On “Meritocracy,” Ponzi Schemes, and Fallacies of Composition

Tyler Wright is a Twitter hustlebro whose handle is — predictably enough — @DefiningWealth. His bio is typical of the ilk, who prey on basically the same demographic of gullible young men as Jordan Peterson and Andrew Tate: “$0 at 22. $1.5 Million and Retired from Corporate America at 28. Now I help people do the same. Sign up for my Free Financial Freedom Webinar this week!” The account is the standard nauseating mixture of New Age Prosperity Woo (“Your thoughts become your words, your words become your actions, your actions become your habits, and your habits create your destiny”), and predation so naked it would make a velociraptor blush.

At some point in time (currently impossible to determine, because his account is currently private for reasons I can only guess at), Wright tweeted the following: 

Bank buys me the house.

Tenants pay off the loan.

Property manager handles everything.

I collect cash every month.

Inflation builds me massive wealth.

On Friday Nathan J. Robinson posted a screenshot with the comment: “This landlord just gave the best indictment of capitalism I’ve ever seen. ‘I am socially useless and yet I make piles of money.’” And it truly amounts to a confession note. The fact that the landlord takes money with one hand, pays the mortgage with the other after skimming some off the top — and pockets the unearned appreciation in land value all the while — says a lot about how screwed up both our land property rules and credit system are.

The usual mix of defensive reactions from pro-capitalist bootlickers appeared in the replies. As invariably happens, a right-libertarian “Voluntaryist” type commented: “yes because it’s disgusting how *checks notes* all parties were mutually benefitted [sic] in the voluntary exchange of services for money.” Yes, you can pass off any exchange —– no matter how exploitative —– as “voluntary,” so long as you build the coercion into the background structural conditions.  

But it’s another reply — of a sort equally common from capitalism apologists — that I want to focus on here: “That sounds like recipe [sic] that anybody can follow to get passive income. How is that bad?”

Such comments — along with recommendations to “learn to code” or to learn some other skill, or more generally to deal with economic inequality by “making better choices” — fall afoul of what’s known as the Fallacy of Composition. That is, they falsely reason that what is possible for people individually or severally is possible for everyone in society as a whole. While anyone may be able to get out of poverty through such individual approaches, it is structurally impossible for everyone to do so. It’s structurally impossible where everyone makes a living wage by “improving their skills,” while the manual labor just does itself. It’s structurally impossible to have a society where everyone is a landlord, with nobody working to pay the rent.

I’ve seen similar arguments from people who argue there’s no structural bias in capitalism because “thousands of cooperatives already exist out there.” That doesn’t change the fact that capitalism systematically filters in favor of absentee ownership and the separation of capital from wage labor. I once got into a social media exchange with someone who insisted that the fact that “x million people belong to workers’ cooperatives” demonstrated that it was possible to organize cooperatives, which in turn demonstrated that there was no barrier to everyone doing so and capitalism was a completely neutral system. After repeated, futile, and increasingly acrimonious attempts to convince him that 1) the numerator of “x million people” was meaningless unless we knew the denominator, and 2) the ratio was an indication of structural conditions, I finally gave up in disgust.

It’s interesting that the people who denounce Social Security as a Ponzi scheme are, by and large, the same ones who accept hustles like Wright’s — in which by definition only those who get in at the start are able to get rich quick, and the folks left behind are the ones who get milked — as legit.

All systems of class privilege with some degree of social mobility and “meritocracy” amount to Ponzi schemes. It’s possible for the most energetic or ruthless people at the bottom to work their way to the top. But it’s impossible for everyone to do so; and, at any given moment, those at the top are benefiting from those at the bottom.

The ideology of Hustle and Meritocracy serves capitalism well. First, it distracts some of the more potentially dangerous people in the lower orders from any attempt at systemic change, and coopts them into the system by promoting them to the middle or top. And second, the existence of such people gives everyone the false impression that the system as a whole is meritocratic, thereby disguising its real zero-sum nature.

The truth of the matter is that structural injustice can’t be solved by individual “choices,” no matter what they are. No matter what “choices” a minority may be able to make to move from the exploited to the exploiter class, the structural relationship between the classes itself remains zero-sum and exploitative. The only way to solve the problem is to recognize — regardless of what the right-libertarian polemicists and hustlebros say — that the injustice is structural, and the only real solution is structural.

Anarchy and Democracy
Fighting Fascism
Markets Not Capitalism
The Anatomy of Escape
Organization Theory