“Our first challenge is to create an entire economic infrastructure, from top to bottom, out of whole cloth. No gradual evolution from previous economic systems is possible, because there IS no previous economic system. Each interdependent piece must be materialized simultaneously and in perfect working order; otherwise the system will crash out before it ever gets off the ground.”
— CEO Nwabudike Morgan, “The Centauri Monopoly”
Industrial Economics, in the game, does basically what you’d expect it to do. It’s the second-tier economic tech, based on its predecessor Industrial Base. It enables the creation of Energy Banks in bases (which magnify energy production) and the adoption of the Free Market social engineering choice, which greatly increases energy creation at the expense of the faction’s planet and police scores. Essentially, this tech is the early-game key to big money.
CEO Morgan is therefore the logical choice for the quote. As we’ve seen before, “The Centauri Monopoly” is the tome in which Morgan lays out his path to global domination. Here, he describes the challenges inherent in getting a real economy going on Planet. And, when you think about it, it would be pretty tough to get an economy of any sort started up from absolutely nothing. Especially since even the number of initial colonists in each faction is going to be large enough for the necessary coordination to be considerable.
The problem is especially difficult if you think about it from Morgan’s perspective. He’s all about the superiority of the market economy over other forms of resource allocation. Another faction leader might be satisfied with just relying on fiat to solve the initial problem. And, as modeled by the game, even Morgan has to rely on a simple, no-frills economic system at first. But as soon as possible, he’s looking for a way to get to a system where prices and free exchange are driving allocation decisions.
The real-world history of economic models in online video games shines some light on the difficulty the first colonists are facing here. Even in a virtual world where there is no intrinsic value for any of the goods or services being provided, it’s distressingly common for their whole system to grow more and more unbalanced until it just collapses. The record shows instances of runaway inflation, player-initiated cartels monopolizing key supply-chain components, and black markets that grow so rapidly as to dominate the supported legal channels for exchange.
So, in order for a faction to implement the advances that are implied by Industrial Economics, it is necessary for them to solve the ex nihilo economic model creation problem of the MMOs. But that’s not all. They also need the various parts of this brand-new model to correspond to real economic activity. Unlike in a video game, they can’t just change the physics model to, say, change the number of steel bars and sheets of glass that it takes to build an airtight colony dome. And, finally, they don’t have the ability to anchor the new system to an existing broader economy. A modern video game can try to set the value of their in-game gold in terms of USD or EUR. But that option isn’t available to the colonists in this scenario.
Essentially, the problem boils down to the need to set the initial economic conditions (in terms of both stock and flow) such that when the system boots up, it begins to converge on a solution instead of oscillating wildly into chaos. It says a lot about the native abilities of the colonists that, in SMAC, this problem is one of the first ones that they successfully tackle on Planet.