Victoria 3 - Dev Diary #92 - Companies

[Me_]

Have you considered giving these chartered companies presidens/chairpersons?

This could give an option to make more use of the character mechanics in the game.

It could be interesting to see e.g. a company get more efficient under a good president or struggle under a bad one.

It would also be a chance to make more use of famous industrialists of the era.

 

[Olaf Trygvasson]

One thing that I think would be a good idea is for "Company ownership" to be its own Ownership Method, greatly reducing the number of Capitalists employed per level but giving those fewer capitalists the same total amount that would have been paid to the greater number. So instead of paying, say, 100 capitalists $20, it is paying 10 capitalists $200. This would simulate the difference between a large corporation owning all of the factories where the only employees are largely just management versus a sector of multiple independently-owned factories, and it would also exacerbate the wealth inequality that admittedly doesn't cause any social problems yet, but may in future updates

 

[Standstill]

Amazing idea with truly a lot of potential. Also, that's some lovely PH art!

 

[Chief of Staff]

Regardless of the merits of the design as currently outlined in its preliminary form for the Companies mechanic, I, for the one, am very glad to see Companies being implemented as a mechanic. After all, corporations were the major and somewhat new player in the timeframe that this game covered. I say somewhat new because corporation is a very old concept but which have been fundamentally extended/expanded in a way that it became a way to effectively organize the business on larger scale that were unprecedented in the eras before this timeframe.

For the context of corporation being a somewhat "new" concept, the corporation as a method of organizing business were severely restricted in the United Kingdom before 1850s, as it had required Royal Charter or an Act of Parliament to incorporate a company, something that were extremely rare and difficult to obtain from the government or the Parliament. This was a legacy of the South Sea Bubble that engendered long-running suspicions about corporations and the potential scale of damage it could wrought if mismanaged. While this restriction embodied in the Bubble Act was instituted shortly before the bubble crashed the same year it was passed in, it is the toxic legacy of that bubble's crash, which was the Britain's first stock market crash, that effectively discouraged any further approvals of requests to legally incorporate the companies for roughly a century to come.

This became a sort of long-established habit, and, as a saying goes, habit dies hard. This legacy took a long time to dissipate, but that it did, albeit gradually. In 1825, near the end of the First Industrial Revolution (before the recessions hit and innovations that made this industrial revolution fully matured) and during the government of Lord Liverpool (whose administration, in my opinion, laid the foundation for the Victorian prosperity, notwithstanding the bloody legacy of Peterloo), the notorious Bubble Act was partially abolished before it was finally abolished in full in 1901. However, the requirement that companies be incorporated only by Royal Charter or an Act of Parliament remained. It was not until Joint Companies Act, 1844, that allowed simple registration of companies, but limited liability was not finally established as an essential element of a corporation until Limited Liability Act, 1855, followed by the passage next year of Joint Stock Companies Act, 1856, thanks to Robert Lowe, which was considered the world's first modern corporate law.

That being said, this is, of course, relevant only for Great Britain, but it is not difficult to see how suspicions engendered by the infamous South Sea Bubble and also by the crash of near-contemporaneous Mississippi Company in France, which collapsed the next year, towards the corporation have affected nearly all of the European world and its colonies as well the former colonies such as the United States in the early 19th century. However, it was in the United States that the state of New York took a lead in promoting corporation as a method of organizing business when it enacted a law in 1811 allowing for simple registration without need to obtain a charter from the government and which also provided for limited liability. Of course, that this happened in the United States earlier before the United Kingdom is not entirely unexpected given the distance of the United States when it was colonies back then at the time these twin bubbles in Britain and France occurred, which meant that it had largely avoided the bitter memory of these bubbles, though that it is not to say it did not engender suspicions of corporation in these then-colonies which most likely persisted among many people by 1810s and beyond.

Anyway, I am getting way off-topic, as I meant to speak about the Companies mechanic which, in my view, is a long overdue feature of a game in the Victoria franchise but which, understandably, was probably not feasible until this generation owing to the computing power then available at the time of Victoria II and the limits of the framework that Victoria II was built on. Nevertheless, this is a completely new, uncharted space that Victoria franchise is entering, and I can only wish the development team good luck and progress on this. I look forward to seeing how it will eventually turn out for its final release, and how it will evolve with subsequent patches (and DLCs?). We can only imagine what the Companies mechanic will look like in its final form by the end of development for Victoria 3, a decade or two from today.

One thing I may suggest, though, is that Companies may not be necessarily established solely by you as the player, but which could be also autonomously established by the capitalists... for a price, of course, as it costs money to register a company (and I believe it still does to this day). One possibility to extend this is by having a Law for corporate formation which can restrict how companies could be formed, in a similar manner as I have outlined above for historical reference. The Corporate Law would come in three forms:

1. Corporate formation completely forbidden
2. Corporate formation only through executive formation as currently outlined by the Duke of @Wizzington and special Law Events through the legislature
3. Simple registration, though you can still form companies yourself.

The main difference in autonomous formation by Capitalist POPS of Companies between legislative acts and simple registration is that the barrier to forming companies is significantly higher in the former method, which can have strong implications for the future of the economy. The legislative events, in which you can try to oppose formation if you feel so strongly against that particular company proposed for formation in certain industry, would obviously be limited in frequency which would act to simulate the difficulty of forming corporations for Capitalist Pops through this method versus the simple registration. It would also potentially cost a great deal of money to form companies legislatively, as the group aspiring to form a company this way obviously need to lobby for its formation.

You could also regulate the autonomous formation of companies through setting of fees for simple registration, though how high it can go could also be capped by another Law or perhaps the maximum cap could be set based on a combination of various economic laws that determines how business friendly the laws collectively are.

I also recommend considering separate taxes for corporations and to allow for us to set taxes differently for companies and for non-company buildings, as corporations obviously will have, in general, far greater income from which it could pay more taxes than their non-corporate counterparts would. Again, the maximum taxation levels for corporations can be adjusted either by a separate law group or by a modifier based on a combination of different economic law groups.

And here is hoping that we will eventually have stocks and stock market in the future development of Victoria 3 after the Companies mechanic have been worked out, as they were obviously a big part of the economic history during the timeframe that this game was set in.

To be clear, these suggestions may or may not be viable for gameplay. As the Duke of Wizzington made clear years ago, gameplay > realism. Sometimes, you have to sacrifice a bit of realism in order to make the game enjoyable or, else, it will be tedious such that it will not be fun and enjoyable to play anyway.

 

[Mordekai99]

What *kinds* of historical organizations are you planning on including under the umbrella of flavor companies? Major monopoliea like General Electric, Mitsubishi, Nokia or Krupp are pretty obvious inclusions, but state agencies and agricultural cooperatives, for instance, also seem like the logical choices for bonuses to certain kinds of buildings.

 

[Geredis]

And another few questions came to mind:

Will there be any dynamism to the companies?

It's not uncommon in this period for a company to start off doing one thing, and then find itself evolving into other fields, either due to technogical or societal changes. In game terms, will it be possible to have a timber syndicate expand into rubber? Or to decide to vertically integrate and go into furniture? What about shifts where a company might start out making tools, then expand into engines and machinery, before it then decides whether it wants to be an automotive or an electronics company when the respective innovations come about? These kind of evolutions/adjustments to corporate structures were very common with so much change going on, and I'd love to see it.

Relatedly, can we impose our own corporations on other countries? Say if we force Central America into the US market, can we basically make them adopt United Fruit, with all the bonuses and maluses that come from it?

Is there a way to allow a company to provide a bonus to its headquartering country, while providing a more mixed series of effects where the company is actually doing business? For example: a furniture company owns its factory. It'd then shave, say 15% of its profits off of the factory and shunt them directly into the company. Further, if this factory is in Mexico for instance, but the home country is France, and the French company is paying Mexican workers wages commensurate to an appropriate French SOL, will this allow knock-on effects in the local economy that might destabilize the economy as pops would rather work in a foreign institution instead of a domestic one. Presumably that 15% would still get taxed; but as it's a French company, Mexico might not get to call in the taxes, France would... While not strictly in-timeline I thin it could be interesting to explore the possibility of offshoring certain industrial aspects and have the player be forced to deal with it, either as the outsourcer, or the outsourced-to.

And lastly, with this focus on corporations, that makes me wonder: will this include an overhaul of the customs union/common market systems so that you can, say, only integrate one resource (say Rubber, as Brazil) without entwining your whole economy with foreign markets that may or may not actually be beneficial to you?

 

[Woifee]

One thing that I think would be a good idea is for "Company ownership" to be its own Ownership Method, greatly reducing the number of Capitalists employed per level but giving those fewer capitalists the same total amount that would have been paid to the greater number. So instead of paying, say, 100 capitalists $20, it is paying 10 capitalists $200. This would simulate the difference between a large corporation owning all of the factories where the only employees are largely just management versus a sector of multiple independently-owned factories, and it would also exacerbate the wealth inequality that admittedly doesn't cause any social problems yet, but may in future updates

Shares and Finance Market would also allow other pop to become capitalists just by owning a little amount of shares each, wich in the end also might end up in a lot of money used to finance huge corporations.

 

[IsaacCAT]

Yes, in the first release it is actually way too easy to do so. That is NOT the intention going forward. You should be able to get rid of a company, but only under certain circumstances or with pretty big penalties. How they will look like I cannot tell you right now as we need to invest more time into designing these.

Not at this point. Maybe in the future.

For the future, companies should have a life of its own, or else the implementation it is not fun. Click button, get company bonus. Forget about it.

What about companies going bust? Not by player decision but because the buildings they are linked have loses, reducing their capital and no credit is available.

As some others have suggested, this will need companies to have a share of the profits from the buildings and a separate financial balance of its own.

I would imagine a separate market for companies, similar for what we have for food, minerals, etc… with all the companies valuated by their cash flow of the last 5 years.

This companies market will use their money to buy other companies outside the player intervention. In case they were cash strapped, they could split in different companies.

If all buildings were to be under one oligopoly the throughput and construction bonuses should be reduced as less competition reduces the supply of products.

The player could enact antitrust laws to be able to break these companies or socialist laws to create public companies to try to compete, or communist laws to expropiate companies (with the same result as the monopoly with different owners).

I understand this is well beyond the initial scope, but it does not harm to dream.

 

[Woifee]

What *kinds* of historical organizations are you planning on including under the umbrella of flavor companies? Major monopoliea like General Electric, Mitsubishi, Nokia or Krupp are pretty obvious inclusions, but state agencies and agricultural cooperatives, for instance, also seem like the logical choices for bonuses to certain kinds of buildings.

Nintendo obviously.

 

[Leoreth]

Sorry, this feels like another EU4 style tacked on mechanic to me that doesn't add much to the experience but makes the game more fiddly and tedious to play. There is a lot of potential and also a lot of issues in the existing mechanics that should be the focus of further development, not flashy but low impact features like this.

 

[NilsFabian]

I asked specially to have it included, I have a soft spot for martins_fish_tank_emporium

I thought that you have learned by now from your mistakes.
This is another Blorg situation. There is NO way we will accept any kind of game that doesn't provide Martins Fish Tank Emporium as a genuine corporation. You've teased us with it. Now make it happen

The modded one

Sorry thats not an acceptable answer.

 

[Claudius84]

I don't like that whole "comparing Productivity with all companies in the world to determine Profitability" thing tbh, it feels like you decide who would win a war by "comparing all the armies". And how could companies "compete" (because that's the implication here) if two countries hardly interact with eachother in the world economy?

Isn't the productivity already implicitly being "compared with all the companies in the world", because it's selling goods on a market where other companies also compete with their products? Why not let Profitability just slowy increase when the Productivity is positive?

 

[diglosgr]

Will the East India Company be a company for Britain? And if it is dissolved will it be annexed by Britain?

 

[Woifee]

Corporations could be cool way to link domestic politics and economy with foreign policy and even war, or say an "Intervention".

Corporations could put pressure on the government to join plays or even start plays themselves where the Country is draged into. Let's say you have a powerfull fruit company in your country and they want do expand into a central american state or protect their property in said central american state.

Companies might lobby for trade agreements, companies might lobby to colonize in certain states.

A Military Industrial Complex might lobby to support arms and credits to warfaring countries (so they can buy more weapons), they might lobby to expand their own country to increase military spending.

 

[Kipsta]

It's a cool little feature, especially with the flavor it adds, but some people seem to be overhyping this.
Looks like a button you click to get some bonuses on some production chains and that's it. Doesn't change the gameplay of building multiple thousands of construction points and reaching 100% employment long before the game is anywhere near finished.

 

[Svenska Super]

i encourage this game design approach, this gives me hope the rationale will emerge of revamping some other game mechanics like trade and implement stockpiling.
One criticis i have on what is presented is that the buffs in terms of prestige etc. look to strong make things to arcade

 

[DominusNovus]

I'd like to piggyback off what @Chief of Staff wrote up, because there's plenty of detail there to work with. I'm still quite skeptical of how this feature is being implemented, but I think the basic concept could go a long way to furthering two goals that are mutually exclusive: allowing players that want to tend to their economy like a garden to do so, and allowing the devs that want to give the players as much control as possible to do so.

I think its fair to say that these companies, in general, represent corporations, in that they have a life of their own, so to speak. The system could be useful to represent state-run organizations in communist countries, I suppose, but lets set that aside for the moment. I'm going to use corporations in place of companies for the time being, just to stay mentally consistent in my own mind. Please indulge me.

I agree with CoS that a country should have, at least, 3 different laws regarding corporations:
- Corporations banned
- Chartered Corporations (the state has to take the initiative to form the corporation, for a specific chartered purpose - like what was done historically in the UK)
- Registered Corporations (the prospective business owners in question form a corporation by registering with the state)

Perhaps a future time, there could be more options there, for additional nuance.

What also needs to be taken into consideration is just how to represent the various small and medium sized corporations that any nation might have. There is probably no point in creating a specific identity for every single corporation large enough to own a single factory in your country. You probably only want to deal with the largest ones that have the most flavor. Perhaps its just a matter of having various bonuses/penalties for the various buildings that are not officially 'owned' by a corporation in your nation. Basically to represent that, yes, these factories likely are owned by a corporation but its just too minor of one to warrant your attention.

Next, corporations should exist independent of any owned buildings they might have, which would enable them to buy almost any building (possibly contingent on your laws). This opens up an entirely new array of possibilities. Does a given corporation decide to focus on a specific building type? Maybe it goes strictly for textile factories, and does its best to own as much of the textile industry in your country as possible. Maybe it wants vertical integration, and so a steel corporation starts buying up coal and iron mines, as well. Maybe it wants to form a conglomerate that extends across a wide variety of unrelated industries, so that you end up with an auto company that also owns shipyards, electronics, and textile mills.

The preceding point is a great avenue perspective to design a lot of the corporation bonuses for.

In addition, corporations should also be able to exist outside of one nation's borders. They should have a set HQ, of course (lets ignore the possibility of said HQ moving for now), and that HQ should determine which country generally benefits the most from their activities, but they can go out and buy buildings in other countries... as their own domestic laws permit, and the laws of those countries permit. Yes, we can have our banana republics this way. Yes, we can have colonial empires being built specifically for the benefit of corporations this way. Yes, we can have nationalization attempts this way. And, for the savvy player, there should be a way to play a minor country, get lots of foreign investment as an American company comes in to invest in your country, and use that to kickstart your own industrialization process. Imagine inviting in GenericUS, the premier US textile firm, with the prospect of relying on your cheap labor, and then gradually raising their taxes so that your own local El Generico textile firm can rise to prominence. Just... be careful.

Finally, and this is the biggest hurdle to my layman's eyes: allow shares of corporations to be traded. This means creating a stock market of some sort. But, if its going to be done right, not just a stock market. Nations need bond markets, too. I am certain that this would take a lot of time and effort to be done correctly - heck it would take a lot of time and effort to be done incorrectly, but it is the lynchpin of creating a thorough economic simulation that allows for a wide variety of playstyles - hands on or off.

EDIT: I want to add some more detail to that last point. Stocks and bonds play a huge part in how governments (attempt to) steer economies. I would like to recommend some reading for the devs: The Price of Time, by Edward Chancellor. Its basically a history of how interest rates have impacted history, going all the way back to ancient Mesopotamia. If Vicky3 had a Central Bank mechanic in which the player could set interest rates, that alone would be an absolutely huge lever to steer the economy, without the mechanic of 'the player is omni-Stalin' as Vicky3 1.0 was. Want to juice economic and technological development? Lower rates, but you'll end up with a bubble economy, increased inequality, and general instability. Want to help your pensioners and reign in speculative investment? Raise rates! Just... be careful if you've got a lot of government debt, because your own government is likely to be one of the biggest debtors.

 

[Delterius]

What about colonial companies which give maluses to industries they don't favor? Say, a colonial company for rubber in indonesia, or mining in the congo, which cripples manufacturing. Unless the devs have other ideas, this could simulate center-periphery relations in colonial empires.

I also hope that companies come to eventually interface with next year's plans for foreign investment.

 

[bcw2311]

This looks a good system and I think it will add to the game. However, what downsides, actual or potential, are there to forming companies? You've discussed the positive impacts of establishing companies, but what happens if that industry starts struggling? Could we see that company going bankrupt?

I think you need to have a risk element to Companies, as well as the upsides, else it's surely a no-brainer to form a company when possible. But in terms of game mechanics there is a lot of potential. You mention that "The purpose of this effect as a game mechanic is to give players a direct economic reason to care about their overall prestige ranking versus other nations", so a bankruptcy could have negative impact on a country's prestige - appreciate this is a different timeline but think about the impact of Enron in the USA, or Carillion in the UK. Regarding the former, Sarbanes-Oxley was introduced soon afterwards, so there is potential to link to Laws in that country. There could also be a hit to the ruling IGs' popularity, if you link to Characters they could become involved in a corporate scandal, several bankruptcies could be part of events leading to the Great Depression, etc...

You've discussed the potential of the system and I'm sure you've already considered a lot of what I've just discussed for future development. The main point I want to get across though, is I think there needs to be risk as well as opportunity in this system, and would be grateful to understand what that is under the present build?

 

[Geredis]

What about colonial companies which give maluses to industries they don't favor? Say, a colonial company for rubber in indonesia, or mining in the congo, which cripples manufacturing. Unless the devs have other ideas, this could simulate center-periphery relations in colonial empires.

I also hope that companies come to eventually interface with next year's plans for foreign investment.

And if that's the case, companies would have to be geographically locked, or be able to be set to affect only incorporated/unincorporated states.