Best economic system

I've been asked what MMO I thought had the best economic system. The sad answer is "none of them". Economic systems are often not at the heart of MMORPGs, and only added at a late stage of the development as an afterthought. Warhammer Online, for example, did not have an auction house for most of the beta, and when one was added just before release, it didn't work very well. Crafting in WoW is a joke, you can get from level 1 to the level cap in an hour once you bought the resources. And in nearly all games you are forced to craft a huge number of useless items to skill up. If we want to have a good economic system, we'll have to design one from scratch, taking highlights from various games:

Resource gathering: By far the most fun resource gathering I ever played in a MMORPG was in Star Wars Galaxies. In that game the location of resources change once per week, and resources have stats. So you go out exploring with a fun scanning system to find resources, manually extract one resource to find out its quality, and if that quality is to your liking, plant a harvester. Great system, with lots of advantages: Putting in more effort to find better quality resources pays off, but somebody not playing a lot can still have his harvesters running while he is offline, unlike most other games where you don't get anything if you're not online.

Trading: In the real world trade happens because certain goods are plentiful in one place, and rare in another. Thus transporting the good from A to B enables you to sell it at a profit. Very few MMORPGs have a system like that, and most of those who have are space flight games. In a game like WoW the auction house of lets say Undercity is linked with that of Thunder Bluff, thus the price of goods is the same regardless of location. And if that wasn't the case, transporting items by teleport would quickly remove all opportunity for trading. If we want to add trading to an economic MMORPG, we would need a system where teleporting and other fast transport is limited to characters and their equipment, while the transport of goods was much slower. Ideally transporting goods from A to B would have some adventure involved, so there would be an interest in a career as trader, transporting goods all over the world.

Crafting: The best crafting system I know is smithing a blade in A Tale in the Desert. There you start with a block of metal, and need to hammer it into the shape of the blade you want, using different types of hammers. The closer your block of metal resembles the target shape, the better the quality of your produced blade. Thus you can hammer out a cheap blade quickly, or spend an hour on a perfect product. And the whole process really feels like smithing, you're not just clicking a button, or playing Bejewelled to craft something.

Craft skilling: I'm still looking for a good system here. I do not like systems where you need to craft useless things to skill up to be allowed to craft useful things. Star Wars Galaxies at least had a sort of practice crafting, which used less resources, did not produce anything, but still gained you skill points. Systems where you can salvage a crafted item and get most of the resources back can also work to avoid markets being flooded with items only crafted for skilling.

Auction house: I much prefer blind auction houses like the one in Final Fantasy XI to the more common simple WoW AH system. In a blind AH you don't see for how much the seller has put up his goods, but you do see how many items are available, and for how much the last X items sold. Then you make a bid, and if there is a seller whose offer price is lower than your bid, you'll buy his item. In a WoW system you only see the price of the items that *didn't* sell, so the average computed by an addon like Auctioneer is systematically too high. Blind auction houses also prevent people from seeing at what price the competition offered their items, and then simply underbidding them by 5 copper. In addition to being blind, a better auction house system would also offer buy orders, not just sell orders.

Personal shops: I'm not totally against personal shops. I do however strongly dislike systems where there are ONLY personal shops, and no centralized system to find who is selling what, example Ragnarok Online. In such a system, whenever you want to buy anything, you need to visit every personal shop one by one to see whether what you want is on offer. Comparing prices takes forever, a really horrible system. Personal shops however can be a good addition to an auction house system, or you could design a system with only personal shops, but a centralized register to find who is selling what where at what price. Another suboptimal feature of many personal shop systems (mostly in Asian games) is the necessity to stay online to keep your shop open. That is a design based on the fact that in Asia you often pay per hour hour for these games. Thus keeping your shop up costs you real money, and earns the game company revenue, which is why they design it that way. In a monthly fee or Free2Play business model, the need to stay online to sell something is just annoying and serves no purpose. Nothing more annoying than to come back after having set up an afk shop and finding that you sold nothing, because for some reason you got disconnected shortly after going afk. A much better personal shop system is the one in Star Wars Galaxies, where there is player housing which can effectively be turned into a shop, the selling is done via vendor robots and works offline, you can even put up a display of the wares you want to sell, and over time you can get a reputation as a master crafter and good shop source for some type of item.

Inflation: One major problem of economic gameplay is the convention that a level 1 character killing a monster will earn currency or items worth only a few coppers. A high-level character killing a monster of his level, in spite of that being no more difficult than the level 1 character killing that level 1 monster, will get far more valuable loot. In World of Warcraft the reward for one daily quest at level 80 is sufficient for all the monetary needs of a character from level 1 to 20. That level based inflation is extremely destructive to economic systems. Nothing but the economic activity at the level cap really matters.

Rest of game: I mentioned before that economic systems are often added as an afterthought. While some people have a lot of fun doing economic activities like resource gathering, crafting, or trading, most games are designed in a way that these activities are not necessary. You can perfectly well get from level 1 to the level cap in World of Warcraft without ever visiting the auction house, gathering a single resource, or crafting a single item. Items never break permanently, they can always be repaired. The only items leaving the economy are those that are soulbound, being either bind on pickup, or bind on equip items that have been equipped, and where the owner got hold of a better item. So the old item gets vendored or disenchanted. Crafted items compete with all other sources of items, loot drops, quest rewards, PvP rewards, token items, etc. In a game where crafting and the player economy was to play a bigger role, crafting would have to become the major source of items. For example the raid boss would not drop epic loot, but only a resource that was needed to craft an epic item. All current non-crafting sources of items would give out resources or gold instead, and you'd have to take these resources to a crafter to get items made, or sell the resources and buy the items on the market. This is how Luminary works, which is why I'm playing that game now. Other game systems that encourage crafting are systems in which items break, and have to be replaced, or where repairing gets more and more expensive until buying a new item is simply cheaper.

So as you can see, elements of good economic gameplay are already existing in various games, but there isn't really one game where all the elements are good. One game has fun trading, but boring resource gathering. In another game crafting is fun, but there is no need for the items you crafted, and nobody buys them. No game is really a good economic simulation MMORPG with fun in all of the various aspects.