Nerfing the Market Makers

Instead of nerfing more MMs, think about why players are selling to them.

I don’t think anybody starts playing this game with the intent to isolate themself from the economy; there are lots of single-player games they could play instead. Rather, they get pushed in that direction as every other option becomes less profitable. The reason for the reduced profitability is falling prices, i.e. deflation.

An economy with a fixed money supply tends to stagnate or deflate. If it grows by population increase (read: more players), then the same amount of money is spread across more people, making it hard to accumulate enough capital in one place to make any sort of infrastructure investment. PrUn avoids this by giving each player some starting cash created from nowhere.

However, if the economy grows by increased productivity (read: more factories per capita), deflation still results. This can be explained in terms of currency having an actual, inherent value, associated with its ability to facilitate trade. As the economy grows, more trading needs to take place, causing an increase in demand for currency. With the supply fixed, the value of currency then must increase due this added demand, and an increase in the value of currency translates to reduced prices on a broad range of goods.

The purpose the market makers are serving right now is to arrest deflation. They do this by setting a floor on particular prices and injecting more currency into the economy in the process.

Usually a currency source would cause inflation, but in the case of market makers all it can do is hold the inflation rate at 0%. Why? because the market maker price itself doesn’t increase. Other prices will stabilize around the point where making those other things is competitive with making whatever the market maker is buying, but if anything increases past that point, a lot of people who were dumping to the MM will switch, causing a surge in production and driving the price down.

Nerfing a market maker will disrupt the economy, starting a deflation spiral until we find a new equilibrium by substituting a new market maker. Removing the market makers entirely will cause a deflationary spiral that forces players to be self-sufficient or barter to survive. Or, in a lot of cases, quit the game.

In real life, healthy economies have a small, but positive rate of inflation. This encourages investment because hoarded cash will lose value over time, and that investment causes economic growth. This contrasts with a deflating economy, where hoarded cash gains value and new investments are discouraged.

So how do real life economies maintain a positive inflation rate? Two ways: First, governments are constantly printing money and using it to buy things. This can be likened to the market makers; the stuff governments buy is of course put to use instead of being destroyed as it is in PrUn, but that doesn’t actually matter much for the goal of inflating the economy.

Second, the banking system increases the supply of money through lending. When I put my money in a bank account, they don’t just hold 100% of it in the vault. They loan a portion of it out to other people, who spend it. The people who get paid then put the money in a bank, and the process repeats itself. Now I still have my money - as long as not too many people make withdrawals at once, I can always get it back from the bank - but someone else also has money that was created through the loan. This effectively multiplies the monetary base so that the amount of currency in circulation dwarfs the amount of actual, physical cash that has been printed.

In order for the economy to survive if market makers are removed, we need some sort of replacement for the money source they provide. A player-driven banking system would be an amazing feature to have eventually, but a more reliable, stable source of currency would be something functionally similar to market makers, with two changes:

a) It should feel productive, not destructive; when I sell something to the MM I feel like I’m throwing away useful resources.
b) It should support the economy more evenly, causing a variety of goods to be profitable to produce.

Since players will ultimately run factions, I propose to allow those player-run factions to print currency as an alternative to taxes, to buy things the faction needs such as rations and drinking water to keep the CoGC running. This way resources are put to use instead of being deleted, and if the factions are encouraged through game design to buy a variety of items, then they support a wide range of industries.

There is of course the potential for a poorly-managed faction economy to suffer runaway inflation or deflation, but if that happens it will be due to mistakes made by the players, and we will have the tools to correct it if we play wisely.

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