Defining a new economic system for future versions

[Breakable]

Plz lets do it as simple as possible at first. A minimum set of requirements. No extra cases. Like an economy without currency. If you really need one - please change the code.

[loki1950]

Then one of the control variables is the total value of currency as per the classic Macro Economics models with sub values for each faction effectively defining there resource base so they become critical initial conditions. might be a few other values of this nature that may need exposure so lets keep that in mind.

Enjoy the Choice

[chuck_starchaser]

Plz lets do it as simple as possible at first. A minimum set of requirements. No extra cases. Like an economy without currency. If you really need one - please change the code.

Trying to keep things simple at the requirements and design stages is the biggest mistake made in software development again, and again, and again. I'm the only coder where I work whose projects work well the first time, and that is because I don't shy away from complexity at the design stage. Everybody else here gets initial results in half the time as I do, but final results, as in a product that works reliably, well... they rarely get there... When the boss finally gets tired of problems with a product, he involves me in it, and I complexify it the right way, and then it works.

Additionally, exploring as many possible needs does NOT imply that they MUST be addressed. It is an intellectual exercise, a geographic survey of the problem domain. Sometimes you discover hidden jewels while exploring, and these magical pieces end up fitting into some seemingly unsolvable puzzle, and some principle is discovered that profoundly simplifies coding. This has happened to me countless times. And the beauty of such simplifications is that they are "correct" simplifications, as opposed to the arbitrary, and often counter-productive simplifications people make based on this culturally entrenched and irrational fear of complexity, and lack of insight as to what really is complex or isn't.

We had a coder here (microcontroller code, embedded systems) who considered signed arithmetic "too complicated", so all his programming used only unsigned integer variables, and then he had separate flags and if statements to deal with negative quantities. Took me months to cure him of his fear of signed arithmetic.
It's unbelievable sometimes to see the way people complicate their lives in the name of simplifying...

In this particular case, just by considering potential "problems" like cash-less trade, currencies and inflation, we become aware that money IS a commodity with a value; NOT a measure of value itself. There is NO such thing as a measure of value; but we could solve the problem simply by using credits just like we do, but keeping them hidden from the player; --call them Hidden Credits (HC's) or God's Credits, whatever. Then we treat exposed currencies like we treat any other commodity; --i.e.: give them a value in HC's. One HC in the simplest case. Multiple currencies would simply be multiple "Currency Commodities", each with its own value in HC's. Inflation is achieved by periodically adjusting the value in HC's of a given currency commodity. Working for love would be a matter of giving "love" (faction relation points) a value in HC's.

You see?
Very simple solution; almost as simple as doing nothing at all; and it saves us months of refactoring later on, the day we happen to NEED multiple currencies. Most importantly, treating currencies as commodities is correct. That's why the motto that every extra hour spent at the beginning of a project is 100 hours saved at the end of it is a gross understatement.

And before you ask what's so desirable about "correctness", consider the very case under consideration: If we want to model offer and demand for commodities, our model will never work very realistically unless we also model offer and demand for currencies. But how could you model demand for a currency if you don't have a way of expressing the value of it except in its own units?
Furthermore, if, or rather when, we want a stock market, and a commodities market, and a currencies market... You see what I'm driving at? And chances are we'll find that no economic simulation works too realistically without such markets and exchanges. Not to mention the fact that they could be a great source of quirks to spice up the news.

Correctness always opens doors. Incorrectness closes them. Facing to the complexities of the problem domain leads to correctness, and correctness simplifies much more efficiently than acting out of irrational aversion to complexity.

Don't chicken at the sight of complexity. Stand up and FIGHT! You'll never regret it. The worst thing that can happen is that you lose the fight; it happens sometimes... But then, so what? Complexity cannot kill you, so you got the advantage.

[Deus Siddis]

Okay, well if we are listing requirements for the economic model, then I have a vague notion of one I'd like to add for now-- alternative forms of currency/money/credits. Here are some examples:

Generic energy in some form of batteries or densely packed matter. (For a universe where energy and matter can be easily converted back and forth into any particular form, thus transporting raw anything is the only resources that exists.) So essentially a commodity with with volume and mass is the currency. This might be the most realistic for any game with FTL.

That reminds me of a book I read recently; can't remember which right now, and I'm at work so I can't look around for the book; but in its setting, a company found a way to pack huge amounts of energy into some kind of cells. They become a monopoli, though, supposedly a benevolent monopoli. However, a lot of global unrest and terrorism turns out to be the result of two factions within the company's management fighting for control.
Indeed. At one time there used to be a "gold standard" (and we might see it again de-facto before this decade is over); and perhaps oil was always too liquid to be used as liquidity, but dense energy cells could indeed become first a de-facto currency, and eventually even the official one.
I think that would be covered by the requirement for handling multiple currencies, though. Energy cells would just be one of them.

It would be covered by a multiple currencies system only if it allows for a kind of currency that has to be transported physically by and takes up volume wherever it is currently stored and adds mass to whatever vehicle is transporting it. That's a bit of a departure from the generic electronic currency you see in most games like VS or WCP.

Faction/Player Relation Points are used as currency. (So you don't have to do anything in particular that makes a particular faction happy, useful for any pseudo-tribalistic system [Less communist or socialist where they might tell you exactly what you must do and you are not fullfilling mission contracts that you've accepted like in the usual capitalistic-employee/employer system]). This would probably help the Vega Trek folks for example.

IOW, you work for love... That's Interesting.

Not just interesting but ancient and instinctive in all of us.

Let's say you were the greatest hunter within your little prehistoric hunter/gatherer tribe, you drove every hunt within your clan, helped lead and teach the other hunters the knowledge to bring home food and live through repeated conflicts with dangerous creatures. But one day while chasing your quarry you take a small spill off a cliff. You're not badly injured but the bow you've always hunted with is broken in the fall. So you go to your tribe's senior bowyer. What does he do? He happily gives you his finest work, a bow of timber with the exactly perfect grain aged for 15 years in the kiln and in return he asks for nothing.

Why? You are what we would today call close friends, having known each other since you were both young, but the same can be said for most everyone else within your tribe. What is different about you is that you have benefited everyone in the tribe, perhaps more so than anyone else to some extent. You have helped common friends to help common friends, protected them with your knowledge and effort and put meat on the table that he eats from. So he is honored that you came to him with your problem and he is honored that his finest work will be used by you, to benefit everyone he knows and himself too.

But if you were a lousy hunter who tripped over himself and needed a new bow every year, well. . .maybe he would give you his finest spear-thrower.

Fast forward to today and you see that this sort of system is mostly nonexistant amoung large nations of people too numerous to be anything more than strangers to the majority of their counterparts. But in open source developments where there are no finite resources for people to absorb from others they don't know or care about, it still works really well. In this new system, you are bit like the former hunter and one of the VS coders is kind of like the bowyer for example.

Fast forward again to a future within a game universe and the same economy (if you would call it that) could exist. The masses of people needed to work and maintain an industrial aged civilization like we have today have been replaced by very advanced automation. Similarly, the bow of our hunter is replaced by the spaceship, powered by a source of energy as enormous as its technical explanation is cryptic.

I for one certainly am not holding out for the promise of a future like this, not in the least, but for a game universe it is plenty plausible enough and so I think it's economic system should be accounted for.

And of course all of these are just a few examples, there's a million more out there.

No currency and no trade. Space is so vast and expensive to cross in this universe that there is not even interplanetary trade. You and anyone/anything under your command must collect and distribute resources to your own facilities yourselves for your economy to function at all. The same applies to everyone else. A great many games use a system like this, especially in the RTS genre.

Good point, too. I have to remember this when someone argues against hierarchical economy. In a system without trade, or with very little trade, local economies are the only economies; so provision MUST be made for hierarchical economies.

Thanks, I think this one is especially important, as it is the most realistic economy type for a 'hard scifi' space game or just one that really tries and captures the feel of "it's space, your alone, if you need help you're on you're own' times the number of megameters you are from the next guy. It is also the most fun type of economy, there's nothing worth trading with some one/thing else, the only thing beyond an alliance that is worth getting from him is everything he has, by force!

Another, much more common alternative payment would be credit: whether as in credit card, or as in line of credit, or as in written IOU's, or even verbal trust.

Which brings my mind to yet another aspect of economic simulation: Are traders able to borrow? Are factories able to borrow? Are consumers? Are... ahem... governments? I know this is starting to sound crazy, but it isn't. Take any two nations: One where banks are tightly regulated; one with very liberal banking, and you find two polar opposites: A nation that can't borrow is a nation that can't save either. Don't believe me? Where banks are not allowed to make money off your money by lending it to someone else, they don't care for your savings, and if you try to open a savings account they give you red tape. In such nations, people use the undersides of their matresses as their banks. What happens then is that the money in circulation begins to disappear, as more and more goes under matresses. When money goes out of circulation, prices go down. This is called "DE-flation". Prices going down implies the value of money is going up. When people see the value of money going up, they want to save more, so more of it ends up under matresses. That's why DE-flation is as dangerous and explosive as TNT.
So, the only kind of economy you can have, without borrowing, is an IN-flationary economy; because the only way DE-flation can be prevented is by purposely injecting inflation.
On the other hand, liberal lending leads to a constant growth of the cash-less money supply (M1 or M2 or... MINUS the cash in circulation), which right now is like 100 times the cash in circulation and continuing to grow, in the Western world. Economists don't know where it comes from (don't tell them I told you), but it roughly tracks the sum of private, corporate and government debt put together. Explosive in a different way.
Anyways, if not simulated, it might be good to at least aesthetically better characterize economieS in some mod, even if just by having some economy have high inflation. You load on widgets at one planet, then sell them at seven times the price elsewhere, but the money is only worth one sixth of what it was when you bought the stuff, and you'd better run to the currency exchange booth

The concern with this is that, even for a project and engine with the scope and openess and indefinite lifespan of Vega Strike, economics simulation with complexities and detail down to things like debt, borrowing, speculators, mass market psychology, etc. is possibly going well beyond anything that any mod that could be built off of VS and that anyone would want to play for fun would ever need. There could be a thousand other design considerations for an economy engine that would be about this fun for the player in a mod.

I'm sure that more than anyone on this forum, you are concerned with the threats of feature creep. Without caution or a line in the sand, this could be the start of it.

So I would suggest that the engine's design concept of an economy revolve tightly around actual physical resources (though you still have basic liquid currency supported obviously), especially the necessities upon which factions and players rise and fall. Given the kind of mods that have sprung from the VS engine (space exploration, space combat, space empires), I see this as the most logical place to draw the line against feature creep.

[chuck_starchaser]

R.e: love economy: Very well and eloquently put. I'm almost dreaming of a new mod already.

The concern with this is that, even for a project and engine with the scope and openess and indefinite lifespan of Vega Strike, economics simulation with complexities and detail down to things like debt, borrowing, speculators, mass market psychology, etc. is possibly going well beyond anything that any mod that could be built off of VS and that anyone would want to play for fun would ever need.

But we don't know that, yet. This is complementary to what I was just saying to Breakable: The requirements phase should be uncompromisingly thorough. The time to assess the complexity of implementation will come in due time. But at the requirements stage, you should not let fears of implementation cloud your judgement or shorten your vision. To take this very case in point, allowing credit simply means using a signed variable for our "budget" model and allowing negative numbers. What's so complex about it? It's actually easier than trying to decide what to do when a budget tries to go negative, if we decided beforehand that it should not.
So, let's put our premature perceptions of complexity aside, and think about the problem domain objectively. What do we want, or what could anyone possibly want, out of the Economics Module. That's the only question that should occupy our minds.

I'm sure that more than anyone on this forum, you are concerned with the threats of feature creep. Without caution or a line in the sand, this could be the start of it.

There's nothing I hate more than feature creep, except maybe Adolf Hitler
But feature creep is CAUSED by the tendency to simplify. Every time we have a new customer with a project, I ask them so many questions they leave the meeting stuttering. Why? Because I KNOW that they are presenting me a simplified description of the problem domain "for my benefit". But I don't want that benefit. Thank you very much. I want to know every angle, every potential problem, every thought in their minds about how the project might expand later, so that I can make provision for such growth at the design stage. So I very rarely get feature creep problems, because I already planned ahead for those features.
Doing a thorough initial analysis of the problem domain is the cure for feature creep.

... Given the kind of mods that have sprung from the VS engine (space exploration, space combat, space empires), I see this as the most logical place to draw the line against feature creep.

Wrong. You cannot base your estimates of what's needed on "what has sprung" from the VS engine. That is putting the cart before the horses; because the most likely reason only the things that sprang did spring is due to the limitations and rigidities. You would have to analyze precisely those projects that *considered* using the VS engine but didn't. They got the key.
This is like that story of this airbase commander in WWII, who was giving the technicians an order... "See where there's bullet holes on these planes? I want you to put extra plating in those areas." But a visiting officer who was an engineer interjected "Excuse me, but I think you need to do the exact opposite: put extra plating anywhere you DON'T see bullet holes." Why? Because the planes that got bullet holes where you DON'T see any are the ones that never made it back.

[Deus Siddis]

R.e: love economy: Very well and eloquently put. I'm almost dreaming of a new mod already.

The first mod to use this could be VS itself. If nothing else, it would help illustrate the 'alieness' of one of the factions who used it, like the Rlaan or Aera. But alas, I once again digress down to the content level.

This is complementary to what I was just saying to Brakable: The requirements phase should be uncompromisingly thorough. The time to assess the complexity of implementation will come in due time. But at the requirements stage, you should not let fears of implementation cloud your judgement or shorten your vision.

Fair enough, brain storm first, cut stuff later.

You cannot base your estimates of what's needed on "what has sprung" from the VS engine. That is putting the cart before the horses; because the most likely reason only the things that sprang did spring is due to the limitations and rigidities. You would have to analyze precisely those projects that *considered* using the VS engine but didn't. THAT is what is important.

This is like that story of this airbase commander in WWII, who was giving the technicians an order... "See where there's bullet holes on these planes? I want you to put extra plating in those areas." But a visiting officer who was an engineer interjected "Excuse me, but I think you need to do the exact opposite: put extra plating anywhere you DON'T see bullet holes." Why? Because the planes that got bullet holes where you don't see any are the ones that never made it back.

I put it poorly. The basic idea is if VS has any kind of limitations to its scope, beyond which the loss of a potential mod community is considered acceptable, we shouldn't have to worry about things that fall beyond this.

So the question will have to be asked at some stage is, is VS the be-all-end-all game engine that can be used to make any game period or is it for making a certain type of game. And if the later, how is this type of game that it is defined?

I'm in no position to answer this myself, but it is something that I wonder about from time to time, being a simple content maker who's not yet dived into the realm of code-- the ultimate game engine.

[chuck_starchaser]

R.e: love economy: Very well and eloquently put. I'm almost dreaming of a new mod already.

The first mod to use this could be VS itself. If nothing else, it would help illustrate the 'alieness' of one of the factions who used it, like the Rlaan or Aera. But alas, I once again digress down to the content level.

Digressions into content are not "bad", actually. Digressing completely is what's bad, because then what needs to be done doesn't get done.

I put it poorly. The basic idea is if VS has any kind of limitations to its scope, beyond which the loss of a potential mod community is considered acceptable, we shouldn't have to worry about things that fall beyond this.

Okay, I gottcha.

So the question will have to be asked at some stage is, is VS the be-all-end-all game engine that can be used to make any game period or is it for making a certain type of game. And if the later, how is this type of game that it is defined?

Personally, I would like it to be; and I think it has the potential to be. What it needs for that is, first of all a huge cleanup; but Safemode is on it. The other is expansion of its CPU-side 3D algorithms to be able to do a) atmospheric flight, b) interiors, c) exteriors (nature) d) cities and e) characters, plus having elastic physics, inverse kinematic AI's, and a few other features I forget now. Admittedly, that's HUGE. On the other hand, I think it could be all done at once. Notice how 3D engines are usually specialized in one of those categories. The idea would be to design an engine that can do it all; and not piece-wise, but continuous; --single algorithm-like. I do believe it can be done. But this is NOT something the developers are convinced of already; quite the opposite. I'll start preaching to them when the time comes.
But to get back to Economics, the thing is, most games don't have simulated economics. Only turn sims and some RTS's do. But what conclusions can you draw from that? That nobody wants economics in their games? I highly doubt that's the case. Hey, here we got a game that is not an RTS and I've seen dozens of threads of a dozen pages each discussing economics. I highly doubt that Vegastrike is an exceptional case. It seems to me most players want to see realistic economics in MOST games in which there's any trade involved, but their wishes are simply not being addressed. If this is the case, and VS is the first space sim to have economics, that will make it a big hit. The big success stories are always stories of people who were pioneers in something; but a pioneer is not someone who looks to see what the next guy is doing, and says "if he's not doing it, then I shouldn't do it."

I'm in no position to answer this myself, but it is something that I wonder about from time to time, being a simple content maker who's not yet dived into the realm of code-- the ultimate game engine.

The ultimate game engine would be one that can model the real world, completely. By that standard, every engine is garbage, right now. But then again, this is true without appeal to any such high standards. Hell, 9 out of 10 people looking for a 3D game engine end up trying to code their own. They all either suck, or are not GPL, or suck both ways.

[chuck_starchaser]

Finally I'm getting around...

I Know my elementary economics fairly well and it looks like you want economics input rather than simply game design input. This may be a bit over the top, but from the replies I've seen you want precise and simple abstraction,

Exactly.

Anyway, if you want to start from a clear base, that breakdown you're using is generally right but a little bit messy, in that it isn't abstracted to the core elements of an economic system.

A tighter description of elements present in every real economic system would be;

There is time; fairly self explanatory, accounts for lag in adjustments of supply and demand which you may want to take into account, e.g. how quickly prices respond to events etc.

This point is gooder than it might appear at first look. Precisely, time needs to be modelled. Not just for economics, but even for standard game elements. Similar to the situation of treating currencies as commodities, rather than hardcoding a currency and treating it as a magical measure of value. Time also needs to be abstracted, because many games need to control the passing of time. Some RPG like Fallout that has a sleep function would have to code their own time to use the VS engine. It would be a great feature to have functions to throttle time, synchronization points, and time event callbacks built into the engine.
But to get back to economics, I forsee Vegastrike the game tripping on its own shoe-laces for lack of time: Once there is some semblance of economics, most players and developers will discover that the realistic economics cycles are too realistic, and now they want recessions and stock market crashes to happen 16x faster, and they start tweaking this and that until the economics data AND code are trashed. That speedup could simply be achieved by giving the economics engine its own time variable which is then tied to the regular time variable multiplied by a factor of 16. Without a time variable already designed into the system, it would be very difficult to hack something like it in there.

There is space; how far things have to be transported, fragmented economic systems, the aforementioned lag times being different over different areas.

Yep.

There are actors; each with a rational self interest (maximising "happiness") these actors can be individuals, companies and up to the macro economic level, nations ( or in VS's case factions).

Let's not forget that "maximizing happiness" is the motto of just one particular culture in modern times. Not to say that it isn't what we all do by instinct, regardless of culture; but people in most cultures aren't even aware that they are seeking happiness. They may think they are "fulfilling their duties". Which brings up a question that may seem non-germain at first: Are those forsaken attacking you pursuing happiness?
The question begs another: Is the Economics module supposed to apply to all AI units, or only merchants? Don't get me wrong: Probably only merchants; but I still think it's a good question.

There is demand; stemming from the wants of individuals and groups.

There is supply; goods provided.

There is aggregate supply; the total output of all goods and services provided by a faction or all factions in total.

There is aggregate demand; see above but for demand.

K.

There is capacity; the potential for adjustment of supply; affects price inflation.

This I don't get.

There is elasticity of demand; the responsiveness of demand to price, income, economic shocks etc

Elasticity is a per-comodity attribute, I suppose; but different social groups might show distinct elasticity spectra.

There is elasticity of supply; the responsiveness of supply to demand, price, economic shocks etc.

True. Like the chip foundries have the least elasticity of almost any industry, with a 2 billion price tag for a fab that produces a fixed amount of chips per hour. With only a minor drop in demand, the depreciation of the equipment alone causes huge losses. A rise in demand simply cannot be met and all it does is raise price.

There are economies of scale; the larger the quantity of something made the cheaper the per unit price.

There is x inefficiency; the point at which economies of scale become inverted.

Didn't know this one. How does that work?

Now obviously this is possibly more detailed than you need,

Not at all! Do we want economics, or not? If the answer is yes, then we want Economics, not some caricature of it.

but if there's going to be complaints about people's examples being not fully applicable to all economies, (eg that computer analogy) a cast iron list of principles applicable to all real economic systems will need to be very precise, ie if you want a series of basic principles you can't pick holes in then you'll have to put up with verbose explanations

EXACTLY. If you're gonna do it do it right. In any case, it would be ultimately up to modders to decide how realistic to configure their economies; but the Economics Module itself shouldn't be a joke based on the assumption that everyone is joking. Besides, people's sense of humor can vary.


EDIT:
I believe this list is still grossly incomplete. We haven't mentioned competition, for instance. Of course, it's implicit, and yet, it needs to be explicit because there are "problems" arising from it. And I'm not talking about monopolies, although that also needs addressing; but a much more serious problem from a coding perspective, although I've said this is not the time to worry about coding, but this IS pertinent here, I believe: In the real world, there is competition because people see opportunity. But how does one program AI(s) to "see opportunity"? Or do we use a statistical model that assumes the competition is already there?

We also haven't mentioned Profit. Happiness is one thing; profit is another. We can't be sure that everybody seeks happiness, but there's few of us seeking loss.

As I was mentioning earlier, resources. Natural resources would come from modders' own universe/map generators; but when we get to human resources I think things get hairy. Do we model education? How about education as a function of income, or spare time? I'm asking, and not saying we should, because this is not a core constituent of Economics, although it is important to it; and because the economic cycles related to education are probably too long to make a difference in the timeline of the game; so this is probably not worth it, but it may be worth mentioning. If nothing else, we could statically characterize the socioeconomic situation of a faction by depicting them as having a brain-drain --is that the term?-- (well educated specialists emigrating), because the society was in a very good economic position a while earlier and overspent on education. But how about population growth?

And speaking of the devil, Growth. (I hate Growth, but it's there.)

Last but not least, Money. Currencies.
And bonds.
And gold.
And Energizer cells.

Budget.

Marketing.

Do we model the distinction between a society that transacts mostly in cash and saves in gold and knows not debt; from a society that transacts and saves electronically and has a morgage on everything they own and some things they don't?

Do we treat a nation's geographical jurisdiction as "ownership", or do we acknowledge that McDonnald's owns them?

[Fade]

Wow ! Well, I have no time to read everything you written but here is my thought about money.

Money has to be symbolic values. Like the real world. I can't explain it in english. It's too complicated for me. What provide a value to a money is not what it is (even if they are gold coins), it's what you think you can buy with it (so a simple piece of paper do the trick). Money volume, interest, etc, has to be controled by some central authorative institution in order to control economy activity. This central institution may add or remove money. That can't be done with a natural ressources especialy a useful one.

[chuck_starchaser]

Okay, I think I get you. I once read a story about a POW (Prisoners of War) camp in Germany during WWII, in a book in Economics. This camp received shipments of goods once a month via the Red Cross. The shipments included cigarettes; about 100 per per person for a whole month, so, high demand. But many people were non-smokers, so they started bartering their cigarettes for other things. Anyways, cigarettes became a de-facto currency. Not only that, but often shipments were late, so some of the prisoners organized a voluntary membership cigarette bank, that would help smooth the fluctuations in time of delivery. Then came lending, interest, deflation, inflation, all in cigarettes.
Just the thought of it makes me light up.
Anyways, the moral was that cigarettes were so unstable a currency precisely because they were a consummable.
I still would insist that money IS a commodity.
But perhaps commodities need to be classified into perishables, consummables, deprciables, real estate, collectables, investables, foreign currencies and local currencies; each category having its own dynamics.
A "local currency commodity" has a value (HC credits) which value represents and simplifies the subjective process of perceiving its value for its purchasing power.

[Fade]

If you are in a market one day, some goods will be exchanged between people with the help of money.
If you are in this market the second day, you'll see the same thing happen again.
But, in this imaginary market, the world market, you may notice that goods are differents (because, once stuff is sold to the final consumer, it's consummed), the money is the same (there is no final consumer with money). Money is not a good, it's a flow.

About valuing money, this is a big issue. You may want to attribute a universal value to it but it will be not realistic. Anyway, I don't know if you want to push simulation so far. For exemple, in real world, central bank, may want to buy their own money to rarify it so it's price (relativly to other money) incereases. There is no absolute values for money. There was (gold standard), but it didn't work.

[rivalin]

Finally I'm getting around...

I Know my elementary economics fairly well and it looks like you want economics input rather than simply game design input. This may be a bit over the top, but from the replies I've seen you want precise and simple abstraction,

Exactly.

Anyway, if you want to start from a clear base, that breakdown you're using is generally right but a little bit messy, in that it isn't abstracted to the core elements of an economic system.

A tighter description of elements present in every real economic system would be;

There is time; fairly self explanatory, accounts for lag in adjustments of supply and demand which you may want to take into account, e.g. how quickly prices respond to events etc.

This point is gooder than it might appear at first look. Precisely, time needs to be modelled. Not just for economics, but even for standard game elements. Similar to the situation of treating currencies as commodities, rather than hardcoding a currency and treating it as a magical measure of value. Time also needs to be abstracted, because many games need to control the passing of time. Some RPG like Fallout that has a sleep function would have to code their own time to use the VS engine. It would be a great feature to have functions to throttle time, synchronization points, and time event callbacks built into the engine.
But to get back to economics, I forsee Vegastrike the game tripping on its own shoe-laces for lack of time: Once there is some semblance of economics, most players and developers will discover that the realistic economics cycles are too realistic, and now they want recessions and stock market crashes to happen 16x faster, and they start tweaking this and that until the economics data AND code are trashed. That speedup could simply be achieved by giving the economics engine its own time variable which is then tied to the regular time variable multiplied by a factor of 16. Without a time variable already designed into the system, it would be very difficult to hack something like it in there.

There is space; how far things have to be transported, fragmented economic systems, the aforementioned lag times being different over different areas.

Yep.

There are actors; each with a rational self interest (maximising "happiness") these actors can be individuals, companies and up to the macro economic level, nations ( or in VS's case factions).

Let's not forget that "maximizing happiness" is the motto of just one particular culture in modern times. Not to say that it isn't what we all do by instinct, regardless of culture; but people in most cultures aren't even aware that they are seeking happiness. They may think they are "fulfilling their duties". Which brings up a question that may seem non-germain at first: Are those forsaken attacking you pursuing happiness?
The question begs another: Is the Economics module supposed to apply to all AI units, or only merchants? Don't get me wrong: Probably only merchants; but I still think it's a good question.

Happiness was probably the wrong word to use there, when modern economists use that word, they don't mean it in the common sense, rather they mean effieicent fulfilment of personal goals, i.e. if they serve a faction government, they would maximise their "happiness" by doing the maximum amount of good for that faction with the minimum amount of effort. You might call what I'm talking about "personal efficiency and objective fulfilment" though that still doesn't encapsulate the complexity of the concept.

There is demand; stemming from the wants of individuals and groups.

There is supply; goods provided.

There is aggregate supply; the total output of all goods and services provided by a faction or all factions in total.

There is aggregate demand; see above but for demand.

K.

There is capacity; the potential for adjustment of supply; affects price inflation.

This I don't get.

Capacity is the potential output of the economy at any one time, not the actual amount it supplies (aggr supply), all economies tend to have some spare capacity (spare industrial plant, too many university graduates for jobs) and some lack of capacity at different times. Ability to adjust capacity impacts adjustments of long run aggregate supply (LRAS) ; economies aim to have just the right amount of spare capacity, too much creates deflationary pressure and is an inefficient use of resources, too little leaves no room for adjustment of output

There is elasticity of demand; the responsiveness of demand to price, income, economic shocks etc

Elasticity is a per-comodity attribute, I suppose; but different social groups might show distinct elasticity spectra.

Indeed, you basically described the two specific types of demand elasticity; price elasticity of demand (response to price of goods) and income elasticity of demand (response to demand of changes in income)

There is elasticity of supply; the responsiveness of supply to demand, price, economic shocks etc.

True. Like the chip foundries have the least elasticity of almost any industry, with a 2 billion price tag for a fab that produces a fixed amount of chips per hour. With only a minor drop in demand, the depreciation of the equipment alone causes huge losses. A rise in demand simply cannot be met and all it does is raise price.

There are economies of scale; the larger the quantity of something made the cheaper the per unit price.

There is x inefficiency; the point at which economies of scale become inverted.

Didn't know this one. How does that work?

In essence, the economies of scale companies gain as they grow larger tend to reverse when the company reaches a very large size (eg GM, General Electric, Microsoft. The company management becomes fractured and loses full control, different subunits begin competing with one another, investments and r and d are duplicated, the supply chain is disrupted due to massive size. People are always amazed by how much money Microsoft sinks in to projects while producing less than stellar results. Essentially the relationship between size and increases in efficiency is not directly proportional. After a company becomes x inefficient, it is very hard to fix ( tends to be why well run companies parcel out divisions as separate companies when they reach a certain size)

Anyway, before getting into specifics I should have simply added efficiency to the breakdown of core elements.

Now obviously this is possibly more detailed than you need,

Not at all! Do we want economics, or not? If the answer is yes, then we want Economics, not some caricature of it.

but if there's going to be complaints about people's examples being not fully applicable to all economies, (eg that computer analogy) a cast iron list of principles applicable to all real economic systems will need to be very precise, ie if you want a series of basic principles you can't pick holes in then you'll have to put up with verbose explanations

EXACTLY. If you're gonna do it do it right. In any case, it would be ultimately up to modders to decide how realistic to configure their economies; but the Economics Module itself shouldn't be a joke based on the assumption that everyone is joking. Besides, people's sense of humor can vary.


EDIT:
I believe this list is still grossly incomplete. We haven't mentioned competition, for instance. Of course, it's implicit, and yet, it needs to be explicit because there are "problems" arising from it. And I'm not talking about monopolies, although that also needs addressing; but a much more serious problem from a coding perspective, although I've said this is not the time to worry about coding, but this IS pertinent here, I believe: In the real world, there is competition because people see opportunity. But how does one program AI(s) to "see opportunity"? Or do we use a statistical model that assumes the competition is already there?

We also haven't mentioned Profit. Happiness is one thing; profit is another. We can't be sure that everybody seeks happiness, but there's few of us seeking loss.

I think I covered the bit about the economics meaning of happiness above, the desire for profit being implicit ( I know this is a western civilization conception of economics, but every economist of note for the last several hundred years has worked from assumptions like this so I'd urge not getting into any crazy economics, and in any case economic systems like communism can be effectively conceptualized within this framework)

As I was mentioning earlier, resources. Natural resources would come from modders' own universe/map generators; but when we get to human resources I think things get hairy. Do we model education? How about education as a function of income, or spare time? I'm asking, and not saying we should, because this is not a core constituent of Economics, although it is important to it; and because the economic cycles related to education are probably too long to make a difference in the timeline of the game; so this is probably not worth it, but it may be worth mentioning. If nothing else, we could statically characterize the socioeconomic situation of a faction by depicting them as having a brain-drain --is that the term?-- (well educated specialists emigrating), because the society was in a very good economic position a while earlier and overspent on education. But how about population growth?

Right, if you're conceptualizing an economic system as some kind of flow chart type diagram (as I assume coders like to) the middle would be fairly confused, but you would start with the above as inputs (raw materials, human capital and so on) and end with outputs

And speaking of the devil, Growth. (I hate Growth, but it's there.)


Last but not least, Money. Currencies.
And bonds.
And gold.
And Energizer cells.

I wrote my post down yesterday and forgot to copy one of the points down ; the above can be distilled down to means of exchange, this being the mechanism by which trade occurs, be it barter, currencies, or any other means of affixing value (another important concept ) for the means of facilitating commerce.

Budget.

Marketing.

Do we model the distinction between a society that transacts mostly in cash and saves in gold and knows not debt; from a society that transacts and saves electronically and has a morgage on everything they own and some things they don't?

Do we treat a nation's geographical jurisdiction as "ownership", or do we acknowledge that McDonnald's owns them?

Well, those certainly are questions, but I'd suggest that we would make some concrete progress by coming up with a list of concepts and elements to be incorporated into an economic system, and attempt (this might be insanely complex, if fun) to come up with some kind of paper based diagram of a basic economic engine, which I presume would be exactly what a coder would want, with inputs and outputs an variables, obviously not defining anything exactly, but just trying to get some basic ideas going.

Now my head hurts

[chuck_starchaser]

Excellent!

One thing we forgot is taxes. I think taxation can help us characterize a whole spectrum of types of economies from a single parameter:
In an ideal Capitalist system taxes would be zero, government services and social assistance would be zero, competition would be maximal.
In an ideal Communist system, taxes would be 100%, government services and social assistance would equal government income, and there'd be no competition.
Neither could possibly work.
So, in the real world, we could say perhaps that the most capitalist of capitalist nations are at about 30% tax, and the most communist of communist nations are at about 70%, and Canada has it right, at 50%.

Before I forget,

Code: Select all

class budget
{
  account *savings;
  account *debt;
  account forward_savings;
  account forward_debt;
public:
  void enter_receivable( receivable* );
  void enter_payeable( payable* );
  void enter_income( receivable* );
  void enter_expense( payable* );
};

Or something like that. I think it will be important to have an account class, rather than use (eech!) floats, as money doesn't always sit in a bag, but is rather "handled" by an institution. So, during initialization of the class, we can separately pass pointers to savings and debt handlers.
In the case of a national, factional or planetary government, the debt handler would be the bond market. That way we don't have a magical bond market of arbitrary size that just sits there; but rather comes from where it really comes from.

NOTE: Someone might ask, isn't modeling a bond market going too far?
Answer should be a resounding NO, because in the real world, the bond market is so huge it dwarfs stock markets. The bond market is THE market. People think that interest rates are set by the central bank; but that's a bad joke. The central bank only controls short-term interest rates. Long term interest rates are dictated by offer and demand forces which manifest themselves ultimately through bond prices. That's why you can have situations like yield curve inversion, when a central bank is desperately trying to make short term interest rate go one way, but the price of bonds is dictating that long term interest rates MUST go the other way, and then you get to a situation when short term savings pay more interest than long term savings... Without a bond market, such (conceptually subtle but effectively huge) effects could not be modeled.

Before any variabling and flowcharting can begin, I think we need to define simulation scopes. The finest level of simulation perhaps would simulate individual companies. At a coarser level, you'd simulate whole sectors, like chip makers, jump drive manufacturers, and so on. Different mods could choose how finely to model things; but probably Vegastrike would want to dynamically vary the scope by player proximity. For example, while you're parked at and roaming about a commerce center, you might want the economic simulation to do each company separately, but as soon as you fly off, it reverts to simulation by sectors. Once you're 7 jumps away, it might switch to simulation of general categories, like food producers, equipment manufacturers, consumer product manufacturers... And once you're 14 jumps away it might stop simulating that commerce center altogether and merge it with the simulation of all bases and planets of that faction.

Going the other way, as we enter a new area of space controlled by a faction and as we approach a base, the scopes keep switching to finer and finer. At each switching, the coarser simulation results are split into the constituent sub-sectors or individual companies; and the split could go by last known relative sizes and/or budgets.

Note, however that, for simplification, I've now assumed that the modding configuration variables are set to "economic_LOD" *plus* "simulate all", which is not necessarily the case: If a mod chooses NOT to have individual companies simulated, they would simply not be simulated, and LOD control would stop at simulating business sectors.

The acid test of scopes is that the cumulative, global results of the finest simulation should be fairly similar to to the coarsest simulation, and to the cumulative, global results of all simulation scopes in-between.

[chuck_starchaser]

Sorry; I missed your post.

If you are in a market one day, some goods will be exchanged between people with the help of money.
If you are in this market the second day, you'll see the same thing happen again.
But, in this imaginary market, the world market, you may notice that goods are differents (because, once stuff is sold to the final consumer, it's consummed), the money is the same (there is no final consumer with money). Money is not a good, it's a flow.

Not sure I understand but I think I disgree anyhow: Money flows, and so do goods. Goods are wanted, and so is money. There's no difference except that money is a) not a consumable (and not all commodities are consumable, anyways), and b) that it is an agreed means of exchange. So are some commodities to some extent, such as gold; but money is the officially agreed means of exchange. But there's no essential distinction forcing us to consider money as separate from commodities. The idea that money is a measure of value is what its issuers would like us to believe, but that is horse-shit. If money didn't have a subjective value to us, it would not work as a means of exchange in the first place. And that subjective value is subject to offer and demand FOR money. Currencies ARE commodities. Fiat commodities; agreed, but so what? Isn't everything ultimately a fiat? What's the value of an egg on Mars? Without human subjectivity there is no "value".

About valuing money, this is a big issue. You may want to attribute a universal value to it but it will be not realistic.

Exactly.

Anyway, I don't know if you want to push simulation so far.

Like I said, simulating the value of money is required if we want to be able to simulate inflation. It is also required if we want to allow factions having their own currencies, and having currency exchange rates. These are hugely desirable features. I can't even imagine that an engine could advertise its ability to simulate economies while being incapable of having inflation, or forcing you to have a single currency. And HACKING such features into an economic system that lacks them would be hugely difficult; whereas designing such features up front is insanely easy: Just a matter of treating currencies as commodities, and having a universal credit hidden from the player. Super easy. And it is correct. And it opens the door to simulating offer and demand FOR money if/when we want to; so it's a no-brainer.

For exemple, in real world, central bank, may want to buy their own money to rarify it so it's price (relativly to other money) incereases. There is no absolute values for money. There was (gold standard), but it didn't work.

It didn't work precisely because there's nothing special to gold. Some people talk about going back to the gold standard as if it ware some final solution for god knows which problem; but that's a religious belief. Gold is a commodity like any other. (PSST... And its price is going to go up like crazy over the coming year, for those wondering where to invest.)

[lee]

The question is silly because it is blatantly rethorical.

It's is not a rethorical question. I doubt that it is possible to create an "economy engine" like you would like to have. It's possible to come up with something, but that something probably won't be as you want to have it.

[chuck_starchaser]

It's is not a rethorical question. I doubt that it is possible to create an "economy engine" like you would like to have. It's possible to come up with something, but that something probably won't be as you want to have it.

I thought you were not a programmer; but now you're telling me, a programmer, what's possible in programming and what isn't.

Besides, you begin your sentence with a strong denial that your question was rethorical, and follow it with an explanation of what you meant (which was already obvious, BTW), which explanation reveals that that the question was indeed rethorical... ... FYI, rethorical questions are assertions dressed up as questions.

Rethorical Questions?

It's a good idea, when one doesn't know the meaning of a word, to use a dictionary. I know; it's a lot of
work; but if you don't do it and instead decide to pretend that you know what the word means, you risk
putting your foot in your mouth, like you just did.

[Fade]

Well, I didn't mean to say that money was flow. It's because I can't find the engish word

I meant it's the thing that is flowing, like the blood in the body. It's not a regular good because its volume has to increase or decrease to manipulate economic habilities. I can't explain further because this matter takes books to explain.

Goods are consumed, even those who are out of the circuit and the rare ones you can eventualy sell to another consummer.

Money is never out of the circuit except if you keep paper money hidden at your home. If you have a bank account, the money, hosted by your bank, will silently flow in the economy. Because money in your bank is just a promess that the bank will give you money if you need to. That's not the same money you earned. Money can also be moved accross far distance instantly. This money virtualization powers economic activity. Money mass can grow in size, what ever the activity feeded is. Money needs to be costless (or very cheap) and "built" without limit if necessary (and of course it has to be easy to store and move). No good can do that.

[chuck_starchaser]

Well, I didn't mean to say that money was flow. It's because I can't find the engish word

I meant it's the thing that is flowing, like the blood in the body. It's not a regular good because its volume has to increase or decrease to manipulate economic habilities. I can't explain further because this matter takes books to explain.

But I didn't misunderstand you; I just contradicted the conclusions you drew from the observation of money's movement, namely that it is something fundamentally different from a commodity. It's as if in Volleyball you were to say that although the net is a physical object, the ball is not because it keeps moving. The ball keeps moving and the net is stationary because that's the name of the game. Similarly, money was put in circulation with strong accompaining and effective brainwash that it's some kind of measure of value and that it can help you buy stuff. And it worked, and today we all agree that's what money is for. A dollar bill on Phobos does not move, though. This motion requires human agency.

All I was trying to say is that your observations are quantitative, not qualitative. The fact that currency commodities move faster than other commodities is a quantitative difference. The other commodities also move; just not as much. If I sell you an ice-cream, you hand me the money, AND, I hand you an ice-cream.

Goods are consumed,

Consumables are, like ice-cream. Gold is rarely consumed. Money is also consumed when Greek restaurant owners pin bills up on cork boards for decoration.

even those who are out of the circuit and the rare ones you can eventualy sell to another consummer.

Not rare at all. And if you want to take the analysis to the next level, money IS perishable. Bills get wrinkled, broken, wet, stained, bleached, faded, split, rolled, smoked and shat on; and they have to be replaced. If every time our videocard fans failed the Central Bank gave us new ones, we'd be able to sell our videocards to one another forever, So the fact that money keeps circulating is not a magical property of money, but a deliberate intervention; it was intentionally set up and continuously supported to do so. IOW, the interest of the Central Bank is to make money appear as if it were a stable and reliable means of exchange, and they do whatever it takes to keep this appearance, and to try to keep our minds away from the realization that money is a commodity; but it IS. It is THE one commodity which is marketed on the comical premise that it is not. Note that it could not be "sold" so they loaned into circulation. How nice... At the End of Time, the central bank will get it back, plus interest. Hmmm... Who's going to mint the interest?

Money is never out of the circuit except if you keep paper money hidden at your home.

There you go. I DO. But don't tell anybody.

If you have a bank account, the money, hosted by your bank, will silently flow in the economy. Because money in your bank is just a promise that the bank will give you money if you need to. That's not the same money you earned.

That can be true of any commodity.

Money can also be moved accross far distance instantly.

So can commodities. United Arab Emirates bought 8% of AMD in November; but AMD's fabs are still in the same place in Dresden.

This money virtualization powers economic activity. Money mass can grow in size, what ever the activity feeded is. Money needs to be costless (or very cheap) and "built" without limit if necessary (and of course it has to be easy to store and move). No good can do that.

I don't disagree with the statement that money is "really, REALLY different" from other commodities. What i'm saying is that it is NOT distinct. There's a difference...

[chuck_starchaser]

I don't think we've finished yet; have we?

One area that needs to be brainstormed is the business sectors. I think dividing the thing into Resources,
Manufacturing and Services is not fine enough a division. But going down pencil sharpening products and gogo
dancing would be too fine a division.

I think we need to group business sectors by similarity of market dynamics and the way they operate, to make sure
we have a dozen or two distinct simulation classes to cover it all.

Like, luxuries would tend to bunch together, and be affected first during recessions.
Imports might be another.
Tourism should be separable into outgoing and incoming. Outgoing is affected by the local economy. Incoming
is affected by economies in surrounding regions.
Etceteras.

[Breakable]

The new economists were trying to imagine money as electricity, and economic system as a circuit.

You could imagine money as electrons. What makes the usefull work is their flow. Conversion of money flow to different type of energy such as goods produces usefull work.

Some critics, such as classical economists dont subscribe to that view.

[lee]

I thought you were not a programmer; but now you're telling me, a programmer, what's possible in programming and what isn't.

No I don't --- read carefully.

Besides, you begin your sentence with a strong denial that your question was rethorical, and follow it with an explanation of what you meant (which was already obvious, BTW),

No, I didn't --- read carefully.

rethorical questions are assertions dressed up as questions.

If you use the word "assertion" like I would use the word "Behauptung" in German, this would show again that you don't understand what I'm saying. And before you complain: I looked up "assertion", but the dictionary doesn't exactly tell me what it means.

If you want to keep argueing on this level of stupidity, that's fine, but I won't do that.

[chuck_starchaser]

@lee: Glad to hear.

The new economists were trying to imagine money as electricity, and economic system as a circuit.

You could imagine money as electrons. What makes the usefull work is their flow. Conversion of money flow to different type of energy such as goods produces usefull work.

Some critics, such as classical economists don't subscribe to that view.

As an Electrical Engineer I have serious problems with this metaphor. Precisely because electron-volts ARE a measure of energy; whereas money is NOT a measure of value. So, while you can translate electron flows into measures of useful work, you cannot do the same with money. When I was a kid, pre-school, once my father was explaining money to me (yes, I knew how to solve simple, linear equations before I started school, thanks to a father that would never stop answering questions); and he explained to me about the problem of counterfitting, so I asked him why didn't the government legalize counterfitting and save themselves the trouble of having to print money. So my father said to me that the money in circulation represents all the goods. If you let the money supply increase without a corresponding increase in the amount of goods, money would be worth less. I kept that model in my head and repeated it for years, until someone corrected me, saying that the money supply represents only those goods that are changing hands at any given time.
Later I realized the matter had to be a bit more complicated, because you could say that the moment something changes ownership is instantaneous, so chances are that not two goods in the entire planet ever change hands at the exact same femto-second.
Indeed, the cash in circulation is related to what amount of purchasing power people like to carry in their pockets on average; and cheques and credit cards muddy the picture even further.
None of this stuff has any parallel in electronics.

And one might ask, why do we need a metaphor for money, in the first place?
Metaphors are often used to help us understand something we're unfamiliar with, by reference to a process we're more familiar with. Money we're all familiar with, whereas electrons are less palpable, a lot more elusive and still not fully understood. The metaphorical winds should be blowing the exact opposite way.

[Breakable]

Just searching for an abstraction to simplify things. Abstractions are good to simplify things, unless they are too leaky. For example if we talk about a computer, there is no need to think about individual transistors inside.

Anyway you are welcome to ignore me. I am just adding my 2c when I have some time.
PS:Ok so if currency is cannot be represented by electric power, maybe value can?

[chuck_starchaser]

Just searching for an abstraction to simplify things. Abstractions are good to simplify things, unless they are too leaky. For example if we talk about a computer, there is no need to think about individual transistors inside.

Anyway you are welcome to ignore me. I am just adding my 2c when I have some time.
PS:Ok so if currency is cannot be represented by electric power, maybe value can?

Hmmm... Maybe... But I still question the value of trying to represent value by something; --anything at all.
What exactly is the point?
The easiest way of conceptualizing money is simply as money. There is no need, and probably no wisdom in
trying to come up with a parallel in the natural world. The natural world requires discovery to know and
understand, because we, humans, did not invent it.
But we did invent money.
Being our own invention, money is fully knowable and understandable.

Besides, suppose for simplicity that we assumed money to actually be a measure of value. Still...

• electricity behaves as a continuum (notwithstanding the fact that electrons are discrete, still, the
  quantum mechanics of it makes it appear as a continuum); whereas money usually moves as lumps,
  and in discreet, sudden, friction-less jumps, like a tunneling phenomenon.
• For one of a gazillion possible examples, you could think of a flat, 6% sales tax as a current draw, but
  the current draw is a fixed percentage of the pre-tax current flow. Now, how do you build a circuit to
  represent this? You'd need a low value, shunt resistor (e.g. 0.006 ohm) to measure pre-tax current flow,
  another (0.1 ohm) for the tax circuit branch, then using a "differential difference" operational amplifier
  circuit driving the base of a transistor controlling the tax current you 'd more or less get a fairly precise
  "tax current", I suppose. But is this easier to visualize than a 6% sales tax? What have we gained?
• If currents (Amps) represent money-flows ($/s), and Amps are Coulombs per second, then
  1 dollar = 1 Coulomb; --a measure of charge.
  Now, whether you have $1 or $1000000 in a safe, nothing changes. But while having 1 Coulomb in a
  1 Farad capacitor is okay and safe, pushing a million Coulombs into a 1 Farad capacitor raises its voltage
  to one million volts... (please don't try this at home). This is because electrons repel each other.
  Coins and bills don't repel each other; and pushing money into a safe is not a job needing sumo wrestlers.
• And what do volts represent, in the economy anyways?

And I could give you a million other reasons why it's a poor analogy/metaphor.

But like I said, my first objection to it is philosophical: Metaphor should be used with caution, for a good reason,
and where it's needed. But there is no need for metaphor here in the first place; and this one in particular
confounds more than it clarifies.

[Fade]

Please, check the folowing book:

Economicon english version
Economicon french version

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