Gold & The World of Warcraft Economy
Posted on August 1st, 2009 by Lawbringer under Auction House, Economics, Efficiency Tips, Exploits, General Tips, Gold Building, Gold Farming, Supply And Demand, World of Warcraft, WotLKIt’s Not Economies Of Scale That Matter – But Economies Of Perfection
Once again I must emphasise that I am not a trained economist on any level. However, I’m getting old. That in, and of, itself qualifies me to some degree to talk about how hard it is to consolidate wealth. The consolidation of wealth is a very important function in any economic system. So let’s talk a bit about why the WoW economy makes the process of wealth consolidation so much more likely in the than anywhere else in the world.
We really try to avoid tirades if at all possible and I promise this will not turn into one (at least I hope). So let’s focus on the positives in the WoW marketplace that give it a unique flavor – and perhaps why, and HOW you can make sure you are on the right end of the consolidation stick (instead of being beaten to death with it by – well – me).
You see, every other economy on the planet is based entirely on debt. We won’t go into the long of the story because frankly there is no short way to the point at all. But the really short way is to say that every currency basically only represents the debt of one government or another to a bank.
Because currency is not based on GDP (Gross Domestic Product) it can’t truly be fiat currency, but rather just a something or other that means something quite different than what you think it means. Obtuse – yes, it couldn’t possily stated in a more fuzzy way, or a shorter one, but we warned you about that.
In the end what I’ve come to discover is that all you goobers who complain about the WoW economy are just – well, goobers. There is simply no better place to witness the true power and simplicity that comes from a system where every single member of the society has the same access to wealth as any other.
What happens in real life is that when certain individuals concentrate a certain amount of wealth, they spend all the rest of their time keeping everyone else’s gruby little hands off of the rest of the remaining wealth. You would be surprised at how monumentally effective this tactic can be. This is completely impossible in the WoW marketplace.
In World of Warcraft, there are no banks. There is no way to really loan out gold and actually claim it as a real debt. No way to charge interest, no way to squeeze a money supply, absolutely NO way to end up being the only guy on your server with complete control of the gold. And that’s why everyone can have as much gold as they like.
Some of you have said that we are goofy for liking to make gold. It’s only the real world that makes you think that. We feel it is just about a civic obligation to gather gold to our bankers.
You see – gold in WoW really does grow on trees. You can get it from mobs, you can get it from quests, you can get it from other players. No matter how much gold dissapears into the vendors’ pockets, there is always more out there, just waiting to be had. (This open flow of gold completely destroys the concept that more money causes inflation – it’s positively preposterous).
As a matter of fact – the only way you can do certain things is to consolidate the readily available gold into your account. You could blast through dailies for like – ever – to get a Wooly Mammoth mount, but that would be silly from our perspective. There is a much better way to gather all that freely available gold into your purse. And it is easier than you will ever be able to do so in the real world.
Since gold is basically growing on trees, all you have to do is just figure out where the trees are, then go hire some guy to pick fruit for you. We do it all the time. On our new Ally server (NO, you can’t know which one yet) there is a guy who mails us cod enough fish every week to make about 100 fish feasts, which we promptly sell to everyone else for a 30% profit. If that isn’t hiring some guy to just give you gold I don’t know what is.
Sure, he could sell it all himself, but he would rather have his money now. Impatience has a price. I am not willing to pay the price to work to farm, but I’m willing to pay the farmer to continue to farm. He is willing to accept my price, and someone else is willing to buy those goods that I have consolidated for the market price. You’ll notice I skip the word “fair” price – because it’s stupid. Fair is whatever anyone is willing to pay. Calling any price unfair just reveals that you are a weak-minded whiner. Don’t like the price – don’t pay it. But don’t cry little baby, or it’s an early bedtime for you.
Anyway, our point of view is that the we really wish that the rest of the world was a lot more like WoW. You can have anything you want in WoW with either a little bit of clever or a lot of hard work. It doesn’t really work that way in life. But, you can learn a few lessons about clever and how hard work can help if you like. I guess what we’re trying to say is that it doesn’t get any better than this, so quit thinking it’s worse and get to Dominating.
That is a great article and a great perspective. Thank you. I am going to share this with some people who don;t play WoW, just so they can understand that WoW can be a better alternative to reality…LOL…Then reality sets in…:) Seriously…great aticle.
i would tend to disagree with the comment “This open flow of gold completely destroys the concept that more money causes inflation – it’s positively preposterous”
I think of it like this…in pre-BC where money was rare, and 1000g was a lot of money and took days to get, if not longer, things were overall cheaper. Copper ore was almost never over 60s a stack, and you’d be lucky if it was 1g. Now its more like 3-5g a stack.
Thats just one example. I admit, Saronite Ore is about the same price as Adamantite was back in BC, maybe even less, but thats because blizzard added a whole lot more veins in at players request. The other thing is that Blizzard themselves curb inflation to some degree by setting some things outrageously high and not wavering on the price(Epic Flying and Cold weather flying?). They even added duel specs and there are rediculously expensive mounts as gold sinks so that people would not horde money.
I fully expect to see more gold sinks come out in 3.2, and maybe at some point, Blizzard left the option for tri-specs to come out(for what, 5k gold???). If you are serious about making money, you can get your own personal guild bank and pay outrageous fees for the last 3 tabs.
The inflation is there…and thats why blizzard keeps adding gold sinks, and changing the best professions so that min-maxers spend the money to re-powerlevel new professions.
yes i agree
You also have to take into account that Bliz only raises those prices, and adds those gold sinks, because the vast majority of the players have ,or have the opportunity to get, more gold than they ‘need’. So, they add in things that can eat up that gold, or redistribute it amongst the ‘goobers’.
Just look at the new pricing on mounts for 3.2 to get the picture. Some of them have dropped, but the levels have dropped as well. Bliz is fully aware that a level 20 toon can now have well enough gold to buy a mount, the riding skill, and so forth. Pre-BC, that was unheard of. Only a rare few knew how to get that much gold together at that low of a level. They’re changing the dynamic to suit the players not the other way around. Players don’t have to make large adjustments to get the cash, they just need to be a little smarter about it.
Most Northrend gems are selling lower than BC gems did. Northrend cloth is ridiculously low priced compared to the higher amounts of money people are making since Wrath. I could give you a list of hundreds of items that are lower priced now. Niether expensive nor cheap items have gotten that way because people have “too much gold”. lol
5k gold is not what I call a gold sink. I can make that in one day and I only have to do it ONCE in the whole lifetime of my character. Gold sink, shmold sink. Most players with tons of gold already have all your so called “gold sink” items and are still making money hand over fist.
Old world items are more expensive because of supply and demand, not because of more gold in the economy.
If all the coal workers in Amercia decided to get different jobs and quit coal mining, then coal would quickly become more valuable than gold. Not because americans have too much money, but because there would be lots of people wanting it, but none being produced.
I too wish the real world was more like WoW. I like it that money grows on trees. Everything you do in WoW makes you gold. It always has. I’ve played for almost 4 years and I have never once looked to see how much a repair cost me. NEVER. Yet people discuss this so often, one would think gold was actually hard to get. I used to to think that everything you did in WoW makes you gold. Then a guildie proved me wrong. There is something in WoW that doesnt make you money—–> /spit Maybe that’s why I’ve never done it before.
Maybe I shouldn’t disparage the goobers. If it weren’t for them, I wouldnt be covered in jewels, riding around on one of my 75 mounts with one of my 75 pets following. Mwahahhaaha.
If those crybabies spent as much time earning gold as they do whining in trade chat, they would have nothing to whine about.
All i really got from that response, Zimini, is you think somehow your better than everyone else in the game. You are god, and make billions of gold in just minutes. Good job being the best at the game (since obviously no one else is as good as you, right?). Now why don’t you go get some money in real life instead.
The point isn’t how easy it is to make 5000g for person who knows how to get money from players. That has nothing to do with inflation. The point is how easy it is to “create” gold. Real life money is created from debt, and grows and shrinks exponentially based on what levels of debt are allowed in a given economy. WoW money is created from killing mobs, vendoring items, and questing (and nothing else).
It is NOT easy to create money in WoW in large quantities. A typicial progression raid night costs well over a thousand gold, or even two thousand, in repairs for a guild, while a typical farming night might create a couple hundred gold in vendorable items and mob dropped money. Farming dailies might generate a hundred gold in an hour if you’re fast. Leveling generates a few hundred gold per day at best. Compare all that to the gold sinks in the game and it’s very possible that some days might not see a collective increase in the amount of gold on a server at all.
Envy and want drive the WoW economy. Very few items at auction are “needs” when you consider that aside from coin dropping from every mob (or items valued in coinage), there are quest and rep rewards aplenty to outfit your toon with. In fact most of the best stuff (I am talkin gear) in the game can’t be bought at auction. Everything else falls into two categories… convenience, like a mount that has vendors on it and 2 spots for your pals, and vanity, like pets etc. I never buy anything in those 2 categories unless I have at least double the cost in my pocket… my guildies constantly go like a rollercoaster from “yay, I am rich” to “I am broke.” In fact I hear the “I am broke” at least once per Auction House visit, et tu?
‘What What, In the Butt?’ -butters
Gold sinks, besides maybe 300 riding, appeal to those who feel that they must have everything in order to be accepted by others. I do not personally own any type of bear mount, any type of mammoth mount, any Kirin Tor signet (in part because the ring’s stats are rubbish). I have 50 pets on one character – I seriously doubt any of them cost me more than 25 gold. I have 50 mounts on one character – not spending more than 200 gold on any single one.
Perhaps the style of gold sinks currently in the game, besides 300 riding, just doesn’t appeal to me. I don’t drive a new car – in fact, my car is almost as old as I am. I don’t live in a new house – it’s older than my father by a couple months. Where people would spend money on alcohol and cigarettes I spend on my hobby instead. I think that if gold sinks were something other than “look at me I know how to spend 16,000 gold and block mailboxes” or “look at me I know how to spend 17,000 gold and have an incredibly annoying sound emanating from my item” I might be more inclined to share my 100k+ cash reserves with a vendor for something other than repairs, enchants, reagents and other necessities.
Awesome article. I too get heckled by “goobers”. In fact, much of WoW requires real life skills to be successful at an elite level.
When a guild mate remarked that he was making oodles of gold through auctions that I started trying it. Now, I have specialists among my alts with all greens and gems going once place, leather and herbs to another, etc.
You are exactly right about how money is created in the real world. The biggest reason this is different than in WoW is that since in Real Life people have to start out pretty much relying on being IN debt instead of the one CREATING the debt to others, it is a LOT harder to consolidate wealth. In WoW, all you have to do is work hard and be smart with your spending. While you need to do the same thing in RL, the process is sooooo much more efficient in WoW because you can consolidate a small amount of gold with just effort. And since you don’t have rent to pay or food expense (and all the other things we have to pay for with debt fiat money in RL) you can end up with a big enough stake to enter the world of the merchant – and never have to rely on the creation of debt to gain wealth. It really is a better system where anyone can trickle off gold into a pile somewhere and not have it just represent a big pile of debt that is losing value if it is not loaned out creating another debt to someone else somewhere. Money in RL only gains value when it is used in ‘usery,’ gold in WoW has no way of doing so.
As to the point of the amount of gold remaining static, this is only because people spend it. If they were not using it at vendors in huge amounts there would be more of it, but it still would not effect prices much. The trend to save would pull more gold into the economy, but since it was being saved and not spent it would have no effect on the price structure since it would not create more supply or more demand, merely more savings. Only debt money flowing into an economy creates inflation, and only does so through fractional reserve lending.
Here’s why – Fractional reserve lending requires a bank to hold, say, 10% of it’s ‘lended’ money in reserve. That means that for every 10 dollars you loan out (creating 10 dollars in debt to the bank) the bank only has to hold 1 dollar in the safe. They just loaned out 9 dollars they don’t have. They just invented debt out of thin air. Then, the person uses this made up debt money and it gets ‘deposited’ (if you can call it that – I’m still unsure how all of this is even legal since if you or I did the same thing with anything else it would be called fraud) in another bank. The second bank can then loan out 9 more fake debt dollars to other folks based on the one already fake dollar they got and on it goes sometimes through 10 levels before you just run out of bank. So, when the Federal Reserve (which is neither Federal, nor Reserve) lets the US Government borrow 100 million dollars it balloons in probably less than a month into more than 1 billion dollars in debt in the economy. Since every single dime of it is based on a loan, not a single one of those dollars has any fiat value left EXCEPT to the banks themselves, and the banks are the only ones sucking any real value out of the GDP the currency is supposed to represent.
Then, since there were only a small fraction of the actual dollar bills or coins or 20’s printed based on the 100 million, the actual end result is that the supply of fiat coin and notes circulating as a percentage of the fractional reserves has shrunk exponentially. So the number of 20 dollar bills you can get your hands on goes down in relationship to the amount of money the banks can demand in payment. But since there are hundreds of millions of more electronic bills floating around out there in fractional wisp money – the value of each of the ‘real’ dollars just decreased. That is how inflation happens.
You can see in WoW how this is completely impossible. Gold really has a set buying power since vendor prices are static, and so are the quest reward amounts. Everyone in WoW could spend all their time gathering gold and the prices at the AH would remain fairly static because the supply and demand chains are pretty static as well. You could do the same thing in real life if money was actually fiat and fractional reserve banking was done away with.
I can only loan Aemaeth/Zmack gold that I have on hand. I can’t loan him 10,000 gold if I only have 1,000. It’s when banks make up fake gold that inflation happens, NOT when people gather and save the real thing.
In the end – it is NOT an instantaneous process to consolidate wealth in WoW. It does take some time and effort. But since the gold actually represents real buying power at vendors and among players since there is no way to water down the currency with debt lending fractionals – the value of all goods and services will be based entirely on supply and demand no matter how much of the gold is floating around out there.
In other words, the CONTROL valve that protects the money supply in WoW has nothing to do with price controls, regulation, gathering any amount of it, taxes, or anything like that. There is even lending going on – I hold debts from several people (not that Aemae will ever make enough to pay me back), but that doesn’t hurt me either. The real control is the fact that NO ONE can leverage their way into a central bank because the vehicle does not exist. The control is that no one can ruin the gold supply by flooding it with 9 times more than they actually own.
It shouldn’t exist in RL either. Every US President that bucked the centralized banking system was assassinated. I apologize to a small degree for the uniquely American terminology used here, but it’s the same in every country. Just apply dollar to your currency (Sterling, Yuan, whatever) and Federal Reserve to whatever central bank holds control of the currency there and you’re in the same boat.
This long answer should probably be a post in and of itself, except for the fact that people don’t come to DYS to read rants about economic or money theory overall. But it’s fun to talk about. So to sum up: you’re being Dominated by centralized banks folks – we would all have to go PvP on them to get out from under it too. The point is that by seeing how GOOD a money system can work without fractional reserves, and the fact that it is being used to whack people between the eyes, you just might grow a set and vote for someone who will actually oppose the current economic banking system out there wherever you are – or run for office yourself and make yourself a royal pain in the backside. Be careful though, guys in power tend to want to stay there, and you just might put yourself in harms way for the reals if you buck too hard against the reigns. Be bold, but be shrewd.
Bravo! I think the main reason I get frustrated with people who whine about the WoW economy, is that it is NOT an economy…it is a simulated economy, and people don’t get the difference. In a real world economy, people have needs. In WoW, you really do not have needs (no, fish feasts do not equal formula and repairs are not the same as diapers…). Everything in WoW is a want. You can do without anything in the game (yes, even a flying mount) for as long as you are willing to do so. Once you do decide you want to get any item in the game, you can get it in a number of different ways by plucking that money we have been told about off those WoW trees. Some people will pluck it quickly, others more slowly. There is nothing in the game out of your reach.
The fact remains that I can get a flying mount or enough gear to do anything in the game a bit at a time if I put my mind to it. In the real world, I am a teacher. As much as I may want a Porsche 911…it ain’t happening. I can’t go mine copper ore until I get the gold to do it. Why? Because I and my family have needs.
I think those who truly “dominate” in WoW get that. So, don’t whine about the AH and don’t moan about how the economy on any one server is worse than another…just go get the gold! (I just realized I could have scanned the AH on both my horde and my Ally servers in the time it took me to respond to this…Aargh!)