Transport and Markets (in Minecraft)
In ‘The Wealth of Nations’, Adam Smith postulates ‘That the Division of Labour is limited by the Extent of the Market’. He then uses the example of water-carriages and the ever-increasing size of boats (increasing economies of scale in the transport sector) as an example of recent boosts to economic efficiencies as markets (at the time) were almost at a global scale, and of course, they now are.
From March 2025 through to July 2025 a few of my friends (all of which don’t, and have never, studied economics (other than myself)) ran a Minecraft multiplayer server (which was limited to 5,000 by 5,000 blocks, this detail is important) which, I feel, perfectly encapsulates this theory that while widely accepted, displays how a barter economy can, arguably, benefit more from hugely expanded markets even more than the monetary economy we currently live in.
To preface, this is not in favour of a barter economy, in fact I fully believe in a monetary economy and, if Randal Wray (and various other history economists) is to be believed then the ‘Barter theory’ of money is entirely false and so a ‘barter economy’ in full form has never been tried, and never will and for good reason monetary economies are simply more liquid and allow for greater consumer choice as a medium of exchange.
Now to explain the test conditions; as previously noted, the world was limited to 5,000 by 5,000 blocks, this is an important detail as with these conditions it allowed for individuals houses to be far enough apart that travel between them was time consuming and difficult, but also limited the world size in order so that resources could not scale infinitely and therefore render comparative advantage useless as, otherwise, people could simply travel wherever they pleased in search of resources.
Comparative advantage started almost instantaneously, the initial rush of everyone mining and getting iron tools was very quick and was done by almost everyone, however following this people began setting up houses and farms alongside that. In the goal of simplification I will refer to my friends by their first name; G very quickly found a village and began setting up a ‘villager farm’ which allowed her to get all kinds of enchanting books (an item that increases the stats of certain items allowing them to be used more efficiently), meanwhile, A started a large potato farm, C began a quarry of sorts, mining large amounts of stone and finally other members (J and Je in particular) simply played the game mining and gathering a numerosity of resources, never specialising but rather focusing on diversifying their ‘wealth’ for trading (although this was likely never their intention).
I, like most people, bought into this initial rush but took advantage of the specialisation and found myself with a fully enchanted set of tools and armour in the matter of a few hours and while I did set up my own, albeit smaller scale, ‘villager farm’ I quickly abandoned this venture as G’s villagers were cheaper and I found my interest in making my trade as efficient as possible.
In Minecraft, you can go through ‘portals’ which take you to the nether, ever 1 block in this dimension is 8 blocks in the normal world; already, you can see how moving through this dimension can massively reduce travel times, however, this dimension is full of hostile mobs and lava and is therefore significantly more risky and dangerous, reducing this risk, while also maximising movement speed in this dimension, therefore, comes at a massive benefit to anyone wanting to travel between economically important areas. If 2 people have a portal in their respective bases, and their bases are, say, 800 blocks away, travelling through the nether means that you must only travel 100 blocks.
Obsidian is one of the ‘strongest’ blocks in the game, taking several seconds to break even with a completely maximised (in efficiency) pickaxe and ice, when travelled on by boat, allows you to move far faster than you could on foot. With this in mind, connecting 2 portals in the nether with ice blocks would massively reduce travel times as you can travel tens of blocks in mere seconds from portal to portal, cutting travel time down by several orders of magnitude between bases; however, as mentioned, the nether is dangerous and risky, and so protecting this ‘highway’ with tough obsidian blocks further incentivises its use and massively reduces the risk, making it the obvious method of transportation.
The issue arises, however, that obsidian takes a long time to mine and both obsidian and ice is hard to come by; therefore, whom ever can harvest these resources and then build the transportation links is not only doing themselves a big favour by reducing their transport times, but also benefits the wider server by reducing everyone’s transport time, with the added benefit that whoever built said highway would have immense soft power.
Hence, with nothing to do and already having benefited hugely from trade and the maximum efficiency (making me arguably have the comparative advantage in making this theoretical highway) I set out to make this highway, at first, just from my base to Je’s base (as she was the closest), followed by G’s (whom was the second closest); after a few hours of resource extraction I had built this highway, which connected Je to my base, and then from my base to G’s base.
Prior to this, when transacting resources, people would meet at predetermined coordinates in the world as the server had no enforced rules, and so, revealing your base location was a risk due to the fact that people could, with no repercussions, steal from you; therefore, mine and G’s base connection was a risk, however, given how convenient the highway was, and now that we could spend much more time working on gathering resources rather than transporting and transacting them, me and G quickly became the most resource rich people on the server, with Je also benefiting from this as, although materially poorer, she had access to a much larger surplus of goods and due to the convenience of getting to Je’s base we were willing to sell at much more competitive rates.
J and S (whom like J and Je never specialised and instead diversified) whom were the next 2 closest bases (to Je) were the natural expansion, and with the agreement that they would abide by my laws (no stealing, no killing etc.) I expanded the highway system to their bases. From this, they began buying from me and G, further enriching us, but also giving them access to the more valuable goods that we had, boosting their productivity; the highways final expansion came with A’s base whom was now able to export his potatoes much more efficiently; C refused to be added to the highway network as he wanted the ‘advantage’ of being able to steal and kill, however, given the unity and expansion of the market, this ‘advantage’ was at a major opportunity cost meaning that, in reality, he was the one missing out as he lacked the co-operation and more efficient specialisation, with roughly 7 people connected to the highway network with more efficient transport links and, therefore, greater division of labour even if C had worked 7x more than everyone on the server, he would still fall behind (and did so, ultimately ending the server as he, being the owner, was not best pleased by the implementation of pseudo-rules brought upon the server by the unity of the highway).
To conclude, with limited land and resources (somewhat mimicking a real economy), comparative advantage and greater transport links proves to not only be more efficient, but also incentivises co-operative, rather than individualistic behaviour; one could interpret this from a libertarian perspective, showing how free markets, when organised properly, allow for greater flow of goods and an increased productivity, but of course, this only happened due to the implementation of rules imposed by me in return for the public good provided by me (efficient, free to use transport); I personally, although this is not the sole reason for my believe, see this as what the main goal of a government should be, making markets more dynamic and efficient. While not feasible in the extent to which I did as, of course, as it would have to be funded through taxation, or potentially printed money if you take a MMT approach and assume that the productive capacity provided by the government operations increases output more than the printed money increases inflation; the governments main priority being economic efficiency, rather than growth, is a far greater and more sensible objective, especially as we try to move away from the ‘finance economy’ were we push for marginal GDP gains through mass money printing.
Randal Wray’s talk: