The Game of Oligarchy

You should try this game.

I just invented and played a game today with my family, and it worked great– it was fun and we learned an important lesson. Similar to the game “Monopoly” which shows that one person ends up monopolizing even though you think the rules are “fair,” the game of Oligarchy shows that the “free market” leads inexorably to one person getting all the money and everyone else going broke. And fast.

The reason this is important is that it disproves one basic tenet of the free-market idea– that it is a game with many winners. Rather the free market, without redistribution, puts everyone (except one) in debt bondage, and quickly. We joked that those that were run out of money had to sell organs. Our game broke up into social classes– it was not worth it to the rich to play with the poor. It was all very real for a simple game.

All of this is based on a paper in Scientific American, Is Inequality Inevitable? Wealth naturally trickles up in free-market economies, model suggests, which has been a mind-blower for me: it is so simple and disproves the Libertarian premise.

We played 4 rounds with 6 people in about an hour:

  • each gets a pad of paper and pen and writes $100 at the top, that is their pot of money
  • each gets a coin to flip

Then each player picks another player agrees to gamble on a flip of a coin, they agree on which wins on heads, and tosses. The stake of the gamble is set at 50% of the lesser of the pots of that pair. So in the beginning, when everyone has $100, the gamble is $50.

Then the players pick another player (or the same player) to do another round. This proceeds.

What is amazing is that even through each toss is “fair” in that it is a 50-50 chance to win a straight amount of money, the results shows one player wins all the money, and really quickly.

Two nephews and their partners, Mary and I played 4 rounds in about an hour and we discovered social classes (we called the broke ones “organ sellers”), feeling of righteous empowerment based on being successful (even though it was completely random), but also that “free market” ended with all-but-one-of-us in a bad situation really quickly.

Try it, it is fun. And read the article, it is startling– free-market without redistribution goes to Oligarchy very very fast. This book on Sumerian and Babylonian economics shows it has always been this way, so people developed peaceful reset mechanisms with debt forgiveness and Julilee: …and Forgive Them Their Debts by Michael Hudson.

[And now you can see it played automatically! Go Neal!]

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6 Responses to The Game of Oligarchy

  1. John J. Rynne says:

    Very interesting article.
    Just a minor correction:
    “The reason this is important is that it disproves one basic tenant”
    That should be “tenet”

  2. Rob says:

    It really is too bad all the money always rises. Possible by providing Good information at the top of a chain, one can help rationalize the system.

  3. Michael Gorectke says:

    It’s disturbing that this game is presented as a fair representation of the free market. Where is the exchange of goods? Where is the ability for the participants to decide to operate in their best interest? Why do the losses of the losers automatically go to the winners? The answers to these three basic questions show that this is a misleading comparison.

    • thank you for taking the time to reply.

      #1: This is simulating money flow in transactions, back-and-forth, basically (does not representing the goods). 50-50 to say who pays whom. #2: it is up to each participant to trade with whomever they want. #3: it is not quite losses if you think of it as trading back and forth, 1/2 time going one way 1/2 time going the other way, and a person spends a maximum of a fixed percentage of their wealth.

      The scientific american paper is more clear on this. I recommend

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