From Welfare State To Laissez-Faire Capitalism

Trotsky’s, a bar in NeufreistadtLinden Lab, when I was very young in Second Life (that’s mid-2004), had a policy of subsidizing content, since the world started “empty” and LL expected that residents would indeed fill it up, from corner to corner, with exciting and alluring 3D objects. This was already a third phase; during the first phase, there was no real “economy” (except for barter); the second phase followed up with the introduction of the Linden Dollar, and having the residents pay L$ for every prim rezzed. This soon proved catastrophic as people “hoarded” prims disallowing others to create content, and Linden Lab quickly changed to the current model: prims are tied to land, and people buy land to get an allotment of prims.

To promote more content, while still maintaining a solid business model, Linden Lab introduced two interesting notions: weekly stipends and (generically) ratings. The stipends apparently were as high as L$2500 per week; in mid-2004, basic accounts got L$50 (if they logged in once per week) and premium accounts got L$500; as time went by, basic accounts don’t get a single L$ from LL, while premium accounts now only get L$300, and, very likely, will get nothing at all pretty soon. A subsidy was also given out to anyone hosting an event (which naturally was very abused); later only to educational classes; today, none at all. “Ratings” included not only people rating each other and getting an increase in their weekly stipend (the idea being that better producers of content should get a higher weekly allowance) but also the notion that parcels attracting a lot of people (due, hopefully, to better content) should also give people a higher weekly allowance. Both systems were so much abused that Linden Lab slowly and over time got rid of them, as well as of the “leader boards” where the statistics of the richest people and the highest rated ones were publicly displayed.

Linden Lab, at the beginning of Second Life, acted indeed as a “welfare state”, providing avatars with a minimum amount of money to freely spend in SL, and actively promoting content with a subsidy (either through sponsoring places attracting more people or encouraging people to host events). This modelled not only the beginning of the SL economy, but also generated some expectations on how SL should “look like” and what role LL was to have in the Metaverse. Everything changed since then.

The Linden Welfare State

What was the cause of the increasing enthusiasm about Second Life in 2004? The early days of glamour and glory, when both residents and Lindens rubbed their noses in a common environment, where everybody knew everybody else by name, were long gone. The “Spirit of Beta” was long over. Lindens were remote entities, seldom seen, except for their occasional intervention here and there on the grid – to launch ideas, to settle disputes arising from Abuse Reports, to do technical support (Liaisons hung around on the Welcome Areas). So people focused on producing content (building, scripting, and events) and establishing the groundwork of the society and economy of Second Life; there was something like the “spirit of Second Life”, where people generally helped each others, griefers were quickly dealt with (they always existed), and creativity, communication/socialisation, and commerce were just starting.

People started “poor” but not “hopeless”. You got some money to start with. Most new users were very curious about the potential of SL, and the usual path was to start on the Orientation Island, spend hours tweaking your avatar, arrive fresh at the Welcome Area, get greeted by a lively and happy crowd, absorb as many freebies you could take, and wander to the nearby Sandbox, where you finally met the “work in progress” of everything that was being built. Day-old newbies stumbled upon week-old ones, as they exchanged tips and tricks, gave bookmarks to the immortal areas like the Ivory Tower of Primitives, the Particle Laboratory or simply Yadni’s Junkyard.

You also saw your first shops pretty soon, and wasted your money buying things you had no idea what they were good for. The next weekly stipend was, well, possibly a long time in the future (there was noboy around telling you that the grid historically started on a Tuesday, so payday is still Tuesdays since then). So what was there to do? Well, you could try to build, to script, or to design clothes while you waited. In the worst case scenario, you’d have those items for your own self (instead of waiting to have money to buy them); in the best case scenario, you’d be able to sell them to the next batch of newbies, and spare them some trouble.

Tons of people started this way. Many simply found out that things took too much time to do and just wanted to enjoy themselves. They found the Search > Events and attended those, in search for contests that gave huge money prizes (since they were Linden-sponsored, every event tended to give at least half the sponsorship back to the “winner” of the contest). “Rating parties” were also popular, since they increased your weekly stipend. In effect, money was rather easy to get; a basic account would be able to quickly get L$1000-2000 per week by basically doing not much more than ratings and attending contests. Since you had a way to convert those L$ in US$ (through the LindeX’s resident-run predecessor, GOM), this would mean that effectively Linden Lab paid you to test their platform. Also, if you had a place that attracted a lot of people continually, Linden Lab would give you a real money prize, the Developer Award, that was planned to give an incentive to creative content creators to design something extraordinary and get a monthly stipend that would easily cover their land fees.

The market also regulated the prices. The reason why currently most items are in the L$10-1000 price range — with L$200-300 being a good average for, say, outfits and furniture — is because the weekly stipend was L$500, and it was reasonable to assume that an user would buy something every week or so when getting the stipend.

The fundamental source of information on Second Life were the official Linden forums. The SLogosphere didn’t exist yet, although the Herald was around. About 6% of all residents read and wrote on the forums, so it was the best way to get some recognition, search for tips, and promote your work. If you wish, SL was at the “small town stage” — large enough for anonymity, small enough to allow everybody to be aware of what was going on at all the time.

The consequence was mostly a booming, happy economy. Money and items quickly exchanged hands. New users coming in asking the dreaded question: “how do I make money in SL?” had as an answer: go to the contests to win some money. If they tired of attending contests, they started running their own events or bought some land (it was still reasonably cheap – even on the days before First Land) and set up a shop there to sell their content. Good, talented creators would make fortunes; but even reasonably amateurish work would earn enough L$ to allow you to pay for your semi-professional work.

This was still the days of Philip’s “I’m not building a game, I’m building a country.” There still was the sense of belonging to a society and a community. Even the anarchic mainland had some order: people could not teleport everywhere (just if they got a teleport offer from a friend), but went to a telehub first and had to fly the rest of the way. This gave the landscape some order: commercial areas were deeply concentrated in a circle around the telehub, and residential areas were as far away from it as possible. This encouraged casual browsing and exploring, since you had always to travel a bit (imagine a city connected by an undergound /subway, where you needed to go “the last mile” by foot or flying). It also regulated the land speculation market: telehub plots became insanely expensive, but so were the residential areas very far away from any telehub for the ones desiring some privacy.

Still you expected Linden Lab to settle the differences; Abuse Reports were handled for all possible cases (except business-related ones) and often commented publicly on the forums.

Now, the “good old days” are always golden and perfect; at each step where every tiny little bit of this “welfare utopia” was removed, there were uprisals and protests.

So, why the changes?

From ten thousand to ten million

We’re now close to 7.3 million users, and Linden Lab’s Second Life is being closely watched from all corners. Perhaps a thousand (if not more) real companies are using SL as a media to create their virtual presence on the metaverse, which was predictable (but not really believed in) 3 years ago. The grid has grown so much that it’s impossible (do the maths) to view it all. Content has grown to an (estimated) 1.2 million GBytes of data on Linden Lab’s servers. And over 1.5 million US$ are transacted per day on LL’s L$-to-US$ money exchange, the LindeX.

This shows that Second Life is now big. It has become an idea and an expression that flies around the media in the world. People might not log in to it, or still ignore it for a while, but they’re aware that Second Life is where they place the finger and say: “here is where it all began”. In 5 years, very likely there will be no human being on the planet with an Internet connection that didn’t try it at least once; and in ten years, Second Life will be “part of your online routine”, like web browsing, emailing, or chatting on MSN/Yahoo/AIM/Gtalk is part of your current online routine.

This meant mostly that Second Life had to change.

Not a single community any more

The first recognition, made publicly over a year ago, is that Second Life is not a community any more; instead, it’s a mix of communities, with completely different goals, and ethics or morals. Many huge communities don’t even speak SL’s lingua franca, English, and were never seen outside their “corner of the virtua world”. Others simply move in to a community they like (which, having grown, slowly becomes self-sustaining and independent, providing their own specific content and events targeted for their community) and remain there voluntarily. This has been described by many as the “balkanisation of Second Life”: “many communities, one world”. I believe it might have been foreseeable, since, unlike a “real country”, which, through education, provides a cultural environment for their citizens, Second Life is the reverse: it promotes diversity and different cultures, and allows them to pacifically co-exist (well, most of the time, at least…). The result, of course, is a “fragmentation”. Last year people still clamoured for “the lost predominant culture of Second Life: an environment where people were helpful, friendly (or at least polite), communicative, and tolerant”. In 2007, we all became pragmatists. The “Second Life Culture” does not exist. Instead, we have many cultures, many socities, many local norms and uses, and it’s up to each and every one to adopt the ones they like, and tolerate the rest.

It’s the latter point that is more controversial, as more and real-world Puritanism enters Second Life, and everything adult/mature starts now to be seriously attacked from all corners. On the other hand, excepting for that sensitive area, you’re still welcome to do whatever you wish — provided you’re on the “right” community.

No more welfare

This was seriously debated for years after years, but at least Linden Lab saw it coming, possibly as easly as 2003, and most definitely by the end of 2004: the value of the L$ remains stable as long as money is not injected at a faster rate as it is removed from the economy. “Removal” is provided through money sinks: money you spend that does not circulate any more. We still have a few, like the cost of creating textures/animations/sounds; creating groups; getting a partner. These are not big enough to allow a lot of stipends to be paid (money created from “nowhere” and injected into the economy). So Linden Lab adjusted the system, and removed all inentives, stipends, extra bonuses or any other external source of money, except for stipends for Premium users, which have been reducing gradually. The economy’s flux of money is regulated at the LindeX: if too many new users come in at a single day, this means that Linden Lab can safely inject a few more L$ (the market grew organically, ie. with more users in it, so it can handle a larger amount of circulating L$), but these are sold now at the LindeX and not “given away to users” as before.

This naturally changed radically the landscape in Second Life. Although you can get a reasonable weekly allowance with a handful of US$ exchanged for L$, most people still want money for free. New users always ask “how do I make money?”. In 80% of the cases, it’s their first question; in 50% of the cases, it’s the only question they ask the volunteers during their stay at Help Island.

Without making money somehow, new users are not active participants in the economy. Camping chairs or dancing pads (or windows cleaners, which I always found cute and imaginative) are just gimmicks to allow the landowners to get higher rankings on LL’s Search engine, but they also provide cheap jobs to the new users. However, we start to see the landmark of a move from a welfare society towards laissez-faire capitalism: instead of getting L$50 “for free” every week, people now have to slave away for hours and hours (well, they have scripts to allow them to stay online while doing other things) to be able to earn those L$. People eagerly stay around to catch a free spot on a camping chair site, waiting for someone to crash, nudging each other, sometimes insulting others and breaking out on a fight when someone managed to grab an empty spot just in front of you (in a sense, these people waiting for a chair are even better for the landowners: they also contribute to traffic calculations, but they’re unpaid workers).

While the events list still feature prizes and opportunities to earn L$ for free (and, in absolute numbers, there are more than, say, last year), it’s clear these are not enough. What seems currently to be the case is that there is an obsession in earning free money, which was not so intense a year ago, and practically unknown of two years back. We had “money trees” back in 2004 and 2005, and probably earlier than that; they would not give away such a huge amount of money to be worthwhile (people would move towards prize-giving events very quickly). Now people fight for a camping chair. How strange that might sound!

Talking to relatively new users after “a few months” gives you a very interesting perspective of the change. They’ll tell you things like “I used to be a dancer or an escort, but now I’m lucky enough to sell some furniture or a few T-shirts instead”. The new users very quickly are engaged in the lowest level of work in SL, and accept it as “the right way to begin your road to success”. In RL, when moving to a new country, I would be hard pressed to start to work as a prostitute!… but in Second Life, there might not be any other option for a job, if you’re not willing to do anything creative. What a strange world this is; what a strange morality has emerged.

In 2004, one sixth of all users were Premium users. This was pretty much constant for almost two years. Now it’s just 0.1%. Although LL makes their money mostly from leasing private islands these days, you can see a huge gap between the resident’s classes. 99% of the world is owned by 0.01% of the population or thereabouts. The next layer, Premium users, own the remaining 1%. The rest are landless owners; although several have enough money to rent or pay for plots on private islands without being Premium accounts, I would strongly suspect that not even 1% of all users buy plots on private islands; and perhaps 2-3% rent land (or shops) from others. All in all, it means that while perhaps 5% of all residents are active participants in the economy and generally are able to pay their land fees/rentals and contribute to the overall content, the remaining 95% are completely out of the loop.

This is a drastic change between producers and consumers. During Beta, all consumers were producers. When SL launched, it was about 50%/50%. In 2004, it was about 75% consumers/25% producers. I predicted that the ratio would come closer to “real life”, which is about 90% consumers and 10% producers. I’m afraid I was an optimist — the ratio is very close to 20:1 these days, if not more. And I’m not talking about the quality of the products (it takes a thousand producers to get one that is extraordinarily good; but all thousand have to exist), just the quantity.

The gap between both worlds — a world of people with a comfortable income, or even making a living out of Second Life’s content creation, who engage in the economy every day, both by contributing new content (event hosting is also content!) or by consuming regularly content; and a world of people fighting for that camping chair — is growing huge. The big question is what will happen when Linden Lab removes the last artificial metric in SL (as they have semi-announced they would), which is traffic. Then the landowners will not have any incentive to pay people to come to their premises to get a good ranking on Search; they’ll need to figure out what to do next. What will that mean for SL’s economy then, if 95% of all users have no money to spend and have no idea on how to get it?

Imagine a city as large as Paris where 95% of the houses are owned by someone, but that almost all its inhabitants are unemployed and live by begging on the streets.

Second Life’s residents overall have been notoriously good at adapting to an ever-changing world, but the truth is that the mainstream resident is drawing the short straw. They’re not creative or social enough to be able to think of alternatives (the ones that are have already moved on). They’ll take what is given to them. But without a drive to “give people a job”, where will these people get money from?


No more Linden Lab intervention

Let’s be clear on it; Linden Lab cannot possibly “solve” the ‘unemployment issue’. An interesting idea would be to give, say, L$5 upon every day that a user logs in to SL (this would be even lower than the old Basic account weekly stipendium). Now consider: this is L$35 million per day, or close to US$130,000/day (US$34 million per year!… and the number will grow and grow every day). Obviously, Linden Lab could constantly devaluate the L$, and create a staggering inflation by continuing to commit to weekly stipends, but as you can see, we’re not talking peanuts any more: a very low stipend for all Basic accounts is perhaps equivalent to half (or at least a third) of LL’s overall income.

True governments, of course, have alternatives to stipends. Obviously a mostly jobless economy, where the overwhelming majority of all residents is unemployed, is impossible to control just with stipends. Artificially creating jobs (and that’s what camping chairs and dancing pads are… but they’re sponsored by business owners, not the “Second Life Government”) is a possible alternative. Many people have suggested low-paying jobs like returning prims from Linden Land or any similar “useless” tasks but that would have at least some value (ie. not requiring Linden Liaisons to spend time on those issues). Technically difficulties aside, it’s obvious that these things would immediately be heavilly gamed, and it’s almost impossible to devise a “low-paying” job that can’t be easily abused.

Linden Lab, however, went the opposite way. Instead of being a “regulatory” force — imposing a model for the society — they’re withdrawing totally from intervening in Second Life. This was also expected, as Second Life grows way beyond the ability of Linden Lab to take care of millions upon millions of non-paying users. Technical support is now “tiered”, and Basic accounts just get access to the bare-bones (ie. browsing through documentation), which makes sense — only paying customers get access to privileged support, which is expensive to maintain, and the better customer you are, the higher your level of support. Abuse Reports will slowly be “phased out” as well — let the “local authorities” (owners of private islands) deal with abuse locally. Adult content, at least on the beginning, will be flagged by residents themselves (just like YouTube, MySpace, or any other online community that allows the users to flag “offensive behaviour”). All things money-related — ratings, traffic, stipends, awards, etc. — have been slowly removed. Let the market pay for what is needed; unlike what the doomsayers predicted, Events did not disappear (although, obviously, we have more yard sales and silly contests giving away prize money). Educational classes are taught by organisations that managed to pay their teachers through advertising, sponsoring, and funding. Things like the Foundation For Rich Content allowed cultural events to establish themselves initially; now, the artistic and cultural environment in SL pays for itself. There is hardly a gallery/museum that doesn’t make a profit, and live concerts always hit sim limits. All these are good reasons for having as little intervention by Linden Lab as possible: the market self-regulates, and we can’t even make a point about having few “interesting” or “cultural” events either — both of the latter cases have, indeed, improved quality and managed a successful business model that allows them to compete with the “mass market/mainstream” low-quality events. In fact, one may even make the case that the high-quality events are better attended than the others these days; since they always hit sim limits, it’s hard to say what would happen if a sim could hold a thousand avatars instead of just the usual 40-100.

Volunteering has always existed to help new users, but the next step will have Linden Lab remove all Orientation Areas and Help Islands. Why? Just because commercial or resident-run areas are much better than Linden Lab’s own. And we’re not (yet) talking about IBM-sponsored welcome areas, but things offered by Anshe Chung’s Dreamland, Azure Islands, or New Citizens Inc. They’re all better thought and planned, are run by paid teachers/trainers, and are economically viable (people will very likely begin here and stay there, since the quality of the surrounding content is very high). So this will be an area that Linden Lab will certainly drop as well, as quickly as possible, and just offer new residents the opportunity to select which of the commercial orientation areas they want to begin with (according to Meta Linden, roughly 15% of all new users already come through third-party sites), since through the Registration API, Linden Lab even allows these entrepreneurs to register new avatars and have them land directly on a private orientation area instead.

So what is missing? While residents have shown they’re perfectly able to replace very effectively the incentives for social events, create high quality content, manage land, and provide much better technical support than Linden Lab, there is an area that defies control: fraud and vandalism. We’ll address both below.

Technical issues

This is also an area that Linden Lab will take 18-24 months to strengthen. Currently, it’s quite clear to anyone — both new and old users — that a technology designed for roughly a hundred sims and that even managed to deal with 250,000 users (back in mid-2006) is totally inadequate to deal with 10 million users and less than 50,000 simultaneous ones during the whole day. The assumptions that people will “mostly live and stay on their own sim” has been completely underestimated; in fact, people are drawn to the places “where things happen”, and these are always stressing the sims to the upper limit. 40-people-events were a dream of 2002 (when rarely 40 users were online at the same time), but this is the best that LL’s technology can deal with. We now require a much higher density of avatars on a single place: perhaps up to a thousand, but in 5 years, it won’t be very surprising to get, say, ten or twenty thousand people attending a live concert given by a popular band in SL.

Now this was definitely unforeseen and totally unplanned for. LL’s architecture cannot deal with 10,000 avatars in the same sim, period. The proposed change — which is under way, but will probably not see the light of the day before 2009 — will allow 400,000 simultaneous users, but we don’t have the slightest idea of how many will be able to be on the same sim. I would predict that LL will possibly give landowners an intermediate solution: paying US$1200/month for a physical server (instead of sharing a server with three other private islands) and allowing 400 simultaneous avatars on that physical server, on a 256×256 sim with 60,000 prims. Technically, it should be possible. Commercially, it might even attract a thousand customers that require much higher numbers of attendants than the usual “40-100” residents. But still this will not scale much beyond “a few hundred avatars”, even taking into account that computer power will increase in the next few years (on the other hand, the SL viewer will also evolve to handle more content at the same time, ie. avatars with higher polygon count, more complex sculptie-based meshes, shadow maps, etc.).

A lot of “side issues” are also not yet taken care of. Inventory loss is a recurring nightmare; Linden Lab will probably allow sim owners to backup their content offline (they have mentioned this often), and this will certainly be the case when the server code is open sourced. But what individual content owned by a user? With the open source client, it’s at least conceivable that this could somehow be replicated.

However, one thing is clear. Right now, the open source client is not a panacea to all Evil Bugs, and it cannot do magic. People have been tweaking with it, helping Linden Lab a lot by submitting corrected bugs, and even launching one or two projects like OpenMetaverse and “alternative” clients, but this is all yet on the beginning stages. The point is, we can’t fix what LL breaks — yet. This requires a complete overhaul of what the “Metaverse” is going to be. While we all know that LL thinks on this every day, what we don’t know is when it’s going to be addressed! Expect a long wait, again, 18-24 months at least, until LL will effectively delegate “subgrids” to third parties.

These will naturally engage the society and economy by providing value-added services that LL cannot afford (or has no ability) to do. Things like SL Brazil show what will happen in the very new future: companies creating high quality content and providing the whole range of services that LL refuses to do: a special client, a logging-in system, a welcome area, high quality content to visit, thematic builds targetted to a specific language/culture, in-world patrolling, technical support, teaching/training, events, and land rentals. Think of these as “private condominiums” — where you’re safe, are treated as a customer (and not simply a number on the statistics), and willing to pay premium for it (to the company setting it all up, not to Linden Lab). However, what you will not get is a better Second Life, since the technology will be the same — only the services will change. In 2010, however, this might be completely different. Some entrepreneuring companies (like IBM or Dell or Sun) might deploy 8 CPU-servers to run single sims with 100 MBps bandwidth each and allow you to enter a grid where “hundreds” of avatars can meet in lagless sims. They will also be able to charge you, say, US$10-20 monthly for the privilege of running on a “smoother grid”, and allow you to use as many scripted attachments as you wish on your favourite event. Again, Linden Lab cannot justify the costs of these options; but a different business model most certainly will be able to capitalise on Linden Lab’s technology and employ it more successfully.
The result: free-for-all capitalism?

Ginko Financials Offices (Interior)

We thus come to the state of things today. On one hand, we have seen how Linden Lab has mostly dealt with the social issues. By bringing more and more freedom into Second Life, and allowing residents not only to create content, but effectively to run most of what would be LL’s traditional business (like orientation and technical support), new business opportunities were created. In fact, basically everything leads to “business” in the end. And here is where we find the first flaws of the model.

In Second Life — unlike real life — business is completely unregulated. The only “protection” granted to consumers and producers are the IP rights and the successful transactions (which only fail due to technical difficulties, and although they can be hacked by experts, the horror stories about these are largely myth and urban legends). From there on, it’s a “free-for-all” system — laissez-faire capitalism like on the 1850s in the US and UK.

There are no central regulatory authorities. You cannot file abuse reports for fraud. You have no way to know if someone is a known fraud or a reputable businessperson. Although word-of-mouth helps to spread the reputation, that’s all there is. There are also no taxes. And until very recently, there was no control on the kind of content that you could sell.

Some communities established, locally, a way to deal with frauds and abuse from either producers or consumers. On a mall, for instance, it’s customary to kick out a fraudulent merchant; but they’ll simply move to the mall next door, defame the previous mall owner, and business goes on as usual. There is no way to file a suit against someone. Consumers have no rights and no way to enforce them, even if they managed to band together to protest (which they do, but are mostly ignored); producers can be ripped off using several techniques, and they have no way to legitimately claim for justice.

Prices vary wildly, of course, and they’re not curbed in any way. People buy things on one place of the grid, raise the price tenfold, and sell it on the other side of the grid — with the original content producer being utterly clueless of what goes on (the new “acquired” flag on objects will at least allow the buyer to understand if they’re getting an original product from the content creator). The discussion of if this is “allowed” or “ethical” goes on for ages and ages; in effect, legally, it’s definitely allowed and there is no question about it.

Is this in effect so “bad”? Actually, a case can be made that, overall and in general, the aggressiveness of the SL market, which is highly competitive, definitely benefits the merchants, and indirectly, through competition, it tends to favour the consumer that will get more things with higher quality for a lower price. A typical example is a skin or an outfit that hits the market for, say, L$1000, gets “stolen” due to a permissions bug and/or hacked by someone, and then gets redistributed in a digitally identical copy all over the grid for L$100. The consumers are happy to get the novelty for a tenth of the price; the original creator has no choice but to lower the prices as well to continue to be selling those items. However, in real life, a serious crime has been commited – akin to assaulting, say, a Nike factory, stealing all the sneakers there, and distributing them world-wide for a tenth of the price.

Linden Lab does not interfere at all with this practice. They don’t approve it, but they also know it’s far less important than the SL media tends to estimate. It doesn’t happen “every day”, and definitely not to everybody. And on the other hand, very successful businesses — like Ginko Financial — who have a spotless track record for several years now and not a single unhappy customer are targetted with envious and jealous competitors as being a fraud. Ginko’s owner, Nicholas Portocarrero, is tired of fighting for his reputation, and this is shown on the few interviews he has ever given. He can’t legally defend himself from his competitors from libel and defamation. Linden Lab, again, is not interfering.

World Stock Exchange

Similar examples can be seen around the huge drama surrounding the World Stock Exchange (closed temporarily while I was typing this paragraph), which managed to transact corporate shares of SL businesses, around US$20,000 per day, which is impressive. However, depending on who you’re trusting, either all these corporations are fake and a fraud, a few are legitimate but not all, all are legitimate but get defamed in public, or people are just envious about their success and spread lies about them. I can’t figure out “the truth”, and the same applies to the public in general. These organisations report to no one, they are not liable to any code of laws, and no auditing is done by third parties. They can be as pure and white as your favourite charity next door, or they can be as dirty and corrupt as Dicken’s “Anglo-Bengalee Disinterested Loan and Life Assurance Company” on his novel Martin Chuzzlewit. Speaking of loan, for those people out there who have bad credit, you can still avail loan services here at They provide image source information about their loaning process and its considerations in the most efficient way. The public has no way to know. And certainly we won’t get answers from Linden Lab.

A side-effect of this laissez-faire attitude is the very high tolerance of griefers. Griefers are just cyberbullies, an illegal activity in several countries, and even the US National Crime Prevention Council advertises

strongly against them. However, in SL, they’re rampant, and there is almost nothing that can be done to prevent them, beyond a temporary parcel ban. Private islands fare a little better, if they’re able to deal with 24/7 supervision by an Estate Manager. But this is just prevention, not dealing with the issue. Linden Lab’s Abuse Report system is totally unable to deal with this kind of situation, since it requires effective policing, which they’re not doing. After all, who cares if your account gets banned?… you can get a new one in 3 minutes, get a friend to deliver you the “griefer pack”, unpack it, and attack the next victim again. It’s so easy tha a child can do it — and that’s why childs do it at all.

Is there a way to prevent it? Well, adult validation will in a way minimise things, but some people, fearing a loss of customers, will allow unvalidated avatars. The only effective way to deal with this kind of crime and vandalism is making an example: get the FBI to arrest a few cyberbullies and make a huge press release as an example. Getting ten years in jail for attacking a live concert with live penises floating around until a sim crashes is sure to make a point — “remember, you can be the next one”. Right now, you can only temporarily remove a single alt here and there, which just has the cyberbullies laughing at LL’s backs and prepare the next big attack.

Freedom is not lack of control

Nobel Prize winner Amartya Sen or Rudy Rummel both write on the merits of democratic institutions — Amartya pointing out the positive economic consequences of a well-run democracy, Rudy (who was a resident in SL for several months before his sudden illness) more worried about the social consequences. Both, as well as many other authors, from law students to professors of economy, philosophers and politicians, slowly paint us a very important picture, taken from the lesson of History.

Across the ages, we were thought that as the State became less and less interfering with citizen’s doings, people lived better and better. The philosophy of Libertarianism is still on the roots of the US Constitution and served as a model for several societies. The idea that citizens, given free rein, would very likely be able to self-regulate and generally get along, is something that is still hard to shake off: the State should encourage this kind of mental discipline but not much more. Government, in effect, was supposed just to be a final arbitrer when people simply didn’t manage to “get along”, but this would be a very exceptional case.

Nothing like the optimism of the late 18th Century!… Our contemporary thinkers, however, are much more moderate in their optimism. The major difference is between libertarianism with absolute freedom, and a democratically organised society where the Government is afraid of their citizens and has to provide for them or simply get voted out of the office. Modern thinkers tend to mistrust the “illusion” of the “wisdom of the crowds”; the usual example being quoted is that “a mob has the IQ of its lowest member, divided by the number of members”, although, if you look up “wisdom of the crowds” on the Internet, you’ll see it’s still as popular as ever. The notions of “code is law” (programming code), emerging from the very same Internet, allowed a new class of libertarianism to emerge: one where the function of the State is effectively removed and replaced by programming instructions. Government is always labeled as being oppressive and manipulative for its own purposes — the less government, the better, and in the ultimate utopia, there is no government: just computers programmed to deal with all the issues, and we can forfeit government and taxes.

Just by reviewing the above paragraph it’s pretty clear that this is very much aligned with Linden Lab’s own internal philosophy, which is also widespread in Second Life: give people the tools to govern themselves, and they will generally do an effort to settle all differences among themselves.

As everyone who was griefed, conned, defrauded, or publicly defamed knows, things couldn’t be further from reality.

It pains me to repeat, in a crude and uninformed language, what specialists, philosophers, politicians, economicists, lawyers, and professors of all academic areas have published on the subject; I encourage you to take the two authors listed before as examples as a starting point to further discover what the issue here is. In a nutshell, however, the misconception lies in the notion that “absolute freedom” means “no rules”. In effect, as these very thorough researchers and thinkers have painfully demonstrated, freedom, as in the exercise of your privileges and the protection of your rights as a free-thinking citizen, will only be observed as long as there is a body that enforces your rights and makes sure that your privileges are guaranteed. Contemporary researchers demonstrate that the best (not in the sense that there can’t be anything better; but just that nothing better has been devised) way is to have a democratically elected body to act as arbitrator and fundamentally guaranteeing that your rights and privileges are never trespassed upon. The reasoning is actually simple to follow and comes from a basic trait of human nature: we’re selfish, and we can’t avoid that — eons of natural selection has made every organism as selfish as possible, and this is still hard-coded into our genes, even if our intellect can counter-act our in-built emotions. So the only way to make sure that our rights are not trespassed upon is having the ones doing the enforcement subject to public scrutiny: in effect, voting them out of the office if they abuse their powers. This means that a democratically elected government with proper rotativity is always at the mercy of the public opinion and their voters; lying towards the citizens will gain you a temporarily advantage, but in the long run, you won’t be able to lie all the time — you’ll have to accomplish at least something to keep yourself in power.

None of the above authors promotes one form of government over the other; in fact, they only agree upon the need of having “as little government as possible” and that every citizen has the right to vote and to get elected, and that elections, obviously, should have relatively short terms (large enough to accomplish a plan; short enough to allow public scrutiny to demote people from their offices and get the next batch in power). Furthermore, this is the only way to guarantee freedom of expression and a critical opposition to emerge and speak freely about what they don’t like. Any other model so far devised by Humankind will fail here or there to allow these rights and privileges to exist.

Let’s see how Second Life fits into this model. Linden Lab, during their “welfare state” epoch, were mostly viewed as a benevolent dictatorship: they wouldn’t interfere much with anything. They wouldn’t, however, allow people to decide for them in the sense that the residents had any right to make a decision that would affect the whole community. So while as a resident everybody had the right to free speech, as Linden Lab’s position as “rulers of the Metaverse” was solid and unassailable, your “desires” and “wishes” would simply get ignored. People could yell as loud as they wished; the doors at LL were (mostly) closed.

The current system seems to be the reverse: we can argue as loud as we can, but LL will simply say: “organise yourselves and implement whatever you wish; we won’t interfere”. This mostly means that you’re free to create your own system (as long as you’re able to, ie. from a technological point of view), since LL will never prevent you from doing anything. Difficult moral questions like ageplay are left by the residents to decide — LL washes their collective hands from the issue, and with every week that passes, it’s more and more likely that they’ll simply ignore it (and publicly admit as much).

Remember that on LL’s own agenda they’re looking towards either becoming a “carrier” or possibly simply a “software developer”, pushing all responsability towards the users. This is effectively what Microsoft does: they’ll give you the web server and the browser, but decline any responsability of what you do with it or not. If you wish to get any rights, it’s up to you to establish them on your community, it’s pointless to “negotiate” with Microsoft what kind of HTML pages you wish to see or not. Microsoft is just a technology provider, nothing else, and this is what Linden Lab is striving to become.

So the issue remains unsolved. There are no grounds for democratic participation in SL, since people have to voluntarily embark on such a model of participation. There cannot be “regulation” that allows basic freedoms — like the freedom of protecting your assets, your reputation, or your privacy — simply because that “regulation”, if it ever were “implemented”, would be opt-in. You have no right to not be griefed because there is no one to enforce that right for you — it’s pointless to claim that you have a right if nobody is listening on the other side!

Most of us are used to live in a democratic society, where, if you yell loudly enough, some people will listen, and since ultimately your noise might attract the media’s attention, your opinion might be vented to the governmental level, who might be tempted to listen to you so as to get your vote next time. That’s the basic principle that allows your rights and freedoms to be actively protected by a democratically elected government. We’re so used to it that we think the same applies to Second Life. It doesn’t. In a libertarian society, nobody listens, except the ones that are willing to listen, and, through opt-in mechanisms, allow your voice to be heard. But you’re not guaranteed any rights at all to start with — since everybody else’s rights are as valid as yours. You cannot “push” for an agenda because there is nobody to push against; everybody else’s agenda are in the way, and there is nobody to pick the one that is either best for all, or at least has a consensus of the majority. In effect, a fragmented society with lots of local communities pretty much fending for themselves is the ideal result of a libertarian society: you can join a community that enforces a few rights and allows your voice to be heard once in a while, in exchange for listening to others’ opinions once or twice.

However, there will hardly be bridges across communities, when values and morals are widely different. Democratic states in the real life have also their own values and morals; however, they have something in common: they’re used to collaboration and cooperation, sorting out differences among themselves, and finding what is common and work on compromises using those as a starting point. US and European democracies are based on very different assumptions (and the UK or Japan on even different ones from both!); however, their capacity of “finding common ideals” allows them to join forces based on compromises. Democracies cooperate for mutual interest; and this cooperation is very often long-lasting (Rummel reports — with statistics to prove his assertions — that there are no wars between stable and mature democracies, only between democracies and non-democracies, “emergent democracies”, or authoritarian states).

Libertarian communities, however, have exactly the opposite effect — they’re not binding or congregating forces by themselves; instead, they close themselves to the external world (other libertarian communities). Boundaries are drawn on the principle that “both our values are relevant to either of us, but not both”; obviously, they grow organically as people valuing more a set of principles will join a community that enacts those principles. There aren’t, however, values that remain across communities (or they would be bound together from the start). Recognising this principle is understanding why you cannot pick “my” libertarian community to impose “my” values upon “your” libertarian community with “your” values. It simply does not work that way; either both have the same values — and thus they would be joined from the start! — or they simply will be totally unable to accept each other’s values and remain, forever, apart.

When you read on the SL media that “we need to have a tolerant view of BDSMers, furries, ageplayers — we all should live under the same principles in the same world”, there is a fatal flaw in this reasoning. These communities live under a libertarian umbrella, not a democratic one. Tolerance under a libertarian umbrella simply means that you allow them to exist — outside your own community, of course. Only a true democracy is able to fully encompass such wildly different views of the world and allow them all to live together — because that’s how democracies work — but this is not the case of Second Life, and will never be. We’re too strongly rooted into a libertarian approach to the universe.

Years ago, I expected democracy, as a binding force between communities, to naturally emerge from the libertarian landscape. This never happened, although people keep trying (the latest attempt being the Metaverse Republic), and it shocked and surprised me so. Of course, back then, we had the benevolent, autocratic, Linden-controlled community to deal with all issues, so democratic structures were not “needed” if you had the option to appeal to Linden Lab for “justice and order”. However, the roles have changed. There is “nobody up there” any more. We’re on our own. And we haven’t learned the democratic lesson of bridge-building and bonding, of cooperation and compromise — we’re still at the primitive level of selfish behaviour (which is quite natural for the human species) of “defending our rights inside our community”, but not understanding why the others don’t accept our views.

I don’t think there is a “way out”; I just think that we will have to learn the lesson of the “libertarian utopia” in our bones and understand why all the rights we have as granted (since we were born and live under democracies all the time) simply don’t apply at all. We’ll continue to be victims of fraud and vandalism while we insist on “wishful thinking” that it would go away because we dislike it. The only hope I personally have is that a large group of people will understand the issue, start to congregate (voluntarily, under opt-in systems) under democratic systems, and have them grow over time, by having people to join to be able to get their rights and privileges defended and enforced. And then we’ll see, over time, what will work best: communities running their own democratic systems — no matter how complex or simple they are; there are lots of different ways to reach the same result — or the libertarian, lawless communities scattered all over the landscape.

But it’ll be a long way until we can establish a result. Humanity, after all, took almost 6,000 years for an answer.

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