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!