If you follow politics, you've probably seen the argument. You're reading a blog post or a comment thread or a discussion on an online forum and you see words that go something like "capitalism isn't a zero sum game." What this means is that, when we're talking about wealth, there isn't a limited amount and it isn't possible for one person or one group of people to collect it all. Wealth is created all the time -- if it weren't, a growing population would've ruined capitalism with Malthusian cannibalism long before the system of capitalism even had a name. The "zero sum game" argument is generally used defensively when someone's complaining that such-and-such a gazillionaire is making way too much money. Since wealth creation isn't a "zero sum game," we're told, it's ridiculous to say that this gazillionaire is living high on the hog at the expense of all of the non-gazillionaires among us.
But this "zero sum game" argument is only partially true. At this moment in time, there's only X dollars worth of wealth in the world. It's not an unlimited amount. It is, therefore, most definitely a zero sum game. It won't be eventually, but we live in the now. If you buy something, you're generally not going to get that money back -- eat lunch at a restaurant and someone is cash richer because you've become slightly cash poorer. At any given moment, the contents of your wallet is a fixed sum. It's possible for someone else to take it all.
This reality works both ways and a post by Dean Baker at his American Prospect blog demonstrates that. Baker is a media critic who follows economic reporting (we need a lot more of this, by the way) and his response to a Washington Post article about the market and the economy is much more interesting than the article itself... [CLICK TO READ FULL POST]
