The World Economy is NOT a Zero Sum-game.

Most people seem to have this false idea in their head that in order for me to get richer, someone else have to get poorer. This is not the case, and here is why.

There are 3 types of Economies: Positive sum economies, Negative sum economies and Zero sum Economies.

Positive sum economies:

In a capitalistic economy there will be more winners than losers. The Economy is growing in the long run and both parties benefit from exchanging. If I like pizza with pineapple, and you like pizza with peppers, and we somehow own the wrong pizza - we can exchange it. Both parties benefit. "You do something good for me, like giving me food, which I will pay for with this Litecoin that I earned by painting someones house. Then I'm better off because I valued food more than I valued my Litecoin, and the grocer is better off because he valued the Litecoin more than he valued the food in his store.

Negative sum economies:

A casino for instance has a negative sum economy. The games are rigged in such a way that the house wins more than it loses.

Zero sum economies:

A game of chess. For every winner, there is also a loser. In order for someone to win in a zero sum economy, another one must lose. Same with Poker. It's very rare that a game ends with all parties ending up with the sum they started with.

 

 

Let's look at another example why the economy isn't a zero sum game.

We could start whenever, but let's start at year 1200. Most of the world is a shithole. Dark ages in Europe. People in Africa are tribe-people, same in America. Asians are probably doing OK. Let's fast forward to the year 1950. If the economy is a zero sum economy, surely there must be people that are much worse off now, since a lot of people all around the world are using cars, telephones, have furniture, homes, bicycles, surplus of food, airplanes, trains, boats, fridges, hollidays etc. If it's a zero sum game, all this wealth and prosperity must have been balanced out by someone losing. So a lot of people around the world must have WORSE conditions than in the 12th century. But did they? Of course not. Everyone had better living standards.

Fast forward till now. Internet, supercars, business class, swimming pools, smartphones, macbooks, intelligent homes. Surely, a lot of people must now live in places worse than hell? Sure there are SOME people who experience that, but not many.

Two hundred years ago, most people lived in poverty, and only a small elite enjoyed higher standards of living. Economic growth the last two hundred years has completely changed the world. Poverty has fallen continuously over the last two centuries - despite the population has increased 7-fold.

 

Government create zero sum economies

You didn't see that one coming did you!? Aha! :)

 

The win-win model only works in free market laissez fare capitalist economies. When governments interfere it breaks down. The reason it doesn't work is because of unfair advantage. When the playing field is not level, people use their intelligence and creativity to get around the system instead of creating value. Incentives to create are not as high, and redistribution of wealth through taxation let money end up where it is not deserved, thus lowering the incentive for the person in the receiving end to contribute also.

Non zero-sum has been theorized by Robert Wright in the book "nonzero", where he says; "The logic of human destiny is that society becomes increasingly non zero-sum as it becomes more complex, specialized and interdependent.

Another example

Let's say you and I are cavemen. For some reason we live in the same cave together..(with our cave-women I hope)
We collect nuts and meat. But one day we discover a field of berries! Both benefit.

But let's says I discover the field of berries, but I decide not to tell you. Aha! Did that in any way take anything away from you? No. You're still able to collect the same exact amount of nuts and meat that you used to. The only difference is that now you can trade some of that meat for berries. I even benefit from that, because now I don't have to hunt that much. I can pick more berries and trade with you. We both benefit.

Sure there will be winners and losers. There will always be that. But the world economy is NOT a Zero sum game.