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The Zero-Sum Theory
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We have all heard tough guys brag about how they bested somebody else in a deal. Like the tough guys, many people believe that where one person gains, another person must loose
. This culturally ingrained belief has both maligned and confused capitalism.
The zero-sum idea, at least now, is completely bogus. It seems to have gotten started through the mistaken idea that resources are scarce. Scarily has been local, temporary, and self-imposed. It is our knowledge, skill, and farsightedness that has been historically lacking. There is no scarcity in nature. Human beings comprise an extremely small fraction of the biomass of the Earth. We lack no material or energy. We have lacked critical knowledge - a situation that will continue to improve, as it has dramatically in recent times. We have learned the concept of recycling. At least until the biomass of humanity becomes the dominant biomass on Earth, there will be no nature-imposed shortage of material. Excessive centralization of economic power and decision making power in each of the economic systems tried so far has allowed starvation and poverty to perist. This has continued the misimpression that there is a zero-sum principle at work, but humanity as a whole has not lacked resources in recent centuries, if ever, and has always grown in capability. When we grow weary of moving around and recycling everything that we value, there is always the dust and rock that normally gravitates toward the sun.
We need not continue to contrive scarcities or impede others in order to optimally profit from our work, our knowledge, and our ideas.
During the 1800s in England and elsewhere in Europe, entrepreneurs and investors routinely bought labor from those who would have otherwise starved. They paid them only enough to prevent them from dying. Karl Marx had no choice but to complain about this, and would-be dictators could not pass up the political opportunities presented by the resultant discontent. Short-sighted capitalists created communism. They succeeded little beyond creating a work force that could not afford to buy the products and services offered by their businesses. Their profit was much less than it could have been. Mass markets were delayed.
Henry Ford cut absenteeism, worker turnover, and training costs, by raising wages to double of what they had been; but the real windfall to the Ford Motor Company was this: Workers became financially able to buy Ford cars. This lesson is still not widely appreciated.
I suggest that the national minimum wage laws should be reformulated to set wages to a specific fraction of historical industry income, setting a somewhat different minimum wage for each type of business. The idea is to recognize that labor is a needed value not to be bargained down to as close to zero as possible.
We need a national policy that protects fair businesses from being ruined by competing companies that hold entry-level wages down below a nationally agreed ratio for the particular industry involved.
Sufferers of the zero-sum-winner-loser-scarcity syndrome seem also to insist that everything be ignored except the bottom line. Conscious Capitalism
by John Mackey and Raj Sisodia points out that a business has many stakeholders whose expectations must be attended to simultaneously in order to sustain the business. Because a business creates many kinds of value (cultural, physical, financial, social, ecological, emotional, intellectual, and others) and because the stakeholders (vendors, investors, workers, advertisers, customers, and others) cannot be treated unfairly or in a short-sighted way, simultaneous solutions must be sought
. The tendency to assume that everything is subservient to short-term profits is a simple but less than optimal way to run a business. Thinking hard about possible simultaneous solutions and finding them where they are possible produces far more growth.
I see the foregoing notion as part of a wider world view: The best path is discovered by those who care about everybody.
The culturally ingrained belief that where one person gains, another person must loose
has confused the understanding of capitalism further by fueling resentment of successful people. Transfer payments and high taxes are often not in the best interest of the economy or in the best interest of the poorest among us. Tax payer assistance to the middle class is certainly destructive. Getting votes this way diminishes prosperity. It does no good for politicians to pander to resentment and it does no good for wealthy people to show no interest in finding more inclusive solutions - especially solutions that increase prosperity for everyone involved simultaneously.
Cultural causes of poor productivity are hard to solve. Nothing less than groups characterized by imagination, determination, and courage will make a difference.