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Mercantilism is notorious for treating the world economy as a zero-sum game, wherein the local economy is supposed to benefit when regulations that operate to the detriment of foreign economies are in place. Mercantilist thought is now outdated, and starting with Adam Smith and continuing today, commentators love to point out that the economy is not a zero-sum game.

However economies are large and complex beasts, and the statement "the world economy is not zero-sum" only requires that there exists some part of the world economy that is not zero-sum. So, as a contrived example, the fact that pooling our resources to stop a giant meteor from crashing into Earth is win/win for everyone suffices to show that the world economy is "not zero-sum", but has absolutely no bearing on the day-to-day operation of the world economy under 99.999999% of circumstances. In this way, concepts such as absolute advantage serve to illustrate that the world economy is not inherently zero-sum, but fails to demonstrate the degree to which the economy is not zero-sum.

On a practical level, what are some ways/aspects in which the world economy is zero-sum or approximately zero-sum? For example, access to natural resources such as oil might be considered mostly zero-sum... Norway benefits tremendously from its oil production, and if Switzerland were to capture their oil fields in some way then Switzerland would obtain much of that benefit.

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    $\begingroup$ It may also be worth discussing, on a fundamental level, what are ways to measure the degree to which a game is not zero-sum that might reasonably apply to complex games such as the world economy? $\endgroup$ – Scott Jul 25 '19 at 9:05
  • $\begingroup$ I think the question in your comment is much more interesting and answerable than the question(s) in your post. The question(s) in your post is both too broad and unanswerable without first answering the question in your comment. $\endgroup$ – Herr K. Jul 25 '19 at 17:04
  • $\begingroup$ "your comment is much more ... answerable..." I would argue that it is way less answerable. I can think of a great number of ways to measure non-zero-summiness just off the top of my head. Maximum absolute sum over all outcomes. Sum of square sums over all outcomes. Can we apply these to the world economy? Probably not. OTOH, zero-sum is very well defined and easyish to measure, and is actually identical in both of the metrics I propose above. $\endgroup$ – Scott Jul 25 '19 at 21:21
  • $\begingroup$ This is a broad question, though, I concede. $\endgroup$ – Scott Jul 25 '19 at 21:21
  • $\begingroup$ I don't understand why the measure of non-zero-sum-ness and the measure of zero-sum-ness are not essentially the same measure. If $\mu_0\in[0,1]$ is a measure of the zero-sum-ness of a game (say $\mu_0=1$ for the matching pennies game), then isn't $\mu_1=1-\mu_0$ the measure of the non-zero-sum-ness of the same game? $\endgroup$ – Herr K. Jul 25 '19 at 21:37
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No, the world economy is not a zero-sum game.

Take any sector, and the companies that survive in it are profitable. That's generally because they're wealth-creating.

Access to natural resources is not zero sum. Resources are only viable if they're economically extractable. Constant innovation in resource extraction constantly opens up new reserves, and means that the sector is not zero sum.

Anything involving international trade on a level basis, is not zero-sum - see David Ricardo's work on comparative advantage.

Manufacturing clearly isn't zero sum.

And I'd argue that service provision clearly isn't, either.

Public goods such as education and healthcare aren't either.

So, we've eliminated primary, secondary and tertiary sectors, public goods, and trade. I think that about covers it.

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  • $\begingroup$ "Access to natural resources is not zero sum. Resources are only viable if they're economically extractable. Constant innovation in resource extraction constantly opens up new reserves, and means that the sector is not zero sum." This statement can be taken to mean "In the absence of some new innovation that opens up new reserves, extraction of natural resources is zero-sum." Note that I did not ask "In what ways is the world economy not zero-sum", as this topic has been covered ad nauseam elsewhere. The question is "In what ways is the world economy zero-sum". $\endgroup$ – Scott Jul 25 '19 at 10:17
  • $\begingroup$ If your claim is that "there is not one single conceivable activity in the world economy that is zero-sum, or even approximately so." then this is fine, but I should think that this would require quite extraordinary evidence. $\endgroup$ – Scott Jul 25 '19 at 10:18
  • $\begingroup$ As for natural resources, Luxembourg has no oil reserves, so insomuch as the economic activity "extraction of oil at the Troll A oil well" is concerned, between the parties of Luxembourg and Norway, that aspect of the world economy is basically zero sum. The fact that Norway owns those waters means that Norway gets to exploit that resource, and that Luxembourg does not. $\endgroup$ – Scott Jul 25 '19 at 10:24
  • $\begingroup$ ... A better example might be between Luxembourg and Vatican City over Troll A, since neither country currently has any oil reserves. Norway could feasibly exploit yet other reserves in its region. $\endgroup$ – Scott Jul 25 '19 at 11:34

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