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How Can You Laugh at a Time Like This?

Bruce Madison

No. 87

Capitalism as a pyramid racket...

October 14, 1996

If you have been noodling around on the Internet for some time, you have probably been approached to "invest" in one or another pyramid business scam. Overt pyramid cons are illegal, for example, the simple chain letter which contains a short list of names and requests you to:

Of course, the problem with this and all other such schemes, is the "exponential explosion" of the number of required participants to make it work for the guy at the top. In the end, this means that only a very few people, who get in on the gag at the very beginning, ever really profit from it. The vast majority of participants see zippo as their return.

Anyway, today the con artists who devise these rip-offs disguise them under various types of camouflage, the most common being a device called multi-level marketing. What characterizes these systems is:

  1. something, consisting of actual goods or services, is truly being sold;
  2. what is REALLY being sold, though, is dealerships, "down line" participation, management trees;
  3. there is, as with a chain letter, a promised exponential return on investment.
The first attribute makes it a "business," skirting the main issue with chain letters, namely, that nothing of value is being exchanged. However, the second and third characteristics insure that, at the bottom line, the outcome will be precisely the same. Only the "founders" of the business and perhaps a few more unfortunate shills will ever profit from the "business." I call the latter "unfortunate" because like most unwitting dupes, they will sell the "downline" dealerships to their friends and associates, soon to be ex-friends and ex-associates.

One time, an old friend who is a professional movie cameraman, came to town to shoot a film for a company named Amway, promoting their company, which is incidentally pretty much the prototype of the multi-level marketing firm. In fairness to Amway, they DO sell products and have successfully marketed their products this way for many years. I, personally, however, believe they are little different than the current crop of con artists. I asked my friend, therefore, if wasn't he a little troubled by the pyramid scam nature of his employer. He replied, "Brucie, I'm ashamed of you! You know perfectly well that CAPITALISM is a pyramid scam!"

And, you know what, he was right!

When I was quite a bit younger, I flirted with Marxism for a time, reading all K.M.'s work and participating in many "discussion groups" (usually fronts for recruiters of one or another communist group) to see exactly what was what. While I found many nuggets of information and wisdom among the writings of the leading Marxists of our time, my eventual response to the Big Picture being presented always seemed to be a resounding, "Say what!? You expect me to believe WHAT!?"

However, I will discuss the religious nature of left wing philosophy at another time. Today, I wish to focus on a piece of wisdom about which old Karl was dead right. Capitalism IS a pyramid scam. Oh, he wouldn't have put it quite that way. Instead, he recognized a simple but inherent flaw in the capitalist scheme of things. That is, if the people who actually make things are not paid the full value (measured any way you please) of what they produce, then they can not buy back the complete body of goods and services that they have produced. This must necessarily lead to periodic surpluses of both goods and services (which Marx called the "crisis of overproduction" and which capitalists call the "business cycle") leading to the collapse of uncompetitive companies, unemployment for some portion of the labor force and general malaise among the people. This does indeed happen, all the time. But, that is not the most serious problem. Capitalism deals with this problem in a way guaranteed to lead, eventual ly, to GENERAL collapse, MASSIVE unemployment and a REAL SNIT amongst the people.

You see, capitalist theoreticians long ago noted that a way out of this dilemma was to increase the total market faster than the increases in production. The problem with this "solution" is quite evident. The market is FINITE, while production can increase without limit.

Talk to you later...


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If you have comments or suggestions for Bruce, you can contact him at:
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