Virtual Capitalism

Antiguan officials have enlisted the help of the World Trade Organization to defend their national sovereignty and their right to host Internet gambling that is prohibited by the U.S. According to "Gambling Dispute with Tiny Country Puts U.S. in a Bind" in The New York Times, the principle of allowing a free-flow of capital and commodities across national borders could also "prickly issues as China's attempts to block online content it finds offensive."

U.S. policy-makers made an interesting argument in their bid to avoid sanctions from the WTO for outlawing online betting: "Washington responded to Antigua's complaint by claiming it was within its rights to seek to block online gambling on moral grounds, just as any Muslim country would be within its rights under international trade agreements to ban the import of alcoholic beverages." This argument did not fly with the WTO, but the huge regulatory body is now struggling with the consequences of a decision that jeopardizes its relationship with a huge economic powerhouse by scolding the U.S. for what would appear to be moral rectitude.

What is particularly interesting is the bargaining chip that Antigua wants in its David and Goliath struggle:

Antigua presents a particularly thorny challenge. To balance the scales, a country that wins a W.T.O. case typically demands trade penalties equal to its losses as compensation. But Antigua is so small that any ordinary trade sanctions would barely register in the United States.

. . .

To get around that limitation, Antigua is seeking the right under international law to violate American intellectual property laws. Only once has the trade organization done so, with Ecuador, though Ecuador never actually took advantage of that power. It was used instead as a cudgel to force Ecuador's opponents to back down.

In contrast, the operators of the online virtual world Second Life have done little to contest a recent ban on virtual casinos. The question might be, with the rise of speculation in online environments and "virtual capitalism" (although some like Lev Manovich have pointed out that capitalism is always virtual), where will the ethical lines be drawn? If goods and services aren't at the heart of an economic system, what would give gambling outsider status?

(Thanks to Steve Franklin for passing on this story.)