Runescape, Marxism, and Video Game Economies

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The Labour Theory of Value- explained via Runescape.

On the subreddit of oldschool RuneScape (OSRS), there was a discussion going on about the value of certain items. A user said the following:

Actually the value of the snapdragon seed is equal to the value of the labour required to produce it.

This statement is one of the core truths about a capitalist economy that follows from the labour theory of value (LTV), as set out by Marx and Engels. At the surface level, any Marxist would agree with this, but if we take a closer look at the reality of commodity production in RuneScape and the motivations for performing labour, we see that this is not true. Examining why grants us a deeper insight into the LTV, and allows us to examine other non-capitalist markets using its lessons. First we will cover the basics of LTV and how it predicts market prices, and the terms used in it. After that, we will take a look at the economy of RuneScape and see how LTV cannot be applied to it.

Labour Theory of Value and price-in a quite sizeable nutshell

In real life, capitalists (factory/company owners) compete with each other for profits. For the simplicity of explaining how this results in the price of a product, we will imagine a world where every person is an independent producer without a boss or employees. Additionally, we will only talk about the value added to a product by the act of producing the product, rather than taking the cost of the input material into account. This makes the mental model a bit simpler for the sake of this explanation.

When people produce products for exchange, meaning, for sale/trade and not for personal use, these products are called commodities. The mechanisms of competitive markets, i.e., without monopolistic forces or government interventions that can set prices at arbitrary levels, result in an interesting dynamic between producers.

Every producer, every worker, every person, wants to get as much stuff per hour of work they do as possible. This means they are always looking for work that will give them commodities that are worth more than other commodities in comparison, or in a monetary economy, can be exchanged for the highest number of other products using money as an intermediary step. We can write this as C-M-C’ where C’= more value than the original commodity. When some commodity is in short supply, the relative exchange value, that is the ratio in which you can exchange that commodity for other commodities, will go up.

When bread is in short supply, whether that be through an increase in demand or drop in supply, the amount of products you can exchange for one loaf of bread will go up. The amount of time you need to produce the bread, the amount of labour value (expressed in time), or just “value” in Marxist theory, does not change. What changes is the exchange value, as you can now trade the same amount of bread for more sausages. This rise in exchange value makes it much more worthwhile to bake bread as opposed to producing other commodities, since the amount of loafs you make in one hour can get you, for example, two hours worth of sausages. Conversely, this makes producing sausages much less attractive because the amount of sausages you produce in an hour can only get you half an hours worth of bread.

In such a scenario where the ratio of exchange between commodities does not match the labour value, people will switch careers or production. Butchers will become bakers. This creates a drop in the supply of sausages and a rise in the supply of bread. Consequently, bread will start to go down in exchange value while sausages will go up in exchange value. When this happens we might see the ex-butchers who had become bakers return back to their sausage making. People will keep switching their labour to production of commodities that exchange for relatively more than other commodities per hour worked, and away from production of commodities that exchange for relatively less other commodities.

This dance of changing professions and changing prices will eventually settle into an equilibrium in which the exchange values, the monetary price of commodities, will converge so that their price is equal to their labour costs/values.

This long term price tendency is one of the core aspects of labour theory of value. It directly explains why prices tend to settle at the price that they do. It also directly shows that it is the amount of labour, put in by the workers, that determines the value of the product.

Now, I can already hear you say,

But what if someone works hard and the others work slow?

Excellent point. To the buyers of a commodity it is of no interest who made a product. To them it does not matter if it took you an hour or 10 minutes to make a bread. They will pay the same for each loaf of bread. And a fast worker will never sell its bread for less just because they worked faster. Conversely, a slow worker can never be paid more because he worked slowly. All commodities sell at whatever the market price is at the moment. But because of the dynamic described above, this market price still tends towards the labour value of the commodities. In reality, the labour value of a commodity is determined by the average amount of hours it took all of the producers to produce that commodity. This is known as the socially necessary labour time (SNLT). The monetary price of a commodity will always trend towards the SNLT over time.

But what about useless products? If I make one mud pie an hour, will it be worth one hour?

No. For any product to have value, it needs to be useful. This usefulness is called its use value. It is not important what this use value is, or how it can be quantified, because it is unquantifiable. However, we can know if a product has any use value. If a product has any use value at all, someone will buy it, and in turn someone will produce it, and the above mentioned mechanisms will cause people to start or stop producing it until its exchange value equals its labour value too.

Why you cannot apply the labour theory of value to any market-like system (Such as RuneScape)

The stated hypothesis set out by the user in the Reddit post, that the value of the snapdragon seed is equal to the labour put into it is only true in a generalised commodity market, such as the one described above. RuneScape does not have generalised commodity production for most items as they are drops from monsters. There are no methods to produce only snapdragon seeds or only dragon swords like there is in general commodity production, hence the quantity of individual commodities is not directly governed by the labour costs of their production. Instead, the prices are governed by a complex function that includes many different kinds of commodities, such as noted ores, flax, magic logs and all other types of drops in the droptable of monsters. The farming of monsters yields a collection of many different commodities. In our real life capitalist economy, nearly every commodity is produced on its own, with little to no useful byproducts.

It is further complicated by the fact that in the game, many commodities do not depreciate, unlike real life. A piece of armour like a rune platebody will never be used up during combat, a weapon like a dragon dagger is never damaged to worthlessness by combat. These non consumed items would drop to an exchange value of zero if they were allowed to do so unimpeded. This is because if a product is never used up, never breaks, but keeps being produced, at some point there becomes so much of that product that it is valueless in the market. Nobody will buy a kitchen knife if everyone has 100 stored away in their shed. In real life, there are no useful commodities that never deprecate, there is no capital (tools for production) that exists in perpetuity.

To prevent items from becoming worthless, this game, as well as others, there exist methods to turn items into gold (currency). In RuneScape, every item has a constant, never changing currency value given in return for using the alchemy magic spell on it, consuming the item. Items can at any moment be turned into that amount of currency. This way, alchemy values prevent items from dropping to an exchange value of 0. This keeps these items, received from monster farming or productive skills, artificially inflated at a minimum level, and keeps gameplay activities profitable.

Selling Communism is difficult unless we can demystify the economy

The price of commodities only tends towards their labour value under generalized commodity production, where commodities are produced specifically, like in real life. It also requires no such artificial price limits like alchemy values, or shops that both sell and purchase practically infinite amount of items at a fixed price similar to the alchemy value of those items. These price fixing methods like shop stock at a fixed price, or alchemy values, have a similar effect that monopolies have in a real life capitalist economy.

As such, using the labour theory of value to predict long term price is only useful for items that can be produced in a focused manner without many side products, and which are not affected much by monopolies, and which are consumed upon use. Examples of such items in Runescape are nature runes, law runes, iron ore, food, etc.

Even then, I don’t recommend you to try and apply the LTV to analyse RuneScape, as unlike real life, production in video games is not always, and often is not, conducted for exchange like in real life. Much of the labour performed in these kinds of games is performed with training skills as the goal, rather than making money. Training said skills produces, in the case of OSRS, vast quantities of by-products, far more than their use value and demand justify, which drives down their price far below their actual value. As such, the amount of these items that enter the game are not impacted much by their labour cost or their use value, and as such they cannot be treated like commodities in the real life economy.

To summarize, you cannot apply LTV blindly on video games. The material reality of their production, of the items themselves, of their economy, and of the motivation for production, is not comparable to real life, to capitalism. Many expensive items in RuneScape aren’t produced as individual commodities, many items exist forever, they are kept artificially valuable by means of alchemy, and many items aren’t produced for exchange but rather as a by-product of training skills. The theory of Marx cannot be applied to any situation which is market-like, as the analysis of capitalism set out by Marx and Engels is specific to generalized commodity production as it exists in our real world, which has radically different material conditions from those in RuneScape or other MMOs.

Comrade Rat, (ultimate ironman btw)

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