Has Capitalism Become Zero-Sum Game?
Entrepreneurs line the streets in many developing countries, and freelancers are on every corner, ready to make a buck. Of course, while you can appreciate this dynamism, there’s obviously a flaw. In many countries, nobody seems to get ahead.
The dynamism on the surface obscures the fact the economy behind it is actually a zero sum game, and in a zero sum game, economic dynamism is about survival, not economic progress. This isn’t new. The zero-sum game has been the curse of Capitalism since it emerged at the dawn of history.
In a zero-sum game, the wins are balanced by the losses. The pie doesn’t grow and all boats don’t rise with the tide. Often, a zero sum game is the result of cheating. A situation where all of the gains from the game go to a few players and the rest fight for the same scraps, over and over again. Not surprisingly, a dynamic zero-sum game increasingly describes the situation we are in.
The US workplace is clearly becoming very dynamic. Entrepreneurs and freelancers are everywhere. Based on what I can discern, the percentage of the adult population working this way is 40% and rising fast.
However, all of the economic evidence indicates that this dynamism is based more on a need to survive than economic progress. We are becoming poorer and working harder for less.
It appears that we have, for the first time in our history as a nation, a zero-sum economy.
Why did this happen? How did we end up in a zero-sum economy?
The major reason is that the formula for economic progress provided by the industrial bureaucracy has failed. Both government and corporate bureaucracies have failed us. They aren’t able to deliver results anymore. Worse, rapid technological advancement is decimating the amount of work available in that system. Much of the work that was done by human beings is being replaced by automation, just like it did during the decline of the agricultural economy, and much of the work that is left is offered is volatile and short term in nature.
Another reason, and one that I think has been poorly explained, is that bulk of the wealth being produced is flowing an ever smaller number of players, rather than to the people who are in competition to earn it. This suggests that the economy isn’t only in flux, it’s broken at a fundamental level.
Hey, I’m not against the idea of competition. Far from it.
Competitive games are one of the better ways to allocate the gains of economic activity we’ve found. However, I’m surprised nobody is willing to point out the obvious. Simply, in a good and true economic game, it would be impossible to accumulate winnings millions of times larger than billions of other players. The differences in mental performance, skill, effort, etc. between the individual human participants aren’t that great. The only explanation is that competition between the participants doesn’t occur, and the game is either broken at a fundamental level or it has been hacked/fixed in a way that makes it nearly useless. Either way, the game is broken, and we’re in trouble.
A broken economic game + the loss of the structure provided by employment in the industrial bureaucracy (from the predictability of it to the protections it afforded the participants) is a recipe for a potentially violent disaster.
So, what can we do? I’ve looked at this from a myriad of perspectives and there is only one thing that can work.
In order to prevent this shift from becoming a race to the bottom, we need to replace the structure of the old system with a new structure. A structure that turns it into a cumulative system.
IN a cumulative system, every gain into a step forward for the entire system.
The last time we saw this happen, when a cumulative structure was pasted onto a dynamic zero sum system, the modern world was born. I suspect we can do it again. In fact, we must do it again.
PS: For new readers, this is one part of a book I’m writing. A couple of pages of every day. When I’m done, I’ll edit it, streamline it, and package it up for sale on Amazon on April 1. Sign up below to make sure you don’t miss a section in the meantime.