BY JONATHAN KAY
Imagine that you are in the late stages of a game of Monopoly, battling it out against a lone remaining opponent. You each control a bunch of expensive properties, all loaded with hotels. Both of you also are cash-poor, with no spare properties left to mortgage. Every roll of the dice carries high stakes. If your opponent lands on one of your hotels, the only way he can pay the rent will be to sell off his own hotels at a 50-percent discount (because that is how the rules of Monopoly work), and vice versa. Which means that the first player who lands on an opponent’s hotel will not just lose a lot of money: He will also lose the assets he needs to earn that money back. In real life, the analogy would be the poor worker in Victorian Britain who, unable to pay a small debt, goes to debtor’s prison, which further compromises his ability to earn a livelihood, and so pushes his family deeper into complete destitution.
“Well, that’s capitalism,” you might say. Perhaps. We will get to that later. For now, I want to emphasize that this aspect of Monopoly — the poor get poorer, while the rich get richer — is not only typical of laissez-faire economics. It is also characteristic of a certain dynamic observed in nature, engineering and human relationships, one that mathematicians sometimes describe as unstable equilibrium.
Take a simple physical metaphor: a marble resting at the bottom of a salad bowl is going to exhibit a stableequilibrium — because small movements in any direction will push the marble up against the walls of the bowl, and the marble will roll back toward its start position, also known as its equilibrium point.
If the salad bowl is turned upside down, however, and the marble is placed at the top of it, the marble will exhibit an unstable equilibrium: Even if the marble is balanced perfectly on top of the bowl, and so remains temporarily motionless, a nudge in any direction will lead to a feedback loop whereby the marble rolls off the bowl, moving slowly at first and then accelerating downward. In general, a stable equilibrium tends to correct itself, restoring the balance of offsetting forces that held it in check to begin with; while an unstable equilibrium tends to destabilize in one direction or another, until the system in some way collapses or reaches a different stable equilibrium.
Now let us return to Monopoly. You and your imaginary opponent are moving your tokens around the board, seeking to avoid one another’s hotels. In a way, you each inhabit an economic state analogous to the marble sitting on top of that salad bowl. All you need is a single initial nudge toward poverty and a cascade will begin, pushing you further and further down. […]
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