The idea is sound. The problem is that you have to bring others in to work under you without you having any responsibility for their failures, actions, etc. If they screw up you just disassociate yourself and get another. To be successful you have to have multitudes of people under you to get the bottom up profits allowing your rank in the organization to go up (silver, gold, diamond is a standard ranking system). This is where the pyramid scheme term comes in. The person you work under doesn't have to care at all if you succeed or not because they are constantly looking for others to work under them as well. At the same time they are pushing their underlings to find underlings thus further detaching them from the responsibility of any actions of others. The lack of responsibility is what makes this free-market sounding idea a sleazy scheme.

Fraud sounds like a violation of individual rights.
The biggest pyramid scheme is social insecurity. Opps my mistake. Social insecurity is not a mere pyramid scheme; It is deviously worse. You have a free choice to join at the bottom of a pyramid scheme.

"government at the Gulch would even allow blatant pyramid scheme’"
I think they would as long as the schemes don't cross the line into flat out lying to get money, fraud. I actually think it's a good thing that most people understand pyramid schemes as a bad choice, yet the gov't has not declared war on them. The concept that gov't not using force on its citizens to stop them is not tantamount to endorsing their actions is so important.

Interesting observation. I agree..not a good market for a pyramid...lol...

Eh...that's a stretch, IMO. I don't like either model, mind you. A pyramid is clearly illegal and is represented by what Bernie Madoff did and how Social Security operates. That's different than an MLM. I often hear people mix these up.

Yeah, my wife does YL. I love the products.

Whether MLMs are Objectivist or not, I cannot say. However, I did participate in the Toastmasters Humorous Speech Contest ~20 years ago with a speech titled "Hello Friends!"

I acted out the role of an MLM "Triple Crystal" and my product de jour was Pond Scum -- a most fabulous elixir that put a spring in my step and a million dollars in my pocket. There were a number of props -- including a large poster showing all the wonderful Circles as I shared the joy of building a business and a family (in terms of the down-stream).

I even shared a few testimonials, including a letter from Marge Gimble from Pascagoula, who wrote:
"During the first forty-seven years of my life, I could scarcely keep down a meal. I have been using your product for the past two weeks and my intestines have never felt better. Thank you, thank you. You're beautiful people.
Sincerely,
Marge Gimble
PS: My long lost dog returned home only last week. Coincidence? I don't think so."

The speech was a hit -- in large part because most folks had become acquainted with both the "circles" and the MLM "pitch."

Network Marketing can be very Objectivist, depending on the people involved & the ethics of the company. There are as many scammers in traditional retail as in network marketing.

Here are some statistics:
NFL $9.5B
Music Industry: $16.5B
Video Gaming: $67B
Movie Industry: $80B
Organic Products: $91B
Network Marketing: $167B

I've seen many here call Network Marketing a pyramid scheme. I call that corporate America. I can never make as much as the Dr. I work for, nor more than the incompetent manager that is above me. In Network Marketing I can make as much as I choose by choosing how hard I want to work. Eddie Willers was never going to make more than Jim Taggart, even though he was far more competent.

When I told people I liked Star Wars, Disney didn't send me a check for marketing their product. PURE does send me a check for telling people I like their products and sharing with others how they can also get a check.

Biggest ponzu scheme ever is social security, followed by medicare

Relating this to a real Galt’s Gulch,
I’m guessing that the government at the Gulch would even allow blatant pyramid scheme’s, unless it violated individual rights. Gulch individuals, using rational selfishness and understanding that there is no free lunch, wouldn’t be good marks. How long can a pyramid scheme last with out a continuous inflow of marks?

Yes, they're generally pyramid schemes with products for sale as a crude fig leaf.

I haven't observed anything contrary to objectivism in MLM's other than the system of sales and distribution is annoying. If you don't like it don't sign up or purchase from them. The only ones who make money must work it as a full time job constantly recruiting and keeping the sales force enthused and calling on potential buyers. Some products may be worthwhile, others not. Buyer be aware, know products and costs.
Real Ponzi schemes are where there is no product and the payoff comes from the first being paid by the 2nd, 3rd, 4th, etc. generations signing up for the fraud. Even those are less detrimental than a government enforced (use of violence to ensure compliance) schemes that continue to expand in size and cost driving labor to constantly try to increase production to maintain equilibrium.

I participate in an MLM...essential oil company Young Living...I love product and quality...but I do it just for my health...a few others have signed on beneath me, but only for better health reasons...
As long as the company is open about it's MLM program, it is consenting behavior between adults...fine with me...

Thanks. I knew that, just liked to have it shown in full.

Nobody stays here by faking reality in any manner whatever.

John Galt is talking to the scab Dagny in the Gulch in front of Galt's power station.

Multi-level marketing? isn't that like a pyramid scheme? Moreover, social media enable the spreading of spores/memes/ideas with virus-like febrility.

Could you please get the exact quote? This one is incomplete. Thanks.

Me dino got my first PC after I retired from my department of corrections career ion 2003 and saw "work at home" adds and, for a little while, stepped into the pep talk world of MLM.
I was required to listen to motivational speaker after motivational speaker and at some point realized none directly spoke of calling people on the phone to sell a product and hopefully recruit some into doing the same thing I was in order to take my cut off those I sucked in beneath me.
I was among several recruits during a conference call when we were told we would have to get "leads," that supposedly meaning people susceptible toward cooperating on the telephone.
I was provided with a link that had leads for the taking. I saw two photographed broadly smiling men in suits lovingly extending their arms to the word, "LEADS!" Below that were leads that cost around $100 each to expose the lists.
Me dino complained about the cost of leads to my recruiter, who sourly said, "No, YOU don't have to BUY leads." She suggested that I instead start with family and friends.
Family and friends?
This led me dino to looking up MLM scams and to an email conversation with and ex-MLM person. He told me he was a member of the NFAFL, which means, "No Friends And Family Left."
After all that nonsense, I off and-on, due to my corrections career, had no serious problem working for four different security guard contractors up until 2013 when health problems influenced a full retirement.

Caveat emptor. If a salesperson is good enough to convince a buyer that something is worth more than the established market value, well, value is subjective and plastic. If selling virtual currency that has no utilitarian value whatsoever is acceptable to libertarians, then it would be ludicrous to assume moral compunction to someone selling "over-priced" detergent.

I believe the concept of network marketing is sound. The problem is that, in order to earn the deferred income stream(s) by recruiting your downline, the products are all overpriced, as others have mentioned. So if your interest is strictly consumer-based, not a good value.

About 8 years ago I was an Herbalife Distributor. I learned a lot about sales and managing large groups of people to help us all become successful. I quickly ascended the levels and I made it to Global Expansion Team which is the 8th level in sales and team building. I helped many, many people on different levels to achieve what I achieved. I had many retail customers who purchased monthly from me. I sponsored over a 100 people that I personally brought into the company. They consisted of other distributors, senior consultants, success builders, quality producers, supervisors, and World Team Leaders and they were all in my personal team who were also climbing up the ladder with me. I had a great sponsor who taught and helped me as I taught and helped those that I sponsored.
I used many tools to achieve this. I had automated tracking of my team and I had weekly conference calls with them and weekly personal calls with those directly below me to discuss goals, problems they were having, news, changes, and training. I had an automated lead generator and I had an automated dialing program so that I could contact many people during the day. I had my own website and my own credit card processing program linked to my organization and my bank. I had automated order and shipping system linked to my organization so ordering and shipping products was simplified.
I gained so much doing this and it was not easy. It takes a lot of time, and training but I thoroughly enjoyed it. I learned how to develop a team, how to help others succeed and how to make money. I also learned a lot about customer service, solving problems and creating return customers. I quit when Herbalife was having a lot of problems and my entire organization moved to another company. Thousands of them. It took 2 years before I started turning a profit, but it was worth it to me. I did all of this while still working full-time as a Vice President of a $6 million dollar company. It was kind of fun and a change of pace for me.

MLMs are, quite bluntly, fancied up Ponzi schemes. Only the few at the top actually make much money. I'm astounded that the creators of these things aren't automatically charged with fraud.

Actually, there are rare companies that offer environmentally friendly, effective, and concentrated products that are cost-effective on a per-use basis. One I know of offers a 180-day money-back guarantee. Its food supplements contain concentrated nutrients obtained from plants grown on certified organic farms and manufactured to the highest standards. I don't know of another brand with its record, standards, and R&D. If you think all vitamins are the same, think twice. You get what you pay for. I was raised to think quality over quantity, so perhaps that biases me. As to other MLM complaints, I can sympathize, to a point. Many such companies are not particularly ethical, do not properly "police" or train their distributors, and allow them to run amok with their claims. Another thing that paradoxically turns some people off about MLM is the overt enthusiasm often displayed by the salespeople. My own reaction initially was to be put off by such excitement; it reminded me of evangelicals and mass movements, such as National Socialism. I quickly came to realize that such positive excitement is rare in most people's lives, and as long as it doesn't override reason and ethics, that's great.

A relative of mine does these things from time to time. There is no economic advantage either to him or to his supposed customers. The last one he had me try was the fancy acai-berry grape juice that came in fancy wine bottles, supposedly good for your health. Actually only good for the wallet, and then only if you could manage to sign up dozens of greater fools and keep them hooked. Didn't even taste good. I finally stopped delivery and threw out like ten unopened bottles.

No one gets to this place by faking reality in any whatsoever. - John Galt