Collapsing Ponzi scheme?

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agitating prop's picture
agitating prop
Status: Platinum Member (Offline)
Joined: May 28 2009
Posts: 864
Collapsing Ponzi scheme?

One day, years ago, I was staring at the ceiling, trying to figure out a reasonable, fair way to construct an economy, where responsibility, challenge, and wealth might be spread around in the fairest way.

I reasoned that if someone were to start a company, they should take on partners, rather than employees and that once the company reached a certain size, it would have to break off any new growth into seed companies that would function along the same line, and so on and so on. I figured that if everyone up the chain received small compensation based on a percentage of yeild of the expansion they helped to create, that would provide enough incentive that the system wouldn't have to be policed.

 I was REALLY happy with my perfect little econo-cosmos until a few  hours later when I realized I had just created something very similar to 'Amway', or a multi-level marketing scheme!  Multi-level marketing  DOES work, for a time, for everyone involved, provided there is an actual product backing the company. The key to it's function is expansion, a reliable number of bodies willing to occupy the bottom tier of a pyramid, moving those ahead of them further up the chain, or pyramid.

Of course, demand for the product in the real world doesn't keep up with all of the bodies promised a brilliant shiny future. The main job of the established partners deteriorates into selling the idea of being the 'the master of your own destiny' to new partners. When I was approached by those selling Amway, it seemed this was more essential to them than selling me their product.  I assumed momentum would peter out and their pyramid would vanish. I think they are actually still around, but there have to be many other such schemes that have failed.

Further to this, it seems that this set of dynamics captures some of the essence of capitalism, based on fractional reserve banking. It's not limited entirely to multi-level marketing. This way of structuring lending and doing business has survived, after a fashion, because more and more bodies have been available to fill the bottom tiers. As we surpass seven billion in earthly population, I wonder if there will be a  growing consensus that our society is based on a typical pyramid ponzi model that carries within it, seeds of it's own collapse. 

Fractional reserve banking is predicated on exponential growth not only in the money supply, but in human populations.

Anyway, I will end this with a question. Does anybody here have any experience with multi-level marketing? If so, what was your experience like and what conclusions did you draw from those experiences?







BSV's picture
Status: Silver Member (Offline)
Joined: Jan 26 2009
Posts: 170
Ponzi scheme?

Multi-level marketing likely is a sort of Ponzi scheme, as you infer. Anyone familiar with the work of Dr. Albert Bartlett (University of Colorado, Boulder) on exponential growth will intuitively understand this. Chris Martenson made liberal use of these ideas -- rightly so and to his credit -- in The Crash Course.

If you are looking for something akin to a Third Way in constructing a fair economic system, you might check out Distributism. Start with a Wikipedia search and go from there. It's not perfect. Probably nothing is. But it contains some intriguing ideas that are worthy of discussion. I have been mulling it over for months now, and find it rather interesting.

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936

I tried to get the my fellow unionists to agree to distributism.

I told them that we should buy the Port where we work. They know nothing of Distributism and so assumed  that I was talking twaddle.

It would have worked though. Now we have to go through the reptilian Union versus Management charade.

m111ark's picture
Status: Member (Offline)
Joined: Jul 3 2008
Posts: 9
It's taken a hundred years

It's taken a hundred years for the bankster oligarchs to grab complete control of governments.  You may devise any system you like that you think is fair but unless you deny the banksters the power to create money you will have accomplished nothing.  The first thing is to realize that banking must be a government utility. No private person should ever be allowed to gain interest by creating money out of nothing.

Of course, then you'll realize that governments must work for the benifit of all the people for the above to work at all.  Then you're left stunned to imagine the government in charge of printing money - not with our current or even future politicans.  So this better way will have to wait until we humans evolve to a higher standard... may take some time.

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