The article, Wealth Happens (pdf), describes the dynamic of the game, Monopoly. Some brief comments:
It's not always the smartest or the most efficient who wins at the game, Monopoly. It's that those who first get ahead tend to get even further ahead and those who first get behind tend to get even further behind. [For another reason so many are in poverty, see There's no 'free market' for Labor.]
In a Harvard Business Review (April 2002) article, "Wealth Happens," Mark Buchanan describes from a complexity theory perspective that disparities in wealth happen due to natural dynamics, even when everyone starts out with equal ability and resources. Extremes in the distribution of wealth are greater when capital gains taxes are lower (for obvious reasons) and when sales taxes are higher (introduces "resistance" in the flows between individuals, impeding a leveling of wealth).
The dynamic he describes is called "path dependence" in system dynamics and "success to the successful" in systems thinking. It is the result of two interacting positive feedback loops. This article describes the dynamic and gives examples. See other structures in this file on the Systems Thinking Archetypes & Examples.
Here are causal loop diagrams, the structures, that lead to and illustrate this important dynamic.
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| This is the Generic Structure, which is a combination of two reinforcing feedback loops. Once one entity (person, product, organization, company, or country) gets ahead, it's easier to get even further ahead because better performance provides more resources and a greater ability to improve performance. A "figure 8" path through this structure is also a reinforcing loop. |
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| Example for "good student" performance over "bad student" performance. Once a student gets ahead, the student tends to get more attention, which allows faster progress. This is experienced relative to employees in organizations as the "halo effect." |
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| Example for how monopolies grow from increased market share. The end result is to reduce competition overall as experienced by anyone who has played the game, Monopoly. |
This file has been modified to also contain:
The Sons Also Rise By PAUL KRUGMAN, The New York Times, November 22, 2002
The Apple Falls Close to the Tree By ALAN B. KRUEGER, The New York Times, November 14, 2002
Related to this dynamic, Paul Krugman wrote an article, For Richer, for the NY Times Magazine (10/20/02, 8094 words) on how "the growing concentration of wealth has reshaped our political system: it is at the root both of a general shift to the right and of an extreme polarization of our politics." Toward the end, he describes “… the possibility of a self-reinforcing process” where “economic policy increasingly caters to the interests of the elite …” This is the same dynamic as the "growth machine" described in The Tangle of Growth.
Relative to what he describes, appended are brief explanations of:
- - The Rules of the Game: An excerpt from the textbook, Business Dynamics, Systems Thinking for a Complex World, by John Sterman of MIT. The excerpt describes this self-reinforcing feedback process.
- - The Growth Machine: The reinforcing process that occurs and promotes urban growth.
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