Meanwhile across the Atlantic, Nancy Ruggle (another researcher whose work deserves more visibility) and a handful of other economists were gradually transforming Hotelling’s concepts into what we now know as the second theorem of welfare economics. In France, after a turbulent discussion that culminated in a profound friendship with Hotelling, economist Maurice Allais used the idea to support a cogent political argument to change the face of French power and rail management. Hotelling’s writings from 1938 on natural monopolies met with unexpected success. And again, the ideas of Elizabeth Magie became reincarnated as an economic model. Again, he drew comparisons between capitalist society and his social optimum. Using some clever calculations to compare the level of well-being that would be created by different social models, Hotelling managed to demonstrate how much train tickets, drinking water and electricity would need to be subsidised in order to service the common good. Yes, these are the very same companies present on the Monopoly board and no, this is not a coincidence. Some examples are rail transport, electricity and drinking water. These economic phenomena usually occur when initial investment costs are so high that it is extremely difficult and ultimately infeasible for two companies to invest and compete. The apex of his career as an economist came in 1938 when he turned his attention to natural monopolies, referring to those that make any form of market competition nigh on impossible. However, an ingeniously playful theme runs through his articles, whereby he compares various social utopias by replicating them into the microcosm of the board game.ĭriven by a tireless thirst for knowledge, Hotelling rose through the ranks of American academia and eventually achieved international renown. He expressed his ideas by describing ever-accumulating sums of money, leaving aside everything except solid logic and discussing it all in terms of social welfare. To be clear, Hotelling never actually wrote of “Georgism” in his articles, instead concealing his ideology behind rigorous mathematical proofs. But regardless of topic, Hotelling’s models consistently drew correlations between the social optimum and Georgist policy. The resulting blend was what he coined the “social optimum”, his choice of policy that would help achieve the best for society as a whole.Īspects for us to optimise always depend on the issue at hand, whether this be maximum well-being, more efficient geographical distribution or optimal exploitation of resources. He then compared these potential effects with those offered by alternatives such as socialist management. Hotelling’s social optimumįirstly, Hotelling defined a model for society and proposed to study the effects that capitalist policy would have on it. Following a consistently similar writing structure, Hotelling’s articles dealt with subjects as disparate as taxation, non-renewable resources, geographical economics and social welfare. Eventually and no doubt subconsciously, he began incorporating the game into his later-renowned economic models. His chosen version was, naturally, the original Georgist one. Hotelling enjoyed playing Monopoly with his family, with students, and even alone at night before succumbing to sleep. A gifted statistician, outstanding economist and devotee of Georgism, Hotelling went on to become the thesis advisor of two Nobel Prize winners. We can only guess at how many young minds of Princeton and Columbia might have experienced this new rhetoric of numerals, but we know for sure that one of them was Harold Hotelling. This game made tangible comparisons between capitalism and Georgism, using the material forms of wealth, banknotes and assets. Magie’s game bore many names on its journey to becoming the now-familiar Monopoly. As the game spread along the East Coast, activists and fans copied the model and passed on the rules by word of mouth, playing in university dorms, parks, smoking rooms and even in the lecture hall. Although Magie’s game did not sell well and was poorly promoted, it was met with avid acclaim from those who shared her Georgist ideals. The book tells how Magie was never able to enjoy the rewards of her ingenious creation and how her name was lost to the annals for decades. The Landlord’s Game was the brainchild of the much-unsung Georgist activist and feminist Elizabeth Magie, whose story is chronicled in The Monopolists by American journalist and author Mary Pilon. Wikimedia Elizabeth Magie: social justice pioneer Henry George, whose writings and advocacy formed the basis for Georgism.
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