Inner Circle Syndrome

The inherent problem with capitalism is what I call the Inner Circle Syndrome.

Take a resource, it could be a gold mine, a wheat field, an exclusive piece of real estate, a market exchange or, in a recent bizarre SCOTUS twist, a politician, but regardless what this resource is it has a set amount of “space”, if you will, around it to allow interaction. With a geo-physical entity this space doesn’t necessarily have to be actual spacial space, it can be more like financial access space; only a certain number of people can access such a resource and therefore only those with the biggest bank accounts are generally granted this access. Let’s look at two resources that better illustrate this inner circle syndrome.

A person, any person, has only so much room around them, whether physical or emotional or sociological. We can only deal with so many people at a time. Once we’ve saturated our inner circle we just can’t take on any additional friends, associates or compatriots. Now imagine if access to this inner circle, this circle of yours or mine closest associates, was gated by money. The more you paid me the higher the probability that I would let you in and kick someone else, someone who paid me less, out of my inner circle, an odd proposition I’ll admit.

Now imagine you are a US Congressperson… now this strange application of money to control inner circle access – doesn’t sound so strange.

[And with the recent (April 2014) ruling by the Supreme Court such financial gating is even more apropos.]

With little stretch to the imagination one can easily see how a Congress member can eventually have their inner circle primarily populated by the highest bidders.

Other financially gated inner circles are those around stock market exchanges. These are, to a large extent, actual physical inner circles; there is only so much physical space around the building that hosts an exchange. And so, as the inner circle syndrome goes, this ring around an exchange is populated by those brokers, funds, and banks that can pay the highest rents. It’s these inner circle exchange participants who then benefit from the fastest access to market data. This phenomena exists; is part of the various exchanges’ and the brokers’ plans.

Capitalism supports, condones even, this eventuality, those with the most money get access to limited resources.

There is only so much space around an entity. Whether that space is actual square footage, cubic area, social or network connections, or just a fixed list of party invitations, school slot vacancy or any of hundreds of other limited access resources the rule still applies; capitalism will see that those with the greatest wealth will always gain the inner circle. This is the inherent issue with capitalism. Eventually all systems where success is measured by wealth evolve into a plutocracy.

The Inner Circle Syndrome guarantees it.


One thought on “Inner Circle Syndrome

  1. Henry said:

    “What a perfect explanation of the fundamental problem with the singularization or centralization of any resource. A corollary is that decentralization fixes all this. This in turn moves the discussion onto the decentralization facilitated by the Bitcoin “blockchain” and how similar principles in the future will facilitate completely decentralized distributed stock exchanges.”

Comment if you care

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s