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I used agricultural land in my example above, but what we’re really talking about is the private, unitary ownership of any kind of productive resource or effort—farm land, plans for a manufacturing machine, a business staffed by many people, etc.

We pretend that the capitalist market is competitive and thus weeds out the bad in favor of the good. But this elides the role of random luck—a bad bet on fashion trends, a broken machine, a fire at a warehouse—in undermining some unlucky actors and facilitating consolidation by the lucky.

Physicists have even modeled this process, giving us the “yard sale model.” Start with a group of people, each with precisely equal wealth. Have them engage in an exchange of wealth: a bet of, say, 20% of one’s wealth on the flip of a perfectly fair coin. We might naively imagine that a series of fair coin tosses will produce equal numbers of wins and losses over time, leading to a static equilibrium of wealth.

In reality, initial losses create cascading disadvantages. A person who risks 20% of an initial $100 and loses will only be able to wager $16 in the next round, so even a win immediately following a loss will leave you worse off.

Do this enough times and the wealth distribution inevitably collapses into oligarchy, with a single oligarch holding virtually all wealth based purely on those initial accidents of luck.

There’s a handy visualization of this theory at the link below:

https://pudding.cool/2022/12/yard-sale/

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