If there’s one thing governments hate more than inflation, it’s deflation. The real value of currency, whether it be real world or in-game currency, is heavily impacted by consumer price levels of goods and services. Keynesian macroeconomic theory says that a gradual rate of inflation is a signal of a healthy economy, so what are we worried about?
New Eden has a complex player-driven economy. It is the best, if not the only, example of a virtual world whose participants are actively engaged in income-earning schemes to survive. The PLEX is a fascinating currency because it not only has value in a virtual world, but also the real world. It serves as a revenue generating stream for CCP Games while also providing players with the ability to purchase game time and other items with ISK. The economy of EVE is not an autarky – or “self-sufficient” – it is in fact much closer to an open economy of which the Mundell-Fleming model has extensively analyzed.
The Mundell-Fleming model seeks to interpret the short-run relationship between an economy’s nominal exchange rate, interest rate, and output. Under the Mundell-Fleming model, an economy must have two of three scenarios; It can choose between a fixed exchange rate, free capital movement, and an independent monetary policy. I won’t get into the assumptions of each scenario, known as the “impossible trinity.” Instead, I’ll get right into why this matters to the EVE player base and why CCP Games is keenly aware of the current state of the economy.
Every market has bad actors—those who seek to create profitable opportunities or simply to create chaos. The actor that is to blame for this consistent increase in ISK/PLEX ratio is CCP Games, and no, they are not bad. This is an executive-level decision to generate revenues while sacrificing the value of ISK. In order for this game to survive, CCP has to bring in money one way or another. If the entire subscriber base was paying their subscription fees with ISK, the game would implode on itself.
Let’s not debate whether they are taking the health of this game seriously. CCP is not going to risk a primary source of revenue for a novelty like “free market” economics in a sandbox game. It would make zero business sense to allow your subscribers complete autonomy over something as real as subscription pricing.
PLEX isn’t just printed out of thin air. Players have to purchase it in order to sell them on the open market. If players have no incentive to purchase PLEX then EVE Online will die off, and with it, CCP Games balance sheet will erode. In the long run, ISK will always depreciate against PLEX. For those of us with deep wallets, we can continue to play the game like we always have. If you’re struggling to make ends meet, now would be the time to seek additional sources of income. At the end of the day, this game provides near limitless content and possibilities. There is no free ride in real life or in New Eden. Sacrifices have to be made between earning an income and creating content. Unfortunately for 99% of us, it looks like we just picked up a second job.