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Synthetic Economies and the Social Question

13 Pages Posted: 18 Aug 2005  

Edward Castronova

Indiana University

Date Written: July 2005


Imagine we met only in cyberspace. Among the many things that would change are our wages and incomes and wealth. This paper argues that economies in today's synthetic worlds point with some accuracy to a future in which mental constructs dominate physical ones in the calculus of value. In that future economy, the pattern of human material inequality will be radically different. Not only will the body become less important as a predictor of wealth, but the entire income allocation system will change. Indeed, there is some hope that our singular, dominant income allocation system will be replaced by a menu of wildly different systems among which people can choose as they like. Thus there are two reasons to believe that the advent of avatar-mediated commerce will significantly reduce the ages-old tension around income distribution polices. First, sources of inequality that seem patently unfair (height among CEOs) will be removed, and second, people will be able to sort themselves according to their notions of social and economic justice. The Social Question that has bedeviled incomes policy experts since von Schmoller may be about to find its answer: in the avatar.

Keywords: Synthetic worlds, inequality, social policy

JEL Classification: L86, I3

Suggested Citation

Castronova, Edward, Synthetic Economies and the Social Question (July 2005). Available at SSRN: or

Edward Castronova (Contact Author)

Indiana University ( email )

107 S Indiana Ave
100 South Woodlawn
Bloomington, IN 47405
United States

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