The Positive Sum Outlook

Note: This post is part of our League Symposium on inequality. You can read the introductory post for the Symposiumhere. To see a list of all posts in the Symposium so far, click here.

By Roger Parker

Before we delve into the topic of inequality, I believe it will be fruitful to explore another fundamental difference in worldview between the various political persuasions of the League. Perhaps it is like another dimension on James Hanley’s recent survey.

Specifically, I believe progressives and libertarians view the world differently on the dimension of zero sum versus positive sum. I see this as an area of immense, yet often buried, disagreement. Let me explain.

I believe progressives lean toward what I call the Zero Sum Outlook. At its most extreme incarnation, this is the intuitive belief or operational assumption that social interactions tend to be inherently zero sum — that there is a limit to value and prosperity, and that gains for one person tend to come from losses to another.

I need to start by saying that evolutionary psychologists could probably come up with a good explanation for the origins of this cognitive outlook. The point is, 99.9% of our evolutionary history comes from a time when it was likely more true than false. For a hunter gatherer it is true that every fruit I pick, every mate I take and every rabbit I catch is one less available to others. A zero sum view of the world is probably a pretty useful heuristic for your average stone ager.

The record for agricultural communities, states and empires probably isn’t much better. For most of the past 10,000 years, the world has been divided into the productive majority that farmed, raised livestock or produced crafts and supplied labor, and those various elites and predators that skimmed from them. Natural resources have always been limited and the path to genuine prosperity for most of recorded history has been to take from the producers. The wealthy have historically tended to be exploitative.

Free enterprise has been one of the rare exceptions to this general rule. By free enterprise, I mean the freedom to produce, exchange or interact with others in a constructive way. In brief, a producer creates value, then voluntarily exchanges it with another to create even more value by trading something of lesser value for something of more value. I’ll give you my extra (lower value to me) cups of coffee for your extra (higher value to me) donuts. We both gain from the interaction. It is a win/win.

Through the benefits of specialization, economies of scale and comparative advantage, free enterprise has created huge networks of interdependent, voluntary, win/win interactions of production, employment, investment and exchange. The net result is 10 times as many people, living twice as long, with 10 to 100 times higher standards of living than in the past. People have discovered how to do good for themselves by doing good for others. The more good they do for others, the more good they can do for themselves. The social conventions of property rights and free enterprise leverage this dynamic, and it is now possible to become extremely wealthy while doing great good for others.

When a producer converts materials of low value into something of higher value, he has not violated any laws of physics, but he has created value. By specializing in a narrow area of production, producers become immensely efficient and effective at solving a human need. They then exchange that solution for another, creating even more value. This is a positive sum, value creating, problem solving system based upon voluntary interactions.

When I say someone has a zero sum outlook, I am suggesting that they are not differentiating positive sum, win/win activities and interactions from destructive, counterproductive win/lose activities. The zero sum outlook is defined as having partial or full blinders to the possibility of positive sum, value-creating actions and interactions.

The zero sum outlook logically leads to some common progressive conclusions. If you subscribe to the zero sum view, consciously or unconsciously, you will tend to believe:

• Those that are well off probably became so at expense of the less well off.
• Therefore, the wealthy are morally suspect and the poor are probably victims.
• It is just to correct this imbalance by limiting or redistributing wealth.
• Since the pie is a fixed size, we better get more for the good side (or at least our side).

In other words the zero sum outlook ignores the narrow window of positive sum possibilities inherent in economics and suggests a cure that is itself zero sum. Zero sum thinking is self defeating — it leads to the very dysfunction it assumes. Progressive thinking can and does kill progress.

Let me clarify something first; I am not saying that some of the well off didn’t get their wealth at the expense of the poor. I am sure some of them did cheat, did lie, did steal, and did seek unfair privilege. I am just suggesting that this is a question that first has to be answered. If they became wealthy via voluntary, honest economic interactions with fellow adults, they did so via a positive sum process. They made others better off while making themselves well off.

The positive sum outlook leads to some common libertarian and conservative conclusions. If you subscribe to this view, you will tend to believe:

• It is possible to create wealth by enhancing the wealth and well being of others.
• When taking this path, the more we do for others, the more we benefit ourselves. It is possible to be mega rich and mega beneficial.
• The best path for the poor is to discover or engage in ways to improve the value they add to others.
• Redistribution often reduces the incentives of this win/win system. It introduces a destructive zero sum dynamic to a positive sum process. It partially dis-incentivizes both the poor and the well-off from the positive sum path.
• The key to prosperity is to discourage win/lose interactions (fraud/theft/enslavement/coercion/regulatory wrestling) and encourage win/win positive sum economic interactions. The key is to grow the pie.

As an example, I see Occupy Wall Street as a movement of people that are immersed in a zero sum outlook. They tend to view the one percent as inherently guilty of zero sum actions.  The OWS movement fails to separate the positive sum from the zero sum  one percent, and they offer primarily zero sum, redistributive solutions rather than seeing the hidden potential of additional positive sum arrangements and interactions. They are fighting over slices rather than focusing on how to grow the pie. Their mistaken solution actually just makes the problem worse. They are not just making bad moves, they are actually playing the wrong game.

Let me clarify that I am obviously laying out somewhat of an extreme — perhaps even straw man — portrait of these outlooks. Guilty as charged. I am attempting to make the distinction clear. I am also aware that progressives can argue that those with a positive sum outlook are just operating with rose tinted glasses. Certainly most participants on this site have substantially more nuanced opinions than I have portrayed. The point is to consider there are underlying, often implicit ways of thinking buried in our ideologies and perpetuated in our discussions.

But then again, I could be wrong…