I don't think it is a reduction. It's more like a restructuring that we need in order to be happy. Jane McGonigal pointed out in a TED-talk that people were already playing
games thousands of years ago, in order not only to distract themselves but also to prepare themselves for taking on new real-world challenges. She also uses recent research to show that games fulfil a whole raft of real-world needs, such as giving meaning to our activities. Good gamification then, far from being hollow and cynical and taking away layers of meaning from otherwise meaningful social interactions, is actually adding meaning. Meaning that we lately have been lacking, but that the human psyche needs in order to be happy.
Marx introduced a concept called alienation, which was caused by the scale of an industrialised and technological world. In current manufacturing and marketing, the concept of ownership has been introduced to counter alienation. Ownership makes people happy. It also works in social interactions and even in counselling. I disagree with Adrian Chan, who blogs:
One would think that social game designers see only the game in interaction, the competition behind relationships, the success of action, and the strategic and tactical purpose of communication. As if all social might be subordinated to ulterior and extrinsic motives and outcomes for the sake of tracking, measuring, ranking, and rewarding users.
If by now you don’t see the cynicism an short-sightedness of social perspectives enslaved to the cult of competition, have your head checked. And your heart. Better yet, just hook your heart up to a monitor and track its function; the feeling heart has probably atrophied.
Gamification does not reduce relationships to winning and competition. It allows people to take ownership. In small settings, human interaction was easy to keep track of. It all happened in the real world, and it involved a fairly small amount of people. Information, manufacture,... everything was at a scale that could be grasped. The explosion in scale due to the industrial and technological revolution has led to great things, but it cost us the ability to interact genuinely with the huge amounts of people, information and goods that are available to us. Social media and gamification are the solution, not the problem. Thanks to social media, we can scale down our interactions back to a level where we can own our relationships, such as by using circles in Google+. Gamification is ultimately not about measuring and ranking, and it's not about competition and winning. Gamers don't win, they own.
This is different from Marx's solution to alienation. Distributing goods equally is not happening and indeed, in a society where goals and competition are removed, motivation and happiness seem to go too. What should be distributed is information and that's what we're using social media and gamification for. If someone's job is a cog in a big machine, they can still own their progress using simple tacked-on gamification techniques. But with true embedded well-designed gamification, they will regain ownership of their contribution because they are not just doing a job, they're playing a cooperative massively multiplayer game with a clear common goal that every player believes in. Marx saw that people needed to share, and we do... on Facebook.
Social media is about sharing and gamification is about owning. When done badly, it's trivial and shallow, but when done well, like anything done well, it opens up infinite possibilities to make things better for all of us.