Monopoly may be fun to play at home, but we don’t want to let it loose in the real world
We want our economy to thrive, writes Andrew Leigh
IF your family pulls out a board game this summer, there’s a good chance that it’s the world’s most popular – Monopoly. The game has sold more than a quarter of a billion sets and more than half a billion people have played it.
If Monopoly makes your blood boil, then you’ll know how its designer once felt.
The inventor of Monopoly was feminist writer and actress Lizzie Magie. Born in Illinois in 1866, Magie grew up in the aftermath of the US Civil War when the ‘Robber Barons’ dominated her country.
It was an era where monopolists such as Cornelius Vanderbilt, John D. Rockefeller and Andrew Carnegie controlled huge chunks of the US economy.
Angered by the gap between extreme wealth and dire poverty in US cities, Magie created The Landlord’s Game, the very first version of Monopoly. The game was supposed to serve as an interactive critique of monopoly power.
Magie’s motive was clear: show players how land grabbing enriched property owners and impoverished tenants. Magie filed a patent for her game (at a time when less than 1 per cent of patents were filed by women) but never earned more than $500 from it.
Not long afterwards, game manufacturer Parker Brothers released Monopoly, a game with surprising similarities to Magie’s original invention.
Despite her protestations, Magie was never really acknowledged as the game’s creator during her lifetime.
What does Magie’s rip-off have to do with the modern economy?
Well, if your life feels like you’ve been sent directly to boardgame jail (do not pass go, do not collect $200), then monopoly power may be to blame. Monopolies don’t just dominate mining and banking – they loom large in other sectors you might not initially think of, such as baby food and beer.
Online, there’s a dominant company in internet search. There’s a dominant company in music streaming. There’s a dominant company in social media. Some monopolists act as gatekeepers. Apple controls which apps go into their store. Amazon determines who sells through their marketplace.
Over recent decades, the market share of Australia’s biggest firms has been on the rise. According to new research from the Australian Treasury, the market share of the biggest firms has been getting bigger.
That has allowed them to increase their price mark-ups – charging consumers more because of their market power.
At the same time, the Australian economy isn’t producing new firms like it used to. The start-up rate among employing small businesses is declining.
Workers are less likely to switch from one company to another. For
the past decade, productivity growth has been lousy. Real incomes have grown slower than in any other decade during the post-war era.
The Australian economy should be operating like the opening round of a Monopoly game, when every player has some cash and no-one is scared about landing on the wrong square. But for many Australian families, it feels a whole lot more like the end of the game, when you’re about to lose. Not much cash, no room for error and the danger of bankruptcy looming.
Monopoly may be unfair but at least players get a fresh start.
Real life, in contrast, doesn’t allow you to start the game over. In many sectors, the same firms have dominated the market for decades.
Australians love a rags-to-riches story but if you look at the biggest players atop our sharemarket, they’ve barely changed in a generation.
With only one exception, the five biggest listed firms in 1985 remain the five biggest listed firms in Australia today.
Competition reform can be a powerful driver of economic growth. In the early 1990s, a shake-up of Australia’s competition laws boosted productivity growth substantially, putting $5000 a year into the pockets of the typical Australian household.
Since coming to office, the Albanese government has increased penalties for anti-competitive conduct and banned unfair contract terms. We’re currently consulting on the competition watchdog’s new report into digital services platforms and we’re considering whether we need to act to promote competition in the accommodation booking market. We recognise that competition is essential to a thriving business sector. Ultimately, more dynamism will produce a fairer society and a stronger economy.
Let’s keep Monopoly in the games cupboard, where it belongs. And let’s keep abusive monopolies in check, for the sake of the economy.