All the World's a Game - Are You Ready to Play?

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    Introduction

    Shakespeare famously wrote that all the world’s a stage, and all the men and women merely players. This is certainly an insight into the nature of human existence: an acknowledgement of life’s absurdities, and the masks we all wear in order to fit into our various roles within society. However, I think a far more apt metaphor, especially in the current year, is that all the world’s a game, and that most of us are completely unaware that we’re players.

    I’m not talking about game theory, though such games are very real and come with their own implications. Rather, I’m referring to the insight, first expressed by James Carse, and most recently by Simon Sinek, that all games ultimately boil down into two categories: finite and infinite. In a finite game, the stakes are clear. This is a game that one can ‘win’ or ‘lose’. An infinite game, by contrast, is one where there is no ‘victory condition’, and it can go on indefinitely — until one or more of the parties playing it drops out.

    Problems arise when people fail to recognize the nature of the game that they’re playing. When you play an infinite game as though it’s a finite one, you inevitably end up in a quagmire. Sinek’s go-to example is of the Vietnam war, where the Americans were fighting to win, while the Viet Cong were fighting for their lives. In a conflict where only one side is convinced that they will die if they fail, the side seeking mere victory will eventually lose motivation and drop out of the game.

    “A finite player is trained not only to anticipate every future possibility, but to control the future, to prevent it from altering the past. This is the finite player in the mode of seriousness with its dread of unpredictable consequence.” - James Carse, 1986

    Finite players hate surprises. It is the desire of all finite players to be so perfectly skilled in their play, so perfectly trained to foresee every move — as if according to a script whose every detail is known prior to the play itself — that nothing can ever catch them off-guard. A finite player is trained not only to anticipate every future possibility, but to control the future. Corporations that seek to leverage government power to protect their interests are a prime example of this, and such efforts have massive negative implications for the everyday lives of the average person in the form of stifling competition and slowing down technological progress.

    Indeed, most of the missteps of Capitalism 1.0 are due to the human tendency to see the world in terms of finite games, and this tendency has only been worsened by incentive structures that reward such thinking. This has in some ways been an extraordinary engine of growth, but at the expense of externalities that pose a threat to the continued prosperity of the societies from which they emerge.

    “The speed of technological advancement isn’t nearly as important as short-term quarterly gains.” - Quark, Star Trek: Deep Space Nine

    When Adam Smith first articulated the principles of capitalism, he envisioned a world where exploitative and parasitic practices would be regulated out of society by consumer agency. Adam Smith likely couldn’t have envisioned the sheer scale of modern multinational corporations — nor the immensity of the wealth and power they would wield. Whether one thinks that business should have an influence on government, the current system ensures that it will. Centralization is an unfixable bug in Capitalism 1.0, because those who accumulate wealth will inevitably also accumulate political power. This leads to rent-seeking and protectionism. The free market, as it currently exists in Capitalism 1.0, is driven by forces that will ultimately undermine its freedom.

    We here at Spacemesh believe that there is a way to fix this broken paradigm. We know full well that Capitalism 1.0, while deeply flawed, has proven to be an unprecedented driver of growth. However, growth by itself is simply not enough. This blog series will explore the reasons why the true potential of free markets has yet to be harnessed, and suggest the update patches needed to save Capitalism. In doing so, we hope to break through the finite mindset of Capitalism 1.0, ensuring that growth reaps dividends for all — without throwing the baby out with the bathwater, or destroying our planet.

    “Finite players play to beat the people around them. Infinite players play to be better than themselves.” - Simon Sinek

    The Failures of Capitalism 1.0

    At first glance, it’s undeniable that, in many ways, humanity is better off than it has ever been before. The percentage of the human population living in absolute poverty has declined to its lowest point in history. An individual living almost anywhere in the world today, barring a minority of low-income countries, is more likely to die of heart disease or stroke — diseases associated with old age and abundance — than of violence, infectious disease, or starvation.

    These are certainly developments worthy of celebration. And yet, one can plainly see that something is still not quite right. We can acknowledge these global improvements, while also understanding that they’re of little comfort to the swathes of under-employed, and unemployed, despondent young people in Organisation for Economic Co-operation and Development (OECD) member states.

    The rising tide lifts all boats: that is the promise of Capitalism 1.0. Some boats may rise faster and higher than the others, but, ultimately, all the boats should rise. Unfortunately, this promise has been faltering for the past several decades. It’s become abundantly clear that only some of the boats are being lifted, and often out of all proportion to the others.

    Under the existing paradigm, the greatest ‘improvements’ that the working poor can hope to expect in their lot is access to more affordable electronics and textiles. (And with recent turns to protectionism, perhaps not even that.) The dread of chronic illness or workplace injury looms as large as ever. The bleak possibility of permanent unemployment, allowing only for a life of bare subsistence through government handouts, looms larger than ever before.

    Even for those in the middle class, a pervasive sense of helplessness and hopelessness prevails. The great promise of technological progress has given way to fears of a cyberpunk dystopia — embodied in OECD countries by the complete ubiquity and impunity of Big Data corporations like Google and Facebook, and in the developing world by the rise of surveillance states. The complete loss of privacy and agency is seen by many as inevitable, with the choice simply being between ‘private’ and ‘public’ enforcers. Some even wonder if this is a distinction without a difference.

    The promises of market agency ring hollow, when consumers see nothing come from their moral opposition to corporate practices. The promises of government oversight ring equally hollow, when the line between private and public interests becomes ever more obscured. More and more young people drift further to the extremes of the political spectrum, hoping to restore some sense of direction and purpose to the world. But their talk of revolution and rebirth has the hollow ring of roleplay: while some genuine idealists certainly stand among their ranks, many merely have a thin veneer of zeal that can’t quite hide the yawning chasm of despair and existential dread that lies beneath.

    On a global scale, people are leaving a life of subsistence farming to enter the working poor and lower-middle class at an unprecedented rate. This is a step in the right direction, as they now have a reliable source of bread. But if this era has proven anything, it’s that man does not live by bread alone, and that no man — or nation — is an island. In a globalized world, the problems facing developed nations are the symptoms of systemic global problems. If these problems remain misunderstood and unsolved, the plight of the working poor and middle class in developed nations will one day be the plight of the working poor and middle class everywhere. A bleak outcome, as these are the economic classes that will soon encompass the vast majority of humanity. This is a grim reality that we simply cannot afford to ignore.

    The Problems We Face:

    Declining Labor Share and the Productivity-Pay Gap

    Labor share, or wage share, is the amount of GDP that is accounted for by wages and employee benefits. And this has been falling in advanced economies all over the world, including the United States, the EU, and Japan. What this means, in practical terms, is that while GDP has been rising, this hasn’t been paying dividends to the average citizen. Wages haven’t been stagnant, but they’ve grown far more sluggishly than the economy at large.

    While not quite as universal a problem in developed economies — France, for example, has avoided it entirely — the productivity-pay gap is also distressingly prevalent. This reflects a gap between increases in labor productivity versus the accompanying increases in earnings, meaning that pay is stagnating despite workers becoming more and more productive. It afflicts such preeminent economic powerhouses as the United States, Germany, and Japan. In the USA, for example, average wages for Americans rose only 11%, while productivity improved by 80%.

    So where is all this extra value going, if not to the people working to produce it? Why, to shareholders, of course. And lobbying efforts. Both of these outcomes further blur the line between private and public, creating what amounts to government-backed monopolies and oligopolies. This means that it’s not only workers who are being cut off from benefiting from increased productivity, but consumers. And since the average person is both a worker and a consumer, you can see how the vast majority of people are being denied access to the fruits of growing prosperity.

    Declining Productivity Growth

    That said, productivity growth has been declining across the board in developed economies, which means the fruits of growing prosperity are not nearly as abundant as they could be. A baffling development, on account of massive leaps in technological advancement we’ve experienced in the past two decades. If the means of production are growing ever more efficient, then the precipitous drops in growth must come from elsewhere: the workers.

    We believe that this is due to low commitment and attentiveness, and is often the direct result of a toxic corporate culture that focuses on winning finite games. One that is dominated by urgency, brutal in-house competition, and treating employees like expendable cogs in a machine, rather than an infinite game driven by guiding principles or a vision for a better world. This leads to incentives becoming misaligned. If employees know that they’ll be terminated the moment a project is finished, for example, they are incentivized to be as inefficient as possible.

    Declining Economic Mobility

    An important sign of lower economic mobility is a high youth unemployment rate. It’s normal for middle-aged people to be wealthier than young adults: they’re more established, have years of experience, and have had time to accumulate investments and savings. However, a necessary step in building this wealth is getting a job in one’s youth.

    One may be tempted to think that the only developed country facing this issue is the United States - especially if one lives in the United States. But this is simply not the case. The youth unemployment rate in France and Britain, as of 2019, are 19% and 10% respectively. Compare that to the United States’ 8.5%. Germany has the lowest youth unemployment rate in the EU at 5.6%, but it is the exception that proves the rule. Most of the countries of Southern Europe — Italy, Greece, Spain — have youth unemployment rates exceeding 30%.

    This decline in economic mobility is so obvious that even the OECD recognizes it.

    So what’s the cause of this mass youth unemployment? Usually, it’s due to government meddling in labor markets at the behest of labor unions that have become entrenched powers within their societies. Labor unions are an understandable reaction to the excesses of Capitalism 1.0, but — like so many reactive solutions — they create their own problems. Excessive minimum wage laws, for example, are pushed for the sake of alleviating the conditions of the working poor, but the actual result is creating high barriers to entry into the labor market that disproportionately impact young people. So too with expensive mandatory licensing.

    And, ironically, this all actually feeds into the power of large corporations, since it means that smaller businesses cannot afford to hire as many employees, while the corporations that operate on economies of scale can manage to weather much of the additional costs.

    Indeed, many purported cures to Capitalism 1.0 are simply ways of repackaging or distilling its worst drawbacks. I will explore this matter in detail in a later blog.

    A Rigged Game

    A curious finding of recent decades is that absolute levels of poverty are actually not the key factor in social pathologies as expressed in measures like crime rates and political instability. Rather, it’s the degree of inequality that is a far better predictor. Moderate inequality, such as that experienced in Denmark and the Czech Republic, is tolerated well; excessive inequality, such as that of South Africa, leads to massive problems. This is one factor contributing to why the United States, a country whose poor are not all that poor by global standards, has relatively high crime rates when compared to other developed nations. Its inequality has risen hugely in the past few decades. This also goes a long way to explaining why populists are becoming increasingly prominent in both of its major political parties.

    This is, in fact, the greatest failing of Capitalism 1.0. Its proponents have insisted that inequality doesn’t matter at all, so long as absolute levels of poverty decline. And while eradicating absolute poverty is undeniably a laudable goal, ignoring the deleterious impact of massive inequality will only lead us down the path to disaster. The neoliberal world order championed by Reagan and Thatcher may have made humanity collectively less poor, but that alone is not enough.

    “We were promised economic dynamism in exchange for inequality. We got the inequality, but the dynamism is actually declining. Call it stagnequality — lower growth combined with rising inequality rather than inflation. It is no surprise, then, that the public has rejected conventional economic wisdom.” - Eric A. Posner and E. Glen Weyl, Radical Markets

    So, is the game truly rigged? Is all of this the result of some greedy cabal of people operating maliciously from the shadows? I don’t think so. With the incredible scale of the global economy and its unpredictable, chaotic nature, I don’t think such a feat is even possible. If it were, central planning might not consistently fall short of its lofty aims.

    The Reality of Infinite Change

    The problems we face today are global, complex, and multi-causal. There is no magic bullet that can fix everything in one go, and anybody who says otherwise is probably trying to swindle you. Utopian thinking is just another kind of finite-game mindset, where all the world’s problems can be solved if the utopian ideology ‘wins’. The ideology is imagined as perfect, and therefore impossible to improve upon.

    This is why such solutions always fall flat. Constant change is a fact of human existence, yet all visions of utopia involve humanity entering a state of social and technological stasis. In thinking that humanity can be frozen at a kind of ‘optimal point’ and preserved as if in amber — in thinking that humanity already has the answers to all the big questions — the utopian is doomed to fall into quagmire.

    Not having an easy, clearly-defined ‘enemy’ to beat doesn’t mean we’re helpless, though. In this blog series, I hope to convince you that, for all the undeniable complexity underlying the dysfunction of Capitalism 1.0, there are clear, identifiable trends — chiefly centralization and a loss of coherence. And I hope to show you how blockchain and its related technologies will play an indispensable role in overcoming them.

    I hope to prove to you that change is not only necessary, but inevitable. That a global problem needs a systematic solution, and that globalization — while the root of so many problems — can also empower us. I hope to show you how the interconnected nature of our global society today is in many ways the purest expression of humanity’s social nature, and how we can harness this to our collective benefit.

    I hope to convince you to join us in playing an infinite game.

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