What would it take to kill the Runescape Economy?

[sees_all1]

Shield your eyes!!! this one is huge!

 

 

 

What would it take to kill the RS Economy?

 

 

 

After viewing numerous posts and threads declaring the RS Economy to be dead, and many responses of Its not dead, its better than ever!, Ive decided to examine what makes the RS economy tick, and what would make it bad enough that there would no longer be an economy.

 

 

 

So, lets take a look at what economy means. The definition I will go by is:

 

the system of production and distribution and consumption

 

What are the characteristics of a dead economy?

 

 

 

First and foremost there is no trade. There is no exchange of goods, no wealth passed between characters.

 

 

 

Secondly there is no consumption. No one is using the goods produced, and they just sit.

 

 

 

Lastly there is no production. No one is producing anything, nothing is generated.

 

 

 

 

 

I think the first one is the one that is most likely to happen, because it seems like most causes from the second and third would stem from the first. Im just going to focus this on trade.

 

 

 

How would there come to be no trade?

 

The first, and obvious answer is if RuneScape shuts down entirely Jagex ceases to exist, something along those lines. Because Jagexs financial status seems to be intact and strong, and this would be some external thing, Im not going to discuss this one further. So, on to another idea.

 

There can come a point when everything is viewed as junk. Where items have no more worth, and the current prices do not reflect the current value. This already seems to be the case with many items products of skills that are power-trained.

 

Take smithing for example it is impossible to sell mithril daggers, or steel longswords. The current items price has hit a floor, set by Jagex. Experience is valued more than these items, which leaves frozen markets.

 

It is easy to see this occurring with many items, and the trend will only become worse as more and more people look to max out skills.

 

 

 

There is also the opposite price ceilings. It takes a big event to make a relatively common item hit its ceiling, but when it happens, trade stops entirely.

 

Cooked lobsters have a price ceiling of 368 they hit it for several weeks after the PVP updates. It was impossible to buy 100 lobs in the GE for a while, and after all the hype of PVP worlds died down, it became nearly impossible to sell 100 lobs in the GE.

 

 

 

What is the markets solution to price limits? Junk trading. Certain items holiday items, or rare items, have a whole and complete market unto themselves, and junk trading is the solution to make their economies to flow smoother. However, this only benefits wealthy individuals, instead of those with less than 10M total assets.

 

 

 

What would happen if all price floors were removed, and the markets were allowed to dictate the prices? Its conceivable that certain items, such as bronze-steel items, or willows, would fall to 1-3 gp each, ruining the game for the low leveled players. However, it only takes a few days to a couple weeks of play to get up to where a player is using mithril or better, and this problem wouldnt happen anymore. The price of some steel, and mithril items will find equilibrium at their respective high alchemy price, minus the cost of a nature rune.

 

 

 

This brings up another interesting idea nature runes are more important than GP in the markets.

 

Lets say that a new skill is introduced sailing. Or engineering. Or Aeronautics. It doesnt really matter. But, lets say that nature runes were an integral part of that skill. The skill is introduced, a new demand is created, and the price of nature runes soar. Items that are normally dead, but fall within a range that its worthwhile to high alchemy, would cease trading (rune medium helms, green dhide bodies, etc.) If nature runes were deemed more valuable for this skill than for high alchemies, many different items and skills would become junk.

 

 

 

The last thing that I believe would destroy the economy is if the mechanics of the GE stopped working, which consists of a few things. One would be the GE stops all together, and you cannot use it anymore. This would bring back classical trading, standing in world 1 or 2 for hours trying to get a couple death runes. More scamming would likely occur, prices wouldnt shift, etc.

 

Another is if Jagex doesnt update the prices of items. This would make it that its impossible to trade with gp, trading would cease and the economy would be dead

 

Lastly, if a majority of items hit a price ceiling or floor in the GE. This is a little different than Jagex not updating the prices, however it would result in the same effects.

 

 

 

 

 

Ive heard two other things, and Id like to examine them here.

 

1. A super alchemy spell would destroy the economy.

 

2. Merchanting clans ruin the economy.

 

 

 

So, the first one. No, this isnt true. If a spell gave you more gp per item than the high alchemy spell, new prices would be set for items, and the high alchemy spell may become worthless. However, the economy wouldnt be destroyed in the sense that trade ceases to exist. Rather, the prices would shift for a couple weeks until balance is restored. The only way this could kill the market for certain items is if price ceilings existed, and this spell sans cost of runes gave more gp than the ceiling is at.

 

 

 

The second one Merchanting clans do not ruin the economy, as a whole. A merchanting clan works by creating an artificial demand for an item, raising the price, then selling the items back at the inflated price.

 

This works only in theory rather what probably happens is the leaders of the merchanting clan stock up on a specific item, tell the rest of the clan what that item is, slowly sell back that item at the inflated price, make a tidy profit, and finally watch as their members get screwed and the price of the item plummets as the artificial demand becomes an artificial supply.

 

Even in theory, merchanting clans dont work. If everyone waits until the peak price, what happens is just a redistribution of wealth, or rather a gamble. The lucky ones will be able to sell at the increased price, the unlucky wont, and will have to sell at the floor, or wait until the item rebounds and either net a loss or no profit.

 

 

 

This is sort of off topic, however Id like to point out that while merchanting clans can mess up individual markets, they are not numerous enough, or powerful enough to mess up every item.

 

 

 

A smart scaper will check the different clans before making a significant purchase, and will be able to read pricing histories of specific items to know what each items price is. A smart scaper will also know how much theyre willing to lose on a specific item.

 

 

 

If there were no changes to the game, and an equilibrium were to occur, there wouldnt be merchanting. However, merchanting is an indicator that there is still an economy, that trade exists.

 

 

 

 

 

 

 

Yikes! That was long.

 

Conclusion:

 

I hope you enjoyed the read I enjoyed writing it. Hopefully everything was as clear as I meant it to be. If you have any ideas as to what else would kill the economy, please post them. If you respectfully disagree with any of the things Ive said here, please post them.

 

I look forward to reading and discussing comments.

 

 

 

tl;dr:

 

The RS Economy dies if a few things occur:

 

-RS ceases to exist

 

-Most items become junk and price limits (floors, ceilings) remain

 

-Nature runes become too expensive

 

-The GE stops working (no volume, or prices dont change)

 

 

 

Things that wouldnt kill the Economy:

 

-New super alch spell

 

-Merchanting clans.

[Bauke]

What is the point of this entirely fictional post with too much fantasy?

[Ollyc3]

tl;dr

 

 

 

The economy already died when they released the Exchange

[AceSpitball]

Grand Exchange made capitalist economy to third position.

[Poppet]

The economy dies if there is no gp all items no one can sell on the G.E.

[spacheco]

the economy died when they release rune-mart.

[Bauke]

tl;dr

 

 

 

The economy already died when they released the Exchange

 

The economy is still totally functional. Perhaps not in a way that you would have liked, but a "dead" economy is an economy where nothing is produced and nothing is traded. Clearly not the case in Runescape.

[Makoto_the_Phoenix]

What is the point of this entirely fictional post with too much fantasy?

 

Hypothesizing is mostly fantasy anyway. You should've read at least the summary.

 

 

 

Anyway, I read it [ALL of it], and I've got to say, throughout the 6 or 7 years I've played this game (I can never remember), I've heard the doomsayers proclaim that the economy was ruined, once and for all. I couldn't say it was B.S. at the time (since I didn't have the facilities to prove it), but even I knew that it wasn't true.

 

 

 

Grand thesis: the RS economy is bulletproof. Here's my rationale.

 

 

 

1) All items that are traded fall into three distinct categories: junk (items that we have no value on, or are a useless byproduct of a skill), high-wealth items (easily anything that's over 12M and has no intrinsic use to the player), or the typical traded goods (coal, Yew, essence, and so forth). The only way that the economy could be wounded, let alone "killed", is if merchants could buy up a majority of all typical traded goods. While their value is significantly less than high-wealth items, they come into the game at a rate almost incomparable to anything like a Godsword or Spectral Sigils. That being said, there is no way for the typical traded goods to become scarce, untradable, or undesirable.

 

 

 

2) We will never run out of money to spend. Think about it - every NPC in this game drops cash. We steal cash from Guards, Watchmen, and so forth. Lootshare/Coinshare gives us perceived cash when we split a drop, regardless if the item is sold or not. High alchemy still exists. The list goes on and on, you know. So long as we have a way to accrue cash, goods will still be traded.

 

 

 

3) The amount of cash to raise skills is staggering in many cases. Consider the amount of cash it'd probably take to get a 99 in Construction or Smithing or Fletching or Cooking or even Crafting. It's easy to balloon ballpark the total cost at 350M, although it's a lot less (or more) in some cases. As you said, we place a critical value on skills rather than items; in turn, so long as we want to raise our skills, we will spend at least some fraction of money on resources to level. There are a handful of DIY skillers out there, but for the most part, we all buy what we can in our skill.

 

 

 

4) The junk we create has some value. Barring some some apocalyptic event that merchant clans were able to buy out the common goods, the stuff we could still churn out on our own would have value. At this point in the game, we can create almost anything to get raw materials (pickaxes, hatchets, harpoons with Hunting), and it's a matter of skill to process that to make cash. That being said, all items have value, irrespective if that value is less than the total amount of cash needed to produce the item, and irrespective of the item's demand.

 

 

 

I don't have the time nor computer resources to prove this yet, but the RS economy is something like a bell-curve. The biggest amount of wealth in any one part of the curve is at the high end, but the bigger part of trade occurs in the middle. I suppose this is why merchant clans don't bother me so much; so long as I can buy Iron at 75 each and sell coal for 150 each, then all is well in the RS world.

[Bauke]

What is the point of this entirely fictional post with too much fantasy?

 

Hypothesizing is mostly fantasy anyway. You should've read at least the summary.

 

 

Hypothesizing is not at all related to fantasy.

[sees_all1]

@Makoto - thanks for the remarks, and for taking the time to at least read it.

 

 

 

 

2) We will never run out of money to spend. Think about it - every NPC in this game drops cash. We steal cash from Guards, Watchmen, and so forth. Lootshare/Coinshare gives us perceived cash when we split a drop, regardless if the item is sold or not. High alchemy still exists. The list goes on and on, you know. So long as we have a way to accrue cash, goods will still be traded.

 

 

 

There can, and have come points in time where goods aren't traded, for instance the lobster example. Although this (for the most part) only happens with major updates, and only affects goods of a certain type (pking gear, for example) for a certain time frame, these markets can, and do freeze.

 

 

 

As wholly inconceivable that this will not happen to a majority of goods, I submit that its still possible, and if it did happen, the economy (trade) would grind to a halt.

[mikeg0477]

I think that if EVERYONE became a DIY skiller the economy would take a big hit, but nothing short of RS shutting down would kill it.

What is the point of this entirely fictional post with too much fantasy?

 

Hypothesizing is mostly fantasy anyway. You should've read at least the summary.

 

 

Hypothesizing is not at all related to fantasy.

 

If the hypothesis can't be proven, it is fantasy.

[Earth_Poet]

The second one Merchanting clans do not ruin the economy, as a whole. A merchanting clan works by creating an artificial demand for an item, raising the price, then selling the items back at the inflated price.

 

This works only in theory rather what probably happens is the leaders of the merchanting clan stock up on a specific item, tell the rest of the clan what that item is, slowly sell back that item at the inflated price, make a tidy profit, and finally watch as their members get screwed and the price of the item plummets as the artificial demand becomes an artificial supply.

 

Even in theory, merchanting clans dont work. If everyone waits until the peak price, what happens is just a redistribution of wealth, or rather a gamble. The lucky ones will be able to sell at the increased price, the unlucky wont, and will have to sell at the floor, or wait until the item rebounds and either net a loss or no profit.

 

 

 

This is sort of off topic, however Id like to point out that while merchanting clans can mess up individual markets, they are not numerous enough, or powerful enough to mess up every item.

 

 

 

You have some points, but I tend to disagree. I believe merchant clans such as the one you describe are currently the biggest threat to the RS economy. This doesn't present an immediate, or sudden threat, but it is slowly building.

 

 

 

The last paragraph points this out. You can already see the effects merchant clans can have in certain pockets within the market. Merchant clans are in fact a collusion in an attempt to corner the market on certain items. In other words, they use their strength in numbers to buy out a dominant share of any given item on the market in an attempt to dictate the price demand.

 

 

 

You have roughly half of the clan making out with a profit, (unless the clan is really devious) while making it irritating for a few outside players looking to trade this particular item. Right now, the non-merchant has only one viable option, and that is to wait it out until either the price becomes more desirable, or the clan's shenanigans are over.

 

 

 

You pointed out that right now there aren't enough merchant clans strong enough to influence the entire market, only individual items. However, the trend as been growing stronger, and more prices are getting manipulated every day. If Jagex decides that price manipulation is fair practice, the trend will only grow.

 

 

 

Eventually, you will have enough merchant clans to affect every item on the GE. Prices will become so unstable that consumers (non-merchants) will lose confidence of the true value of any items. Several things could happen next.

 

 

 

The most likely scenario is this will create a massive panic selloff, with all players looking to liquidate their bank to cash. This would crash the market, possibly for an extended period of time with only a select few items retaining some sort of value. Eventually, players may look to disregard the GE for trading purposes, and return to person-to-person trading. The mechanics of the GE will cease as you hypothesized. It could even lead to the value of gp becoming suspect, and players beginning to rely on a barter system, possibly with one item becoming more valuable such as logs or fish.

 

 

 

Merchant clans can create instant gratification. The players engaged make quick cash and are happy. Many other players feel unaffected by their actions, and so they don't care. I think we need a little more foresight on what effect merchant clans could have on the economy.

[Zaaps1]

Hmm, what would make an impact. But tbh it doesn't seem very possibly. Once the price rises too low or too high, the players would take actions themselves and save the economy, without even realizing it.

 

 

 

For example, if natures get to, say 400gp per rune. So many people would go for 91 rc, or craft natures again that it would drive the price back down.

 

 

 

Plus there will always be some level of interaction, so the only way to kill the economy is to kill the GE AND regular trading, or shut down RS.

[Makoto_the_Phoenix]

 

2) We will never run out of money to spend. Think about it - every NPC in this game drops cash. We steal cash from Guards, Watchmen, and so forth. Lootshare/Coinshare gives us perceived cash when we split a drop, regardless if the item is sold or not. High alchemy still exists. The list goes on and on, you know. So long as we have a way to accrue cash, goods will still be traded.

 

 

 

There can, and have come points in time where goods aren't traded, for instance the lobster example. Although this (for the most part) only happens with major updates, and only affects goods of a certain type (pking gear, for example) for a certain time frame, these markets can, and do freeze.

 

 

 

As wholly inconceivable that this will not happen to a majority of goods, I submit that its still possible, and if it did happen, the economy (trade) would grind to a halt.

 

 

 

I'll willingly submit that parts of this economy can (and sometimes does) come to a pure standstill. I'm considering only the majority of goods, or the sheer number of people it would take to cause the economy to stop entirely. It's entirely true that merchant clans isolate or monopolize an entire subsection of the market, but I do not think that they alone can cause the economy to collapse.

 

 

 

Think about it - the players of RS outnumber any sum of clan members, even if we are also mixed into some of those clans. As zaaps1 said, should an item instantly become insanely high, like Natures, then players will drive to get the RC level to make it incredibly profitable, thus saving the economy. That same scenario is happening right now, with a run on Yew logs over 400gp each (funny that they've stayed that high since '06 though); more players cutting Yews will eventually result in lower Yew prices.

 

 

 

Another reason that I don't think merchant clans would gain enough steam to take the entire market over is due to the number of micro-markets comprised into one major market. With most every new update, some new niche market gets created, and in turn, that becomes yet another market to drop resources into (we're talking billions here). Emergent gameplay also occurs, creating demand for an item that was previously thought to be nearly useless (chinchompas).

 

 

 

Lastly, the number of niche markets along with potential niche markets make monopolizing an entire economy through merchant clans impossible and impractical. Let's take Karambwan for example - they heal 18, but getting them in bulk is worse than pulling teeth. Should merchant clans take over many other parts of the Fishing micro-economy, Karambwan exists as an alternative, albeit impractical.

 

 

 

Oh, did I mention that it would take hundreds of millions, if not billions, to overrun a single part of the economy?

[yuriqiu]

The current RS economy closely resembles the policy implemented at China. Limited free trade. Price floor and ceilings on all the items and limited price changes on items. It all comes down to can Jagex predict where the equilibrium price for every item are. Also, merchant clans provide a major inconvenience. Although it will not "kill" the economy per say, it will cause lags in certain parts of the economy. Would be great if people can get rid of them. My main wish is just for Jagex to remove the price ceiling/floors and perhaps allow for more movement of prices with items.

[nversaydie13]

good read. alot of those would most likely never happen but its fun to imagine things if they did. i enjoyed it! =D>

[RuneAge]

As many people have already pointed out, Merchanting clans cannot "kill" the economy, they can maybe wound isolated parts, But all in all, i'm pretty sure if not 100% sure that merchanting clans cannot kill the economy, but nether the less, this was very interesting and a fun read.

[Omali]

The economy is ruined every time an update comes out, you should pay more attention to the RSOF.

 

 

 

GE? Ruined it.

 

Trade limit? Ruined it.

 

Party Pete's afro wigs? Ruined it.

 

New graphics? ruined it.

 

FunOrb? Ruined it.

 

This post? Ruined it again.

[sees_all1]

You have some points, but I tend to disagree. I believe merchant clans such as the one you describe are currently the biggest threat to the RS economy. This doesn't present an immediate, or sudden threat, but it is slowly building.

 

 

 

....

 

 

 

You pointed out that right now there aren't enough merchant clans strong enough to influence the entire market, only individual items. However, the trend as been growing stronger, and more prices are getting manipulated every day. If Jagex decides that price manipulation is fair practice, the trend will only grow.

 

 

 

Eventually, you will have enough merchant clans to affect every item on the GE. Prices will become so unstable that consumers (non-merchants) will lose confidence of the true value of any items. Several things could happen next.

 

 

I'd like to point out that what's good for the goose, is not in fact, good for the gander (this assumption is called fallacy of composition)

 

(taken from the book Microeconomics for Economics 251, published by Pearson)

 

"The fallacy of composition is the (false) statement that what is true of the parts is true of the whole or that what is true of the whole is true of the parts. There are many everyday examples of this fallacy. Standing at a ball game to get a better view works for one person but not for all--what is true for a part of a crowd is not true for the whole crowd."

 

 

 

While merchanting clans may be popular right now, there are many uninformed individuals that are going in, trusting the clan leaders, and getting screwed by playing by the rules.

 

All of these individuals will have backlash; they will refuse to go into these clans again, and/or warn others. Not everyone in runescape is able to or will participate in merchanting, and certainly not everyone can profit from it.

 

 

 

There are far too many items that are substitutes for merchanted goods, or simply too much volume of certain items to allow merchanting clans to put a big dent in their prices. I sincerely doubt merchanting clans are able to change the price of high volume items - air runes, pure essense, nature runes - especially because most of these items are created from scratch. These items are the backbone of the Runescape economy.

 

 

 

 

I'll willingly submit that parts of this economy can (and sometimes does) come to a pure standstill. I'm considering only the majority of goods, or the sheer number of people it would take to cause the economy to stop entirely. It's entirely true that merchant clans isolate or monopolize an entire subsection of the market, but I do not think that they alone can cause the economy to collapse.

 

I think you and I agree on most of this. I suppose what I'm saying is that the players will not, in the end, collapse the economy, it'll be some (really really big) action of Jagex.

[Gpguy]

 

What would it take to kill the Runescape Economy?

 

 

 

Bailouts.

[acenator]

Oh, did I mention that it would take hundreds of millions, if not billions, to overrun a single part of the economy?

 

You forgot to mention that, unless the clan went after a discontinued item(s), the clan would eventually run out of money as more of said item(s) continued their steady, and likely increasing with the higher prices, flow into the markets (another part of your post implied it, but you forgot to mention it outright).

 

 

 

The fact of the matter is that, short of having a large majority (probably at least 75%) of the RS population involved in the endeavor (which, obviously, isn't going to happen), there is no way for players to, in a lasting and sustainable way, kill even a small part (i.e. one item) of the RS economy (Jagex could with a combination of the removal of player-to-player trades and the freezing of prices on the GE).

 

 

 

 

 

 

What would it take to kill the Runescape Economy?

 

 

 

Bailouts.

 

I lol'd :lol:

[walka92]

I think that if EVERYONE became a DIY skiller the economy would take a big hit, but nothing short of RS shutting down would kill it.

What is the point of this entirely fictional post with too much fantasy?

 

Hypothesizing is mostly fantasy anyway. You should've read at least the summary.

 

 

Hypothesizing is not at all related to fantasy.

 

If the hypothesis can't be proven' date=' it is fantasy.[/quote']

 

just because its not proven doesnt make it fantasy

[Returned3]

The Runescape economy will die when all monsters and random coins/runes on the floor never respawn.

[n64jive]

I feel this post is too hypothetical. I feel Jagex did ruin an entire aspect of the game with the introduction of the Grand Exchange, but perhaps they didn't like this aspect of the game. The G.E does make skilling quite an easier task, which is something that Jagex developed. The market, before the GE, was a player made market. Players controlled the prices, and players manipulated the prices. Players scammed, and players merchanted. Players deemed a totally worthless item as investment items. It wasn't the looks that made these items appealing, but the fact that they could only be purchased from other players. Jagex tried to combat rare items with introducing all sorts of head pieces and hairstyles that could be purchased cheap, but it wasn't the same.

 

 

 

I feel every update since the RWT updates has made the game more linear. I used to train in the wilderness because I liked the fact that it was less crowded and I could always attack someone who wanted to challenge me for my training spot(a person who would be equally equipped as myself). I find it very difficult to train on pvp worlds. Because my I often risk enough gear to make me an applicable target anywhere, I am killed by pkers. It used to be a pker would search the training spots(like greens) for anyone who happened to be killing greens in expensive gear, or people who specifically take joy in killing autoers...but now you will be killed, regardless. And because of this, training on pvp worlds is pretty pointless. All the crowded spots are going to be crowded with pkers, and all the spots that arn't won't be crowded on non pvp worlds.

[Gpguy]

If the hypothesis can't be proven, it is fantasy.

 

 

 

Ahh yes, like the "fantasy of evolution" or the "quantum fantasy".

 

 

 

No son! Fantasy and theory are NOT synonymous. Fantasy is something proven to be the null hypothesis, and Fact is something proven to be the hypothesis proposition. The agnostic "middle ground" is where the majority of knowledge lies, and this knowledge is hypothesized in the form of theories.