As well all know, one of the ultimate sins of playing an MMO such as World of Warcraft is buying gold. This article is not meant to be a flame starter, more of an eye opener to see both sides of the story. I realize that people will strongly stand on one side or the other of the issue, but this is meant to be informative about how gold farming works, and how it affects the economy.
Putting aside the fact for a moment that gold farmers regularly hack people's accounts in order to get fast gold, let's look at the gold sellers that get their gold "legitimately" by farming it. Usually, these farmers will be on teams, with each person on a server, being paid to farm as much gold as possible to be sold off later. If they are doing this by farming crafting materials, this can have negative AND positive effects on the economy.
I realize right now, you're probably thinking to yourself: "Well, this guy must be a gold buyer if he thinks there are any positive aspects." You would be wrong, however, as I prefer to not risk losing my account and all of my time over a bit of gold that I could easily farm myself. What is being looked at more here is the fact that gold farmers are able to go back to the older content, and farm items that normally wouldn't be sold. For example: If a gold farming company finds that maybe farming Large Brilliant Shards is profitable due to nobody else farming them, and they are able to make the largest turn over possible from this, they will do so. This will put Large Brilliant Shards into the market for the server, allowing enchanters who are either leveling up their professions or just doing low level enchants easy access to the materials. Without this farming being done, they would either have to farm the materials themselves, find a friend or guild mate with them, or spam trade chat for hours hoping to find someone that has what they need. This would be a large inconvenience to some people, deterring them away from what they were planning on doing. Another example is low level gear. Say someone decides they want to power level an alternate character, to fill a spot their guild needs in raids. They want to have the best gear possible while leveling, to reduce the amount of time they will be leveling. They buy their gear ahead of time, but they are missing a large amount of gear for a certain level gap, causing them to create a larger demand on this gear. This is a bit more of an extreme example, but it is possible. This player would then have to go farm the gear himself, spending more time (the exact thing he was trying to avoid in the first place), take longer to level (also causing him to have to spend more time), or just avoid leveling the character altogether, causing the guild to be missing a possibly much needed player to fill a certain role in their raid.
While I am trying to point out the positives of this, I will also acknowledge the negatives. As we all know, if gold farmers really did nothing but just farm, they would be a bit less of a problem in games. However, gold farmers tend to spam random players, or trade chat, with advertisements to their website. Blizzard has taken a stand against this (going so far as to shut down peons4hire and acquiring their web domain) and adding the "report spam" feature in chat to quickly remove gold spammers from the game. The spamming is a bit of a nuisance on normal servers, but on RP servers it can completely ruin the attitude and setting of someone. Also, gold farmers tend to key log people in order to gain access to their account. They then strip them of their gold, and either sell all of their gear as well or use them to spam advertisements or to farm more gold, with either resulting in them being banned.
This practice hurts the player base a lot, as compared to someone trying to power level their alt to fill a slot in their guild, they may be doing so at the expense of a necessary player, or possibly even the leader of another guild. Also, depending on the company, some gold sellers like to take your credit card info and make personal purchases with it after they have sold you the gold. This could cause you a large amount of financial distress, depending on your real life situation and how much they decide they want to take from you. There is also the risk of not even receiving the gold that you had purchased, with nothing you are able to do due to the fact that purchasing gold is against Blizzard's terms of service, and very few credit card companies, banking companies and even Pay Pal will help you because gold and items are considered "intangible goods".
The solution to this problem? So far, it seems as if cash shops are a way to go. Many free MMORPGs use this method to keep their games financially afloat, selling anywhere from in game money and costumes to the best items in the game. This allows you to spend money on what you want, allowing you to lower time invested and have fun sooner. CCP (The creators of EVE Online) have found a bit of a happy medium to buying gold. They allow players to buy game time and convert it to an in game item, which is then able to be sold for a hefty amount of ISK (EVE's version of currency). This has a much smaller impact on the economy, as ISK is not being generated to be sold; however, the ISK still must be farmed by someone in order to be spent. This did not stop gold sellers on EVE, but it reduced their numbers by a large amount, and deterred people from risking their accounts when they want to buy ISK and offered them a safe alternative. SOE is more towards the far end, where they set up a shop where players are able to safely buy and sell gold and characters to each other, and SOE handles the transaction. This is the same as gold selling, however, only SOE is making more of a profit off of it, and allowing it in their game. World of Warcraft attempts to stop this problem by having a zero tolerance policy, meaning that if you are caught participating in real money trade, you will be banned permanently. This deters people who care about their accounts, but still leaves those who are willing to take the risk for easy gold and save themselves some time.