Honestly one of the reasons I fell for a pyramid scheme coming out of high school.
A friend invited me and I went to shit on it and get him out, but the main guy’s whole thing was “everything is a pyramid scheme, at least here you have the chance to build a pyramid beneath you.”
Obviously there were other reasons as old as time, but the argument of “so what, your ‘regular job’ is already a pyramid scheme you can’t win” was pretty rattling to a teenager in 2011.
The difference between a pyramid scheme and a good business is where your money comes from, in a pyramid scheme it comes from the people at the bottom of the pyramid, in a business it comes from selling goods and/or services, that’s not saying I agree with big business, but one is profiting off of legitimate customers, the other is profiting off it’s own “employees”. I nearly got caught into one a few years ago too, until I realized what it was, at that point they had only taken a couple $100 for the interview and sign up stage, i had to block my card for them to never get access again, because even though i didnt complete sign up, thwy kept charging me monthly
What about the stock market? They seem to be pricing companies way higher than they are worth.
Imagine you own a goose that lays golden eggs. It lays one golden egg per year. How much would you sell it for? Probably not one golden egg, but definitely you’d sell if for a million gold eggs. You’d probably settle for maybe 5? 10? 15? Something like that.
Suppose the goose only lays one egg per year now (or none at all!) but it’s still young and most people expect it to start laying four or five or even ten or twenty eggs per year in a few years from now. It’s impossible to tell for sure how many it’ll lay over its life, or when that will happen, or if it will happen at all. NOW how much do you sell it for?
That’s the stock market.
A bunch of investors think a bunch of gooses will start laying a ton more golden eggs soon, and they’re willing to pay big bucks now in exchange for the possibility of that in the future. This isn’t a pyramid scheme or a zero sum game or anything like that. It’s just a prediction of the future which may or may not be correct, and only time will tell.
That’s the description of the very basics of the stock market.
Now do the derivatives, and let’s see why it’s gone to hell.
I’d say it’s more like disguised feudalism. We’re all peasants for the few kings and queens that have all the money at the top.
I don’t think people actually agree on the definition of capitalism itself, I just looked it up and was a little surprised how definitive it is:
an economic and political system in which a country’s trade and industry are controlled by private owners for profit.
If you asked whether capitalism is a political system, at least in my random polling, 2 out of 9 respondents said No.
If anything this understates the problem.
It fundamentally is NOT a pyramid scheme. In a pyramid scheme there is no actual product or service of value and simply extracts wealth from the people in lower tiers. Value, or wealth, is simply the byproduct of an equitable transaction between two or more parties.
Except that you’re describing commerce, not capitalism. Capitalism is the idea that the commerce has value, and that one can own the value of the commercial activity. Further, the value of the business is tied to it’s growth.
Further, products and services are never exchanged in an equitable transaction between two parties, because capitalism necessitates a third party, the capitalist. The capitalist must acquire products and services from employees for less than their true value, and then sell them to consumers for more than their true value.
And because capitalism demands growth, one or both of those two margins must continue to expand. This means workers must be pressured to work for less and less, which is why the capitalist opposes social services, universal healthcare, and affordable housing. This also means the capitalism opposes consumer protections, environmental protections, and taxes that provide a functioning society that might interfere with their growth.
Now what happens when every producer and consumer is fighting for the same margins, the same advantages, and the same growth? Then the capitalist seeks new avenues for new capital and new capitalists. Building business on ensuring the growth of business for other capitalists. Selling the idea that you, too, can join us at the top of the pyramid, all the while kicking down ladders they climbed to get there.
So no, the system itself isn’t a pyramid scheme. It’s just an idea that encourages pyramid schemes because it relies on impossible growth, like a cancer eating away at society.
Transactions are often not equitable, and most wealth bubbles up to the people on the top tiers.
Markets are not always fair or efficient but that doesn’t mean capitalism is a pyramid scheme. It is still very much the opposite.
Unregulated capitalism places all of the power in the hands of the wealthy. Even with the amount of regulation in place, the last 4 decades has irrefutably proven that. The transfer of wealth from the bottom 95% to the top 5% has has been insane.
The only reason we need so much regulation is because people are garbage and if they can gain something for nothing, they will. You cannot consider the pure idea of capitalism without also considering the reality of human nature, that it is inherently going to create a pyramid scheme like situation where the top transfer power and wealth to themselves in the largest quantities they can, in spite of pesky things like laws and taxes.
Yes that is true, and you can view wealth distribution as pyramid shaped, but that is not what a pyramid scheme means. As noted the system is very good at producing massive amounts of commodities, distributing them all over the planet, and exchanging them for your labor. If capitalism did nothing useful it would have disappeared long ago.
Global south would like a word.
Like every proponent of capitalism ignores the cheap labor and blatant theft of natural resources the rich nations need to make the line go up.
It’s not the virtue of capitalism that makes our lives so luxurious. It’s the suffering of the rest of the world.
