Multi-Level Marketing Is the Gutter of Capitalism

I’ve never been in an MLM, but for some reason I’m addicted to watching anti-MLM content and listening to stories of people who have been in them and got screwed. It’s clear that most people in MLM’s make almost no money or lose money, based on income disclosure statements from the company’s themselves, the federal trade commission, and experiences told from people previously in MLMs.

Anyway, I’ve seen people in MLMs make a lot of arguments defending their line of work. The most common ones I see include things like this: “Pyramid schemes are illegal”, and

“Every corporation is shaped like a pyramid”, and

“If you work hard enough in an MLM, you can rise above your upline. In a regular job, you’ll never be the CEO.”

A couple of those arguments aren’t necessarily wrong. Most corporations do have a sort of pyramid structure in a sense, with the boss being on top and then managers, then employees. But that isn’t the argument that they think it is. For one, in a normal corporation, even if someone is at the very “bottom”, such as a minimum wage employee, that employee is still getting paid, unlike in an MLM, where one makes money primarily by recruiting. Plus, many MLM reps make significantly less than minimum wage in a year, if they make anything at all. But as many of us have seen come to light, especially recently, that minimum wage isn’t sufficient either.

So to me, the argument that all corporations are shaped like a pyramid seems to solidify and emphasize that capitalism is a bad system rather than an MLM being a good alternative. This is ironic because lots of MLM representatives try to market the “opportunity” as a way to escape an average, every-day life that one might find themselves in as a result of capitalism. However, in my opinion, MLMs are the gutter of capitalism because they mirror the worst parts. It’s low pay for most employees without the guarantee of income for hours worked.

Let’s take a look at this opinion from Parlia on the pros and cons of capitalism:

“Capitalism ignores peoples' needs, results in wealth inequality, and does not promote equal opportunity. Capitalism also encourages mass consumption, is unsustainable, and provides an incentive for business owners to harm the environment for monetary gain. Capitalism is also ineffective and unstable.”

MLMs demonstrate this very clearly. They too are unstable. There have been many instances of MLM companies shutting down very suddenly due to a number of issues, the most recent being Black Oxygen Organics, due to allegations of unsafe products.

MLMs, much like a capitalist economy in general, prioritize profit over anything else, including quality of products or consumer health or well-being. This is seen in the instance of Black Oxygen Organics as well as Monat, which has multiple lawsuits recorded due to allegations of hair falling out, or DoTerra Essential Oils, where MLM reps allegedly promote orally consuming their products even though essential oils are not safe to consume and can cause significant poisoning even if small amounts are ingested.

Going back to the comparison between MLMs and capitalism as a whole, the structure of MLMs in a sense promotes wealth inequality and lack equal opportunity primarily due to their structure. To make any real money in an MLM, you have to recruit. You’re likely not going to make a liveable wage just from selling the product, plus an MLM rep is often encouraged to recruit by their upline so they can make money off of them and their downline’s sales. More of a downline=more money for the people above them. In a minimum wage job, at least, one can go to work, do their job, and clock out. They don’t have to convince customers to work there too in order for the employee to get paid. Those who enter the MLM early on are much more likely to be successful because they have a higher chance of building a bigger downline. The further down you are in an MLM downline, the thicker the competition, the less chances of making any money. Upon calculating the numbers, it's shown that only thirteen levels down an MLM line may double the population of the earth, depending on how many recruits one is encouraged to find.

Conversely, even though corporations have their own issues with fair pay and things like that, one doesn’t have to recruit a downline to move up in the company, and theoretically can get promoted through their own efforts.

A couple of relevant pillars of capitalism include self-interest and the market mechanism. The pillar of self interest, according to imf.org, is where people pursue their own good, ignoring socio-political pressure, and in theory, they end up benefiting society. MLM’s, much like the capitalist economy from which it stems, discourages creativity and doesn’t allow for individuals to adjust to market demand. A real individual business owner can theoretically adjust their prices and items of production to suit the current market. An MLM rep thinks they are a business owner, but they can’t do any of those things, nor are they receiving the benefits that come from being an employee of a corporation.

MLM reps promise time freedom and money freedom if you just work hard enough. This reminds me of the concept behind the American Dream. Work hard, and you’ll be moderately successful in whatever pursuit you want, right? Well, not so much.

In both MLM’s and a capitalist economy, there can’t be a top without a bottom. MLM’s are a great representation of how capitalism harms those at the bottom the most, while benefiting those at the top, and no amount of hard work will get one to the top unless they are born into it (in capitalism) or given a downline from the beginning (in an MLM). It also demonstrates how, sure, those at the top probably put in an amount of work to be there, but it’s on the backs of those they are exploiting. So even if you personally are in an MLM and make it to the top, or you become a billionaire, an untold number of people will continue to struggle in a way that benefits you. Some people might say that’s a good thing, and it’s survival of the fittest or something, but I personally don’t think so. It really sucks.

MLMs are also harmful for real small businesses trying to make a living. An MLM rep might claim that when you purchase from them, you are supporting a small business, but in reality, you’re supporting their upline and a large corporation. Seeing MLM’s at craft fairs taking away from other small businesses is particularly upsetting, as their items aren’t handmade. Unfortunately, the presence of MLM’s in the “small business” market might discourage entrepreneurs, which then may discourage innovation. Innovation is one of the prime supposed benefits of capitalism. So while MLMs are a product of capitalism, I think they are a great representation of the flaws of capitalism, while also somehow being worse than most other for-profit business structures.