Pyramid schemes are very simple to understand. You tell the first round of investors that your scheme will make them rich. So they give you their money. When the second round of investors comes, you take their money and pay the first investors, earning them their promised profit. Rinse and repeat for as many times as you can find investors.
You’re essentially robbing Peter to pay Paul.
Obviously, this all comes crashing down once you can no longer find more investors to sustain the charade, so the aim is to find as many people as possible.
Now, while the global economy is often viewed as a marvel of modern civilisation – an intricate system that drives innovation, allocates resources and sustains billions of people – it’s really just one big pyramid scheme.
One of the most striking similarities between a pyramid scheme and our current economic system is the concentration of wealth at the top. In recent years, income inequality has reached extreme levels.
In Malta, for instance, the wealthiest 10% of the population controls a staggering 90% of the country’s wealth, while wages for the middle and lower classes stagnate or decline.
In a healthy economic system wealth would be more equitably distributed, allowing for sustained consumption and growth. However, in a system structured like a pyramid, most resources flow upward, enriching a few at the expense of the many.
This creates an imbalance that undermines the long-term viability of the economy, as those at the bottom struggle to maintain their purchasing power. Eventually, this imbalance leads to widespread discontent, social unrest and political instability, further destabilising the economic system.
Debt is one of the primary pillars that support the economy’s pyramid-like structure. Both governments and individuals rely on borrowing to sustain their lifestyles, often without sufficient means to repay.
Debt-fuelled growth creates a façade of prosperity, where consumers spend money they don’t have, and governments prop up economies with borrowed funds.
But, at some point, debt has to be repaid. If wages and productivity fail to keep up with rising debt levels, the system will inevitably buckle under its own weight.
When economies borrow from the future to pay for the present, they operate much like a pyramid scheme. The continuous reliance on increasing debt levels to maintain economic growth means that, like any pyramid, collapse is inevitable once the foundation can no longer support the structure.
In Malta, the wealthiest 10% of the population controls a staggering 90% of the country’s wealth- Ivan Bartolo
An economy structured like a pyramid scheme is inherently unsustainable because it depends on perpetual growth. However, the natural world places limits on how much growth can be achieved. Resources are finite and the environmental impacts of endless consumption are becoming increasingly apparent.
Climate change, deforestation, and the depletion of natural resources are all consequences of a system that prioritises growth at any cost.
As the population grows and economies consume more resources, the pressure on natural ecosystems intensifies. Eventually, the planet will no longer be able to support the insatiable demand for growth.
When that limit is reached, economies will face severe contraction, leading to widespread economic collapse. In this way, the economy resembles a pyramid scheme – its success depends on continuous expansion but that expansion is impossible to sustain indefinitely.
All pyramid schemes must necessarily collapse because infinite growth is only possible in video games; if the global economy is indeed structured like a pyramid scheme, then the economy will similarly collapse. The only question is when.
The signs of instability are already present: rising debt levels, growing inequality, environmental degradation and social unrest.
The consequences of collapse will be far-reaching. In the short term, we could see financial crises, bankruptcies and mass unemployment and, in the long term, widespread poverty, political instability and even the breakdown of civil society.
Governments and central banks may attempt to delay the inevitable by printing more money, bailing out failing industries or enacting stimulus measures, but these efforts only postpone the collapse – they do not solve the underlying problem.
If we are to avoid a catastrophic collapse, we must rethink the very foundations of our economic system. A more sustainable, equitable and resilient model is needed, one that does not rely on the perpetual expansion of debt and consumption.
This will require bold reforms, a shift away from profit-driven capitalism and an emphasis on environmental and social well-being over short-term economic growth.
When the prime minister speaks about fostering economic growth, it’s not exactly clear that he understands the implications of his words. If he does, then he’s certainly not showing it.
Ivan Bartolo, MP, is a member of parliament’s Social Affairs Committee and the Nationalist Party’s spokesperson on social and affordable accommodation, pensions and the fight against poverty.