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- Zero-sum
Is the pursuit of wealth a zero-sum game?
Allow me to pose three questions to the inquisitive:
1. Is the pursuit of wealth a zero-sum game?
2. Is the pursuit of money a zero-sum game?
3. Is the pursuit of wealth possible these days without money?
Your input is greatly appreciated. For more information on the pursuit of wealth, money, and Game Theory, visit the site www.juggernautcometh.com, and browse the compendium, which summarizes the theory.
IMHO, the pursuit of wealth is a plus sum game. One can reinvest real wealth and create more wealth.
When money is closely tied to real wealth, then the pursuit of money can be a plus sum game.
When money become decoupled from wealth, the pursuit of money can actually become destructive.
Thank your for your thoughts. What are the qualifications for money being closely tied to real wealth? What does it take to accomplish that?
I agree with Kevin that the pursuit of wealth is a positive sum game. After a voluntary economic transaction, both parties are “wealthier”. I believe pursuit of money is a misnomer or nonexistent. People don’t really pursue paper, they pursue the wealth that paper represents. And no, I think money is required to pursue wealth, whether it be commodity money, fiat, or some other currency.
Thank you for your input as well. A follow up question: if money is required to attain wealth these days, then don’t people pursue money at least to some extent? They may see wealth as the ultimate goal, but don’t they first have to figure out a way to attain money?
Yes- in that case, money is a necessary goal on the way to the larger goal of wealth.
So, if money is necessary to access the ultimate goal of wealth, doesn’t that mean that the pursuit of wealth takes on the characteristics of the pursuit of money?
Dear Mr. Morse,
How great it is to enjoy a discussion with the author without having to sit through some boring university lecture first. I have given your questions much thought today and I hope you will notice the effort I’ve put into my answers.
“1. Is the pursuit of wealth a zero-sum game? 2. Is the pursuit of money a zero-sum game?”
It seems that answering either one of these questions in the affirmative or negative would be to fall victim to the ‘either/or’ logical fallicy. In any financial transaction, it’s possible that either one or both parties could view the event as zero sum, when in fact both parties in actually benefited. By the same token, a transaction viewed by non-zero sum could be argued as having in actuality a clear winner and loser. It just depends on the set of criteria you’re using to judge the situation. To have a rock solid zero sum transaction between a buyer and a seller, certain assumptions must be made. An example from Columbia University Economics Professor Prafit Dutta includes the assumption that the payoff “to a buyer is his valuation minus the price while the payoff to the seller is the price minus the seller’s valution.” – (Strategies and Games: Theory and Practice.) Given the variety of views from man to man, it seems fallacious to suggest that all transactions will presuppose such assumptions.
3. Is the pursuit of wealth possible these days without money? Even if it were possible do to so, via shrewd negotion and unsurpassed creativity, the time and effort required to accomplish such a feat would render such endeavor less than gainful.
As for your follow up question regarding the commonalities of the pursuit of money and the pursuit of wealth: I, myself, have run with the muck of society as well as the cream of society, finding little difference between the two excepting the condition of their teeth and the quality of their conversation. That being said, when the conversation turns to economics, as it often does, I have rarely heard the muck use the word ‘wealth’ nor the cream utter the word ‘money’. I wouldn’t, however, argue the pursuit of either one being much different than the other.
Yours truly,
Peter Nathaniel Hand
Mr. Hand, thank you for your thoughtful and insightful post. Your comment, “I have rarely heard the muck use the word ‘wealth’ nor the cream utter the word ‘money’” is a piece of insight worth a great discussion in itself.
In response to your other comments:
I’m sorry if the first two questions seemed like an either/or proposition–they weren’t intended to be. I just wanted to know whether anyone viewed either pursuit as zero-sum. They were juxtaposed for contrast, for sure, but mainly to better understand the difference between wealth and money.
You make a valid point that gain is based in perceptions of value, and that people can perceive value in all kinds of things. This would lead to the conclusion that no such pursuit of gain is zero-sum as long as the participants value things differently.
But aren’t there things that all people value equally? Oxygen, for instance is something that no one can do without; we all value it to the same degree because it is crucial to survive and prosper. And, as such, the pursuit of oxygen is a zero-sum game in that gain for one is necessarily loss for another. It is never thought of in this way because there is plenty for everyone and no one is at risk of running out of oxygen.
The idea I would suggest is that money is a lot like economic oxygen. No one can do without it and so, for the most part, we all value it to the same degree. You agree in your response to the third question. So, if this is the case, isn’t it right to view the pursuit of money as a zero-sum game where gain for one is necessarily loss for another?
Again, your thoughtful response is sincerely welcomed.
Great discussion.
For me, wealth is a class of “things” that enrich an individual. It is by nature additive and not subtractive. It include intangibles such as free time, family. For assets, they must be appreciating unless they benefit intangibles (the cliche, RV for retirement). Due to the nature of individual desire (which changes) wealth is a PLUS-SUM. An example of this type of transaction happens after a buyout is announced. An existing stockholder sells for $0.25 less than buyout offer to lock in most of the gain. The buyer wants the small profit for little risk.
Money merely facilitates transactions. The majority of transactions involve no wealth. Money is orthogonal to wealth, but is exchangeable for wealth. The pursuit of money is conceptually ZERO-SUM but due to the exchangeability with wealth is PLUS-SUM with a smaller multiplier.
Pursuit of wealth without pursuit of money. Its a matter of personal outlook. On one extreme you have self-reliant individuals who minimize financial interaction with the world but are able to create everything they need and desire. The other extreme is misers who amass monetary wealth but never use it for enrichment.
Fascinating post, Carlo Calica–thanks for your input. I do have questions regarding your take on both wealth and money. First, how exactly must wealth be ‘additive’? Can’t wealth also be subtracted, say, when a valuable good or service is eliminated from possible use? Your example of stock buyouts is very intriguing, precisely because so many see the stock market as the ultimate zero-sum game–one person sells high and another person must buy high–gain for one is loss for another. A trader might have other factors in mind (risk, for example), but the gain in risk for one is necessarily a loss in risk for another. Isn’t that so?
I would also like to know more about the exchangeability of money with wealth. This is similar to something Mr. Hand said earlier (see above). Would you say that something is practically non-zero-sum when it can be exchanged for something that is non-zero-sum, even when it is technically limited and controllable? Does the fact that money can be exchanged for practically limitless real wealth mean that it too is practically limitless?
I’d love to hear yours or anyone’s response to these inquiries.