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You have surely played the Parker Brother's board game Monopoly. It has been published in 26 languages and in 80 countries around the world. Since being introduced in 1935, in fact, an estimated one-half billion people have played it. It has taught the multitudes what they know about how an economy works.

The problem is that the game seriously misrepresents how an actual market economy operates. To review, in the free market, Mises wrote,

Neither the entrepreneurs nor the farmers nor the capitalists determine what has to be produced. The consumers do that. . . . Their buying and their abstention from buying decides who should own and run the plants and the farms. They make poor people rich and rich people poor. They determine precisely what should be produced, in what quality, and in what quantities. They are merciless bosses, full of whims and fancies, changeable and unpredictable.

That's the real world. In the game Monopoly, owners of land and houses and hotels, though acquiring their possessions by luck, are flattered into believing they are masters of the universe, extracting profits from anyone who passes their way. There is no consumer choice and no consumer sovereignty. This is not a small detail. The entire raison d'etre of the market is missing, and thus the real goal and the guide of all production in a market economy.

Consumer choice is replaced by a roll of the dice. The player then becomes passive. Landing on property owned by another person creates not a mutual gain but a loss. In this way, trade is portrayed as "zero-sum." The elimination of consumer choice leads to the belief that businesses profit only at the consumers' expense.

In the real world, when consumers choose to purchase items from business, there are always expected gains from trade. Two people voluntarily act in their own best interest and take advantage of their differences in subjective valuation. A reverse inequality of values is what gives rise to trade in the first place. When a person exchanges something, he values what he gets more than what he gives up. The other party to the exchange values what he gets more than what he gives up. Both parties are better off than before the trade. Business transactions between sellers and buyers are positive-sum transactions in the real world because both parties enter the agreement voluntarily.

In Monopoly, a roll of the dice forces exchanges between producers and others. However, business to business transactions are left to free negotiation. Players are allowed to offer property for trade or cash to other players on mutually agreeable terms. Even in these transactions, regulation raises its ugly head when there are buildings on the property. Players are forced to demolish buildings before making any property exchanges.

The pervasiveness of monopolies in the game does not represent the situation in the real world. Every piece of property on the game board is essentially a monopoly; once the dice roll determines where a player lands, there is only one seller who the consumer must purchase from. The monopolies are easily obtained by purchasing land from the bank or another player. In the real world, however, consumers are rarely compelled to purchase goods from a seller—or if one seller exists it is because it has out-competed others over time. Even with one seller, consumers can always switch to substitutes or abstain from purchasing completely. That is not the case in Monopoly. Again, this is not a small matter. The game is wrong on the central point of economic decision making: who is in control of what is produced and how?

Ironically, even though the game does a poor job of demonstrating the benefits of mutually advantageous trade in a market economy, the game was banned in some socialist economies. A 1985 edition of the game came with a book that noted, "The anticapitalist world, not surprisingly, disdains the free-wheeling and dealing game. Fidel Castro once ordered all Cuban Monopoly sets destroyed, and the Soviet Union has banned the game."

In fact, Monopoly better illustrates how an economy works when it is based on intervention, central banking, and government privilege. For example, the game nicely illustrates the coercive nature of taxation. When players land on either of the two spaces requiring them to pay a tax, there is no pretense of the tax being voluntary or justified by the provision of "public goods." The income and luxury taxes are simply taken from the player against their wishes while they are given nothing in return.

Parker Brothers instructions note that in some house rules tax revenue is even placed on the "free parking" square and then redistributed to a player lucky enough to land there. The game's realism could be improved by putting only a portion of the tax revenue in free parking for redistribution while the rest could be lost to simulate the dead weight loss of taxation and redistribution.

"Community Chest" and "Chance" cards accurately represent other coercive acts of government. One Community Chest card directs the player to "pay school tax of $150" while another assesses a player for street repairs for each building owned. Chance cards may direct a player to "pay poor tax of $15" or simulate building code regulations by forcing a player to "make general repairs on all their property."

Both Community Chest and Chance cards may randomly send a player to jail for no wrongdoing on their part. Although there are many apologists for above government interventions in real life, at least in the game of Monopoly it is clear from the standpoint of the players that these acts are harmful and should hopefully be avoided.

The Parker Brothers do a particularly good job of mimicking a government regulated banking sector. The game comes complete with a single central bank, rules restricting lending competition, and the ability to inflate the currency. The rules eliminate lending competition by stating "Money can only be loaned to a player by the bank and then only by mortgaging property. No player may borrow from or lend money to another player."

In addition all mortgages are price controlled to a 10 percent interest rate. As for inflation, the rules clearly state that the central bank "never goes bankrupt. To continue playing, use slips of paper to keep track of each player's banking transactions—until the bank has enough paper money to operate again"(emphasis in original).

In one case, where players did not want to work with slips of paper, Parker Brothers actually "wired" extra money to them. In 1961, during a 161-hour marathon game of Monopoly at the University of Pittsburgh the bank ran out of money. The players wired Parker Brothers and asked for a bailout. Parker Brothers responded by sending extra game money on a plane to Pittsburgh and then having an armored car pick it up at the airport and deliver it to campus!

Although regulated central banking is accurately recreated and players correctly dread the government taking their money, the problem with the game lies in its representation of the nature of economic transactions in the private sector. Even this problem is correctable with a little bit of "game theory" of our own.

Government is the source of monopoly in the real world. As Murray Rothbard wrote, "A monopoly price and a monopoly by any usable definition arise only through the coercive grant of exclusive privilege by the government." Only government has the ability to forbid competition or force citizens to consume something against their wishes. Instead of viewing the game of Monopoly as a market economy, the classical definition of monopoly, "a special grant of privilege by the state," should be applied to the game.

To make the game resemble an economy with grants of government privilege, think of each square as an individual monopoly grant. Since the government has the ability to give out these grants, think of the government as the initial owner of each square at the start of the game. The initial price players pay for their land goes to the game's bank and should be thought of as a cost of lobbying the government to receive the special monopoly grant. The final step is to imagine that government compels the other players to buy from you and you from them, when a player lands on a grant of monopoly privilege.

Although reinterpreting the starting conditions of the game makes it more accurate, another problem is thereby created. The game's winner is not a wonderful entrepreneur but just the best rent seeker. He wins because he is the most successful at securing grants of government privilege and coercing other players into trading with them.

Monopoly may be fun to play but it leaves us with two unpleasant choices. The game either misrepresents the nature of trade in a market economy, or if slightly reinterpreted it glorifies rent seeking by making it the object of the game.