The Economics Behind the Monopoly Board Game

Monopoly has been much in the news lately?not because the Obama Administration has suddenly assumed the guise of a vigorous anti-trust cop (fat chance!), but because the toy company Hasbro is making a conspicuous change to its flagship board game. In a contest held on Facebook over the past month, Hasbro invited the public to decide the fate of one of Monopoly?s classic tokens?the little metal figurines that represent each player on the game board. After more than 10 million votes poured in from fans in 120 countries around the world, the firm announced yesterday that, by will of the people, the old flat iron would be replaced with a new token in the form of a cat.

The new token chosen by Facebook voters

But what does Monopoly actually mean to all those millions of voters, aside from being a perennial diversion for families forced to endure rainy summer days indoors? Last fall an article in Harper?s magazine by Christopher Ketcham examined the peculiar history of Monopoly, a game that has, over the past 110 years, been periodically repurposed to teach a number of often conflicting lessons about economics.

As Ketcham explains, the earliest version of Monopoly was designed in 1903 by a Maryland actress named Lizzie Magie as a vehicle for popularizing the ideas of Henry George, a now largely forgotten 19th century political economist whose thoughts on remedying inequality in an industrial society were embraced by such contemporaries as Mark Twain, John Dewey, and Leo Tolstoy. In the game?s original version, players could choose to behave like monopolists and drive their adversaries to financial ruin?an outcome whose perniciousness Magie took to be self-evident?or they could agree to cooperate with each other, pay rent into a common pool, and achieve an arguably happier shared prosperity. Monopoly was deeply anti-monopolist.

As the game evolved, though, subsequent iterations cast aside the communitarian cooperative option. This was certainly the case with the version patented by Charles Darrow, ?an unemployed steam-radiator repairman and part-time dog walker from Philadelphia? who sold the game to Parker Brothers in the mid-1930s. From that point on, the game came to teach a rather different economic lesson. What had started out as a cautionary tale against the evils of unbridled capitalism became a diversion from the trauma of the Great Depression, and then a parlor game where clever children could end up owning their parents. What?s more, as the game made its way around the world, its message varied.

When I was a college student in Vienna in the late 1960s, my friends and I played a German edition of Monopoly that was of post-World War II vintage. In lieu of Park Place and Boardwalk, the game featured properties ranging from the proletarian Badstrasse to the plutocratic Schlossallee. From time to time, you?d be unlucky enough to draw a card bearing the stern order: Gehen Sie in das Gef?ngnis (Go to Jail).

What was especially intriguing about this version of the game was a twist in the rules that made it singularly conducive to rampant inflation. By collecting rents and other cash awards (such as for merely passing ?Los?), some players inevitably amassed huge fortunes, enough to dry up all the available Deutschmarks.

To continue playing, it became necessary to convert smaller bills into much larger units of currency in order to maintain liquidity. One-mark notes would be re-denominated into scrip as large as 100,000 marks. In effect, the bank lost control of the money supply. It was Weimar all over again.

I?ve since wondered if we had simply misinterpreted the rules or whether this version of the game had instead been deliberately rigged by postwar German authorities to instill in young players the virtues of conservative economic and fiscal policies. Perhaps this helps explain the exaggerated sense of alarm with which contemporary Germans react at the meagerest hint of inflation.

So what economic lesson does today?s edition of Monopoly impart? For his Harper?s article, Ketcham had a conversation with Richard Marinaccio, the 2009 U.S. national Monopoly champion, who explained the game this way:

?Monopoly players around the kitchen table??which is to say, most people??think the game is all about accumulation,? he said. ?You know,?making a lot of money. But the real object is to?bankrupt your opponents as quickly as possible. To have just enough so that everybody else has nothing.? In his view, Monopoly is not about unleashing creativity and innovation among many?competing parties, nor is it about opening markets and expanding trade or creating wealth through hard work and enlightened self-interest, the virtues Adam Smith thought of as the invisible hands that would produce a dynamic and prosperous society. Instead, it?s about shutting down the marketplace? The initial phase of competition in Monopoly, the free-trade phase that happens to be the most exciting part of the game to watch, is really all about obliterating free trade and annihilating competition in order to replace it with monopolistic rent-seeking.

Ah, so that?s why it?s so much fun to play on a snowy afternoon.

Source: http://www.psmag.com/culture/the-meaning-of-monopoly-52448/

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