The Economy of EVE

Whenever EVE Online is considered in its totality, the sandbox nature of the game will be at the centre of discussion. Most will focus on the emergent ship combat between players, but while exploding spaceships are spectacular and mediagenic, they are only one part of the whole. Much more subtle but no less significant is the economic aspect of the game. It sometimes takes centre stage whenever there is a massive heist or other cunning scheme that comes to public attention. For the most part, however, the economy remains a sideshow in the media. Still, every day manufacturers, traders and resource gatherers engage in emergent gameplay that can be just as complex and ruthless as a sov-warfare campaign or as fast and aggressive as a frigate duel. With only a few exceptions like skillbooks and T1 blueprint originals, almost everything in EVE is gathered, sourced, manufactured and traded by players. This unique aspect of EVE forms the basis of a living and complex real economy driven by player interaction. In this two-part article I will provide a broad overview of the nature of EVE’s economy and the gameplay involved in it. I am of course no economist myself, so I will focus mostly on socio-economic aspects rather than econometric analysis, neither is this intended as a guide for industrialists or traders. Instead, this discussion of the EVE economy can offer some insight to readers of all playstyles.

At The Basis

To begin the analysis of an economy, one would first look at the sectors of production, i.e. agriculture, industry and services, and which role they have in the economy. Immediately it becomes apparent that agriculture is virtually irrelevant. The few agricultural products available in the game are actually supplied by NPCs and bought by them too. The only exception to that rule is livestock which can be acquired through Planetary Interaction (PI) and is a precursor product for the manufacture of wetware mainframes. The other agricultural commodities only fulfill a role in the economy that could best be compared to running level 1 or level 2 missions. In fact they often are subject of courier missions and thus only relevant in PVE. Industry on the other hand is the main contributor to the EVE economy. The whole range of industrial tiers are represented in the game. There is primary industry like gathering basic PI products and mining. Exploration and gathering of loot items that are not manufacturable also belong to this category. PI also occurs in the second tier of industrial production, particularly the stage where base materials are refined, reprocessed and turned into advanced goods. The production of T1 ammunition, modules and ships also qualifies as second tier industry. There is a healthy amount of third tier industry which carries goods from the centres of manufacturing to the centres of trade or delivers them to the end-user directly. The ships used for that purpose are quite aptly named Industrial Ships. Finally, the highest tier of industry is represented by the invention and reverse engineering of T2 and T3 items and ships. The synthesis of booster drugs and moon material reactions to produce advanced materials also belong to this category. The service sector is present in the EVE economy but not as significant as industry by far. Most services are in fact part of other aspects of the economy or the game as a whole. Red Frog or PushX offer a service, but they are actually doing third-tier industrial work for hire. Mercenaries offer their skills for ISK as well, but they are involved in warfare, not economic activity in the purest sense. A few actual services do exist, like Estel Arador Corp Services or Chribba’s supercapital broker service, but while they fulfill important roles they pale in comparison to the vast amounts of ISK turned around by industry every day. One place where services play a significant role is inside larger player organisations. There are diverse third-party services which are provided by individuals or groups for the alliances they work with. Those can be forums, spreadsheets to make industrial activity easier, killboards and more. As long as those services are not provided on the open market they do not directly contribute to the economy though. In that way they are similar to domestic work like childcare and house-cleaning done by parents. They do influence the economic framework but are not part of the volume of goods bought and sold on the markets. KBushWe

Economic Agency

It is significant to note that most players participate in the EVE economy as entrepreneurs. Some do in fact decidedly follow the development path of an industrial corporation as it would exist in the real world. Others gather materials through exploration or other PVE activities. They specialize in one tier of industry or spread their operations over several of them. It may seem that miners, mission runners and PI operators take the most passive role in the economy, but even they need to engage with other players when they bring their goods to the market. At this point many make the initial mistake to overlook that. The PVP aspects of selling gathered materials is way less obvious than the very straightforward cause-and-effect of ship-to-ship combat. A lot of the PVP dynamic influencing the EVE economy is obscured behind the market interface and if a player does not realize just how far-reaching the impact of others on the economy can be, they will just blindly sell their goods. In doing so they become helpless subjects not much different from someone who jumps into a gate camp without a scout. They may not lose a ship, but they can easily lose profits that amount to the same. A truly successful producer must be aware of the wider implications of their activities to reap profit consistently. Traders tend to be the most aware of this dynamic because their potential for profit relies much more on their ability to compete with others in their field. They need to identify the best places to buy goods cheaply and to resell them with a profit margin elsewhere. To understand the fluctuation of prices, traders need to pay a lot of attention to the metagame. Political developments in nullsec, for example, could indicate the beginning of a large conflict and if a trader can be ready ahead of time to supply the goods needed for a war they can make a high profit. The shrewdest operators will try to acquire large quantities of crucial goods in an attempt to create artificial scarcity. When the war begins in earnest, they can then sell their stock at an even higher margin because demand will be highly inelastic to price. What that means is, that a warring party in the middle of conflict can hardly afford to simply not buy the ships, weapons and ammunitions needed for their main fleet doctrines. Within reasonable boundaries they will virtually pay any price. There are a few exceptions to the primary role of entrepreneur. To begin with – just like in any economy – each player is also a consumer. Some more so than others. The players who focus mostly on PVP may have alts doing industry or trade, but their main role is to buy and destroy goods. If the industrial sector provides the fuel and the motor, it is those PVP players who buy the vehicles and burn the fuel. The actual exceptions to the entrepreneurial majority are the few wage-earners of EVE. Mercenaries – for example – can be classified as such. More notably, large nullsec coalitions will have players among their membership who hardly engage in productive activities or trade but are provided with the ships they need as a sort of payment. The “participation link” system of the CFC even makes it possible for a player to earn ISK for participating in fleets if they go above the required minimum participation. The fact that pure wage-earners are not accommodated by the game mechanics is an interesting facet of the way EVE developed through player actions. Even a mission runner does not simply get paid bounty wages but they would also gain a significant amount of their income by trading loot on the market. Only players themselves have created mechanisms of wage-earning. Again that shows just how far the influence of players on the economy can go.

Recapitulation And Outlook

At this point we have a general idea of the structure and agents of the EVE economy. A few interesting implications become apparent even at such a basic level of analysis. There is a notable absence of subsistence level production and trade. Nobody needs to eat or drink to stay alive and agriculture is therefore virtually non-existent. There is also not really a labour market as such. Players may be selected for corporation or alliance membership based on their skills to fit and fly ships, but that is only a very limited form of labour and can only be fully classified as such if the players in question earn their ISK primarily through PVP. Another glaring absence from the EVE economy is the lack of a financial sector. There have been some initiatives to set up banking services, but they eventually all turned out to be scams or ponzi schemes. Unlike in the real world, EVE players have completely lost trust in financial institutions and consequently ignore them. In the next part of this series I will look more closely at the underlying reasons for that and discuss what the implications are. Finally I will give an overview of the way how taxation works in EVE Online and what that means for the economy.
Tags: economy, industry, tarek, trade

About the author

Tarek Raimo

Former nullsec spy (no not under that name of course) and current failure at lowsec solo PVP, Tarek spends his time not logging in to the game as much as he keeps thinking about its social and metagame nature and sharing some of those thoughts with the CZ readers.