Thinking in Systems: A Primer

by Donella H. Meadows

Another expression of this trap was part of the critique of capitalism by Karl Marx. Two firms competing in the same market will exhibit the same behavior as two species competing in a niche. One will gain a slight advantage, through greater efficiency or smarter investment or better technology or bigger bribes, or whatever. With that advantage, the firm will have more income to invest in productive facilities or newer technologies or advertising or bribes. Its reinforcing feedback loop of capital accumulation will be able to turn faster than that of the other firm, enabling it to produce still more and earn still more. If there is a finite market and no antitrust law to stop it, one firm will take over everything as long as it chooses to reinvest in and expand its production facilities. Some people think the fall of the communist Soviet Union has disproved the theories of Karl Marx, but this particular analysis of his—that market competition systematically eliminates market competition—is demonstrated wherever there is, or used to be, a competitive market. Because of the reinforcing feedback loop of success to the successful, the many automobile companies in the United States were reduced to three (not one, because of antitrust laws). In most major U.S. cities, there is only one newspaper left. In every market economy, we see long-term trends of declining numbers of farms, while the size of farms increases.