Parsimony & Power: The Counterintuitive Economics of Digital Leadership

The Virtual Prince XVIII: In Praise of Parsimony; Warbonds, Strategic Generosity, and Frontline Looting

While generosity seems virtuous, Machiavelli reveals a counterintuitive truth: that excessive generosity ultimately harms both prince and subjects.

The tension between generosity and miserliness is an aspect of The Prince which directly carries over from the 16th century to the digital realms. If you wish to be seen as a generous leader who distributes resources lavishly to cultivate admiration, you must spend for it; but you will inevitably spend too much, eventually bankrupting yourself and becoming a burden on your people.

The Hazards of Generosity

In The Prince chapter 16, Of Generosity and Miserliness [De liberalitate et parsimonia], Machiavelli writes:

“...I say that it would be good to be considered generous. Nevertheless, generosity employed in such a way as to give you a reputation for it will injure you, because if it is employed virtuously and as one should employ it, it will not be recognized, and you will not avoid the infamy of its opposite.

And so, if a prince wishes to maintain his reputation for generosity among men, it is necessary for him not to neglect any possible means of sumptuous display; in doing so, such a prince will always use up all his resources in such displays, and will eventually be obliged, if he wishes to maintain his reputation for generosity, to burden the people with excessive taxes and to do all those things one does to procure money.”

The Prince, p. 54

True generosity is dangerous in a leader, not a virtue; Machiavelli points to the wisdom of appearing generous where possible, but otherwise adopting the spending habits of a miser. A miserly leader has more resources available to his state, which improves every aspect of his organization, and thus makes him a more powerful and capable leader in turn.

Plus, there is not so much reputational damage in being perceived as a miser, compared to other vices such as rapacity; miserliness is unpleasant, but does not inspire hatred. Miserliness is thus a net positive in a leader, while generosity is a tremendous negative.

Machiavelli writes:

“Therefore, a prince, being unable to use this virtue of generosity in a manner that will not harm himself if he is known for it, should, if he is wise, not concern himself about the reputation of being miserly.

With time, he will come to be considered more generous, once it is evident that, as a result of his parsimony, his income is sufficient, he can defend himself from anyone who wages war against him, and he can undertake enterprises without overburdening his people.

In this way, he appears generous to all those from whom he takes nothing, who are countless, and as miserly to all those whom he gives nothing, who are few.”

The Prince, p. 54

This principle applies perfectly to the virtual prince's situation today. During my tenure leading our online empire, I maintained a distinctly parsimonious approach. Unlike many players who coveted expensive virtual assets, I found little personal interest in acquiring luxurious spaceships; even a fully-equipped Titan held little appeal compared to the strategic satisfaction of conquering or destroying territorial assets. This personal restraint naturally evolved into organizational policy - a culture of parsimony that proved tremendously advantageous.

By contrast, our enemies during these years - the MoneyBadger Coalition (MBC) - demonstrated the perils of excessive generosity.

Despite controlling a massive stream of gambling income, instead of investing in strategic stockpiles and competitive fleet strength, their leadership squandered these windfalls on ostentatious faction ships for themselves and their favorites. These extravagant vessels proved worthless in actual combat, requiring withdrawal to prevent their loss. They further depleted their treasury by hiring mercenaries, whose ineffectiveness we've already established. In this way, the MBC foolishly dispersed one of the largest fortunes in the game's history on mercenaries, battlefield-useless ornamentation, and general profligacy.

When it came time to test their stockpiles against ours, years later, it was miserliness, which had over time contributed to the largest stockpiles of war materiel in the history of the game in the Imperial Palace, which won the day.