Adam Smith, the father of modern economics, has had an immeasurable impact on the society in which we live today. His insights into factors of production, corrective market forces, the role of government and the creation of wealth lay the theoretical foundations for classical economic thought, and much further down the track, the globalised economy. There is of course no better homage to classical economic theory than Ensemble Studios’ 1999 timeless RTS game Age of Empires 2 (AoE).
A cornerstone of classical economic theory is that if two parties see a benefit to a trade, total wealth is said to have increased. AoE acknowledges this by offering trade carts at the market, available from the Feudal Age onwards. A trade building, the market allows players to exchange resources internally, as well as send their trade carts to allied markets to produce a theoretically limitless supply of gold, or wealth. The decline of feudalism and the measurement of wealth as gross national income rather than a Feudal King’s riches ushered in a new era of economic prosperity. Ensemble Studios’ recognition of the constraints of a society built on a Feudalistic hierarchy is clear. The game mechanics themselves bolster their point by allowing mutually beneficial exchanges to occur. 1v1 matches make trade impossible due to a lack of allies, so once the gold mines on the map run out, civilizations are forced to create lower quality units with no gold cost. Ensemble Studios recognises that protectionist societies can flourish in the short term, but in AoE as well as classical economic theory, long term protectionism leads to stagnation and inferior technological progress. Expansionist structure and free trade liberates unutilised resources, and exploits domestic and international specialisation.
Smith was an advocate for minimal government intervention, and one of the flashier arrows in his economic quiver is the notion of the ‘invisible hand’, a metaphor for how:
“in a free market economy, self-interested individuals operate through a system of mutual interdependence to promote the general benefit of society at large.”
This is one of my personal favourite economic concepts, because the idea of the most efficient system being one where people are largely left to their own devices genuinely warms my heart. In AoE, the player acts as an autocratic leader ceaselessly aided by the civilization’s invisible hand. Villagers are initially sent to whichever resource the player commands, but once guided they automatically, as if by some invisible hand, choose which tree to chop, which mine to mine, which seed to sow, or which fish to fish. The game mechanics act as the classical economic corrective market forces. By working the optimal resource, villagers act in their own interest within the game to supply the military with the economic strength to defend the civilization. Players overly micromanaging their villagers can lead to reduced resource yield, a commentary on free market theory and the benefits of the laissez-faire approach.
An AoE economy appears to have been simplified down to just four resources, but in fact it is a perfect construction of Smith, Riccardo, and other classical economists’ theories on the factors of production. Land, labour, and capital are all well modelled in AoE. Capital is your resource count and available buildings. Labour, constrained by your population cap, is your villager supply. Land is of course map size, and is crucial to the difficulty of any given scenario. Unavailability of land is a direct growth constraint to an empire. This is why pro-casters are always discussing the importance of map control, because they are all subscribers to classical economic theory!
The importance of technological progression for the development of society, and the reference to a ‘marginal revolution’ surfaces throughout classical economic writing. AoE’s advancement through the four ages exemplifies this revolution. The idea here is that more sophisticated technology allows superior output given identical input, and it underpins how players win a game of AoE. Once the research has been completed, the ‘man at arms’ costs the same as the militia (its primitive predecessor) yet is vastly superior in combat. Furthermore, the utility of capital increases consistently throughout the game’s timeline, while the marginal cost of output decreases. This is thanks to economic upgrades creating scales of economy as the empire grows (e.g. discovering a double-bit axe is more significant if you have 50 lumberjacks rather than 5).
The late Imperial Age was designed to represent the benefits of open and freely trading markets. Technological advancements generally remove wood and food as constraints and promote gold (wealth) as the premier resource (and constraint) in the game. This mirrors history, as well as classical economic thought. The transition from subsistence to surplus farming allowed societies to flourish and concern themselves with things other than day to day food constraints. It is worth noting that the reward for longer trade routes in game (greater distance between allies’ markets) represents Riccardo’s belief in expansionist trade and the mutual bolstering of international wealth. Criticisms of Riccardo’s theory generally aren’t applicable to AoE because all nations in AoE can produce similar outputs, and are therefore unconstrained by natural endowments of resources. So, in this sense, Ensemble Studios created a society capable of operating under perfect classical economics.
The Economics of Gaming 