New Civilization News: Multi Level Money    
 Multi Level Money20 comments
picture 12 Nov 2004 @ 23:45, by Flemming Funch

I've never exactly liked multi-level marketing (MLM). Well, half of the time I hate it. It too often looks like being conned into shelling out a few hundred dollars for some supply of diet pills or something, and then you need to convince all your friends to sign up under you and get really excited about it.

But then again, I like the idea of having thousands of people in my network who'll provide me with a continuous residual income. So, if I could do that without having to force my friends to buy some overpriced vitamins they don't want, I might change my mind.

At times it had seemed very attractive. I've known or met people who've done extremely well with MLM, and obviously, to see those folks who've done best can inspire a lot of other people. Like, I remember this event at the house of one of the top Herbalife people. Larry something. He had made 65 million dollars at the time. So it was a recruitment event in the basement disco of his Beverly Hills mansion. There were at least 500 people. It has ostrich feathers on the wall. His couple of Ferraris and Lamborghinis were strategically parked out front. Well, he seemed like a nice guy too. And they put on quite a show. Seemed like those vitamins cured cancer and just about anything else. And lots of previously normal little folks had great success stories to tell about how well they'd done on marketing it.

However inspiring it was, I didn't sign up more than maybe one or two people, who didn't do anything with it. My family ate the vitamins for a year or so, which was perfectly fine, albeit a little expensive.

And, statistically speaking, that's how it goes for most people who sign up in an MLM. They think it sounds great at first. They imagine themselves making 10s of thousands in residual income every month. They find the money for the starter package somewhere. And that's usually how far they get. Because they don't know how to be as inspiring as the people who hooked them on to it. And because their friends aren't really interested, and they don't know how to reach anybody else who is.

Even at those times when I temporarily thought it was a great idea, I've had moral qualms about the pyramid nature of it. I mean, obviously the scheme is in the shape of a pyramid. People sign up under somebody else, becoming part of their down-line. And the money they spend to join or to buy products is what goes to fund the people higher up. But you can pretty easily see it as a pyramid where a few people at the top are doing really well, some of them becoming millionaires, being able to tell great success stories. And the further we go down in the pyramid, the more dull it looks. At the bottom are people who paid money for nothing, or there are people who work at actually selling the product it all was about. Seems like there will have to be a great many loosers to fund a few winners.

But then it just struck me. This is really very similar to how a capitalist economy works. Most people haven't thought of it that way, but it is really structured as a pyramid scheme too. Except for that it is so complicated and cleverly done that it pretty much can keep going indefinitely, without anybody really noticing.

A capitalist economy works in part on the expectation that one can make investments that produce returns. I.e. you give something out and you get more back. Like, an investor invests in a company, or a bank gives a loan, and they want it back with interest. So the company does a bunch of things that does the same thing. They put the money into things that give more money back. I.e. they pass the buck to somebody else, in order to get a return for themselves and the people behind them. And so forth, through numerous steps. It is really inherently the same idea as a pyramid scheme. And at the bottom of the pyramid you find the people who do the actual work, or who buy the products. And they generally get less back than they put out. I.e. they work hard and get paid less than what it is worth, in order to finance that the people higher up in the scheme get their returns. Which produces our typical societal arrangement where a small percentage of people are doing really well, and the majority of people are just getting by, stuck in a daily routine.

You see it even more clearly in the way money is actually created in the first place. No, it doesn't inherenly come from hard work. It might fund some hard work later, but at its origin it has nothing whatsoever to do with it. A bank creates the money out of thin air, in order to lend it out. The bank has certain limits on how much money it can create, which is in ratio to how much money they currently have as actual deposits. Like, they can create 10 times as much money as what is deposited there. That money doesn't go anywhere. The money that is "lent" out is created as entries in a computer. The bank then puts that money at the disposal of somebody that they expect will be able to pay it back with interest. I.e. to somebody who will turn a profit from some activity, or who'll earn the extra money somewhere else, in order to pay it back.

Now, mind you, money can ONLY be created by a bank. Most governments retain the right to create money as well, but currently none of them do. Even most of the money the government borrows is created out of nothing by a bank, and the government needs to pay it back with interest.

Now, it shouldn't be very hard to notice that the math is in principle impossible. Certain amounts of money are being created, and more than that needs to come back. Lots more, as interest compounds quickly. In the big picture, that isn't possible. There is no other source of it, so you can't pay more back than what exists. And the truth of the matter is that if all loans in the world were called back this moment, not only would all existing money be used up for that purpose, but there wouldn't be enough.

See, in case you missed it, a magical thing that happens when you pay back a loan to a bank is that the money then disappears. It is not that they had been missing it, and now we paid it "back". It didn't exist before they lent it out, and it stops existing after you pay it back. But the interest, which is the bank's profit, will keep existing.

The whole thing is based on that the profit, the returns, the extra interest, will come from the next guy in line. You pass the buck, or rather the debt. You start off by owing something, and you make somebody else pay not only that, but enough so that you can keep something, in addition to paying back your source.

And if you freeze the whole picture right now, it isn't possible for everybody to be paid. Because there would invevitably be a relatively small number of people that have a lot, or that a lot is owed to, and a whole lot of people that owe it, and can't pay it. The losers at the bottom of the pyramid.

But the amazing thing is that it still mostly works. The wheels keep churning. People are busy running businesses and making a living and buying and selling things. And most don't give that whole thing a single though. Those who do best are keenly aware of the magic of compound interest, and spend their efforts on putting their resources where they give the biggest return. But hardly anybody worries about the inherent impossibility in it all. And, actually, it isn't as impossible as I make it out to be, because it is a complex dynamic system, always in motion, which gives it a certain stability that isn't obvious when we take a snapshot.

And maybe I'm being a little too harsh about it. I would tend to use that kind of logic to attack the system, to complain about how insane it is, and how it is only designed to make the people at the top very rich, and keep the people at the bottom enslaved in an impossible situation.

But we can also look at it different ways, because essentially, seemingly against logic, the system works, and might well keep working for quite a while.

It might keep working in part because it is very complex and opaque, so nobody sees through it, and one can maintain one's confidence in the money system. It keeps working also because there are many ways to pass the buck to others. I.e. anybody has the opportunity for investing their capital wisely and getting a return back. And there's actually nothing that stops most everybody from being a business which gains a profit. There's no law that says you have to be the suffering lower rungs of the pyramid. People are there in part because they don't succeed in playing the capitalist game very well, so they just get taken advantage of. But they could play if they learned how.

The economy is actually arranged so the money can keep moving indefinitely. The same dollar can be used any number of times. So even though you're providing a profit for somebody higher up in some pyramid, you're free to set up the same type of scheme for yourself, and do something that produces more return than what you put into it. There's no scarcity of pyramid schemes. Or, more kindly, systems that can leverage your investment into much more.

And, in-between, money can be passed around any number of times. If the money velocity increases, more people can be paid off of the same money. It isn't all about borrowing and paying back loans, of course. I could earn and spend loads of money without being involved with any loans at all, and without thinking about where the money originally came from. I could just have a well-paying job with a pension plan and feel happy and secure, without directly having to worry about business or where money comes from.

But it all still is built on a mechanism of getting returns. Getting more back than you put out. Getting as many people as possible to give you more back than you give them. At least that's the game for those who're playing the game.

So, now, a multi-level marketing scheme is not all that different. It is simply more transparent. It is easier to see the pyramid forming within a particular scheme, so easier to have qualms about it, and start thinking it is impossible. It is also easier for it to obviously not work as well, if everybody's in the same pyramid, and there's only a very limited number of products and things to do in it. But there's nothing really that stops such an arrangement from being complex enough that everybody can make profits and keep going indefinitely. Because there can be many different types of businesses, and because money can circulate endlessly, at any kind of speed.

My objections about the morality of MLM aren't very different from my qualms about a general capitalist economy. Is it fair that some people get extra money back without directly doing any work for it? Well, if it would only be theoretically possible for a few people to do it, I might not think it is fair. But if it is possible for everybody, then it might be a good thing. It indeed might be possible to keep the balls in the air, and have everybody profit from it, as long as they think as businesses, rather than as consumers and workers.

Thinking as an investor or as a business is obviously very different from thinking as a consumer or a worker. The inherent laws of how it works are different. You won't be a good investor if you only think about what work you can do and what stuff you can buy. Somebody who's good at business or at investing is looking for ways they can get their capital and resources to do the most possible work, to give the biggest return. Very different.

So, now, I still have a lot of qualms about our money economy and the society it tends to create. But several thoughts:

There's apparently no fundamental reason that most participants couldn't do very well even in an economy based on pyramids, or on returns on investment. But they have to all be willing to become business people, rather than workers and consumers

There's no big reason why one can't build networks as a sub-set of the bigger economy where the participants do that same thing with each other, and maybe create returns faster than the general economy, and where most people could do well. But, again, they would know how to act as business people.

There might well be some possible scheme that works better than pyramid and interest systems, and that inherently would make it more possible for everybody to play. I.e. there's gotta be some kind of constellation of people that can both out-compete the greed-based capitalist system AND provide the leverage to do more with less AND make it actually work for most people.

A profit/interest/pyramid based money system can easily out-compete a local money system with a flat structure that only uses currency for exchange for goods and services. But it has a lot of negative characteristics. Lots of effort is wasted. People are forced or tricked into paying for lots of things that aren't useful, and the system leaves most people lost in struggle. That could potentially be different, if everybody just played the system well, and made sure they had good information. But there might be other systems that are more easily playable, ensuring that more people actually will play in them, and thus be more likely to be successful at them.

So, I'm looking for a different geometry, I guess. More complex, in a synergetic way.

And, in the meantime, I'll try to refrain from feeling bad about concentrating on investing my time and effort for the maximum return.



[< Back] [New Civilization News]

Category:  

20 comments

13 Nov 2004 @ 15:10 by rainbowfish : Banks: don't you just LOVE them!
No, neither do I. I can't help noticing that, with the benefit of modern technology, bank transactions have been made so much easier but why is it that money can be taken out of my account instantly, but it takes 5 working days for money paid in to actually be credited to my account?  


13 Nov 2004 @ 18:48 by ming : Banks
Yeah, annoys me endlessly. I can pay with a credit card in 5 seconds, easy and automatic. But if I want to transfer money TO my account, particularly between countries, it takes days, sometimes weeks, and they pretend it is really complicated, as if it were done manually, which I'm sure it isn't.  


13 Nov 2004 @ 20:07 by astrid : Ohhhh ming.....
..... now we're cookin' !... “When you and I have a dollar each and exchange it, you and I would still have one dollar each. When you and I have one idea each and exchange them, you and I then have two ideas each!” / Anon

The Money game can be over tomorrow morning. We don’t know “who” or what might pull the rug from underneath from the whole World economy. We KNOW it WILL be pulled, rather sooner than later. Only to repalced with the Electronic Value tracking System; YOU, ming, will now not be able to change your value anymore!…. you have the value (bracket)/your “share,” that the Big Boys decided is right for a guy like you…
No more POSSIBLITIES to “get into the Game”

I quote you:
“But we can also look at it different ways, because essentially, seemingly against logic, the system works, and might well keep working for quite a while.”

Does it really????
WHAT exactly are the ( Bottomline) RULES one has to follow to be REALLY successful in The Game??? I tell you what they are: DECEPTION, CRUELTY, LYING, CHEETING, COERSION, COVERTNESS, GREED “ …as long as I do well….” = always AT THE COST OF SOMEONE ELSE ( severely including NATURE!!!!…..) plus a whole shit load of other equally “ethical” behaviour, all equally CROOKed !….. A Crook is a Crook is aCrook.Am I right?
How do you recognize a Crook? From their BEHAVIOUR!!! To put it short: By selling my Soul to the DEVIL/ DoubleStandards, will I ( truly) prosper to the point where my prosperity would gain some lifted eyeborws and RESPECT/ AND HOSTILITY FILLED JEALOUSY from the Big Boys

No. We have to face the Cosmic Truth of it all: LIFE is FREE!… That’s how Life/ ”God” made it. Sun shinig on your shoulders, ming or on my. What’s the “diff” in MONEY??? Rain on you, Rain on me????
So….. what to do? As far as I, A-d, can see: CHANGE THE RULES!… which is to say: find the more lifesustaining rules in our Hearts, start following them and the Game is auotmatically changed! FOR THE BETTER/HIGHEST GOOD OF ALL, not just a select few, who are deeper and more firmly INTO POVERTY and LACK consciousness than ANYBODY else on the Planet!!!! THAT is why they HAVE to hoard compulsively, 24/7 century after century…. "Godda have more…just to be sure, that I won’t suffer lack!" That IS the INJURED PSYCHE of EACH and EVERYONE of these “HighRollers”…. nobody a bigger = POORER HighRoller than the guys --none mentioned,but none forgotten-- who print the money = keeping the Game intact, untill they replace it with the 100% Slavery system, they've been working on to replace this paperdollar system...You know it.I know it...  



13 Nov 2004 @ 22:02 by ming : Money Systems
Well, I actually suspect that they're looking for ways to keep it running. In that it is a very effective and non-obvious way of keeping most of us stuck in a type of slavery, and we mostly don't notice. We don't quite notice that we're working mostly for somebody else, rather than for ourselves or for the world, so we keep going, because it is hard to see any other way. So they'll probably keep thinking of ways of making it more opaque what is really going on. But the idea is to maximize how much we can be milked for while still leaving us with enough energy to produce more milk.

There's a whole in the bucket. We carry water and end up with only half left when we get where we're going. But we might run 3 times faster, and we'll end up ahead.

Yes, I think it is crooked. But it keeps a bunch of smart people very motivated in trying to get returns on their investment. Which creates some damage, but it also creates a lot of useful stuff along the way. And it keeps a lot more people motivated to go to work every day, which is to a large extent a waste of time, but which also does some good along the way.

So, I think the task is to come up with another system that motivates people to be productive, but in a more beneficial way for all of us, and in a way that can allow more people to actually play, and be productive.

Life is free. It should be in our nature to spend our energies on increasing the quality of life wherever we can, while keeping it free. We have no inherent need for accounting. And eventually we'll get to a social order where it just works like that. We do what we're most inspired and capable of doing, and we work for ourselves and the whole, when we feel like it. But on the way there, there might be some stepping stones. Some systems that actually are more likely to get us there than the current economic system.  



13 Nov 2004 @ 22:11 by lugon @80.58.19.44 : the firefox way
Don't forget about the "escape path"! http://www.spreadfirefox.com is an example: there's a need (maybe many people don't perceive it - that's another topic altogether), then you create the technology, then you incentivate its adoption.

There's need for a new world. There's bits of the needed technology here and there. But it's still in "beta" and/or we haven't found ways to incentivate its adoption.  



13 Nov 2004 @ 22:18 by ov : MLM
I think we need to question the whole concept of productivity, screw it, who needs it. The things that we absolutely need are already being provided so all this additional "useful stuff" is simply toys and luxuries, which wouldn't be so bad except it contributes to the unsustainability.

There are lots of suggestions out there on making the shift from economic capital to social capital, but I don't think they will get any support until the economy collapses.  



13 Nov 2004 @ 22:27 by lugon @80.58.19.44 : collapse
Thing is, if/when economy collapses, we collapse too. Or at least many of us. At http://dieoff.org they say there are sensitive areas in all those places that are heavily illuminated at night - the pearls of the planet - huge cities.

But if we try to make for a softer landing, won't we effectively be changing the world?  



14 Nov 2004 @ 01:11 by ming : Collapse
It would be very painful if the world economy collapsed. You know, like millions of dead and the risk of losing much of our technological know-how. Some might think that's good and necessary. I don't really. I'd hope we'd have something in place to take over, the moment the world economy starts faltering, something that has the potential of being at least as sophisticated. So we don't have to go through any Mad Max post-apocalyptic stage.  


14 Nov 2004 @ 02:16 by astrid : Right on, ov....
....this absolutely insane Belief & Worship that so much of Mankind has for PRODUCTIVITY, thinking that Salvation will come from it, is beyond me!!! WHAT does it take to WAKE people up fom THAT fallacy?...

Humankind could stop ALL productivity TODAY -exept for FRESH Food productivity- and we would still be more than "sustained" with & and by all the crapp that already is in existence for the next ten to twenty years without making one more item of any kind, but only use what's here already.
This whole NEW-productivity is the biggest PSEUDO-GAME the Corps have pulled on us!.... and the Planet(s resources!.....)
Yes, lugon, all the Mall worshippers et al WOULD collapse.... That wouldn't be such a big loss, would it? At least it would save the Planet!....
Our 3D Technology is extreamly CRUDE and fallible and a very LAME substitute for the REAL THING; Inner Abilities, you know all those Abilites "HIDDEN" in those 90% of our Brain/Mind that we currently don't use!....
Thank you, ming, for taking up this subject.We need to talk much more about this than we've done so far.
Yes, I think you are right between our Ultimate Abilties/New Way of Life and now, we need ALTERNATIVE ways to handle Life.
Lugon, I saw your articles and like them a lot. I will study them more.  



14 Nov 2004 @ 02:21 by ov : Collapse
Who says the entire world economy has to collapse, just the US dollar would be enough, the other currencies might take a bit of a blow but I think they would recover fairly fast. China is going to be the next economic super power. The Euro is getting stronger all the time. The Iran Bourssa will be set up next year to trade all the OPEC oil in Euros, and China has given warning for hands off of Iran. The loss of the greenback will be a mere bump in the road, a temporary inconvience, and I think once the initial withdrawal has passed everyone will be wondering why they waited so long to do it.  


14 Nov 2004 @ 02:41 by Jon Husband @24.87.29.109 : Capitalism and MLM
The current system is a house of cards, imo. It depends upon peoples' fear of not getting or having enough, so credit was created to keep them in control, in hock .. to this existing system. I think it may well collapse in our lifetimes, and it will be painful ... although no doubt the majority of people on the planet already live in the painful part of the system ... it's just that we in the "1st" world don't really see it, or don't experience it.  


14 Nov 2004 @ 23:08 by vibrani : I always wondered
what would happen if we all demanded the money we have in our banks right now, in cash. Couldn't be done. And that is a huge problem with the system. It works on credit as much as many people do.  


15 Nov 2004 @ 11:23 by rainbowfish : "Life is FREE"
Inspired by that particular comment, something I don't think I'll ever fully understand is how anyone can own land. It was always there. For anyone to be able to buy land, it must have been stolen in the first place!  


15 Nov 2004 @ 14:54 by vibrani : How about just claimed?
not stolen?  


15 Nov 2004 @ 16:59 by ming : Land Ownership
I have a problem with land ownership as well. How can somebody own the land? Or the sea or the air, for that matter.

But particularly what I have a problem with is most kinds of ownership in absentia. I.e. you can own lots of land without doing anything useful with it. You can turn it into an empty parking lot, if you feel like it.

But I think there's some use in noting what is put to good use. In my ideal society, if I were making the rules, it would be like that. If you do something useful and productive with a piece of land, then you gain a certain right to keep doing it. You have more right to it than anybody who just comes along later with some other idea. But that would of course be based on entirely different premises, of expecting that one would do something useful and productive for the whole, not just something profitable for oneself.  



15 Nov 2004 @ 19:57 by Chris Hagglund @24.141.159.103 : Yeah land ownership blows my mind
It just blows my mind right off my head. How can you own what the Earth gives for free? If you want to learn about the State's monopoly on the right to the use of force, just try building a house on some piece of land that 'appears' unused. You'll learn that you have no real human rights unless you have money. Human rights to me partly means a place to build a house and not be harassed by some government shitheads. But we dont have that around these parts. What to do, what to do. Guess I'll keep working for this corporation earning the money and the priveledge of this lovely townhouse that I am so gracefully allowed to keep my family sheltered inside -- as long as I pay the rent.  


17 Nov 2004 @ 06:18 by James @68.3.7.187 : What about...
CHALICE -- Conscious Humans Abundantly Linked In Creative Exchange...?
Wouldn't that be at least along the lines of a "different geometry"??
I'm sure we, that is, the NCN membership, can find a way to implement and test such a system...Let's implement it, Flemming. Let's turn the NCN pyramid on its head!  



17 Nov 2004 @ 06:35 by Me Again! @68.3.7.187 : You wrote:
"But then again, I like the idea of having thousands of people in my network who'll provide me with a continuous residual income. So, if I could do that without having to force my friends to buy some overpriced vitamins they don't want, I might change my mind."

So, first step would be to start "your own" MLM! Make the product aspects of, or the entire, NCN website/service itself, with a focus on activating CHALICE (or some other, hot/cool acronym :o) within and for the community membership.

Perhaps the "product" would be like initially an education service about money, and the current system, and also the potential/actual solution of "CHALICE". Maybe what will eventually come out of the MLM would be a LETS-type peice of individual software, perhaps open-source, that can spread virally, globally transforming current consumer/workers into small business owners. The smallest business there is of your own body, brain, experience, time and atttention (see: The Inner Game of Work http://www.theinnergame.com/ )

To be continued...  



17 Nov 2004 @ 06:42 by maxtobin : Owned ~ Possessed?
I always delight in your analysis of our shared reality Ming.
Almost always the biggest bully gets the "right" to do as they wish, an aspect of the dark ages we live in I guess. (Organised secret aganda bullies are the worst?)
In Polynesia the land is held in a custodial way for future generations rather than owned. But they still manage to get into all sorts of strife over who the custodian is and how use is determined (more complex when the corporate agenda weaves its effects into the picture). New Zealand has a very interesting situation where the indiginous peoples signed a treaty with Queen Victoria and now there is endless dispute over what was intended and who should recieve the compensation. And of course certain history is being hidden to allow the whole gravey train to exist, 'make every thing right with money' ties us all in at a level where the spiritual aspects and benefits of the relationship are lost.
Ho Hum, dumm dee dumb! Same ol' same ol!! The change of ages is upon us so we must learn to ride the changes and find our stable hearts. I believe that is the way through this and a new 'system' of sharing the treasure of human experience wil e-merge?!!  



17 Nov 2004 @ 16:51 by ming : Chalice
James, yeah, I'm getting around to thinking that it might actually be the right time to implement the {link:http://www.chalice.org|Chalice} network. A gift economy, a LETs system and a network marketing economy rolled into one. It is still a unique idea. I need to get some more immediate and pressing things out of the way, but then I'm game. There are still a few problematic puzzles I need to work out, like how to encourage a flow towards the gift economy, but I got some new ideas as well.  


Your Name:
Your URL: (or email)
Subject:       
Comment:
For verification, please type the word you see on the left:


Other entries in
2 Oct 2015 @ 22:16: Release of the iviCivi Project
24 Jun 2010 @ 02:13: BAILING OUT AILING BANKS IS IMMORAL/CRIMINAL
1 Jun 2010 @ 07:25: Extirpating Capitalism
30 May 2010 @ 06:13: ‘LATE’ CAPITALISM CRASHING DOWN ITS DEATH BED
28 May 2010 @ 02:27: EUROZONE’S BURNING, CONVENE GLOBAL FINANCIAL CONFERENCE!
7 Jan 2009 @ 15:36: Did God invent natural money?
11 Dec 2008 @ 14:29: Borrowing money to a beggar
2 Dec 2008 @ 07:03: 10,000 "uninsured" depositors of Indymac Bank
1 Dec 2008 @ 11:01: Important Notice Of Change In Terms
30 Nov 2008 @ 05:10: HEALING GLOBAL ECONOMY VIA NEW FINANCIAL ARCHITECTURE



[< Back] [New Civilization News] [PermaLink]?