In economic strategy board games, it’s very common to have an arc of growth over the course of the game. You start out with few resources, and then you invest those resources to bolster your income, which then gets reinvested to grow even more, following an exponential trajectory. Central to this growth trajectory is the concept of capital.
In economics, capital is understood as durable goods that are used to increase or enable production. The classic example of capital is factory machines, but capital could also be something abstract, such as an education. People commonly understand capital as simply money, which is true insofar as money is commonly invested into capital. And so it is in economic board games, where you invest fictional money into fictional capital in order to increase fictional production.
The Strategy of Capital
I have to use a specific board game as an example, although I realize that most readers would not be familiar with any example I choose. I’ll use Terraforming Mars, a relatively straightforward example. Terraforming Mars is what board gamers call an “engine-building” game, but if we translated to the language of economics/finance, we would probably call it a “capital-building” game.
Terraforming Mars is structured as a series of rounds where you earn income, and make purchasing decisions. You look at a series of cards, most cards presenting an investment opportunity that further increases your income. In essence, it’s a game about shopping for different kinds of capital.
Different kinds of investments have different interest rates. For example, if you invest in money income, it costs about 5M to increase your income by 1M (M stands for megacredits, a sci-fi currency). That’s an interest rate of 20% per round. Therefore, if you only ever use this kind of investment, you will grow exponentially by 20% per round.
You can also leave money uninvested, to be used in a later round. In board game lingo, we’d call this “floating” the resource. The problem with floating is that you’re effectively paying an opportunity cost of 1M per round for every 5M floated. That said, floating could be the correct strategy if the current investment options aren’t good or aren’t available, and you’re hoping for better opportunities later.
Other investments may have higher or lower interest rates, with various tradeoffs. For example, it costs around 10M to increase your income by one titanium. One titanium is worth 3M, so this is a 30% interest rate. However, titanium can only be spent on certain kinds of cards. Effectively, you’re trading flexibility for a higher interest rate.
It’s very difficult to measure the value of flexibility against the value of capital. Who can say what cost you’re paying when you restrict your future actions? Strategy games thrive on this sort of decision, asking the player to evaluate things with no clear quantitative value.
Terraforming Mars also has one very important resource that isn’t a form of capital: victory points. Victory points don’t provide any income, but you win if you have the most victory points at the end of the game. It costs around 5M to get one victory point. So the ideal trajectory is to invest your resources into the capital with the highest interest rates, and then suddenly pivot into dumping all your resources into victory points.
However, this depends on getting the right opportunities at the right time. Many cards will give you income and victory points as a two for one deal, which isn’t very efficient when you want only one or the other. Some cards give you more victory points if you play them early on. In practice, the players gradually pivot from capital to victory points over the course of a game, because it’s very difficult to suddenly convert all your resources into victory points right at the end.
Comparison to Capitalism
By the way, I’m being very deliberate in distinguishing capital from capitalism. “Capitalism” might be defined as a system in which capital is privately owned. Non-capitalist systems still have capital, e.g. Soviets still had factories. When a board game features economic growth, that is an example of capital, but it is not necessarily capitalist.
Terraforming Mars is a game that I would describe as capitalist. Mechanically, players individually own separate pools of capital. Thematically, it’s about a bunch of corporations competing to terraform mars, while vying for the favor of a governmental organization. We jokingly describe it as a crony capitalist utopia. On the other hand, Terraforming Mars lacks some other defining characteristics of capitalism, such as competitive markets. Some board games have competitive markets in the form of bidding, but in Terraforming Mars the prices of cards are just fixed by the game designer.
And then take Spirit Island. Spirit Island also involves (in a limited way) investment and growth. However, thematically the game is about repelling colonists from an island. And mechanically, it’s a cooperative game, so any capital is publicly owned, so to speak. So while the game mechanically has “capital”, I would not describe it as “capitalist” at all.
But let me highlight two more ideas in real-world finance, and comment on their application to board games. In finance, you have the concept of liquidity, the ability to meet short-term obligations. For example, when people withdraw money from a bank, the bank needs sufficient liquidity to produce the money. Some assets are liquid, meaning it’s easy to convert them to money on short notice, while others are illiquid, meaning that you’d probably have to sell them at a discount if you want to sell them quickly. If a bank invests too heavily in illiquid assets, then they may lose money if they have to sell them off quickly.
In Terraforming Mars the analogue to liquidity is flexibility. For example, titanium is very efficient to produce, but it’s not very liquid—there aren’t always good ways to spend it. Another analogue to liquidity is the player’s ability to quickly convert resources into victory points towards the end of the game.
Another concept in finance is that of risk. Risk is basically the variance in outcome. All other things being equal, risk is bad for investors. So there’s less demand for riskier investment opportunities, which means those investments are marginally cheaper (i.e. they pay higher interest rates). The most challenging aspect of investment is managing risk. A good investment portfolio will have assets that match the risk tolerance of the investor–while also avoiding unnecessary risks that don’t pay out in any way.
In board games, risk plays quite a different role. After all, the worst that can happen in a board game is that you lose the game. The best that can happen is that you win. Since players aren’t risk averse in the same way that real-world investors are–and since the price of an investment isn’t determined by supply and demand–there isn’t any reason to believe that riskier investments should have higher interest rates. In principle, you want to take whatever level of risk maximizes your chance of winning. So if you’re behind, take risks that may cause you to pull ahead; if you’re ahead, avoid risks that might cause you to fall behind.
What Makes Capital Fun?
In a board game that involves capital, you start out in a weak position, and then become more powerful over time. Let’s imagine a hypothetical board game that does the opposite: you start out strong, and become weaker over time. On the surface, you’re getting the same mix of experiences–at some point you’re weak, and at some point you’re powerful. But it really doesn’t sound as fun, and I’ve never heard of a board game which attempts to make it fun. (Tell me about your counterexample in the comments!)
Capital-building games are basically power fantasies. Becoming powerful over time is the fantasy. Becoming less powerful over time is the anti-fantasy. Staying the same power level over the course of the game, and it’s like you’re never powerful.
There’s something to be said about how a good board game should tell a story. There should be setup, rising tension, climax, and denouement. Generally, you want to build tension over the course of the game, and don’t make it clear who’s winning until the end.
A tried and true method to tell a board game story, is what we call the “build up cash out” structure. Early on, the goal is to build up capital and resources—that’s the setup and rising tension. Later, the goal is to efficiently convert those resources into victory points—that’s the climax. It’s not clear who will win until the end, because the value of capital is obscured until players convert to VP. The denouement is when players count out their points and talk about the experience.
One common problem in capital-based board games, is the “runaway winner” problem. Because of the exponential growth, any early gap between the players may grow until it becomes an insurmountable lead. Experienced players may recognize this, and knowing the likely winner from an early stage undercuts the game’s narrative arc. It is fair to say that Terraforming Mars has a bit of this problem as well.
In finance, obviously telling a story isn’t particularly a priority. There’s no real beginning, middle, and end. And uh, the runaway winner problem is a bit graver in its consequences.