Fun matters. Real world currencies rise and fall based, in part, by the economic might of the nations that issue them. Virtual world currencies are more strongly tied to whether there's any reason to spend the virtual currency on the objects that are denominated in it. 10,000 EverQuest golds might trade for $100 on a day when that same sum will buy you a magic EQ sword that enables you to play alongside the most interesting people online, running the most fun missions online. But if all those players out-migrate to World of Warcraft, and word gets around that Warlord's Command is way more fun than anything in poor old creaky EverQuest, your EverQuest gold turns into Weimar Deutschemarks, a devalued currency that you can't even give away.
This is where the plausibility of my democratic, co-operative, open source virtual world starts to break down. Elected governments can field armies, run schools, provide health care (I'm a Canadian), and bring acid lakes back to health. But I've never done anything run by a government agency that was a lot of fun. It's my sneaking suspicion that the only people who'd enjoy playing World of Democracycraft would be the people running for office there. The players would soon find themselves playing IRSQuest, Second Notice of Proposed Rulemaking Life, and Caves of 27 Stroke B.
Maybe I'm wrong. Maybe customership is enough of a rock to build a platform of sustainable industry upon. It's not like entrepreneurs in Dubai have a lot of recourse if they get on the wrong side of the Emir; or like Singaporeans get to appeal the decisions of President Nathan, and there's plenty of industry there.
And hell, maybe bureaucracies have hidden reserves of fun that have been lurking there, waiting for the chance to bust out and surprise us all.
I sure hope so. These online worlds are endlessly diverting places. It'd be a shame if it turned out that cyberspace was a dictatorship -- benevolent or otherwise.