At the end of the 20th century, digital economies emerged on the Internet. Today, they also exist in virtual worlds. These economies offer freedoms which are suppressed by state violence. Virtual worlds can employ arbitrary rule sets which may or may not impose subsidies, taxes, price controls, respect for private property or self-ownership, among other norms. Virtual worlds may be operated as socioeconomic experiments in a cost-effective manner; a few hundred dollars instead of tens or hundreds of thousands. Experiments of this variety may be conducted ethically because participation is voluntary. In a virtual world, participant activity can be recorded easily, which offers a more complete data set for empirical analysis. In this way, virtual worlds offer a means to explore the adverse effect of state policies without risking large amounts of capital or human lives and freedoms.
To achieve this goal, one must first establish a control condition as a baseline for comparison. In December 2015, I decided to create a demonstration of Austrian economics with libertarian ethics using the world’s best-selling computer game, Minecraft. Following two beta tests which failed to generate a profit, Liberty Minecraft’s official launch was in March 2017, and today it is a profit-generating proof of concept. In November 2017, I wrote “Building Liberty in Minecraft” for Zeroth Position in which we explored digital economies, Minecraft, and liberty. September 2018 marked the launch of a new world that offers several technical improvements. This article will be the first in a quarterly series of updates on the Liberty Minecraft project, and will explore three topics: is Liberty Minecraft a valid demonstration of Austrian economics and libertarian ethics, the differences between the Old World and the New World, and what has happened there so far.
Is Liberty Minecraft Valid?
Minecraft is not the real world. Minecraft items have familiar names; “Cooked Chicken” will satisfy “Hunger” and restore “Health,” but these names and their association to objects in the real world is completely illusory. Rather, in-game items offer some utility as a means to achieve goals, and this means that items in Minecraft can produce real incentive systems. Liberty Minecraft is not and is not intended to be a simulation of reality. However, the players involved and their freedom to express preferences are completely real. When real actors compete to acquire scarce means that satisfy ends, a real economy and society develops, even in a digital world. Liberty Minecraft is a game world which implements Austrian economics with libertarian ethics using smart contracts. Self-ownership, private property, commodity money, and trade are offered via computer code which executes on our game servers. The ‘physical laws’ of Liberty Minecraft are also enforced by computer code.[Footnote 1]
The Rule of Liberty Minecraft
A society will enjoy liberty whenever it abides by this rule: resolve nonviolent disputes nonviolently. This is the primary rule of Liberty Minecraft. Our players “must solve difficult problems without resorting to violence or threats of violence.” I enforce this rule. Here, it is common for people to suggest that I have violently centralized power, that this decision abandons the free market for enforcement services, and therefore that Liberty Minecraft does not represent a libertarian society. Let us see why this is false. First, a person who rejects this rule cannot argue against being banned from Liberty Minecraft without committing a performative contradiction. Second, property owners are free to decide who can use their property, and I have decided that everyone who rejects my rule is not allowed to use my property. Third, I compete with thousands of server operators, and player participation on a Minecraft server is voluntary. Thus, I am accountable in the free market and will put valuable capital at risk by performing my functions poorly. This rule and its enforcement exist in a highly competitive market and are consistent with libertarian ethics and Austrian economics.
The Function of Claim Blocks
In Liberty Minecraft, Claim Blocks are applied to the world in order to claim land as property. In the New World, Claim Blocks are available for purchase at a fixed price of 100 Claim Blocks per Diamond, one of the in-game commodities. Here people often argue that I am engaging in arbitrary price-fixing, therefore Liberty Minecraft is not an implementation of Austrian economics. However, unclaimed land within Liberty Minecraft is my property, and I am free to sell it at the price of my choosing. One may respond that I cannot own all the land within the server, as I have not homesteaded it. These people beg the reader to reject reality as a means to produce a more realistic demonstration: because Liberty Minecraft did not exist before I created it, and all land within Liberty Minecraft exists within Liberty Minecraft, its unclaimed land is my property. Furthermore, I work in order to pay for the proper maintenance and service of the server hardware on which Liberty Minecraft exists.
I have decided to sell land protection services within Liberty Minecraft for our in-game currency because the Terms of Commercial use for Minecraft preclude me from using other, more preferable options. I have developed a reputation by protecting the property of individuals, and in their absence for a period of years. Failing to perform this service in a professional way will result in the destruction of my project. The value of my offer is determined in the free market because I compete with other services for the protection of (digital) life, liberty, and property.
Once a player has bought land, they are free to sell it at any mutually agreeable price. Within Liberty Minecraft, all landowners hold an estate in land which is similar to fee simple except that there are no taxes, eminent domain powers, police powers, or escheat. Landowners are free to make their own rules and terms of enforcement. Ownership is conditional because players must follow my rule to play on my game servers. However, players may retain unconditional ownership by using server software to download a copy of their property. Land which is claimed can only be used with the authorization of the owner or a person to whom they have delegated that right. Land claims expire by default if a player leaves for 60 days. In escheat, property without an heir would go to the State. In my case, Claim Blocks are returned to the player and the property becomes unprotected. However, I am now investing to develop a better option: an auction system where the proceeds will go to the departed player. If this causes currency to become more scarce over time, then the remaining supply will have a higher purchasing power which will serve to attract former players, among other benefits.
Within Liberty Minecraft, Diamonds are used as currency. Minecraft’s Diamonds are durable, portable, fungible, and scarce. Thus, Diamonds have many of the monetary qualities which gold offers in the real world. There is one notable exception: Minecraft’s Diamonds are indivisible. Liberty Minecraft offers a solution where players may subdivide their Diamonds into 10^18 sub-units which may be transferred securely within Liberty Minecraft. One may object that my decision is arbitrary; it prevents the free market from solving this problem, and this abandons Austrian economics. These people seem not to understand that the currency is Diamonds even once they are told, because otherwise such a criticism amounts to the difference between 100,000 centimeters and one kilometer; that is, no difference at all.
Minecraft players have always used Diamonds as a standard of value and medium of exchange, which is why I have selected it as currency. Diamonds are produced by mining or may be discovered in the world’s ‘natural’ structures. In Liberty Minecraft, the supply of Diamonds is finite. Still, this is the only game item for which I am offering money services at our ChestShops. This intervention picks Diamonds as the winner instead of allowing for free market competition among in-game items in Liberty Minecraft, which is the result of an unfortunate technical limitation. At present I cannot offer money services for all game items. However, even if I solve this problem, game items suffer from the same vulnerability: I am an imperfect central point of failure. Therefore, Liberty Minecraft’s Diamond money is a game commodity which must be discovered and produced by mining, which had already been in use as money for many years across Minecraft servers, and which is subdivided in Liberty Minecraft to add an important characteristic of money: divisibility.
Liberty Minecraft is a valid demonstration of Austro-libertarianism for the reasons discussed above. The players of Liberty Minecraft, their preferences, and their freedoms are real. Scarce means may be secured to achieve desirable goals. Our one rule and its enforcement are consistent with libertarian ethics. The sale of land and protection services within Liberty Minecraft are consistent with Austrian economics. Until human incompetence or enmity changes this virtual world, Liberty Minecraft is a valid demonstration of Austrian economics with libertarian ethics.
From Old World to New World
Compared to any other Minecraft server, Liberty Minecraft’s New and Old worlds are nearly identical. Both are played in Survival Mode. They both offer Diamond currency, private property, trade, and self-ownership with smart contracts. They are both exactly the same size, roughly as large as Manhattan. They both subject players to one rule: resolve nonviolent disputes nonviolently. Differences, which remain to be discussed provide an opportunity to demonstrate by example some of the ways in which a virtual world may be altered to test social and economic policies.
Put simply, Liberty Minecraft’s Old World suffered from arbitrary rewards while the New World does not. (This characterization is rather too simple because Minecraft itself contains some arbitrary rewards, but I will offer it as a general rule which rarely fails.) Over the first 9875 hours played across two years, Old World players received Universal Basic Income which created Diamond money from thin air, because otherwise it was impossible to trade land. This technical limitation was discussed in the previous article published here. I solved the problem at the end of November 2017, and my players experienced what happens when a subsidy program is eliminated. To pay for the money printing in the best way I knew how, I mined an amount of Diamonds somewhat larger than those which were printed and blew them up, returning them to the thin air whence they came.
Following this correction, players spent less time idling on the server. Most players who subsisted on UBI either stopped playing Liberty Minecraft or developed new skills, but over 90 percent of the people who have played Liberty Minecraft have stopped playing; our active population is approximately 60 players but more than 600 players have visited. Therefore, one cannot claim by this evidence alone that ending UBI probably caused players to idle less due to the size of the initial population and proportion of surviving players. Furthermore, I do not presently have a research budget to investigate research questions in a formal way. Nevertheless, players in the New World do not suffer from arbitrary rewards and punishments as a consequence of money printing. All money is earned by providing value in exchange to another player or by discovering and mining ‘naturally’ generated Diamonds.
In the Old World, a player ranking system provides arbitrary rewards in exchange for playing an arbitrary amount of time on the server. This ‘solution’ was selected in an attempt to achieve three instrumental goals: 1) I wanted people to play and enjoy Liberty Minecraft, 2) I wished to offer a secure way for players to trade in-game property of any type, including resources which exist but cannot be extracted in Minecraft, and 3) I intended to do this without a development budget.
Distributing new abilities with player ranks in exchange for an arbitrary amount of play time seemed like a simple and inexpensive way to achieve those three goals. However, this incentive system has the undesirable effect of attracting players who are rewarded without producing anything of value. I expect that this has a negative impact on our digital society in the Old World because the system is not meritocratic. In a sense, the New World is a test of this hypothesis because I have removed the arbitrary ranking system and its rewards. In the New World, all of the value a player accumulates is directly attributable to their merit. The New World now competes in real time with the Old World. If the New World makes significantly more money than the Old World, then it is a better product.
Both the New and Old Worlds are subject to the Terms of Commercial Use for Minecraft. Among other things, the terms prohibit me from selling digital items for hard currency. For instance, I cannot offer a secondary market where active players offer real-world value for the assets of inactive players. Without access to the free market, the property of inactive players is left in limbo. In common law, the State takes this property for itself. Liberty Minecraft is building a better option.
When Liberty Minecraft began in 2015, land claims could be configured in two ways which are relevant to this discussion. One could define an arbitrary duration of player inactivity that specifies when a player’s land claims will expire, and an arbitrary amount of wealth invested in Claim Blocks which permanently stops that player’s land claims from expiring. In the Old World, I work within these technical limitations. Niccolo Machiavelli held Cesare Borgia in high regard, and observed that the Romagna waited for more than a month while he was sick and dying. Likewise, I hold my players in high regard, so land claims expire after 60 days. Furthermore, in the Old World, a player who owns 1000 Diamonds worth of Claim Blocks has permanent land claims. This system fails in at least two important ways. First, it punishes value providers who are busy and lose their property. Second, active value providers are punished because I invest resources to maintain the property of people who no longer play Liberty Minecraft.
After three years of operation, I can now turn my attention to these problems. In the New World, I will not work within these technical limitations. First, I wanted the duration of land ownership to be non-arbitrary. Last month, I designed and funded the development of a system which delays claim expiration for Donors and Subscribers. This new option permits an individual to decide how long to hold their property in their absence. By charging donations in exchange for persistent land claims, I may benefit from better earnings, active players may benefit from a server which is better funded, and donors expect to benefit because otherwise they would not donate. The actions of free individuals are a demonstration of their preferences. Second, I wanted a non-arbitrary way of paying the former owner of an expiring Land Claim. This month I created a budget and then designed an automated auction system where expiring land claims are put on auction. The proceeds will go to the former owner and will be available to them if they decide to return.
One Month of Freedom
The New World launched on August 31, 2018. At the time of this writing, Liberty Minecraft’s New World has already earned more than one year of operating expenses. 115 players have logged over 7700 man-hours within Liberty Minecraft’s New World. For comparison, my goal in the first year (beginning March 2017) was to provide 10,000 hours of experience in free markets and liberty. Roughly 13,000 hours were played that year. At the present rate, the New World will reach 10,000 hours by the end of our second month.
Liberty Minecraft’s players have engaged in more than 25,500 free market exchanges using our ChestShop system. More than 2200 shops have been created by the players. Roughly 500 of them exist at present. The money supply is completely unregulated, and has been expanded from $0 to more than $281 million (28,135 player-produced Diamonds exist as cash or claim blocks). Roughly 85 percent of that money is invested in Claim Blocks. More than 940 parcels of land are privately owned by the players. The market price for a number of items was recorded by me after one month of economic activity to be compared with market prices in one year hence.
In addition to this explosion in economic activity, a number of landmarks were established before the first month of play had ended. The players commissioned, designed, and built a house to surprise me with a wonderful gift for operating Liberty Minecraft. Also, a player named __Wildfire_ has constructed a city-wide rail system with lines that pass through the property of at least seven different land owners. The mine cart rail includes terminals in at least five different locations which provide no-fee access to three shopping districts and more than one hundred land claims. Two other owner/operators have agreed to connect their private rail lines to produce a transportation network which is both operated and owned by a distributed network of players.
Another player named Haksndot has become the monopoly owner of a no-fee railway system that spans the world using “The Nether”, one of the game’s three dimensions. Origo Station, which lies in the center of his rail system, includes roughly twenty ‘Portals’ that are native to Minecraft and which connect all around the world’s first populated area, sometimes called Spawn Town or Scar City. Origo also has the world’s second most active shop district called Hellmart. There, Haksndot is crowdsourcing the construction of materials for building his Netherway rail system by purchasing raw materials, automatically processing these materials, selling their products, and buying back the blocks which players may produce for profit and which are used in the construction of The Netherway. These places and many others may be visited by joining Liberty Minecraft which is free to anyone who owns Minecraft for their home computer.
Two clans have established themselves as significant social and economic forces in Liberty Minecraft: the Emerald Clan and Mein Kraft. While each one has their own story to tell, one cannot avoid discussing them by contrast. Emerald Clan has been with Liberty Minecraft for nearly one year and are a cornerstone of our community, but the name ‘Emerald Clan’ did not arise until last month, after Mein Kraft established themselves as a Clan. Mein Kraft joined at the launch of our New World and are still being integrated into our community. Machiavelli observed that there are difficulties when groups differ in language and customs, but the greatest help is if one resides there and sends colonies. Emerald Clan and Mein Kraft differ in language and customs, but they share a love of freedom which is respected in Liberty Minecraft.
At present, the Emerald Clan is mainly involved in the production of goods that are obtained by trading Emeralds with villagers (which is an arbitrary trading feature native to Minecraft). Sharonclaws, who leads the Emerald Clan, is the operator of Emerald Tower, located in Scar City near Spawn. Spawn is the location where players first appear when they arrive in Liberty Minecraft. Mein Kraft is led by K9us, who owns $tore, which is primarily involved in the sale of goods obtained by ‘auto-fishing’ or by raiding End Cities (naturally generated structures that contain valuable goods). Another member, Frozenhammerz, owns Ivory Tower, which is also located in Scar City.
Emerald Clan is more socially invested and less hostile than Mein Kraft because they do not swear in conversations and communicate the purpose of their actions. For instance, they offer to use their property as a means to develop communities based on mutual trust. Mein Kraft has logged more man-hours, and is more productive and collectivistic; at the time of this writing, they have more shops offering items for sale and their clan’s members are trusted on all of the most valuable property owned by their members. Price wars between these two clans have reduced the price of tools and other high value goods by 50–90 percent over the course of one month despite the extraordinary growth in our free market money supply.
Liberty Minecraft’s New World is a technical improvement on my original offering. It is a valid demonstration of Austrian economics with libertarian ethics. The New World is actively testing a hypothesis that abandoning arbitrary rewards and subsidies will create a more profitable world. Since the launch of the New World, more things have happened than I can possibly describe. Our players build transportation infrastructure, establish communities according to their own customs, and have improved the standard of living among our players by direct competition among producers.
1. One qualification must be added in every case because the game’s servers are not hardened against hacking or human fallibility. While I do perform regular backups to prepare for inevitable failures, I will ask that the reader mentally append all game rules and ‘physical’ laws with the qualification “…unless a hacker, operator incompetence, operator malice, or any combination of the above causes this to change.” I am the server operator.
- Woods, Tom (2018, June 26). “Ep. 1187: Private Property vs. No Private Property: The Results”. The Tom Woods Show.
- Machiavelli, Niccolo, and W. K. Marriott. The Prince (ch. 7). Project Gutenberg, 2017.
- Ibid, ch. 3.