The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities… Adam Smith, The Wealth of Nations
EVE Online has a complex economic system because it provides many ways for players to make ISK. But while all ISK creation puts money into player’s wallets, not all ISK creation leads to healthy alliances. The way alliances interact with the economic system can foster a balanced, healthy alliance, or the opposite, an unbalanced alliance. In times of war, alliances must have a balanced approach to the economy that drives EVE. Also, alliances planning for war (and that includes almost every alliance in nullsec) must also foster a healthy economic state. By economy, we do not mean having vast amounts of ISK, because ISK is only the mechanism by which players interact with the true economy. Rather, EVE’s economy revolves around the resources that have always been vital to playing this game: ore, PI materials, components, blueprints, and ships.
Almost everything in the game is created by the players. Even the most advanced ship was once nothing but a pile of ore that came from asteroids and moons and these ores were gleaned by miners. The ore was then processed and ultimately sent to industrialists who built the various ships, components, and ammo. Ore is the key ingredient in the New Eden economy. Without it, the game would grind to a standstill. We are seeing the effects of ore scarcity currently and that scarcity may grow before it gets better. This scarcity has drawn attention to the New Eden economy on the most fundamental level, as alliances currently at war face difficult prospects ahead as they try to replace the ships they have lost.
For the overall economy in New Eden to thrive, players must engage in resource-increasing activities.
Mining and Production
Mining and production are vital for the game as a whole. They fuel the machine. Without ore, there is no war. Alliances must have ships to fly. They can either purchase those ships on the open market or they can produce those ships within the alliance. A good analogy here would be economic relationships between countries. A country can either purchase goods from another country, or produce those goods within their own country. Buying goods from within the country keeps the money within the borders. “Buy American” was a slogan used not too long ago, as Americans wanted to keep the wealth within their own borders. Keeping money within the borders has also been a major factor in recent American economic policy, as some politicians decry sending jobs abroad. An American purchasing a Korean-made car enriches the Korean economy.
Similarly, an alliance that must always purchase ships and components from third-party, non-alliance sellers ultimately sends their wealth outside the alliance, making that other alliance more fiscally healthy while draining their own economic health. Conversely, an alliance that purchases ships, components, and ammo created by a fellow alliance member is keeping the wealth within the alliance. This latter route creates “jobs” and wealth within the alliance.
Planetary Interaction, Exploration, and Salvaging
Planetary Interaction is another activity that creates true wealth, because the end products of PI, as the Uniwiki notes, are “used in blueprints to create POS Structures and Fuel Blocks, Sovereignty structures, Boosters, Nanite Repair Paste, and T2 components.” Again, if an alliance must purchase PI materials from outside the alliance, it experiences an economic sink. Money drains away. An alliance that has players engaged in PI avoids the economic sink and may even create an economic faucet, whereby they can sell surplus goods on the open market.
Other wealth-producing activities include salvaging and exploration. Salvagers locate and sell components that, sometimes, have already been produced at some point in the past, recycling them for profit. Salvaging isn’t always recycling, though. When pilots rat CCP-generated npc ships, then the salvage from those destroyed ships is freshly minted into the game, even more valuable than the same components created from ore. But PvP salvage we should consider recycling. So, salvaging can be profitable work in EVE, which also contributes to the overall health of an alliance. Like mining, salvaging drains nothing from the game increases true resource wealth.
Exploration functions similarly to salvaging. It can lead to the discovery of CCP-generated items and therefore is similar to salvaging game-generated rats. It can bring new resources into the game.
Service Activities: Hauling and Market Trading
Service activities can produce wealth without creating resources. Hauling can be a lucrative business. Having many resources in places far away from the means of production is only slightly better than having no resources at all. So, the transport players provide a service – they move the goods as a convenience at a cost. Note that the cost of this service gets passed on to the end consumer. Moving a car from Detroit to California raises the end cost of the car, without actually adding value. Contracting a hauler to move purchased ships from Jita to Delve adds to the cost, but not the value, of those same ships.
Market traders also make ISK, often in vast amounts. To some degree, they provide a service, in that they make it more convenient for people to buy and sell – pilots don’t have to contract their materials and wait for a buyer who needs that exact resource. It’s a bit like purchasing food from a grocery story. Yes, you could go to a farmer’s market and get that corn straight from the grower, but you want a bunch of other stuff, too, and the grocery store has everything you need. But as market traders make money for adding convenience, they also make goods more expensive. They do not create any true wealth. They do not produce resources. The ISK they make comes from others who have, in turn, produced the resources so vitally needed to run EVE.
Some ISK-creating activities do not add resources to the game. Rather, they add ISK. Unlimited wealth means nothing if there is nothing to purchase. Ratting, for the most part, produces wealth without adding resources. Therefore, ratting is vampiric – it feeds on destruction and weakens the game as a whole. If every player in the game were to rat constantly, in short order the game would collapse. True, destroyed rats drop loot which can be salvaged, but those are two different activities. Many ratters never salvage and they just leave the loot behind, finding it more profitable to quickly move on and kill other rats. Ratting ultimately, by generating more money but no new products, will actually inflate the economy: ratters who don’t salvage inflate the prices of goods for others who contribute to the real economy while they themselves are parasites on that economy.
Perhaps the most parasitic, even vampiric, was to make ISK in New Eden is by renting space. While renting can be lucrative, and many alliances have either done it, or are still doing it, renting represents only cash flow. Money flowing into an alliance is not always a good thing for the game as a whole. Renting depletes ISK from the renters, but does not bring any resources into the game. In that sense, renting is more vampiric than ratting, which at least has the benefits of raising ADM and leaving components to salvage.
Finding a Balance
Alliances must understand the complexities of New Eden’s economy. A healthy alliance will always have players engaged in almost all of these ISK-producing activities. Alliances that want strong economies, for war or anything else, should consider to what degree they will allow their pilots to pursue activities that don’t contribute to the real resource-driven economy. True, there are taxes on ratting. But ISK alone means nothing when there isn’t anything to buy from within the alliance. Purchasing goods from outside the alliance enriches those outside the alliance and impoverishes those inside the alliance. The fewer goods there are to buy, the higher the price for those goods, defeating the purpose of having more cash in the first place. A healthy alliance will produce many of the goods needed by their alliance members.
EVE’s history is worth studying. Past healthy and strong alliances always have had a balance between miners, industrialists, and PvP experts. An alliance that relies only on mining, or industry, or fighting, won’t last long in the kind of extended war we are seeing currently in New Eden.