distribution of the surplus they collectively create. Just like IRL societies, there are many possible forms of governance within the game. Fortunately, in an old game like World of Warcraft, we have over 15 years of case studies to help determine the most stable and productive forms of player organization.

In the game space, you can ‘vote with your feet’. If a player feels that the guild's governance decisions are unfair, they can very easily quit. This is as simple as typing “/gquit”. After which, players can join another guild. The ability to quickly and easily exit means that any durable organizational structure must be considered legitimate and have the consent of the overwhelming majority.

As you might expect, gamer guilds will often have heated disputes over who gets the most valuable items. (Many of these players are quick to argue and very comfortable saying extremely offensive things all of the time.) It’s especially important to emphasize the anti-social and combative disposition of many gamers. The great irony of the last few years is that many mainstream narratives have written off these online spaces as “too rude” or “too hateful” to ever be folded into a moral system like socialism. But this criticism also cuts the other way— if we can prove that the guild formation is socialism, then consequently this must mean that the economic model is so stable and productive that it can withstand the most volatile and destructive personalities. The plan works even when the people you put inside of it are imperfect.

Earning DKP

DKP is an in-guild currency. DKP is issued by the guild and only members of the guild may own it. This internal currency is used by players to purchase the items dropped by the raid boss. Guild members may earn DKP in three ways: time, attendance and boss kills.

Within the guild there is an hourly wage, often awarded at fifteen minute increments. These wages are paid during the designated raid event hours, when all forty players get together, for example from 6-9pm ET. As an incentive to arrive on time and to be prepared for work, a flat rate starting bonus is distributed promptly at 6pm when beginning the event. Throughout the raid, players receive an additional flat fee for each boss they successfully kill.

Additionally, there are rewards for good performance. In the case where a group kills all of the bosses very quickly, players will receive a bonus for time efficiency. This bonus is usually priced above and beyond the standard hourly rate to disincentivize work slowdowns. Otherwise, the potential to collect wages would outweigh the bonus pay and players would prefer to simply run out the clock and collect their hourly rate. If you’ve played MMO games before, you have likely participated in similar group arrangements but probably not stopped to consider their economic structures. The DKP system is carefully designed to incentivize everyone to have fun, show up on time and play their best.

As an economic structure, each player is a worker in the cooperative entity of the guild. Surplus value is produced through a boss kill. This value is represented by the in-guild currency called DKP.

Importantly, DKP is paid out to all members equally. Across the range of job performances, from high to low, the wages remain equal. Players who routinely under-perform may be disinvited from the guild. But in order to maintain social harmony, guilds keep an equal level of compensation across all players.

In a real world analogy, a DKP system would look like the CEO and the janitor each collecting the same salary, despite their vastly different tasks and responsibilities. In the game, the raid leader, the main tank, the highest and lowest damage dealers, all get paid the same. Despite the seeming illogic of this system, DKP reigned as the dominant form of player organization for about fifteen years. It only ended when the game was structurally reorganized to accommodate more casual participants as the late player base dwindled. Today, many guilds use a modified system of DKP, with many similar mechanics.

Comparative Governance

Many other models of guild governance exist. For example, there are monarchies or dictatorships, where one guild leader decides everything. (These groups do not last very long.)

Loot Council is a system of representative democracy. In this model, a small committee is comprised of members from each specialization. This committee will make decisions about how to distribute scarce resources in order to best serve the organization as a whole. In varying models, members of a Loot Council may be elected from below or appointed from above. Decisions by this council are often made on a purely technocratic basis, allocating resources to maximize damage output. Alternatively, the council may function in a more communitarian fashion where it chooses reward certain players to ensure social cohesion over maximum efficiency. At any given time, the council must deliberate and decide what is most beneficial for the group.

Suicide Kings is a queue system that evenly distributes scarce resources without the space for messy democratic debate. Similar to an organ donor list, a player will be “on deck” for the next magical sword. When the boss drops an item that fits this description, the sword is awarded to that player and they drop back down to the bottom of the list. The queue continues to churn as new scarce items are doled out to players. Suicide Kings is not the most efficient system for maximizing output but it avoids the pitfalls of political corruption and favoritism. If guild members have trouble reaching a democratic agreement, Suicide Kings can be an expedient compromise. Sometimes fairness is more important than efficiency.

Casual guilds most often use random dice rolls to distribute items. This is essentially a Lottery System. This organizational model is most useful for people who don’t play together very often. They may join the group this week but not attend for the next. If you join a random group in town, this is generally how they will do it.

In rare cases, a very wealthy player will pay a lot of gold to hire thirty-nine other raiders and take all the loot for himself. This is Capitalism. (Please comment below if you have any suggestions for how to improve this??)

Guild Economies

While many other models of guild governance exist, DKP has proven to be the most politically stable in the long term and provides an efficient means of distributing resources to where they are needed most. DKP includes all the efficienices and benefits of a market economy while avoiding the pitfalls of laissez faire capitalism.

DKP is used as a currency. Guild members spend this currency to to purchase items dropped by the raid boss. Importantly, while DKP might feel like “money” — there is no way to rent DKP and there is no way to charge interest. DKP is not capital.

For example, gamer friend and artist Filip Kostic can’t loan me 10 DKP and I’ll agree to pay him back 12 DKP at next week’s raid. This type of transaction does not exist within the economic model of the guild. Players cannot exchange or pay each other in DKP. There is no such thing as DKP debt. The group ledger is monitored and can only be updated by trusted guild officers. If players attempt these types of illicit transactions, they will not be approved or entered into the group ledger.

Additionally, DKP cannot be moved between different guilds. If a player has 100 DKP with “Guild A” they cannot withdraw these funds and transfer them to “Guild B”. The value of this currency is only recognized within the economic organization of the guild. So while DKP may feel like money, in the sense that it represents prices and relative value, it is not capital. There is no way to invest DKP in order to generate profits.

Furthermore, items dropped by raid bosses are only distributed to players based on their use value. Guild members cannot obtain these items to later sell for profit or to hold as an investment. For example, magic users are not allowed to claim an agility dagger and resell it later on the auction house. Within the guild, goods are distributed according to their use value, not their exchange value. From each according to his ability, to each according to his needs.

External Markets

Free markets do exist elsewhere in the game but only outside of the guild structure. In WoW, the auction house allows players to buy and sell goods through a medium of exchange, in this case “gold currency”. On the auction house, commodities are subject to all the fluctuations, speculation and demand curves of a complex economy.

Zooming out, over the lifetime of a server, there is an inflationary effect on the money supply. In the early days of the server, there is a very small amount of gold in circulation. Once most of the players have leveled up and reached the end-game content, the amount of gold in circulation will massively increase. In fact, this phenomena is so well understood that it is common for players to stockpile early-game goods that they know will appreciate in value over time. These goods serve as a better store of value than holding the “gold currency” itself.

Often, this strategy involves collecting simple items, such as linen or tin, and selling them several months later at a much higher price. In the late-game, players value these materials more than the necessary time and labor that they would have to expend by traveling back to the early zones and harvesting the materials themselves. In a poetically libertarian example, players will sometimes literally buy and hold “bars of gold”, used as a material reagent for blacksmithing, because the in-game “gold currency” loses its value over time.

In an historic example, a very experienced player had stockpiled an enormous amount of goods. Over time, the value of these goods had grown to roughly a 1/3rd of the entire server’s economy. Recognizing the systemic risk that comes with this degree of wealth concentration (basically a single player’s ability to crash the world economy), the game moderators intervened and forced the player to slowly sell off his holdings. This allowed market prices to remain stable, while forcibly redistributing the wealth of the oligarch player.

Items on the auction house function as in-game financial assets. These assets go through cycles of speculation and market bubbles. Before a new patch, the cost of a given commodity may spike or crash depending on the forthcoming update. Most importantly, while the technical capacity for a laissez-faire free market does exist within the game, these economic models are never utilized within the guild. Here’s what they do instead:

Market Socialism

In practice, DKP is most similar to early socialist proposals for labor vouchers. As a currency, DKP is used to generate a price signal to determine the relative need for certain goods.

For example, myself, Filip and Margo are all healers. I'm a priest, Filip is a druid and Margo is a paladin. During this week’s raid, we have just defeated a powerful boss who dropped a +60 healing mace. Clearly, we could all benefit from the item, but how do we tell who would benefit the most?

As a discipline priest, I’m running a high intellect build. As a Paladin, Margo is running a high +crit build. And as a druid, Filip is running a high +healing build. In this case, Filip’s output would be greatly improved by equipping the +60 healing mace.

As loyal guild members, we have all been paid in DKP, from killing raid bosses, putting in our time and showing up reliably. Now, the guild puts up the item for bids.

I place the minimum bid of 25 DKP. I figure that if no one else wants the item, I wouldn’t mind an upgrade. But primarily, I want to save my DKP for an item that I know would highly benefit me personally. Margo, who wants the mace a bit more than I do, puts in a bid for 50 DKP. Her weapon is relatively out of date and this item would represent a bigger upgrade for her gear. Meanwhile, Filip bids 200 DKP. As a druid, and due to his specific build, he would greatly benefit from having this particular item. Through these competitive bids, we have found a way to represent the relative need of each player. These prices reveal that, while all of the healers may benefit somewhat, Filip would benefit the most.

In a structural analysis, the guild is a worker's co-op that evenly distributes the surplus value it creates. This value is represented by an internal currency that is used to generate a price signal to determine the relative need of goods. This political economic system is market socialism.

Guilds have all of the benefits of a market economy without the distorting effects of speculation. (For the nerds out there, it's actually a cleaner price signal than a regular capitalist economy because all buyers stand on a level playing field.) Unsurprisingly, markets don’t work well when a handful of people have all the money.

Conclusion

In the last few years, much of the analysis of online spaces has talked about hierarchy, dominance and oppression. While gamers often brag about their bootstrapping individual prowess, you can just as likely find them whining in the guild Discord about how the loot decisions from this week’s raid aren’t fair to everybody. QQ

Of all the many possible systems of guild governance, DKP is by far the most popular and frequently used loot system. Most importantly, the WoW design team never built DKP into the game itself. Instead, the designers opened up a system where players could voluntarily self-organize and the model of a worker’s cooperative won.

As far back as 2007, Steve Bannon identified World of Warcraft as a repository for “rootless young men”. His early ventures into WoW gold farming, funded by Goldman Sachs, paid off massively as the Venezuelan economy collapsed. At the time, WoW “gold currency” wages outpaced the the local economy on the ground. Game spaces have always been culturally and economically linked to the real world.

Before serving as Greece’s minister of finance, Yanis Varoufakis was the economist in residence at the game studio Valve. He spent his tenure studying the popular MMO Team Fortress. Game spaces are fully contained but highly complex environments with millions of actors and variables. They allow us to observe economic theories in real time. Most beneficially, when economic experiments go wrong, they do not pose much systemic risk to the outside world.

In recent years, many journalists have argued that internet culture is inherently right-wing. In most cases, they have never really participated in these spaces or spent any time with an actual gamer. Often, they lack the tools to open up the hood and understand how the thing really works.

Winding back the clock, the cultural narratives that emerged around this space could have been: “gamers create a functioning socialist economy by casually hanging out with their internet friends”. Instead, we saw a narrow group of liberal journalists write off the most popular American pastime as a hotbed for ascendant fascism. Perhaps if our media elites were more like gamers, we might have found ourselves in a more equitable world today.

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Josh's Theory of Radicalization