The new banking policy in Second Life has strong parallels to the adoption of 19th-century banking regulations in the real world. These regulations were supposed to stop wildcat banking, where ambitious bankers expanded credit through risky loans until defaults led to insolvency and left their depositors empty-handed.
Similarly, in Second Life, unregulated banks have offered demand deposits bearing interest rates of 40% or more, at least one of which never actually had any loans underlying its interest-bearing deposits.
Cases such as that are almost certainly fraud and should be adjudicated as such, but Linden’s adoption of a draconian ban on all interest-paying banks, which had been preceded by a ban on gambling, has established a clear pattern of economic interventionism. This does not bode well for Second Life users, for as Ludwig Von Mises has taught us, middle-of-the-road policy leads to socialism. FULL ARTICLE
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It was so good until we started talking about morality-ethical division, the ethics of virtual interventionism, and other objectivist garbledeegook. Give us economics, not nonsense!
This continues a well argued and entertaining analysis of “Second Life”. The foundations of Linden’s money certainly seem very shaky. He should guarantee a fixed peg for his $L – either in terms of gold, silver, $US or some other currency. As long as he provided adequate backing for his virtual money, it would not matter how rapidly he expanded the supply.
Since his own virtual currency is on an unsound footing, it is little wonder that his banking system is in trouble.
Ethics of virtual worlds? It seems to me the whole game has to operate on what ever terms were outlined when people signed up for accounts.
What is next the ethics of virtual murder on whatever first person shooter people are playing?
Jared, whether or not a certain banking system is fraudulent or not is an ethical question. It isn’t wholly economic.
Jared, the LVMI is “the research and educational center of classical liberalism, libertarian political theory, and the Austrian School of economics.” Classical liberalism encompasses notions of ethics and morality. If you were referring to capital ‘O’, Ayn Rand “objectivist garbledeegook,” the article is most certainly not. While Mises’s praxeological approach to economics is indeed value free, the application of pure economics is pretty limited if you have no end in mind that you desire to achieve. The ethics laid out by Murray Rothbard in the Ethics of Liberty could be a potential end of virtual world policy makers.
Pete Canning, I basically agree with your remark that “the whole game has to operate on what ever terms were outlined when people signed up for accounts.” Those terms are the elements of a contract formed between Linden and Second Life users, and it’s binding in real life. The terms can contain anything the parties mutually agree to. Nobody’s holding a gun to anyone’s head and forcing them to set up a Second Life account or abide by Linden’s rules. That’s because the Second Life servers are Linden’s property, not anyone else’s. That contrasts with governments in a virtual world who claim the right to regulate things that are the property of others.
I realize you probably meant it as a joke, but “virtual murder” is nonsense. Murder is killing a human being. Human beings don’t exist in virtual worlds; they exist in the real world. I suppose you could some sort of vandalism if one had property rights to an avatar and somebody else destroyed that avatar, but again, that would be destruction of property, not destruction of human life.
Wildcat? Looks more like a fox to me…
Interesting article. I found this part rather odd, however:
“Linden’s ban on interest-paying banks may not be unjust, but that does not mean that it should be condoned. To draw such a conclusion would be to confuse morality with ethics.”
I’ve encountered this odd libertarian juxtaposition between morality and ethics elsewhere before. You appear to be equating ethics with political justice and rights, morality with everything else. Perhaps you even see morality as subjective or relative? But I can’t say from your article.
In any event, the juxtaposition is rather idiosyncratic and confusing. In standard usage, morality is a code of values for guiding man’s actions. It includes rights, when one has a theory of rights. Ethics is often used interchangeably with morality, but not a few like to limit it to or also use it to refer to the systematic philosophical study of what is moral and why (this is ethics qua science).
It’s strange that back in 1994 when I told banksters about my original and innovative idea for a virtual world with realistic economic exchange based on gold-backed e-currency, they pretty much laughed me out the door.
Now here’s Linden Labs, the Kindergarteners, pretending that they understand something.
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