Bren’s Capitalism Game: Another occasion I used games as a teaching tool in a college philosophy class

Last year, I invented a game about capitalism which isn’t really about capitalism. It’s really about ethics: it’s about how to build trust with competitors, and how fragile that trust really is.

Here’s a brief summary of how my game works, when I use it as a teaching and evaluation tool in my philosophy class. Students form teams, each representing a generic manufacturing company, producing generic supply goods: metals, plastics, fasteners, and the like. The teams have to trade with each other to assemble a ‘widget’, which is then sold to the Market (that’s me) at auction. I tell the students that whichever team has the most money at the end of the two hours wins the game. There’s more to the game than this, but I plan to publish the game eventually, so I’ll save the complete rulebook for later.

Most of the time, students hit upon a strategy like this one: In the first few rounds, each team would try to barter its goods for the other goods it needed, usually at a rate of 1 for 1 or 2 for 2. After a few rounds, they would have one or two complete widgets, but they would not sell them right away. Instead, they would hold on to them, and also hoard their own supply goods, in order to drive up the prices and control the market. The idea was to make it impossible for other teams to assemble more widgets. And when all other teams sold the last of their widgets, the team that hoarded its widgets longest could sell them for the highest price.

I say that this strategy was the most popular: but I do not say that this was a winning strategy, because it always turned out to be a losing strategy. When everyone tried to follow it, they all quickly found themselves in a kind of prisoner’s dilemma. Eventually, no one was willing to trade, and therefore no one made any widgets. And therefore the game’s economy as a whole stagnated. Sometimes no widgets were assembled for five or six rounds in a row. Students also found that the team which produced the fewest units of its trade good became the most powerful team in the room. Therefore teams often rationed out how many of their goods they would agree to trade away. “Scarcity creates demand, even if it’s artificial scarcity, and that’s what drives prices up”, one student wrote in her report. Some students compared the situation to Ponzi schemes, and to the Marxist principle of fictitious capital. Some compared the situation to real-world artificial shortages, such as the near-total monopoly on diamonds that the DeBeers corporation held for most of the 20th century. But, again, when one team adopted the strategy, other teams followed, and then the game’s economy would freeze and nothing would get done. Students wrote in their reports about the need for flexibility, quick thinking, and co-operation.

On one occasion, one team categorically refused to sell their supply goods for the first several rounds, and then later demanded a price for their goods that was very, very high. They thought that their competitors would have no choice but to pay their high prices. But the other teams were annoyed, and they refused to pay it. The result was that no widgets were assembled by anyone, for almost two hours! When I made a theatrical show of the suffering of the consumer, who could not buy a widget for love nor money, a student pointed out that “in business, it’s the shareholders who matter, not the customers.” I recognized the proposition from the works of certain economists we had studied earlier in the semester. In terms of business strategy, the student was, in the main, correct. But something about it bothered me. The interests of the customer should matter, somehow. And something’s wrong with an economy in which a businessman can win by making the customer lose.

It was after this occasion that I introduced new rules to represent operating costs, and to give players the chance to buy goods at a (very high) flat rate directly from the market. These new rules made the simulation a bit more true to life: all businesses have expenses and liabilities, and in most cases no one has a complete monopoly on anything. With these new rules, players could still manipulate the market for personal gain, but it became harder to do so.

Teams which created artificial shortages also found themselves at the receiving end of some rather nasty revenge efforts. Several teams formed coalitions and bought each other out precisely in order to ensure that the team which created the artificial shortage would lose the game. A rough “balance of power” tended to evolve, and the most powerful team would often find itself paradoxically the most vulnerable team. Several students wrote something like this in their reports: “We realized we could not possibly win, so we simply stopped playing to win, and started playing to control who the winner would be.” They reasoned that if they couldn’t win, then they would ensure a win for a team that treated them fairly. And if the team they wanted to win did in fact win, they considered that a victory for themselves as well. There are some real-world examples of precisely this kind of behavior in the market. The best known example is that of Steve Jobs, CEO of Apple Computer, who threatened to bankrupt his own multi-billion dollar company in order to destroy Google’s Android cellphone, which Jobs believed was copied from Apple.

Incidentally, this buy-out strategy was always enacted in the last round of play, and never in mid-game. Students knew that if they launched a buyout gambit to prevent a leading team from winning, they had to launch it in the final round, to prevent anyone from retaliating. In the real world of business, of course, there is no final round of play, except perhaps in the sense of economist John Maynard Keynes’ famous statement, “In the long run we are all dead.” I suspect this strategy would play out very differently if the players did not know which round of play would be the last round. But in my classroom, we were ultimately limited by the two hours of our lecture period.

The students also discovered the importance of certain intangible factors, especially to do with the minutia of negotiations. An offer that was both accessible and clear, and presented by someone with a confident and friendly posture, tended to score a deal more often. Even their clothing mattered: some women found that they gained better trades when they wore heels; some men made better trades when they took off their baseball cap, combed their hair, and put on a tie. An excessively expensive price, or a price that changed too much, or a negotiator with a shifty or reluctant demeanour, was usually rejected. Some players also engaged in minor acts of deception, such as by convincing another team that they had traded something to a third team or made a secret deal elsewhere, which in fact they had not done. This usually had the effect of motivating the other team to make a better offer. Of course, two negotiators doing that to each other usually ended up trading nothing. If any impasses were created that way, I do not know how they were resolved.

It was also surprisingly easy for misunderstandings to occur, and grudges to form because of them. Teams often set their prices or joined certain coalitions in order to punish rivals for rudeness, excessive selfishness, or general ‘unreasonableness’ (however perceived). And on one occasion, one team punished another with a trade embargo in order to perpetuate a pattern of bullying and online stalking that had been going on among the students outside the class. I must admit, I did regret using my game as a teaching tool on that day. But in their reports, some students researched real-world examples of business decisions made for very personal reasons. Not all entrepreneurs play to make the most money: some play to dominate a market and force their rivals into the poorhouse, and they might pursue that goal at great cost to themselves.

There was one occasion when the game ran very smoothly, with productive negotiations among all teams and a steady supply of widgets for the customer to buy. It began when a student stood on a chair and suggested a global strategy to the whole class: “let’s all trade our stuff one-to-one, and sell our widgets to the teacher one at a time for twenty dollars each, so that every widget will be sold, and no one will lose, and everyone will win.” In that student’s report, he explained that he was attempting to foster a spirit of Ubuntu in the room. Ubuntu is a humanist philosophy, originating in writers from southern Africa. It states that the best solution to any given problem is the one where everyone co-operates in trust and friendship, and in which no one wins unless everyone wins. This strategy worked for about five consecutive rounds. Then one team decided to sell three widgets at once for a lower price, thus profiting very handsomely, and at the same time cutting two other teams out of their sale in that turn. Trust in that team instantly vanished, never to return. The market became more cutthroat and aggressive as everyone else attempted the same thing in the next round. Several students wrote in their reports that the mood in the classroom had become “very dark”. A few commented about the fragility of trust, or the inherent selfishness of human nature. A few wrote their reports on the morality and immorality of greed. One line from a student report that stands out in my mind went like this: “The system isn’t broken, it’s deliberately designed to screw people.”

Many students wrote in their reports that they learned how important it is to be trusting and honest with one’s negotiating partners. Some students noted how co-operation tended to ‘pay’ better than competition. They learned that power flows from alliances and not simply from one’s own resources. Some wrote that they also learned how cheating, deception, and even backstabbing can actually lead to profit in the short run. Therefore, some concluded that it is better to be aggressive. Others concluded that since cheating leads to success, therefore something is wrong with the system itself: excessive aggressiveness, they argued, shouldn’t be rewarded. But at the same time most students saw that aggressiveness can turn all of one’s trading partners against you. Indeed the deceitful players were often punished by being unable to find trading partners later on. But most of all, nearly every student said they enjoyed the exercise. Certainly, they found it preferable to ordinary essay-writing. Students were laughing and relaxed. And they were thinking.

Laughter and happiness during an exam. That’s what success looks like in my profession.

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