This is part 2 in a series about economic concepts in board games. You can check out part 1, about Sidereal Confluence and trade, here.
When I first started playing modern board games I was delighted by Power Grid, with its crude simulation of supply and demand. As an economics nerd I loved how elegantly it modeled this real-life system, though I understood its shortcomings. It was simple, but predictable. You knew exactly how many units of each energy source were going to be resupplied each round. It works in the context of the game, as you crunch the numbers to figure out how far you can extend and still afford to fuel your power plants.
Power Grid locks in the supply curve for each resource: as more oil, for example, is purchased, the price of each marginal unit of oil increases. Players act as mega-demanders, and their actions in relation to this static supply curve manipulate the price at any given point in time. It’s not a perfect representation of how supply and demand interact in a market (more on that later), but it is a great illustration of how the supply and demand curves function the way they do.
I played Brass a few years after purchasing Power Grid, and I was immediately impressed by how it improved upon that game’s market system by allowing the players to act as both sellers and buyers of certain goods. Both coal and iron can be purchased from the board in a similar manner to Power Grid: as you purchase more the price increases. But if coal or iron pieces are out on the board from player-created manufacturing centers, you can use those cubes instead, for free.
Just like in Sidereal Confluence, trade works to the mutual benefit of both parties. The person using the resources gets them at a cheaper rate and the person supplying them gets to score their building once all the resources are depleted from them (representing profitability, I suppose). If you’re wily enough you can act as both sides, which I think is the Brass version of dunking on your opponents.
Because you can operate on both sides of the equation in Brass, another concept comes into play: entrepreneurial foresight. More than simply maneuvering around other players so as to not let your engine get blocked, entrepreneurial foresight (or “alertness”) is about discovering ways to serve the other players as effectively as possible. In real life this can be done in a number of ways: supplying something new and innovative, or of a higher quality, or recognizing an opportunity before others. In the game, since all iron or coal cubes are identical to each other, timing is key. Being able to predict when and where players will need these resources and using that knowledge to supply them before others can do so is powerful.
If you’ll allow me to nerd out for a moment, I think this dynamic in Brass illustrates nicely an understanding of entrepreneurship developed by economist Israel Kirzner. Before Kirzner the most important ideas about entrepreneurship were written by Joseph Schumpeter, who described it as a sort of disruptive activity that was in a constant state of destroying and rebuilding what came before. He sees entrepreneurship is a equilibrium-altering dynamic that pushes economies forward.
I’m more partial to Kirzner’s modification of this idea, as he rejects the idea that entrepreneurs disrupt an equilibrium that exists. Rather, Kirzner understands entrepreneurship as taking advantage of disequilibriums that already exist. In his book Market Theory and the Price System, he writes:
“One very important observation is that a state of disequilibrium in a general market expresses itself through the creation of profit possibilities.[…]All profit opportunities in the general market thus appear as the expression—in the existence of a lower price and a higher price for the same “good”—of a fundamental inconsistency among market decisions. It is the ceaseless search by entrepreneurs for such profit opportunities that prevents the continuation of existing market activities”
From basic economics you’ll be familiar with a supply and demand graph: two lines crossing each other, one representing the aggregate preferences of suppliers, and the other demanders, of how willing they are to sell/buy at a given price. The equilibrium point is where those lines intersect, demonstrating that aggregate trading preferences will funnel the price and quantity sold of a given good down to one point.
But such a graph is a bit like the mythical “frictionless cube” in physics. It helps illustrate general ideas well, but it’s only representative of the real world in a simplistic way. Kirzner’s understanding of entrepreneurship vis a vis equilibrium highlights a key weakness in this graph: it’s constantly shifting and morphing based on the actions and preferences of the actors in the market. Furthermore, none of those actors understand the theoretical equilibrium point. They’re not even thinking about it. They understand a small sliver of the picture, and act based on limited knowledge. From the entrepreneur’s perspective, they try their best to understand the realities of the market and recognize opportunities where they can capitalize in a space where others have yet to do so.
Here’s where we get back to Brass. Understanding where there will be a demand for coal or iron is a valuable skill to have in the game. But it’s not just a matter of seeing that one is in demand and investing in the buildings that supply it. By that point you may be too late and discover that someone else has already predicted that demand. There’s a race, therefore, to get to market before the other players, in essence fulfilling a demand that hasn’t even been realized yet.
It gets even more complex and fascinating. Investing in resource production buildings can in and of itself affect the decisions that people make, causing them to use the cheap resources at a quicker rate than they would have otherwise. Price signals work both ways. They’re a wordless dialog, shifting incentives and changing priorities. There’s no action against a static backdrop, only ever-expanding possibility branches that reach out from every considered decision.
Victory points complicate matters further. Since you’re ultimately going for victory points you have to weigh actions in accordance to not just their profitability in coin, but also to their profitability in points. Resource buildings typically generate good income but low VPs. Insofar as you’re enabling other players to build more VP-valuable buildings, at what point is the money worth it? I don’t know the answer, but I can tell you that the one time I played with a self-professed expert in Brass the price of resources was much higher than I was used to.
I don’t know of a board game that better communicates ideas around markets and entrepreneurship. Just from this brief review, we’ve seen how the game illustrates the basics of how supply and demand function (that is, what shape they take) in a market, how the actions of consumers and producers wordlessly communicate valuable information greater than what any of the actors have individually, how the concept of equilibrium is ever-shifting and morphing, and how entrepreneurial profit is generated by recognizing and capitalizing upon disequilibrium.
If I continue this series on economic concepts, it’ll probably venture next into the ways in which games have failed to effectively simulate market activity and some proposals for how they can fix that. However, my thoughts in that space are still unfocused, so it might be a while. I might also decide that the best way to make that point is through a game design of my own. We’ll see.
In the meantime, please let me know if this article makes sense. I have a very difficult time judging how much I might need to explain some ideas in this space for people to understand it. Kirzner, Israel “Market Theory and the Price System” 2011, Liberty Fund. Pgs 271, 273