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The end of the Monopoly game is the mother of all housing crashes. But there are ways of keeping the game going indefinitely.
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At the HACT House Party in 2014, I ran a workshop in which we examined the UK housing market in the context of a game of Monopoly.

The famous board game Monopoly is a land and property speculation game, in which the object eventually is to own all property and bankrupt all competitors. It is simple, and old-fashioned – prices by modern standards are simply unbelievable. But it conveys some important messages regarding our attitude to property.

The first thing to note about Monopoly is that it starts with a completely level playing field. Anyone who thinks that inequality is intrinsically necessary for there to be private enterprise should play this game. At the beginning of the game, all players are equal: everyone starts with the same financial endowment, everyone has the same basic income* and everyone has the same chance of acquiring wealth. It’s the most egalitarian society on earth. What determines success is firstly chance and secondly strategy: people who repeatedly win at Monopoly (my brother is one of them) have learned how to use strategy to overcome chance. The end of the game occurs when all property has been acquired by one player, because the rest have been forced to sell assets to pay rent to that player. Monopoly starts off with total equality and ends up with total inequality, simply through the operation of a free market. Inequality is not a necessary condition for free enterprise, but it is an inevitable consequence of it.

So at the end of the game, one player owns all the land and property and everyone else is homeless and bankrupt.. But it would actually be possible to continue the game after this point. There is a free car park in Monopoly (if only such things still existed today!). So the losing players could squat in the car park until things picked up.

And pick up they would. The second thing to note about Monopoly is that the property market is unsustainable. This is because when one person owns all the property, and the income of the rest is insufficient to pay the rents that that person charges, the property market must crash. The real end of Monopoly is actually the mother of all property market crashes, when both the value of housing AND the value of the land on which it is built falls rapidly to levels where rents can be afforded within a basic income.

Once all other players were squatting in the car park, the monopolist would be able to continue the game on his own for quite some time. But eventually the lack of rental income would bankrupt him. At this point, if the game is to keep going, the monopolist would have to be bailed out by the Bank – you can’t have everyone squatting in a car park if the game is to continue. All property would therefore be mortgaged.

Once all property is mortgaged, the other participants can leave the car park and rejoin the game. Now, mortgages in Monopoly are odd things. Mortgaged land is for sale to all comers at its redemption value, normally 2/3 of the original sale price. And all housing developments are bulldozed if the land is mortgaged. Players rejoining the game would therefore have the option of acquiring the monopolist’s property at a substantial discount to its face value – indeed the Bank could auction off the property at fire sale prices. The fact that the squatters are bankrupt doesn’t matter: you don’t pay rent on mortgaged property in Monopoly. All they have to do is pass GO and they are given money.

There is a problem, of course. The Bank bailed out the monopolist and is now a trifle short of money itself. If the Bank runs out of money, the game can’t continue. But there is a solution, of course. When I was a child, a lot of the money in our ancient Monopoly game had gone missing. So we made some by cutting up coloured pieces of paper and writing the note denominations on them. Printing money, in fact. Was it inflationary? No. It simply allowed the game to continue.

So if you print money to support the Bank**, enabling it not only to bail out the monopolist but also to pay a basic income to people rejoining the game after bankruptcy, you can re-start the game after a property crash. Hey-ho, ECB….

But of course, once the game re-starts, it is only a matter of time till the next crash. Indeed, the next crash could happen quite quickly: because he was bailed out rather than bankrupted, the monopolist still has far more capital than other players. Admittedly we now know how to re-start the game after a crash, but squatting on a car park until prices fall is hardly fun, especially if you know you will rejoin the game at a considerable disadvantage. Players could be forgiven for moving on to a different game – perhaps Risk. Nothing like a nice war to level the playing field.

So how could we change the way the game is played so that the Monopoly property market is sustainable? Well, we might have to change the name of the game, for starters. If the property market is to be sustainable, it can’t be monopolised – or can it?

Actually a monopoly position could be sustainable. Supposing our monopolist, having bankrupted everyone, decides that the prospect of the car park squatters getting out the Risk board is just too terrible. So he reduces rents to levels affordable within the basic income. We now have a Benevolent Capitalist Monopoly (BCM). Or do we? Just have a look at what happens to wealth under this scenario.

Each participant in the game receives his £200 on passing GO, and spends that money during the round on rents to our benevolent monopolist. So the Bank is dishing out money which goes straight to our monopolist. Even though he has reduced rents to something affordable for all participants, he gets ever wealthier. Wealth inequality inexorably rises, even though prices and incomes do not rise. Note too that the Bank is eventually forced to resort to money printing to maintain the basic income. Or it is forced to make Monopoly’s idiotic flat tax system a lot more progressive. We could call this version of the game “Piketty”.

A variant of this game leaves rents unchanged but enables everyone who has no property themselves to claim the cost of the rent from the Bank, even if it is for a night in a hotel on Mayfair. In this version, inequality rises faster than it does in “Piketty”, and the Bank is forced to resort to higher taxes and/or money printing sooner. We could call this version of the game “Gordon”. However, if the Bank caps the amount of rent it will pay, making a hotel on Mayfair unaffordable, the game is “Gideon”. Note that this version is NOT sustainable, since it creates the possibility of bankruptcy for players unfortunate enough to land on Mayfair.

But there is a much more radical version, too. Suppose our car park squatters took over the Bank, expropriated the monopolist’s property and evicted him from the game. The Socialist Monopoly Republic (SMR) would then own all property. It would dish out a basic income to all participants, as before, but it would additionally charge rents on property (the Bank doesn’t do this in the normal version of the game) – it would have to do this to avoid eternal money printing. Rents would initially be set in such a way that in a normal round, they would be affordable within the basic income. However, as the SMR can also build houses, rents would be likely to rise over time as sites were improved. To make this version of the game sustainable, the following rules would have to be established;

  • property would not be for sale, only for rent
  • if the Socialist Monopoly Republic raised rents, it would also raise basic income by an equivalent amount

This version of the game could go on for ever. But boy would it be boring. The person playing the Banker, or rather Glorious Leader, might have some fun building houses and messing around with prices and incomes. But everyone else would just be going round and round, collecting basic income and paying rent. The Chance and Community Chest cards would liven things up a bit, and you could add a few more such as random lottery payouts. But basically, everyone would be living a very quiet life. We might call this game “Socialist Stagnation”.

Note what happens to money and wealth in this version of the game. As all property is owned by the SMR, all rents are paid to the SMR, and all money is produced by the SMR, the whole thing is circular. There is really no such thing as private wealth – people may be able to save a little from their basic income, but a bad round or two would eliminate their savings. Even the rents accumulated by the SMR simply return to it the money it issues in the form of basic income. So an alternative name for this game might be “Modern Monopoly Theory”, or MMT.

And there is a version of this game which is sustainable without a monopoly position. Participants could simply agree to share out property equitably and set affordable rents. After all, they all need somewhere to live. But it wouldn’t be much of a game.

In fact there are all manner of dodges that you can introduce to keep the game going, if that is what you want to do. And keeping the game going is exactly what governments want to do. Anything to avoid a disastrous crash of the type I have described. Why do they want this?

So far I have completely omitted the role of debt in the housing market, because it does not feature in Monopoly at all. But actually it doesn’t change anything much as long as prices remain fixed. Debt pushes up prices. Remember that in Monopoly, prices are fixed: I hope I have shown that housing markets can still crash even if there is no debt and no price rise.

The other thing debt does is enable far more people to “own” property. But do they, really? Yes, they may own the title to the property. But as I have argued before, if your property is mortgaged, the mortgagor has first claim on it. In what way can a mortgagee truly be said to “own” their property?

The property ownership illusion is perhaps one of the most toxic of all irrational beliefs. Most residential property is mortgaged. And most people’s savings are tied up in property, one way or another. Bulldozing defaulted housing developments is no longer an option. No wonder governments want to avoid property crashes.

But the measures that governments take to avoid crashes in fact lead inexorably towards monopolistic or oligopolistic ownership of property. In the US, the Fed now owns a high proportion of residential MBS. In the UK, the government is guaranteeing part of high loan-to-value mortgages. Both governments have bailed out mortgage lenders, not once but several times. We now have a range of private sector investors buying large property portfolios. Meanwhile prices rise beyond the means of many ordinary people, especially the young. The game is on, and the next generation of squatters is already taking up residence in the car park.


Originally posted at in June 2014. But this subject never goes out of fashion. 

* You didn’t realise that Monopoly has a basic income? It does – you are given £200 every time you pass GO. You don’t have to do anything to earn it apart from take part in the game.

** The Bank in Monopoly is not like a commercial bank or even a central bank. It acts as a fiscal authority, receiving taxes and paying out basic income. And it also sells land, grants planning permission and builds houses.

Related reading:

Making the case for a right to housing – Alex Marsh

The British obsession with property

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