In the context of a series of non-academic lectures about "The History of Economic Thought", the following text is meant to be an easy introduction to the concept of "Zero-sum thinking" in relation to the beginning of mercantilism. Evaluate and rate the text:
By diving deeper into the understanding of mercantilism, I ran into an aspect of this way of economic thought, which looked all of a sudden so familiar.
Not only familiar, but it also shows how an old idea keeps coming back. Not only in the US but you also see this zero-sum thinking in European populist and nationalist movements.
My point is this: a main feature of mercantilism was the assumption that one country's gain is another country's loss.
This assumption has a name: it is called zero-sum thinking. Maybe you already see the relation with the present.
What the mercantilists assumed more than 400 years ago is exactly the economic assumption of the current president of the US.
He told the people that other nations had terribly cheated the US and that this had to be compensated for by imposing all kinds of tariffs. So far this method has not gained positive polls.
Now, it's important to note that this zero-sum view is heavily contested by most modern economists, who argue that trade is a positive-sum game where all parties can benefit.
However, the intuitive appeal of the zero-sum idea makes it a powerful force in politics, both historically and today.
What does this zero-sum thinking exactly imply? Zero-sum thinking is the belief that in any exchange,
negotiation, or economic interaction, one party’s gain must come at another party’s loss.
In other words: If you win, I must lose. If I win, you must lose.
The total amount of benefit, “the sum”, is assumed to be fixed,
like a pie that cannot grow, so every slice someone takes reduces what remains for others. Dividing the pie evenly is no option.
And here I'd like to return to the cultural aspect of zero-sum thinking in relation to American and European culture.
I may be wrong, but I hear the qualification "loser" more often in American news or videos than in those on TV, where I live. I mean that in the US, more emphasis is put on being a winner.
What I want to tell is that this zero-sum thinking is still common practice in current political rhetoric in the US, or in more general terms, that being a winner is important.
Let me put it in another way: the core of the American dream is self-reliance and upward social mobility: from paperboy to millionaire. If you don't succeed, you might be qualified as a loser.
The European approach is different: if you don't succeed, we focus on the circumstances, financial, physical, and intellectual capabilities of the individual
and then we organize what is needed to give the less gifted more or less equal chances in society by special education or healthcare, for instance.
Zero-sum thinking shaped early economic policy, but as commerce expanded and productivity increased, it became clear that wealth can be created, not just redistributed.
The transition from mercantilism to classical economics begins precisely at this moment—when economists realized the pie can grow.
Main Sources:
MacMillan The Encyclopedia of Philosophy, 2nd edition
of Economic Thought (2012)
TABLE OF CONTENT -----------------------------------------------------------------
1 - 100 Philosophers 9 May 2009 Start of
2 - 25+ Women Philosophers 10 May 2009 this blog
3 - 25 Adventures in Thinking 10 May 2009
4 - Modern Theories of Ethics 29 Oct 2009
5 - The Ideal State 24 Febr 2010 / 234
6 - The Mystery of the Brain 3 Sept 2010 / 266
7 - The Utopia of the Free Market 16 Febr 2012 / 383
8. - The Aftermath of Neo-liberalism 5 Sept 2012 / 413
9. - The Art Not to Be an Egoist 6 Nov 2012 / 426
10 - Non-Western Philosophy 29 May 2013 / 477
11 - Why Science is Right 2 Sept 2014 / 534
12 - A Philosopher looks at Atheism 1 Jan 2015 / 557
13 - EVIL, a philosophical investigation 17 Apr 2015 / 580
14 - Existentialism and Free Will 2 Sept 2015 / 586
15 - Spinoza 2 Sept 2016 / 615
16 - The Meaning of Life 13 Febr 2017 / 637
17 - In Search of my Self 6 Sept 2017 / 670
18 - The 20th Century Revisited 3 Apr 2018 / 706
19 - The Pessimist 11 Jan 2020 / 819
20 - The Optimist 9 Febr 2020 / 824
21 - Awakening from a Neoliberal Dream 8 Oct 2020 / 872
22 - A World Full of Patterns 1 Apr 2021 / 912
23 - The Concept of Freedom 8 Jan 2022 / 965
24 - Materialism 7 Sept 2022 / 1011
25 - Historical Materialism 5 Oct 2023 / 1088
26 - The Bonobo and the Atheist 9 Jan 2024 / 1102
27 - Artificial Intelligence 9 Feb 2024 / 1108
28 - Why Am I Here 6 Sept 2024 / 1139
The Discussion
[13:16] .: Beertje :. (beertje.beaumont): Thank you Herman
[13:16] herman Bergson: The floor is yours :-)
[13:16] Particle Physicist Bejiita (bejiita.imako): ㋡
[13:18] Particle Physicist Bejiita (bejiita.imako): indeed ive hear the term zero sum but never thought much about that it actually means
[13:18] herman Bergson: As you see...like a 400 years ago also today someone believes that a trade deficit is a rip off...is cheating
[13:18] herman Bergson: It means there can not be a win-win situation Bejiita
[13:18] Particle Physicist Bejiita (bejiita.imako): aah
[13:19] Particle Physicist Bejiita (bejiita.imako): hmm in other words the thing that I want it to be like
[13:19] Particle Physicist Bejiita (bejiita.imako): aaa yes
[13:19] Max Chatnoir: Is that because information increases?
[13:20] Stranger Nightfire: Best example of that is America's completely insane attitude towards China today
[13:20] Stranger Nightfire: Which seems to be if China is successful it must be punished for that
[13:20] herman Bergson: What exactly, Max...that zero-sum didn't work?
[13:20] herman Bergson: Yes Strager...
[13:21] herman Bergson: I guess the main point is that 400 years ago states and natioons believed that collecting as much gold and silver was the best thing to do....to pay armies, build ships etc....
[13:22] Max Chatnoir: The pie can get bigger because information increases.
[13:22] herman Bergson: But it blocked for instance innovation...
[13:22] Particle Physicist Bejiita (bejiita.imako): ok
[13:23] herman Bergson: I see...the idea is more that wealth can be increased not by gathering bullion en mass, but by production and innovation
[13:23] herman Bergson: That is moreor less how the economy now functions....
[13:25] herman Bergson: Brings about also its problems....pollution, consumerism, waste of raw materials etc
[13:25] Max Chatnoir: But technological innovation can create problems for the people whose methodology is being superseded.
[13:25] Particle Physicist Bejiita (bejiita.imako): aah
[13:26] Max Chatnoir: You probably can't switch easily from breeding horses to manufacturing cars.
[13:26] herman Bergson: It happened, Max :-)
[13:26] herman Bergson: 1902?
[13:26] Stranger Nightfire: I can't remember who I know I heard about it from Robert Anton Wilson Somebody came up with the idea that a lot of what we refer to as wealth should be referred to by another term which would be called Illth
[13:27] Max Chatnoir: That is, what skills you have may not be applicable to the new thing.
[13:27] Particle Physicist Bejiita (bejiita.imako): and if you dont jump on thee ball immediatley you go under, That was what happened with Nokia for ex when the smartphole arrived and they more or less laughtd it off
[13:27] Stranger Nightfire: like ehen yu are creating weopons of mass destuction you are not creating welth, you are creating illth
[13:27] Particle Physicist Bejiita (bejiita.imako): or Kodak who didnt adapt quickly ennough to digital cameras
[13:29] Particle Physicist Bejiita (bejiita.imako): and also the swedish typewriter manufacturer Facit, when the computer arrived
[13:29] Max Chatnoir: Or me, who has a cupboard full of wonderful videotapes that I can't play any more. :-)
[13:29] Particle Physicist Bejiita (bejiita.imako): facit went under but Kodak and Nokia are still around at least
[13:30] Particle Physicist Bejiita (bejiita.imako): hmm technology transitions
[13:30] Stranger Nightfire: digital watches were invented by th Swiss who just saw them a aaking away from their mechanical watch industry so did not maufacture them, of course The Japanese did and the rest is history
[13:30] herman Bergson: Complicated concept ....wealth :-)
[13:30] herman Bergson: illth....peculiar word
[13:30] Particle Physicist Bejiita (bejiita.imako): aaa same thing there Stranger
[13:31] Particle Physicist Bejiita (bejiita.imako): I think Kodak even invented digital photography but since they had everything invested in film they didnt proceed with it further
[13:31] Particle Physicist Bejiita (bejiita.imako): and the tech ran away from them in the form of other manufacturers jumping on the digital bandwagon, Canin, Nikon ect
[13:31] Particle Physicist Bejiita (bejiita.imako): Canon
[13:32] Particle Physicist Bejiita (bejiita.imako): Sony
[13:33] herman Bergson: So the zero-sum approach was effective to some extend but eventually led to inflation and stagnation
[13:33] herman Bergson: We'll see how that happened
[13:34] herman Bergson: A simple example....
[13:35] herman Bergson: a nation can have its bank filled to the top with gold and silver....they won, the others lost...but what to do with all the bullion?
[13:35] Particle Physicist Bejiita (bejiita.imako): swim in it like scrooge McDuck?
[13:35] herman Bergson: It doesn't do a thing but sitting there
[13:35] herman Bergson: Is an option....
[13:36] Particle Physicist Bejiita (bejiita.imako): indeed Herman
[13:36] Particle Physicist Bejiita (bejiita.imako): there is a term ive heard, money should work
[13:36] .: Beertje :. (beertje.beaumont): you don't make friends with such a bulk of gold
[13:36] herman Bergson: The problem is...when you gonna spend it all domestically on armies or schools or whatever...eventually you run out of gold and silver and are back at square one
[13:37] Particle Physicist Bejiita (bejiita.imako): True Beertje, Well you DO make friends, with other uber rich despots. just look at Trumps friends, all uber rich and total evil pigs
[13:38] Particle Physicist Bejiita (bejiita.imako): latest of his friends, The murderer of Kashoggi
[13:38] herman Bergson: So wealth had to be created not by hoarding lots of gold but in another way to keep a nation r-u-nning :-)
[13:38] .: Beertje :. (beertje.beaumont): are those people realy good friends?
[13:38] Stranger Nightfire: Of course we decoupled money from gold and silver some time ago
[13:38] Particle Physicist Bejiita (bejiita.imako): not really
[13:39] Particle Physicist Bejiita (bejiita.imako): it depends, for someone like Trump who is just interested in destroying the world and have evil buddies like these to plan it with
[13:39] Particle Physicist Bejiita (bejiita.imako): but real friends are non evil in general
[13:40] Particle Physicist Bejiita (bejiita.imako): at least in my view
[13:40] Particle Physicist Bejiita (bejiita.imako): and noone want to be a real friend with someone like Trump
[13:41] Particle Physicist Bejiita (bejiita.imako): the definition of a friend
[13:41] herman Bergson: ok...this about zero-sum thinking...
[13:41] herman Bergson: Unless you still have a question.....
[13:41] Particle Physicist Bejiita (bejiita.imako): lets sum it up
[13:41] Particle Physicist Bejiita (bejiita.imako): ㋡
[13:41] Particle Physicist Bejiita (bejiita.imako): and jump into the goldpile
[13:42] Particle Physicist Bejiita (bejiita.imako): weeeeee!
[13:42] Particle Physicist Bejiita (bejiita.imako): hehe
[13:42] .: Beertje :. (beertje.beaumont): how did this situation end 400 hundred years ago?
[13:42] herman Bergson: ok...thank you all again....
[13:42] herman Bergson: That is for the next lectures to tell you Beertje :-))
[13:42] .: Beertje :. (beertje.beaumont): cliff hanger again:))
[13:43] herman Bergson: Class dismissed ...
[13:43] Max Chatnoir: Yes!:-)
[13:43] .: Beertje :. (beertje.beaumont): Thank you Herman
[13:43] Particle Physicist Bejiita (bejiita.imako): ㋡
[13:43] Stranger Nightfire: really money today is a sort of an abstaction, a belief system
[13:43] herman Bergson: But you know the answer Beertje...we ended up with capitalism :-))
[13:43] Particle Physicist Bejiita (bejiita.imako): i guess that is true Stranger
[13:44] herman Bergson: it is indeed Stranger...
[13:44] .: Beertje :. (beertje.beaumont): money is a religion
[13:44] Stranger Nightfire: the value of the dollar is what you can convince people believe in it
[13:44] herman Bergson: Just start to think about the definition of money.....
[13:44] Particle Physicist Bejiita (bejiita.imako): hmm
[13:45] herman Bergson: it is a materiala means to exchange for goods
[13:45] .: Beertje :. (beertje.beaumont): you can buy power over people
[13:45] herman Bergson: but now it is just numbers in my bankaccount on my screen
[13:45] Max Chatnoir: It's a representation of stuff.
[13:46] Particle Physicist Bejiita (bejiita.imako): its just numbers in a database
[13:46] herman Bergson: yes...a representation...
[13:46] Stranger Nightfire: US has in the past relied on it's dollar being used as the medium through with oil was sold to give it value
[13:46] Max Chatnoir: So you don't have to buy a chicken with 16 eggs.
[13:46] Stranger Nightfire: but that is falling apart now
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