Economics.

[Notch7]

Not pushing for an answer, but have you resigned your view that global economics is not a zero-sum game?

Zero sum game is an interesting economic theory.
It seems to rely on the theory that resources are finite.

I can see how it mathematically plays out in a theoretical situation:
Take 100 people, put them in a room and give them £1000.

to be equal each can have £10
or 98 of the people can have £1 and 2 people can have £451

That way winners mean there must be losers.

I cant see how that can apply in real world economics

And I cant understand how the theory of finite resources can be true.

Why?
The world hasnt yet reached its limit of almost all natural resources, so as yet the amount of resources is unlimited

The availability of labour is a limited resource -true

But - there is no limit to the number of ideas

And - there is as yet no limit to time. For example if somebody finds a way to make something faster, he can make more money.

If resources are not limited then the zero sum game theory cant hold can it?

 

[IWalkLikeHimaMartian]

Zero sum game is an interesting economic theory.
It seems to rely on the theory that resources are finite.

I can see how it mathematically plays out in a theoretical situation:
Take 100 people, put them in a room and give them £1000.

to be equal each can have £10
or 98 of the people can have £1 and 2 people can have £451

That way winners mean there must be losers.

I cant see how that can apply in real world economics

And I cant understand how the theory of finite resources can be true.

So you are not in a position to argue that it is not a zero sum game.

Why?
The world hasnt yet reached its limit of almost all natural resources, so as yet the amount of resources is unlimited

But anyone who owns those resources, or owns the process to obtain those resources can control the process, the cost, the resale, etc.
With their unfair advantage of their wealth, and the usefulness of the resource, they also can influence the legislation around those resources.

The availability of labour is a limited resource -true

But - there is no limit to the number of ideas

But the owners of the ideas can control the labour, the application of ideas. Additionally they can influence legislation. They will allow the labour to gain something, in order to allow that labour to be able to purchase their products, etc. But in doing so the owners of the resources, the ideas, the processes generate more wealth for themselves.
You mentioned a figure of £1000. Suppose the manufacturing costs are £800. The labour cost incuded in that is £400 (shared between many workers, in the whole product chain, so many, many workers) That leaves £200 profit to the owner of the product process.

And - there is as yet no limit to time. For example if somebody finds a way to make something faster, he can make more money.

Exactly, he becomes one of the nouveau riche. Winners are not always winners and vice versa.

If resources are not limited then the zero sum game theory cant hold can it?

Yes it can and does.

 

[Gerrydelasel]

But anyone who owns those resources, or owns the process to obtain those resources can control the process, the cost, the resale, etc.

Yes, but nobody does have the monopoly over any one of the worlds resources. The world is too big.

With their unfair advantage of their wealth, and the usefulness of the resource, they also can influence the legislation around those resources.

Usefulness is represented by prices. If someone did somehow own all of a resource, but he tried to charge too much, no one would buy it; it is not useful enough. He would be forced to lower his price to an amount that brings in sales, and that price hence reflects its relative usefulness to the buyers.

Meanwhile, influence of legislation is a flaw of government, not capitalism. This is a separate issue.

They will allow the labour to gain something, in order to allow that labour to be able to purchase their products, etc. But in doing so the owners of the resources, the ideas, the processes generate more wealth for themselves.

By purchasing the product it is the labour whose wealth has increased, not the seller. The seller has receivied only money (labour) which is not wealth. You have just proved why it is not a zero-sum.

 

[IWalkLikeHimaMartian]

Yes, but nobody does have the monopoly over any one of the worlds resources. The world is too big.

The companies, their shareholders!

Usefulness is represented by prices. If someone did somehow own all of a resource, but he tried to charge too much, no one would buy it; it is not useful enough. He would be forced to lower his price to an amount that brings in sales, and that price hence reflects its relative usefulness to the buyers.

Influence legislation was the point, not fix prices!

Meanwhile, influence of legislation is a flaw of government, not capitalism. This is a separate issue.

Flaws of government brought about by their financial backers, and the financial influence of those companies (buying influence, remember that?)

By purchasing the product it is the labour whose wealth has increased, not the seller. The seller has receivied only money (labour) which is not wealth.

Money is wealth, just as property is wealth because money is so easily converted to other forms of wealth. Also money which is used to create more wealth!

You have just proved why it is not a zero-sum.

You have just put some dopey comments together and claimed it disproves my argument

 

[Gerrydelasel]

The companies, their shareholders!

So a pluriality of people own a plurality of resources. Sounds OK to me. Very different from your 'can-control-prices' scenario. Only a sole-monopoly can control prices.

Money is wealth,

No, money is not wealth, it is a proxy for labour. Wealth is stuff you can use. Money allows you to trade labour for wealth, but it has no intrinsic value itself. Inflation can decimate the purchasing power of your money, but it cannot touch the intrinsic value of the car or house (real wealth) you bought with it. Money can be created on a whim (banks could just print more) but there would be zero increase in wealth. Wealth can only be created by making useful things -which by itself does not necessarily require any increase in money, though in practice the money supply does tend to follow it, i.e. banks tend to print more money as the available wealth grows.

(Money and wealth are often conflated in casual everyday speech, but this is an economics thread)

 

[IWalkLikeHimaMartian]

So a pluriality of people own a plurality of resources. Sounds OK to me. Very different from your 'can-control-prices' scenario. Only a sole-monopoly can control prices.

I guess you would not understand the concept of a 'cartel'?

No, money is not wealth, it is a proxy for labour. Wealth is stuff you can use. Money allows you to trade labour for wealth, but it has no intrinsic value itself.

What? Money is a proxy for labour? Please explain. How can I swap my money for labour? By employing someone to create more wealth for me?

Inflation can decimate the purchasing power of your money, but it cannot touch the intrinsic value of the car or house (real wealth) you bought with it.

Nonsense! Interest rates can maintain and increase the value of money! Investments can maintain and increase the amount of money!
Cars and houses can be devalued through wear and tear, etc.

Money can be created on a whim (banks could just print more) but there would be zero increase in wealth. Wealth can only be created by making useful things -which by itself does not necessarily require any increase in money, though for practical reasons the money supply does tend to follow it.

(Money and wealth are often conflated in casual everyday speech, but this is an economics thread)

Since your claim that money is not wealth, the rest of your comments need no counter argument because they are based on a fallacy.
If you give everyone the same percentage increase in money, that they already had, then the richer would become relatively richer, and the poor would become relatively poorer.
But if you give everyone the same sum of money, irrespective of the amount that they already had, then no-one would be any better off.
That is not how capitalism works. It works on percentage increases, not absolute increases.

 

[Gerrydelasel]

I guess you would not understand the concept of a 'cartel'?

OK yes I forgot to include cartels. But monopolies and cartels are rare and short lived, so I'm not sure what point you're trying to make.

What? Money is a proxy for labour? Please explain. How can I swap my money for labour? By employing someone to create more wealth for me?

Jeez you want me to explain something that basic? Labour creates stuff. If I build a table from wood, I have expended labour. But I need food. The farmer expends his labour in creating food. I trade my table for a sack of potatoes. That's a direct trade of wealth.
Direct trade doesn't work in an economy of millions of people who need millions of different products, so we use money as a proxy. I now pay the farmer £10 for his potatoes, and someone else will pay me £10 for my table, and someone else... and so on. That £10 represents a quantity of labour, whether farming labour, carpenter's labour, or whoever. When someone invents a machine to harvest potatoes, the price of potatoes will eventually fall because less labour is needed to provide one. Same goes for a table-making machine.

Nonsense! Interest rates can maintain and increase the value of money! Investments can maintain and increase the amount of money!

Like I said, in practice money tends to increase with the supply of wealth. Investments are the result of wealth creation. When you invest in a business, that business is creating wealth -that's why your money grows, because it's creating something that people buy. If that business fails to create wealth you will get no return on your investment -no increase in money, see? Interest rates are simply a way of letting the purchasing power of money keep up with the increase in money supply.

Cars and houses can be devalued through wear and tear, etc.

Yes, but that has nothing to do with money or inflation. A derelict house has less intrinsic value than a nice house because a lot of labour will be needed to turn it into a nice house again or, if you prefer, less labour is needed to build a derelict house than a nice house. The real value of something is ultimately in the labour needed to create it. Yes other real-world details also have influence but we're talking fundamentals here.

Since your claim that money is not wealth, the rest of your comments need no counter argument because they are based on a fallacy.

http://www.investopedia.com/terms/w/wealth.asp
"Money is the most common, albeit imperfect, means of measuring wealth. The value of a product or material used as the basis for a monetary system depends on how much others are willing to trade or provide labor in exchange for it."

 

[Notch7]

You are mistaking inequality in society with the argument that there is such thing as a zero sum game.

A zero sum game only seems logical in a theoretical model. Applied to the real world it prevent economies form increasing GDP, or indeed any development at all.

A basic example: a flat screen TV can now be bought for less than the price of a much smaller CRT TV from 30 years ago. That means to me that now many people of all wealth benefit from development in technology.

Those people that create more wealth also pay more taxes and therefore give back more to the state to be distributed to others.

A person earning £100,000 pays more tax than 5 people earning £20,000

A wealthy person may pay for his own health insurance and his childrens private education, he still pays his contribution for the state options.

A pioneering surgeon may earn more than a butcher, a zero sum game would state that his higher pay is at the cost of those poorer. In this country though a poor person could have their life saved by the surgeon -that to me seems to say win-win.

A zero sum game would dictate we all still live in caves.
It also does not appreciate the advantage of post industrial societies that benefit from specialisation of trades and economies of scale that benefit rich and poor.

In a capitalist society, economics works as a win - win game.

http://political-economy.com/zero-sum-economy/

Zero sum or negative sum games can be created by state intervention:

Government can create a zero sum or negative sum economic environment. When governments interfere in the free exchange of goods, the positive model breaks down. The win-win model works in a free capitalist economy. This model does not work in a controlled economy. Examples of a controlled economy are state-run economies

you are confusing a zero sum game, which may apply to chess, it does not apply to economics.

 

[IWalkLikeHimaMartian]

A pioneering surgeon may earn more than a butcher, a zero sum game would state that his higher pay is at the cost of those poorer. In this country though a poor person could have their life saved by the surgeon -that to me seems to say win-win.

Precisely, as you said yourself:

Zero sum or negative sum games can be created by state intervention:
Government can create a zero sum or negative sum economic environment. When governments interfere in the free exchange of goods, the positive model breaks down. The win-win model works in a free capitalist economy. This model does not work in a controlled economy. Examples of a controlled economy are state-run economies

Surely all the world's economies are state controlled economies?

 

[Notch7]

Which economies in the world are state controlled economies? all of them?

Only those which are socialist or communist, the others are capitalist societies which are state regulated, that is totally different from state controlled.

Countries may have:
centrally planned economies ie state control
free market economies
mixed economies

So what you are saying is that socialist, state controlled economies can create zero sum game situations.

 

[IWalkLikeHimaMartian]

So what you are saying is that socialist, state controlled economies can create zero sum game situations.

I did not say it, you did:

Zero sum or negative sum games can be created by state intervention:

Government can create a zero sum or negative sum economic environment.

 

[Notch7]

I did not say it, you did:

Since capitalist economies are not zero sum games, therefore since you believe in zero sum games, then you must mean in the context of an economy under state intervention.

Zero sum game simply does not occur in the real world.

So to try and use it as an argument that the wealthy are at the cost of those poorer is incorrect.

It seems to me like an argument to justify socialism.

 

[SirGalahad]

Since capitalist economies are not zero sum games, therefore since you believe in zero sum games, then you must mean in the context of an economy under state intervention.

Zero sum game simply does not occur in the real world.

So to try and use it as an argument that the wealthy are at the cost of those poorer is incorrect.

It seems to me like an argument to justify socialism.

You are arguing a non position. What is a capitalist economy? All economies apart from a handful are mixed economies with both state provision and private provision.

You don't need to concoct ideas of zero sum games to discuss inequality and its causes or the solutions to inequality as socialism. Go check the Gini coefficient and then consider whether inequality is an issue.

 

[SirGalahad]

It seems to me like an argument to justify socialism.

Is defence spending Socialism? You raise taxes and then spend it without having a say in how it's spent.

 

[Notch7]

You are arguing a non position. What is a capitalist economy? All economies apart from a handful are mixed economies with both state provision and private provision.

You don't need to concoct ideas of zero sum games to discuss inequality and its causes or the solutions to inequality as socialism. Go check the Gini coefficient and then consider whether inequality is an issue.

'You don't need to concoct ideas of zero sum games to discuss inequality'

Exactly -which is the point Im making.

zero sum game concept does not hold true in real life and therefore cannot be used as a valid argument for inequality.

You are arguing a non position. What is a capitalist economy? All economies apart from a handful are mixed economies with both state provision and private provision

Exactly. All economies are mixed. Mixed economies dont fit the model of a zero sum game

I am not countering any idea that social injustice does not exist, it does. The concept that it is due to a zero sum game model is not true.