Extension of A New Economic Game.
Growth, as we've experienced it over the last century, is no longer possible. We have touched our planet's limits. Nevertheless, some players are still growing their fortunes. More often than not, they do so at the expense of individuals and public services; financial bubbles also provide the appearance of growth while sifting additional wealth to the winners of the Global Monopoly Game.
"Monopoly" is said to be the most popular board game of all time. It mirrors the process of Capitalism. Originally created to demonstrate the economic insights of Henry George, its first patent was granted in 1904 under the title of The Landlords Game. The game soared in popularity during the 1930s when people, unable to participate in the real economy, could at least fantasize a place for themselves in the game.
Land Provides Value
When the board game begins, all the properties are available and players can easily collect them. Later in the game, when all the property is owned, a trip around the board can be very costly.
This reflects Henry George's observation as a resident of San Francisco while it grew from a frontier town into a city. As long as there were open spaces, where newcomers could set themselves up, everyone prospered. Once most of the land was taken, newcomers had to rent space from those who had claimed it earlier, making it much harder for them to get by.
George published his findings under the title, "Progress and Poverty". (Recently re-published with updated examples.) At the beginning of the 1900s it was the most popular book in the US, second only to The Bible. Poverty, George explains, is created by the monopolization of "rent" – the ongoing value inherent in land.
In the Monopoly board game, almost everyone knows that once one player gets ahead in the game, there is little chance of catching up. Nothing short of extraordinary luck can change the outcome. According to the rules, however, the game is not properly over until the losers have all mortgaged their properties and lost them to the winner. When the winner has it all, then the game is over.
We are in the mopping-up stage of the Global Monopoly Game. The winners are obvious. For most of humanity and the natural world, as long as we continue with the same game, the prospects are not good. In the original board game there was an alternative set of rules, by which players could cooperate for mutual benefit rather than competing to beat each other. The key difference was that the basic rent for the the land value, not counting the buildings, was paid to a community fund, rather than to the owner of the property.
Henry George felt that paying income and business taxes is unfair. People work hard at their jobs and to build businesses and buildings. They deserve to enjoy the fruits of their labour. At the same time that people are having their hard earned income taxed away, others are making large sums of money for doing nothing.
Picture someone purchasing a piece of land in a developing neighbourhood. If the community builds a school for the local children, the value of the land goes up. A transportation system is constructed to serve the community – the land value goes up again. It is the same with hospitals, local businesses, theatres, parks and other developments that make the community more convenient and satisfying. In each case, the owner of the piece of land is enriched by the efforts and investment of the community. George said that, because increasing property value results from the community's efforts, it is the appropriate source for collecting money to support the community. Indeed, rather than being liabilities to be paid off, schools, hospitals, communications networks and other community services are assets that create real wealth. They could easily be supported by the value they create if that value wasn't claimed by people who did little or nothing to create it.
As you might imagine, those who were getting rich collecting unearned rent were not fond of George's plan. Fighting back against the popular interest in land value taxation, they promoted the new "Neo-Classical" economics. Instead of teaching that "Land", "Labour" and "Capital" all had to be considered to assess economic well-being, "Land" was lumped together with "Capital," thereby making it difficult to identify how much common wealth was being expropriated by private interests.
As unfair as the Neo-Classical system has been, it has produced considerable abundance over the years. Today, there is another factor coming into play that compels the end of the Old Game.
The Danger of Exponential Growth
Many are familiar with the "hockey stick" graphs that illustrate exponential growth. The lines on such graphs run almost horizontally for some time before the rise begins to show. Not long after that the line starts rising rapidly until it is going almost straight up. The numbers can become dramatically large as video #1 here demonstrates.
Exponential growth takes place whenever something grows steadily by a fixed proportion of its size. It is a wonder of mathematics that one can always figure out how many units of time it will take for something growing exponentially to double in size. Divide the number 70 by the percentage growth rate and you will have the doubling time. If the unit of time is years and the growth rate is 10%, size doubles in 7 years. At 7% the doubling time is 10 years.
Exponential growth isn't a problem in mathematics because one can always add more zeros to a number or change the coordinates of the graph to keep a line on the page. The trouble comes when exponential growth is attempted in a finite environment, like the Earth or, when the numbers represent money, which can make claims on people and the environment.
The perpetual economic expansion model was developed at a time when the Earth seemed limitless. It has grown exponentially since then. At a three percent rate of growth, for example, considered healthy but not great, the doubling time is less than 24 years. Imagine our planet in just one generation's time trying to support twice as much human activity as today. In one 70 year lifetime, the Earth would have to be providing eight times as much support !
Problems are also getting out of hand due to the exponential growth of debt. Practically every nation on Earth owes increasingly huge amounts. It isn't because they all have incompetent people managing their budgets; it's how the Global Monopoly Game works.
Over the centuries Capital has grown to enormous volumes. The demands it now makes far outstrip anything imagined when Capitalism emerged, or even since the time of Henry George. Its exponential growth has raised the stakes in the Global Monopoly Game.
Unfortunately, unlike the board game where the players usually decide to end the game when a winner becomes obvious, the winners of the Global Monopoly Game are having a great time and want to keep winning, regardless of the consequences. A player forced out of the board game can go to the refrigerator and make a sandwich or partake in some other distraction while the game is played out; the losers of the Global Game have no where to turn.
Meanwhile, the winners have come up with a new tactic for keeping the Game going. Picture yourself winning on a Monopoly board. At the other end of the table is another group that has recently started playing. If you can persuade those players to join their board onto yours, there will be additional territory from which you can continue expanding your wealth. If you convince them to join their board to yours, you have a "Free" Trade Agreement.
Why We Are All Losing
While poverty has long accompanied the amassing of great fortunes, today we face an additional peril. The material resources needed to expand wealth, and the impacts of the resulting waste, are stretching our planet's limits. Crashing those limits threatens life as we know it.
With few new sources of natural resources, it is as though "business as usual" has started to live off the principal of a savings account. If one is living off an investment, as long as one's needs don't exceed the amount of interest it produces, one can go on indefinitely. Once one starts withdrawing more than the interest, the principal is drawn down. Continuing with such draw-down will eventually exhaust the account. As long as humankind was only consuming at or below the annual productivity of the Earth, our societies could be sustained. Today we are drawing down natural capital.
With natural resource shortages and pollution troubles frequently in the news and inequality growing rapidly, we have a critical question to answer.
Do we want to continue the Global Monopoly Game until everyone but a few winners are destitute, and the Earth is spoiled, or do we want to acknowledge our planet's limits and change the rules in ways that create a system to serve everyone securely within those limits?
It is time to recognize the winners of the old Game, congratulate them, pass out some prizes, pack up the game and play something else. The time has come to play by the rules of sustainability.
Buckminster Fuller identified the objective of the "World Game" as "making the world work for 100% of humanity for all time to come." Because all life is interconnected, we need only add "and other life forms" to identify the goal that can guide the next era of the human story.
The problems of growing to fill our planet have been anticipated for decades. Vast amounts of knowledge, technology and skills have been pioneered. All that is missing is the decision to play by the new rules. It is a Question of Direction.