Monopoly – the name of both an undesirable economic situation and one of the most popular board games around the world. Robin Williams grasped both meanings, saying “Monopoly is just a game, senator. I’m trying to rule the god-damned world!”. This mischievous word play provokes the question of how the game reflects the economic condition.
For anyone who has not encountered the game, in simple terms Monopoly is a board game with the aim of being the last man standing in a continuous race around a 40-space board filled with property and random events. Players try to bankrupt each other by gradually monopolizing and developing specific areas of the board and charging extravagant rents to anyone unlucky enough to visit their houses/hotels, movement being dictated by the throw of two six-sided dice.
The importance of the dice roll is tremendous; some would even say game-defining, but how does this reflect real-life economics? Companies spend fortunes preparing and executing strategies to successfully sell a product. There is room for uncertainty, sure, with the natural unpredictability of consumers and the possibility of random events, but generally a business can exert a large influence on its economic existence. In the game the only choice players get regarding the property they stumble upon is whether or not to buy it, and strategy in the game can only be based on this one factor – when to spend money. Of course, as the game progresses and there is little to no room for purchases, the game starts resembling a real-life market, with players negotiating loans and debt payments, even going so far as to modify the rules to better fit the situation on the board.
The level of interference usually depends on how economics-savvy the players are: Damon Darlin from NY Times provides an account of college Monopoly games including one encounter with Milton Friedman. Robert Smith from npr.org shows what can happen when two economics professors play a game of Monopoly together.
In terms of macro- and microeconomic phenomena, there are several for which the game rules do not account directly, e.g.:
- Money creation – the extra $200 you get for making a complete trip around the board may be considered a mechanic for money creation, but with inflation rules being non-existent this can only lead to a gradual drying up of the cash available in the game box;
- Inflation – the only time the prices diverge from those printed on the cards is when they are auctioned (although after the auction the price returns to the one on the card);
- Prices – contrary to economic mechanics, competition leads to growing rates and prices;
- Taxes – taxation is a random element of the game, without any direct consequences for skipping on this civic duty. In fact, you can go to jail for no apparent reason (though still collecting income from other players, tax-free);
- “The invisible hand of the market” – the dice and cards could in a way be said to reflect the invisible hand of the market, but still the results they produce can be considered extraordinary (like going to jail every four or five turns and still being able to run a business).
Interestingly, Hasbro’s publishing policy itself leads to a curious observation about a shift towards more centrally-governed monetary policy with the Monopoly Live edition using no dice, no money, and no means of negotiating rules (the game is controlled by an electronic device). Stephanie Clifford’s article on this version of the game provides several interesting observations on this topic.
All in all, the game can be seen as a very basic depiction of the real estate market – one that reflects the dynamics of the trade with very little legal or market constraints. The aspect in which the game, at least the traditional version, reflects economics best is that of human interactions – negotiations, emotions running high, competitiveness, backstabbing, modifying rules and risk-taking are all important factors that create the dynamics of the economy as a real-world phenomenon.
Image Credit: MTSOfan