Ponzi scheme – The Binding Chaos Lexicon

1. A pyramid scheme algorithm which requires those at the bottom to support those at the top in order to benefit. This type of scheme never benefits more than a few. 2. Social structure in which everyone tries to acquire celebrity, wealth and power, creating a centripetal force that holds oligarchs in place. Egalitarian systems imposed on unequal populations tend to ponzi.

Expanded explanation

The first sense is the financial algorithm and the second generalizes it into a description of a whole society. Where everyone is trying to acquire celebrity, wealth and power, the aggregate of all that reaching is a centripetal force, and that force is what holds oligarchs in place. So the people at the bottom are not merely failing to rise, they are supplying the pressure that keeps the structure standing, which is the same relation the financial version describes. Under the law of diverted expansion, all exosocial expansion inside an endogroup is diverted into a force towards transcendence, which drives the voracious centripetal ponzi scheme of power, so the mechanism is expansion redirected rather than greed. The last sentence of the definition is the sharpest and the least expected. Egalitarian systems imposed on unequal populations tend to ponzi, meaning that identical treatment applied to people in different positions produces accumulation rather than levelling, which is the same argument the entry on equality makes. Marsh's counterforce is centrifugal, the levelling drive she treats as healthy, and the crabs in a pot entry describes what happens when it is aimed at a person instead of a structure. The failure of the exosocial drive to tear down power structures when they are no longer necessary is what she identifies as having been inhibited, by environmental stress and by social engineering together.

In Heather Marsh’s words

Marsh derives the scheme from expansion redirected rather than from greed, which is what makes it self-sustaining.

“Egalitarian systems imposed on unequal populations tend to ponzi”
Abstracting Divinity

Examples

The bottom holds it up: Reaching for celebrity, wealth and power supplies the centripetal force keeping oligarchs in place.
Expansion redirected: The drive being converted is the ordinary outward one, which is why the scheme does not require anyone to be greedy.
Equal treatment that accumulates: Identical rules applied to unequal positions produce concentration rather than levelling.

How others use it

Charles Ponzi's 1920 fraud gave the scheme its name and financial regulators define it by the payment of returns from new investors' capital rather than from profit. Sociology of inequality documents cumulative advantage, Robert Merton's Matthew effect, in which initial advantages compound, and Piketty's work on returns to capital exceeding growth describes concentration as a structural tendency. Marsh's second sense is the unusual one, since generalizing the algorithm to a whole social structure means the participants are not victims of a fraud but the mechanism of it, and the aspiration to rise is what keeps the arrangement standing rather than what threatens it.