Mark Johnston, Is Life a Ponzi Scheme?

In an earlier Blog I asked if Bernard Madoff was on to something? And whether we might even say that life itself is a huge Ponzi Scheme (although without the schemer). Mark Johnston, in a Boston Review article of Death and the Afterlife by Samuel Scheffler, was the first as far as I know to ask the question, “Is life a Ponzi Scheme?”

Mark Johnston


Ponzi schemes, as I learn from a quick look at How Stuff Works, always begin with an investment by someone in someone else’s idea. It may be as seed money to fund the idea, say an invention, with one’s expectation that one’s money will be returned with profit. But what makes this a Ponzi Scheme is that there are no earnings or profits stemming from a profitable idea realized, but from the constant stream of new contributions (investments) to the fund.

The basic framework of a Ponzi scheme can be applied and reapplied in countless contexts, but the scheme always revolves around the process of satisfying if not repaying old investors with the money obtained from new contributions from new investors. The details of the investment will not much matter. What draws new people into the scheme is the promise of fantastic returns on their investments. This is a fraud, of course, as there are no investment returns at all.

Over time things get more and more complicated. Successive rungs of new investors will always be needed, if for no other reason than to allay the suspicions of the earlier investors. And inevitably the typical Ponzi Scheme, as in the case of Bernard Madoff, becomes unsustainable. The house of cards the schemer has built finally collapses and the schemer goes to jail.

Bernard Madoff

Now there are those Ponzi-like schemes that don’t necessarily collapse. The largest and best known of these are government managed medical, old age, and disability insurance programs. They are Ponzi schemes in as much as the payouts to the insured will all come from the constant stream of payins or taxes by everyone, those insured and those uninsured. There are no earnings or profits to be shared. There are only tax revenues to be redistributed by the Federal government.

While more secure than a Madoff like scheme Medicare, Medicaid, Social Security, and other forms of Government insurance programs may themselves collapse, usually due to the irresponsibility and profligacy of weak and corrupt governments. We are seeing such collapses or near collapses in Greece and other European countries with huge pension or other payment obligations that the elected government is unable to meet without going further into debt. And we have seen something similar in some of our own state governments.

But to return to my original question, and that which is much more interesting, how is life itself a kind Ponzi scheme where the value of our present lives will always depend on the constant stream of future contributions?

I take my answer from Sam Scheffler’s  Berkeley Tanner Lectures, entitled Death and the Afterlife. Imagine for a moment that human life were over with the end of our individual lives, that nothing, no people exactly like us would come along in our stead. Would a life without descendants be a life? A life you’d want to live, and invest in?  A life with value?

Doesn’t the value of our lives come from there being some form of an afterlife, and in this respect the religions of old did have it correct. But they misunderstood that afterlife. It’s not the afterlife of an individual man or woman. It’s the afterlife of Man. And the value we give to our individual lives comes from the value we give to humanity as a whole, and in particular from our belief that humanity doesn’t end with us but goes on, if not forever, for an eternally long moment.

Isn’t this the single measure that we all use to find value in our lives, the single measure being that there will be others who will come after us, our descendants, the seemingly endless successive generations of … US. That’s us, you and me, not the United States.

It has never meant anything at all, at least to me, the widespread belief that we will meet again with our loved ones in an after life. But it means everything to me that my children, my children’s children, and their children will be there in my place after I am gone, as they in turn will be replaced by their descendants. The successive generations are as new contributions that give value to the present generation, and in that sense life is a Ponzi Scheme, but one that need never collapse.

So yes, our present lives do depend on the contributions of those who follow us. The knowledge that there will be others like us, continuing with the same sorts of activities that gave value to our lives, is what enables us to have lives of value. Without that knowledge we would be without the assurance that our lives were in fact meaningful.

We’ve always expected that our own lives were not enough. That something else was needed. The most common answers have in the past come from religion, which has us enjoy another life, as it were, in the company of our loved ones. But science has, if not destroyed, reduced to a pale replica of its former self this personal afterlife, and now most of us live, if we are honest with ourselves, as if this life was all there were for us individually.

However, and this is what Scheffler has helped us to understand, the value of our lives, even without the promise of personal afterlife, is constantly maintained and refreshed by those who come after us. And to this there’s no end. It depends only on our retaining the reproductive capability. As in a Ponzi scheme the future continues to provide value, the goods as it were to insure our happiness in the present.


In Scheffler’s own words, taken from Death and the Afterlife:

My argument has been that personal survival already does matter to us less than we tend to suppose, and that the survival of humanity matters to us more. In saying this, I am not underestimating our powerful impulses to personal survival or the deep terror that many people feel when contemplating their own deaths. Nor am I denying the importance of self-interested motivations in ordinary human behavior. My point is that despite the power of these attitudes, there is a very specific sense in which our own survival is less important to us than the survival of the human race. The prospect of the imminent disappearance of the race poses a far greater threat to our ability to treat other things as mattering to us and, in so doing, it poses a far greater threat to our continued ability to lead value-laden lives.

Or to put it more positively, the coming into existence of people we do not know and love matters more to us than our own survival and the survival of the people we do know and love. . . . This is a remarkable fact which should get more attention than it does in thinking about the nature and limits of our personal egoism.

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