To clarify, the reason that a closed economy fails has nothing to do with the merits of the closed economic mini-theory, but rather because of player behavior, which is far different from realistic societal human behavior.  UO was initially a closed system and it failed miserably because all it takes is one person with a tendency to hoard who gets in early, one person who figures out an exploit allowing massive resource harvesting, a group of players who hit up all the high-cash targets quickly, etc., and then the person who signs up the next day has nothing to earn or do, and he is unable to buy a magic cheesegrater from one of the aforementioned players because he has no way to trade for it.  The closed system was abandoned quickly in favor of a semi-open.

A graduated tax system and decay are ways to attempt to approach the equilibrium that a closed system aims for, without the hazards imposed by player behavior.  MMOGs do not have the same economic incentives or threats that allow a semi-closed system to work on Earth.

Hello,

The above was split from Controlling Currency hyper-inflation, a thread from early 2004.

Please review the site policies listed in the sticky thread at the top of the Site Discussion forum. We have some unusual rules here.

Although it's perfectly all right to continue the older discussion here in this new thread, I suggest that you begin posting in Actual Play, as the forum of choice for new people at the Forge.

Best,
Ron