The MLM Project Log 1: What is Multi-level Marketing?
Posted by <Jak Ritger> on 2021-03-18
Part of a series on The MLM Project
Multi-level Marketing is a problematic pyramid-shaped marketing strategy that relies on a non-salaried workforce to sell the company's products or services. MLM participants engage in “direct selling” or selling products directly to friends and family. To new participants, MLM’s offer an opaque faux-wholesaler business opportunity that is easy to join but delivers little in actual payouts. 99% of MLM participants don’t earn any money and many end up in grave financial trouble. The more involved with an MLM one becomes, the more incentives there are to pivot away from direct-selling and towards recruitment of new MLM participants. By recruiting others into your “downline,” an MLM recruiter can start to earn profits from their recruits’ commissions. The business model of Multi-level Marketing is a combination of door-to-door sales, addictive gaming and gambling, entrepreneurism, “side-hustles,” cults and the hierarchy of corporate structure. Many MLMs are indeed illegal pyramid schemes (defined as generating profits from their own workforce and not end customers) but have staved off investigation or prosecution by the Federal Trade Commission by wielding massive lobbying power. An MLM trade association, The Direct Selling Association reported $35.2 billion of direct sales in 2019 from 6.8 million direct sellers.
MLMs are a crucial area of study because experiences with MLMs make concrete the theoretical critiques of capitalism, specifically the way in which capitalist structures embed regressive and extractive politics into society writ-large. By observing and countering some of these dynamics we can push back against the forces of exploitation as well as distilling the characteristics of capitalist relations and structure. My hope is to create an off-ramp from MLMs towards a material economic critique. This ramp must be “de-classed” in the sense it does not rely on elitist notions that frame the problem as “people being hoodwinked into a scam.” Rather, using MLMs to draw connections between the many expressions of capitalism: industrial complexes, privatization, responsibilization and neoliberal austerity to name a few, we can strive to make actionable the tools of anti-capitalist thinking to those left out of “academic leftism.” Indeed, this project is very much about reckoning with the sense of classism handed down to me through culture and education. My long-term goal is to catalyze an effort to abolish this industry, thus steering away from a pyramid-shaped future.