So, I've been playing a lot of Animal
Crossings: New Horizons lately.
I mean, judging by my Twitter feeds, so has pretty
much everyone else. In these times of
lockdown, quarantine and shelter-in-place,
for a lot of people, I think Animal
Crossing has been a real lifeline. The
game is pretty much unabashed escapism,
and escapism of the sort which dovetails
almost perfectly with the present moment.
For one, a lot of us are currently
spending a considerable amount of time
indoors and this is a game in which you
are mostly outside among nature. A more
profound take on the game's popularity
was offered up by Rob Heiret,
a Nintendo employee who worked on
localizing the game into English a
couple of weeks back. He quoted early
reviews of the game which joked that,
wgere previous games in the Animal
Crossing series had made you the mayor
of your town, this one, in giving you the
ability to terraform the very landscape,
makes you god. And he suggested that, "in
the time of COVID-19, we don't need to
be gods,
we just need agency. We need a
comfortable bed where we can arrange the
blankets just how we like them. That
feels like the most significant part of
the game's popularity to me". At a time
when we seem to be caught in a kind of
epidemiological riptide, with little
control over our lives—indeed with many
of the basic freedoms we usually enjoy
having been taken away (such as having
a haircut)—Animal Crossing is a
sandbox in which we can reclaim a
semblance of power. It is thus my solemn
duty to inform you then that Animal
Crossing is in fact a thinly veiled
parable for the functioning of
contemporary neoliberal economics. Okay,
not quite. But there's a couple of
mechanics within the game that open up
some interesting discussions about our
present economic system. And I don't just
mean the way in which Tom Nook has
gained a perfect, vertically-aligned
monopoly on all economic activity on
your island (other than I guess maybe the
Able Sisters shop, although even
they are only able to establish a presence on
the island due to their acquaintances or
maybe friendship with Timmy and Tommy
which maybe does have something to say
about what Pierre Bourdieu refers to as
"social capital"). But no. We're not gonna
talk about Tom Nook and landlordism or
monopolies or an anarcho-capitalism. I feel like pretty much everything
there is to be said about that has
already been said. In fact, the game itself
kind of makes fun of the eerie
combination of Nook's personable demeanour
and complete economic dominance over
both your life and the entirety of the
in-game world at a few points in a way
that somehow makes it more dystopian. So,
yes, obviously:
hashtag Nationalize Nook Inc. I think there is a slightly
more nuanced point to make about the
political economy of Animal Crossing, however. And
this doesn't relate to Tom Nook but to
Turnips and the Stork Market. And not
only in the mere existence of the Stork
Market, but the way in which the game
increasingly encourages you to move
beyond the mundane, only mildly-
profitable practice of extracting
resources (sometimes perhaps fashioning
them into useable goods and then selling
them to Timmy and Tommy to (presumably)
sell on to someone else) and, instead, to
make your fortune through betting on
whether the magic turnip number will go
up. Because who wants to waste their time
and energy engaging in the economy in a
productive (if potentially ecologically
devastating) way when you can basically
win money from doing nothing at all?
Now, the Stork Market seems to me to be a
fairly intentional parody of how
meaningless the trading of stocks and
shares often seems from the outside. Yet,
the way in which, when playing, one likely
finds themselves relying more and more
on this mystical market to make money,
mirrors a real-world phenomenon known as
"financialization", which has similarly seen
economic activity in advanced capitalist
nations such as the UK and US become
increasingly less centered on productive
activity (such as the selling of goods
and services) and, instead, on the
financial sector, banking and speculation.
In order to discuss all of this, however,
we first need to talk about interest
rates. Gripping stuff, I know. On the 23rd
April 2020, Animal Crossing players
received a letter from the Bank of Nook
(the game's in-game bank) notifying them
that interest rates on their savings were
to be slashed from an already pretty
paltry 0.5% to just
0.05%.
Some fans theorised
that this was an attempt to discourage
players from exploiting the ability to
change the Switch console's onboard clock
to time travel forward a year or so to
reap the rewards of their savings early.
Even for those who'd stuck to the rules,
Ethan Gach of Kotaku wondered whether it
might more broadly be a way of ensuring
that players couldn't simply amass a
certain amount of money in their Bank of
Nook account and then live off the
interest. Either way, it seemed intended
to ensure the players still had to do
something in the game to increase the
amount of bells they had available to
spend. It wasn't only games websites such
as Kotaku who reported on this story,
however. The Bank of Nook's slashing of
interest rates also caught the attention
of publications such as the Financial
Times, which went as far as to feature
the story on its front page.
Each of these outlets pointed to the way
in which the in-game interest rate cut
mirrored similar cuts to interest rates
then being made by real world central
banks. During March 2020, for instance, the
Bank of England cut interest rates for
the UK twice: first to 0.25% and
then to just 0.1%.
Other central banks have done similarly.
And, the goal of doing so is pretty much
the same as that which seems to have
been behind Nintendo's decision: it's an
attempt to get people to stop hoarding
whatever amount of money they might have
in their savings and to instead get out
spend it and grease the wheels of the
local, national and global economy. It
also, to the same end, usually makes the
cost of borrowing money cheaper so that,
even if you don't have a bulging savings
account, you can still do your bit by
taking on debt. See, the COVID 19
pandemic and the lockdown, quarantine
and shelter-in-place measures put in
place to combat it have been devastating
for many economies. At a very basic level,
if people are trapped in their houses
then they can't go out and spend money.
Even after these measures end, people are
likely to still be fairly hesitant to
spend too much. In an uncertain economic
climate, many people's instinct is to
cling tightly to any spare money they
might have after covering their basic
costs in
things get worse. Now, I want to begin by
saying that other economic systems are
available; ones in which the poorest and
most disempowered in our society
wouldn't find themselves at risk of
insolvency or homelessness due to
circumstances so obviously beyond their
control. However, the system we presently
live in requires people to be spending
money in order to properly function.
Under capitalism, your job, however close
or distant it might seem from sales, is
reliant on people buying stuff. I mean, I
make free videos for the internet but
the fact that people are being hesitant
to part with their cash at the moment
means that advertisers are being more
cautious with how they spend their money
which means that the amount that comes
in to my bank account from these videos
at the end of each month is
substantially lower. Thank you of course
to the amazing people who support me on
Patreon for providing some kind of
stability amidst all of this. Reducing
interest rates in both Animal Crossing
and the real-world, then, is essentially a
mechanism for encouraging people not
to save but to get out and spend. In
the real-world, we've also seen a number
of other mechanisms put in place, with
massive (some might say unprecedented)
amounts of money being made available to
businesses and corporations through
stimulus packages such as that included
in the United States' CARES Act. The
aim here is fairly similar. Dishing out
money to businesses is an attempt to
ensure that they can continue to cover
their present costs (including paying
staff) and, in an ideal world, to ensure
they've got money on-hand to invest
into further innovating in whatever
industry it is that they're a part of in
order to be able to introduce new
products and services to the market
which, in turn, will further stimulate the
economy and help us to rise out of the
oncoming recession. If you've been
playing Animal Crossing, however, you
might not be so sure that this will be
the case. For, since the Bank of Nook cut
interest rates,
I can't imagine many of those who have
managed to amass a great fortune in the
game have returned to simply buying and
selling furniture or catching and
selling bugs and fish to keep their
stacks of bells increasing. Instead, if
they've got any sense at all, they'll be
firing up their Switches at some point
before midday on a Sunday, taking
money out the bank and investing it in
Turnips. Buying Turnips and speculating
on the Stork Market is certainly a far
riskier endeavor than either keeping
your bells in the bank or buying and
selling goods, but the potential returns
that one can gain from doing so are
exponentially higher. Even if you were to
lose out one week, you can probably still
make back your losses fairly quickly. In
short, within Animal Crossing, you'd be a
mug to use your enforced financial
liquidity to participate in what
economists refer to as the "real economy"—the bit of the economy in which goods
and services are bought and sold—after a
certain point, the game heavily
encourages you to find your path to
wealth in its equivalent of the
financial sector. Now, I don't think it
all that likely that many ordinary
people will do the same in real life. Yet,
there is a strong chance that those
companies presently receiving corporate
bailouts (a further method that governments
are presently using to get the economy
moving) might.
The analogy doesn't map on perfectly;
it's not necessarily the case that
companies will use the money they've been
given by governments to buy stocks and
shares in other companies (although they
might). What seems highly possible, however,
is that, unless they are strictly barred
from doing so, companies will use their
new liquidity not to avoid job losses or
to invest in the future but to boost
their own stock prices. Of course, these
two things don't have to be in conflict
with one another. Traditionally, a
company's share price is meant to be a
reflection of the profitability of that
company and making a company more
profitable (especially in the long term)
often does involve taking some of the
additional money that that company has
lying around and reinvesting it to
increase capacity through hiring more
staff, maybe, or engaging in research
and development to create new products
and services which that company can then
sell in the future—something which also,
perhaps, often involves hiring more staff
or otherwise contracting other
businesses to build new facilities. In
recent decades, however, many corporations
have increasingly put the cart before
the horse. Or, the Turnips before the
racoon-dog. (The Turnips being a metaphor
for stocks and Tom Nook a metaphor for
profits). In short, they have come to focus on
short-term increases in their stock
price often at the direct expense of
long-term profitability. In a 2000
article for the journal Economy and
Society
William Lazonick and Mary O'Sullivan
posited that there had been a shift in
corporate governance "from retain and
reinvest to downsize and distribute".
Companies have, of course, always sought
to keep their costs low to increase
their profit margin.
But, since the 1970s, we've seen a massive
shift towards companies slimming down
their operations even when that might
damage long-term profitability, in order
to provide short-term gains for their
shareholders. This is one consequence of
a far broader economic trend known as
"financialization". Gerald Epstein defines
financialization as "the increasing role
of financial motives, financial markets,
financial actors and financial
institutions in the operation of the
domestic and international economies". It
refers to a wide trend in which
financial activity (that's trading in
stocks, shares, securities and other
similar products) has come to dominate
the global economy, often at the direct
expense of the "real economy". A great and
accessible exposition of how all this
came to be can be found in Grace
Blakely's book Stolen: How to Save the
World from Financialization. Of course, there's
much that's wrong about the way in which
our "real economy" works too. Even those
companies that do continue to "retain and
reinvest" habitually seek to pay their
workers less than the value of their
labor.
Nevertheless, when a company participates
in a meaningful way in the "real economy",
they're at least making their money
through creating (or facilitating their
worker's creation of) some kind of
tangible value for society, through
creating new products and services. The
financial sector, by contrast, makes money
through increases in the perceived value
of things. Take landlords, for instance.
Unless they undertake a significant
renovation of the property that they own,
when a landlord increases the rent on a
house, they've not made money through
actually creating something new in the
world, they've simply made money through
the increased perceived value of that
property. To go back to Animal Crossing,
when you catch a fish or chop down trees
and sell those to Timmy and Tommy, you
have made money through contributing new
resources to the market which were not
there previously. If you were to make and
sell the hot item of the day, then even
better: you've provided a new product for
someone, somewhere to use. When you make
money through an increase in the
perceived value of Turnips, however,
you've had little real impact on the
island around you. So, why do we keep
bailing these companies out? Why, for
instance, did Tesco (the largest
supermarket chain in the United Kingdom)
receive a tax break worth £585 million just
prior to it paying out £635 million to its
shareholders in order to stop its share
price from falling? Well, that's because,
in the real-world, financial markets are not
entirely disconnected from the "real
economy". In Animal Crossing, Timmy never
stands to lose his job because of a
crash in the price of Turnips. Yet,
however much they downsize, however
little they innovate and however much
they tried to suppress wages, large
corporations in the real-world are still
massive employers. Our present economic
system thus needs them to stay afloat.
They are, as the phrase goes, "too big to
fail". What Grace Blakeley refers to as the
"financialization of the corporation" is,
in fact, one of the reasons that so many
large companies have found themselves in
such dire straits during the present
crisis. For, any money that a company
keeps held back in case of a rainy day
is money that company is not
distributing to its shareholders in
dividends and thus pushing its share
price up even higher. Some might argue
that these companies also know how
reliant the economies in which they
operate are on their continued existence
and so perhaps don't see the need to
have reserves, as they know that
governments are unlikely to let them go
bankrupt. In the wake of the 2008 financial
crisis, the economist Nouriel Roubini
coined the term "socialism for the rich",
writing in an article for The Guardian
that the present system operates in such a
way that "profits are privatized and
losses are socialized". In short, in the
good years (and, as we're seeing at the
moment, even sometimes in the bad), the
profits made within our economy are
quickly siphoned off to shareholders.
When things turn sour, however, these same
companies come crawling on their hands
and knees to governments and central
banks expecting to have their losses
covered for them. Even when things are
going well, so desperate are governments
to keep large corporations operating
within their jurisdictions or to
encourage them to move to them, that they
will often provide tax breaks and other
incentives to subsidize companies
future investments. This has a pretty
clear parallel in Animal Crossing: "oh, you
want Nook Inc to build new housing
which it will profit from the sale of?
Well, we're gonna need the taxpayer to
contribute to that.
If not, we'll probably leave it". The
question remains, then, if we're happy to
"socialize the losses", why not also
socialize the profits too? If we're gonna front Tom Nook the cost of building the
house, why not
hashtag nationalize Nook Inc and
benefit from the proceeds of the sale of
the house? And not in his proprietary Nook
Miles currency but in actual, real bells?
Well, not "real" bells, obviously, but
real within the context of the game. And
similarly, why not hashtag nationalize Tesco?
Or hashtag nationalize Virgin Atlantic or
hashtag nationalize any of the other
companies which expect us to cover the cost of
their failures? For, in doing so, we might
not only be able to stop this
redistribution of wealth from ordinary
taxpayers to the super-rich, but also to
rebuild our economy so that it works in
the way that we're often led to believe
it does. In a way which includes
innovation and investment in a way that
is centered around the creation,
buying and selling of goods and services,
not merely in trying to push the magic
turnip number up and up exponentially, in
a way that actively detriments the lives
of ordinary, working people. Thank you
very much for watching this video! If you
found it interesting, please do consider
sharing it with an Animal
Crossing loving friend. Thanks as always
to Ash, to Michael V Brown, to Shishly, to
J Fraser Cartwright, to armyofme, to Sindre
Nilsen and Kaya Lau for being signed-
up to the top tier of my Patreon. If
you'd like to join them in supporting
what I do here, then I would be super
grateful and you can do so at
patreon.com/tomnicholas.
Thanks once again for watching, and have a
great week!
