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The Landlord’s Game

A parable for modern times

London at Night, by David Holt. [CC BY 4.0]

Have you heard of Elizabeth Magie? She is one of many unsung female heroes of our time, and like so many other talented women over the years, she invented something that would change the world, and had her idea stolen by a man. Magie was the creator of The Landlord’s Game, a precursor to Monopoly, which Charles Darrow patented and sold as his own to Parker Brothers, making him a millionaire. Magie independently approached Parker Brothers, who purchased her patent for $500. Parker Brothers knew of the contention around the true identity of the game’s designer, but invested instead in Darrow’s heavily derivative game. Her involvement has only recently come to light in the popular media, like that of so many other female inventors.

Aside from this heinous case of bropropriation, there is more to the tale. Magie’s game was designed to be played with two different sets of rules, that would each highlight the consequences of different economic philosophies. Darrow dropped the anti-monopolists set of rules and went with a game that only rewards ruthless and uncontrolled capitalism.

Wow, this looks strangely familiar. By Lucius Kwok [CC BY 2.5], from Wikimedia Commons

When Magie’s game is played using the monopolist’s rules, which are similar to the rules of a modern Monopoly set, landlords become richer and richer at the expense of tenants, and eventually larger oligarchs drive out competitors until only one is left, winning the game and possessing a monopoly on land. The aim of this version of the game is to create as much wealth inequality as possible, leveraging resources and cash from one’s competitors and customers, and ensuring that no newcomers can penetrate the market. This type of problem plays out in real life in many business sectors, but the most glaring example of all is the one that Magie identified in the first place: property development.

Magie was a proponent of Georgism, an economic system that advocated for a land-value tax to replace all the other various forms of taxation, such as income tax, inheritance tax, and business taxes. The thinking behind this idea is that because wealth is tied up in property and does not benefit anyone except the property owner, they should pay a fee to offset the privilege of holding a resource (land) that generates guaranteed income or value for them. All other taxes would be abolished so that everyone is able to own all of the value that they create themselves through their labour.

This would allow for a fairer distribution of money and resources throughout the economy, facilitate social mobility, and encourage landowners to make the best use of their land via a “use it or lose it” mentality: if a landlord is simply hanging on to a piece of land in anticipation of increasing land prices, it becomes unprofitable. Bringing one’s land into use allows it to be rented and used for something productive. The tenants will still have to pay rents, but they no longer have the burden of taxation by the government. The government gets all of its tax revenue from the land-value tax, and the cost of administration is far less due to the simplicity of such a system.

When playing by the anti-monopolist’s rules, the aim of the game is for all players to generate wealth, with the winning condition occurring when the player with the least money has earned twice the value they started the game with. It rewards a capitalist mindset, yet also tempers it with a minimum level of income. While such an economic system will have its problems, the principle is certainly better than the monopolist’s outcome.

The game was intended as a simple model to educate the public on the consequences of landlords accumulating large amounts of land with little financial penalty or responsibility. Yet it is such an elegant model, and one that has played out in real life — demonstrating that it works. A single taxation system may not be the answer to all of capitalism’s problems. But the hoarding of land is one of the biggest issues of our time. It underpins many of the concerns in the housing system, all the way up from rough sleeping to the difficulties faced by first-time buyers. Land-hoarding rewards those who already have a great deal of wealth, and punishes and excludes those who do not.

Home ownership has been held up as an aspiration, or expectation, in the UK and US. But if you are not on the housing ladder, it is very difficult to make that first step. We are encouraged to strive for something that creeps ever further out of our reach. And if we are renting, either as a long-term strategy, or in the hope that we can save up enough money in the meantime before we can get a mortgage, we become poorer while the property owners become richer. All the time that we work harder and harder to grasp at what society tells us we should, wealth inequality increases, which has two effects:

  1. We hand over more of our earnings to landlords, who are rewarded again by the tax system.
  2. It takes longer for us to be financially stable enough to purchase a home. Today, the average age of a first-time homebuyer in the UK is 30; in 1960 it was 23.

It is a cruel irony that Magie’s game was popularised by Charles Darrow, who became wealthy off of the back of her labour. The parallels with modern business practices are undeniable. Darrow’s version of the game encouraged us to think that greed is good, whereas Magie wished for us to consider the consequences of the growing problem of land-grabbing. Although it would be a bit of a stretch to claim that the game of Monopoly is behind all of our economic woes, it does bear considering in the context of capitalist societies. If a simple board game could predict where we would go wrong, why did we continue down that path, and why did it become such a popular family game? Should we attach a health warning to it?

The UK has seen a shift in its outlook from the socialist post-WWII governments, that aimed to rebuild a broken nation, to the neoliberal parliaments of the last three decades. As well as home ownership being touted as a goal we should all strive for, investment in social housing has steadily decreased since the 1960s, and much of it has been sold off, either to private occupiers, or ‘social landlords’. The private rented sector is the tenure that has consistently seen the most growth.

At the inception of these policies designed to boost home ownership, it probably seemed like a sensible and admirable thing. It was a chance for everybody to purchase their own little piece of Britain, and to improve their lot through hard work. It certainly began on a more even footing that it is on now. But the system became polarised over time, with wealth ever trickling up, not down, into the pockets of the rich and out of the general economy. Magie never became rich from her invention, and died in 1948, aged 82 and relatively unknown. But she sent us a grim prophecy, that we can see playing out right in front of us. If only we’d listened to her in the first place.