# If I gain, then someone else loses. Correct?

On a very small scale, it's certainly true that if I gain, somebody else might lose. If I take away my brother's chocolate, then he will lose it, and will most probably not get anything comparable.

But on greater scale, say, nationally, if one person (e.g. successful start-up founder) makes a fortune, will this generally be bad for the other players? Or can it be beneficial (e.g. if the money is not saved up)? Does it entirely depend on the rich person's spending behavior?

• When I buy an apple from the grocer, do I lose money or gain an apple? Does the grocer gain money or lose an apple? Short answer: We both lost something we valued less than we gained, so we both profited. – Shadur Jun 2 '15 at 9:16
• Well, perhaps rephrasing the question could help: - Is it possible for everyone/everything to continue gaining at all times (forever so to speak)? The problem with examples is that they tend to support a specific claim while (conveniently?) disregarding the possible alternatives. For example, ... :) – user4822 Jun 2 '15 at 11:35
• The question was phrased as a statement: If some wins, someelse loses. In such a case it is enough to give a counterexample to disprove the statement. I think most of the answers did not claim that all gains are the results of win-win scenarios. (Funny ending.) – Giskard Jun 2 '15 at 11:57
• I don't think this is a good analogy; if you took away your brother's chocolate without a trade that would be stealing. – Michael Theriot Jun 2 '15 at 14:33
• @Turch Wow, thanks! Idealistic undergraduates find their unconsciously preserved child's model of wealth confirmed by eminent writers of the past. It is a case of the mistaken meeting the outdated. < it seems that that's me (though I'm not undergraduate anymore) – Manuel Maly Jun 4 '15 at 14:30

I completely agree with denesp's answer, however I think you can make it even simpler.

On a very small scale, it's certainly true that if I gain, somebody else might lose. If I take away my brother's chocolate, then he will lose it, and will most probably not get anything comparable.

OK, let's say I prefer chocolate to wine gums and my brother likes wine gums better than chocolate. Then taking his chocolate away and giving him my wine gums is good for both of us, so we both win and no one loses. So the answer is no.

You could even consider the extreme case in which your brother hates chocolate and you are doing him a favor by taking it. (Works not as well with chocolate, but you might think of recycling.)

In general these "trades" are called Pareto improvements.

But this is only one example, if you are interested in the subject, you might be interested in one of the following basic economic ideas:

• Trade between two countries in which one of them is more efficient than the other: Ricardo's comparative advantage example

• Your brother likes to give: altruism / warm glow (I really don't like the wiki page here, but was not able to find a decent non-scientific explanation of it.)

• Or maybe other other-regarding preferences, for example fairness (your brother has a lot of chocolate and feels better if he gives you some): Theories of Fairness and Reciprocity (On page 3 is a brief "Non-technical summary" which might be interesting.)

As you can see there are many examples for a "win-win" situation and there are many many others, depending on the situation.

• I'd also add that, similarily, there might also be lose-lose situations, were both parties lose. This should be obvious, but you never know. – o0'. Jun 2 '15 at 9:36
• @Lohoris Sure. And there are situations where someone loses and someone wins ;-) The question was however: someone wins => someone loses, so I constructed counterexamples (i.e., win + win). – The Almighty Bob Jun 2 '15 at 13:47
• I'm a little surprised that you didn't at least mention the existence of zero-sum theory, especially since you link to the Pareto efficiency Wikipedia article. My understanding is that once you have exhausted all possible Pareto improvements (which, granted, is highly unlikely in a complex economic system), transactions must have a winner and loser. – SocioMatt Jun 3 '15 at 12:21
• Saying "if you have exhausted all Pareto improvements there are no Pareto improvements anymore" is correct but imho not necessary. Why I did not mention zero-sum theory: I never heard of it. I know zero-sum games but that is just a class of games (which are easy to solve). Furthermore, the situation which Manuel describes is more general than zero-sum games. – The Almighty Bob Jun 3 '15 at 12:48
• @TheAlmightyBob I didn't say "if you have exhausted all Pareto improvements there are no Pareto improvements anymore" since that would be obvious. I'm saying that the conclusion of Pareto's argument is when all improvements have been made, transactions always cause someone to win to the detriment of another party. You mention Pareto; I'm trying to determine why you only used the part of his economic theory that supports your argument while leaving out the main point: if an economic system is optimized, then there are always winners and losers. – SocioMatt Jun 3 '15 at 13:24

This is a fundamental question which economics can answer quite well. I'll rephrase your question a little bit- Is economics a zero sum game?

The answer is no. Certainly some transactions are, but for the most part, no. It can be proven a little bit more rigorously and denesp has alluded to that by linking the fundamental theorems of welfare economics. I'll focus on an example showing why it isn't a zero sum game.

Value can be created. Say you are an artist and make a painting. The painting (assuming it is good) has some value to people. You can sell that painting and use that money to fund other purchases.

The purchaser of the painting is better off than without it. Why would he buy the painting if he would prefer having the money? He wouldn't. And you are better off because you prefer having the money over your painting.

A large part of economics involves the behavior of markets and mutually beneficial transactions.

• Is economics a zero sum game? The answer is no. I would rephrase that with Is every transaction in economics a zero sum game?. There certainly are zero sum games, especially in Finance, or worse: where taking someone else's part of the cake reduces the overall cake size. – FooBar Jun 2 '15 at 11:17
• @FooBar Good suggestion – Jamzy Jun 2 '15 at 23:05
• A zero-sum game is much more specific than "If I gain, then someone else loses". If you have a game like: A chooses $a \in (0,10)$ and B chooses $in$ or $out$ and for $out$ they all get 0 and for $in$ A gets $a$ and B gets $a-10$ we have a loss/gain situation without being a zero-sum game. Maybe just remove the zero-sum game reference? – The Almighty Bob Jun 4 '15 at 14:29
• @TheAlmightyBob I agree with what you are saying but using your interpretation of the question, the answer is trivial. I read it as 'one mans benefit is another mans loss' which I think is true to the intent of the question.. – Jamzy Jun 30 '15 at 0:55
• I agree with the trivial part. However, my interpretation is more general as zero-sum games (or 'one mans benefit is another mans loss') and they are a special case of "my" interpretation. So the case of zero-sum games is then also trivial (which it is imo). However, I don't think there is much room for interpretation of the simple statement in the question title, but that might be just me. – The Almighty Bob Jun 30 '15 at 8:06

As a complement to the great answers already here, let me give an even simpler small scale example in which you win and no one else loses:

Suppose you have a broken fan at home.

Scenario A: you relax on your couch then go to sleep.

Scenario B: you take your fan apart, figure it's just a loose screw, tighten it, put it back together again, and it's fixed. BAM, value created. Then you go to sleep.

In Scenario B, you gained and nobody lost. When you went to sleep there was literally more material wealth in the world compared to Scenario A. And measurably more so: you can certainly sell the fan for more money now that it's fixed.

If I take away my brother's chocolate, then he will lose it, and will most probably not get anything comparable.

The problem with this example is that there is no economy between you and your brother. You simply stole his chocolate. Conquered it if you will. No trade ever took place. The best way I've ever heard this explained is by calling it the "conquest paradigm." Before capitalism dominated the world, tribes and countries would gain wealth by conquering other civilizations and taking their possessions. This is what you have done, albeit without all the bloodshed.

In a market economy, you would have to make a deal with your brother in order to get his chocolate. In exchange for his chocolate, he wants some of your broccoli because he is on a diet and wants to lose weight. You trade him two heads of broccoli for his chocolate bar. Who wins in this situation?

Nobody would ever make any trades if he stood to lose from the deal. You benefit from giving up your broccoli for his chocolate because you wanted a tasty snack. Your brother benefits from giving up his chocolate for your broccoli because health is important to him. Though all the two of you did was exchange items, both of you benefited.

In a market economy, every trade creates wealth because both parties involved benefit. When the farmer sells you his wheat, he benefits because he would rather have your money than the wheat he sold you; he has lots more, after all. You benefit because eating and staying alive is more important than the money you gave him. Because you both benefited, both of you are said to be wealthier; you live a longer life and he has more money.

A lot of people will characterize capitalism and markets as competitive, but I prefer to think of it as cooperation on a grand scale. Though it's true that Apple and Microsoft might be competing for the business of the consumer, it is important to remember that both of these companies are cooperating with the consumers, their employees, and their suppliers with every trade they make.

Capitalism does not have to be a zero-sum game.

• Just a point to note, but capitalism did not magically stop people - especially westerners - from conquering and "colonizing" other civilizations and taking their land, possessions and workforce. – Shadur Jun 2 '15 at 9:19
• Also even though they are historically related, capitalism and free trade should not be confused. – Giskard Jun 2 '15 at 10:17
• I had to make an economics SE account to make this comment, so here it is. @Shadur please do not confuse capitalism with imperialism. There may be connotations but I think you're getting off topic. – jdero Jun 2 '15 at 18:24
• "it is important to remember that both of these companies are cooperating with the consumers, their employees, and their suppliers with every trade they make." Certainly untrue. If offered to reap more surplus from their customers/suppliers, these firms should do so. After all, we're characterizing market equilibria as solutions to non-cooperative games. – FooBar Jun 2 '15 at 22:12
• @shadur Well, sure. I don't suppose that anyone would say that the existence of a good thing means that all bad things will instantly disappear. If I say, "Someone made a glass of refreshing lemonade for me", I can't imagine anyone believing it necessary to point out that poisons still exist in the world despite the fact that this lemonade is perfectly good. – Jay Jun 4 '15 at 3:22

I think this is more of a microeconomics question.

As long as it is not forceful but voluntary reallocation of goods no one loses. In fact even more can be said but you need to read up on it a little. http://en.wikipedia.org/wiki/Fundamental_theorems_of_welfare_economics

The basic idea is that trade benefits both parties.

An example: Your fridge is broken and you want to fix it. Let's say you know the problem, but it will cost you 100 dollars to fix it yourself. This can be because you do not have the tools to fix it or because you need to take time off from work to do so. Suppose the cost of fixing is merely 60 dollars for a repairman, because he already has the tools and/or has a lower hourly wage. Then if you pay him any amount between 60 and 100 dollars and he fixes your fridge you both benefit.

Your startup example may be a little different as it seems to about a restructuring of industry. Another example:
Suppose someone invents low cost (virtually nil) teleportation. Now getting to work will take 1 second and you will only need to pay 20 cents on the dollar to get there. Pretty much everyone's life will be made easier by this invention, so a lot of people will use it on a daily basis, they are clearly beneficiaries. The inventor would also make a fortune. However this will probably cause a lot of unemployment in the transport industry. Given some assumptions you could fix this with transfers: You could transfer money from the people (in form of taxes) who benefited from the invention to the people (in form of social security) who suffered a loss because of it. Mind that this is a fairness and equility issue and is not itself incorporated in the idea of trade.

• This is exactly why the Apple iPod and iPhone never went anywhere -- Apple had to pay all their competitors for their losses when the game-changing new technology was introduced. </sarcasm> But seriously -- Isn't this mindset the problem we have, right now, in our government? That we can/should 'do something' to 'help' people whose lives/jobs/opportunities have changed? It's all become crystal clear.... – MrWonderful Jun 2 '15 at 23:19
• @MrWonderful: I don't think denesp's intention was to say that there should be transfer payments to those whose profit is reduced by competition, but merely that it such transfer payments would make possible a situation where the entry of a new competitor to the market could leave everybody better off, and nobody worse off, than would otherwise have been the case. – supercat Jun 3 '15 at 22:41
• @supercat - I suppose, except for the people paying the new tax. They would be necessarily worse off, due to decreased profits. – MrWonderful Jun 4 '15 at 7:30
• @MrWonderful There are three scenarios at play here. Scenario one: No innovation. Scenario two: Innovation, no compensation. Scenario three: Innovation & compensation. The people who innovate would be worse off in S3 than in S2, but they would be better of in S3 than in S1. Microeconomics argues that S1 is not Pareto-efficient, while S2 and S3 are. Whether you prefer S2 or S3 is up to you. S3 is mainly introduced to show that S1 is not efficient, as we can have a different scenario when everyone is better off. – Giskard Jun 4 '15 at 7:45
• @supercat - Thanks! I obviously misunderstood the intent and started in on a knee-jerk response suggesting people stop looking to Government as the answer to society's / business' ills... Thanks for the added clarity. – MrWonderful Jun 8 '15 at 18:36

I think the easiest way of looking at this is the macroeconomic perspective. If every transaction necessarily was a zero-sum game, there couldn't be growth.

Yet, we see that (under several measures) all economies are growing and getting richer - even if the underlying distribution is skewing, which is irrelevant for this point.

• I don't think looking at zero-sum games is sufficient (See my comment to Jamzy's answer). – The Almighty Bob Jun 4 '15 at 14:48
• What do you mean by "under several measures" ? which ones ? an example ? What about the native american economy ? I don't think it's growing. – bvdb Jun 4 '15 at 15:14
• @TheAlmightyBob I have to admit that I read this into the question, especially from the very specific example. – FooBar Jun 4 '15 at 15:17
• @bvdb The standard measure is GDP. There's a number of alternatives around, which try to improve GDP for it's lack of measuring "social well being", such as the Fordham Index of Social Health. – FooBar Jun 4 '15 at 15:18

As an additional answer, i.e. to supplement others, I think there is one further concept you might want to look into. "If I gain, somebody else loses," is, I would argue, at least roughly speaking, a good description of mercantilism, a pretty dominant economic theory until a few centuries ago. I'm bringing this to your attention because a) it is a manifestation of your philosophy at the national level, as you specify, and b) it's a neat historical example of a fairly prevalent economic theory that seems pretty silly today.

I have flaged this question to be closed, because it is hopelessly vague -and the many answers here prove it: it is obvious that the terms "gain" and "loss" mean very different things to the answerers, which means that the problem is in the question, which used the words as though there exists a single, universally agreed upon meaning for each.

To give the most interesting (to me) example, I pick an excerpt from another answer:

"Well, the guy selling chocolate looses cause now he lost a possible sell to you."

The emphasis is mine. Such reasoning is sustained by the following interpretation of the meaning/ definition of the word "loss":

$$\text{Loss is any foregone opportunity for gain.}$$

Let's see how this works. Assume I enter willfully and freely into a transaction and the same holds for the other guy, who after the transaction will move abroad. Expressing utilities in monetary (willingness-to-pay) terms, what I give has willingness-to-pay for me say $10$, while what I receive has $12$. So it appears that, after the transaction, I am better off, by $12-10 = 2$... No I am not: I just experienced a loss here: I forfeited the opportunity to get the other guy's stuff without giving up anything. In that case I would have ended up with $10+12 = 22$. Currently, I have only $12$. So this transaction created a loss for me, equal to $22-12 = 10$, given how "loss" is defined. Mind you, there is folk belief that such a definition for "loss" is not just a twisting of words and meanings, but it characterizes the "venturous spirits".

The above only shows that if such terms are not defined somewhat strictly and, unavoidably, narrowly, useful conversation around them is difficult if not impossible -let alone answering a question about them.

• I agree with you. I'm fine with Bob's answer as it points the OP in a good direction for further inquiry. Beyond pointing him or her towards these concepts, however, I don't think these answers are purposeful. – Shane Jun 3 '15 at 21:47
• @Shane Thanks for the comment. Indeed some of the answers pointed towards useful ways to think about these concepts -hopefully some readers will benefit from them. – Alecos Papadopoulos Jun 3 '15 at 23:59
• I disagree. I think for an economist the term person A loses is well-defined, given a context (as A's utility is decreasing, given some reference point). As economists we are using several words differently than "normal" people (e.g. utility, cost, effort, ...) which does not mean that these terms are vague. – The Almighty Bob Jun 4 '15 at 15:00
• @TheAlmightyBob I am not sure I understand with what you disagree. All terms in a discipline like economics have well defined content, even well-defined multiple contents, depending on context. My post has to do exactly with the fact that the OP did not provide, even indirectly, any such context at all - and I believe the multitude of low quality answers attest to this. – Alecos Papadopoulos Jun 4 '15 at 18:12
• @TheAlmightyBob I cannot consider "If I take away my brother's chocolate, then he will lose it, and will most probably not get anything comparable", a "clear context". – Alecos Papadopoulos Jun 4 '15 at 21:39

I agree with several other posts here, but let me add a simple logical proof:

Suppose I sell my used car for, whatever amount, say \$1000. So someone gives me \$1000 and I give him the car.

Why did we do this? You could reason like this: If the car is worth more than \$1000, then I am being cheated. If the car is worth less than \$1000, than the person who buys it is being cheated. Perhaps one of us is a fool who was duped by a con man. But there are plenty of places you can look up the "book value" of a car today quickly and easily. And people make these sort of transactions all the time. There must be thousands of used cars sold in America every day. In every transaction, is one of the people a fool?

You might reply that the deal is fair if the car is worth EXACTLY \$1000. But if that's the case, why should we go to the trouble to make the exchange? If having ten \$100 bills in his pocket is EXACTLY as good as having this used car, why should the buyer look up classified ads and run all over town just to exchange something for something else that has exactly the same value?

No, the only possible explanation is that to me, the seller, ten \$100 bills are worth more than the car, but that to the buyer, the car is worth more than ten \$100 bills. Perhaps I have another car and have little use for two cars, while the buyer's only car was destroyed in an accident yesterday. There are all sorts of things that I can buy with the cash that are more valuable to me than having a second car sitting in the driveway.

This is what makes transactions possible: There is no such thing as "THE value" of a product. What a product is worth to me has nothing to do with what it is worth to you. Thus it is possible for two people to trade products and both to come out ahead. By the values that each person assigned to the products involved, both got more than they gave.

• This is a numerical example, not a "logical proof". – FooBar Jun 4 '15 at 13:31
• @foobar I use an example in the course of making a logical argument. Surely you do not say that a logical argument cannot use examples to make the point concrete? Like if someone says that it is impossible to program a computer to find a square root, and I show a computer program that in fact works, would you say that that argument is invalidated if I then give an example? – Jay Jun 4 '15 at 15:05

Not every action means that somebody is losing. Let's look at the 3 economical sectors.

1. Extracting natural resources will add value in our economical chain (e.g. solar power, recycling paper).

2. But also production companies add value. They buy goods which will be used as a resource to create new products. The value of the end-product is often much bigger than the value of the consumed input products. (e.g. producing furniture)

3. But the same goes for distribution and services. Most economical activities are actually win-win situations.

However, it is true that economical balance can be disturbed if one region is doing better than another. (e.g. Is globalization a good thing or a bad thing?).

Competition also plays an important role. It can be positive (win-win) or negative (e.g. price wars, ...). On the other hand, without competition you get monopolies, which are bad for the consumer. It is partially the task of the government to avoid these kind of situations.

• (i) Solar power and recycling paper are not two examples people typically think about when talking about extraction of natural resources. (ii) How is the economical balance point related to the question? (iii) First you say competition can be positive or negative, then you say lack of competition must be negative. Which one is it? What does it mean that "Competition is hard"? How is this last point related to the question? – FooBar Jun 4 '15 at 13:34
• @FooBar About point (i) : What I'm trying to explain here is that there are 3 sectors: primary, secondary and tertiary. Sorry for dumbing things down to an understandable level. en.wikipedia.org/wiki/Economic_sector – bvdb Jun 4 '15 at 14:07
• @FooBar About (iii): Monopolies give the producer a free choice to set prices. If prices of oil increase, also prices of transport increase, and everything gets more expensive, economy will slow down. If prices of food increase, hunger will appear. I think that's pretty clear ? – bvdb Jun 4 '15 at 14:28
• @FooBar More about (iii): Competition on the other hand can be positive or negative. Positive for the consumer, who will have a choice in price and/or quality. But e.g. when the market is overcrowded it can be negative. The customer is very satisfied, while companies have a hard time (price wars, sacking people, ...). – bvdb Jun 4 '15 at 14:37
• @FooBar Finally about (ii) : About the balance: You need to look at this from a global perspective. Standing still means that you are falling behind. Globalization plays an important role in this story. See: "Economic Inequality" en.wikipedia.org/wiki/Economic_inequality – bvdb Jun 4 '15 at 14:44

I think that is true, for example when a company gains an important place in the market with a certain number of customers the other company will lose these customers. Other example: when "Carrefour market" is open on Sunday it makes profits that the other super market will not make. So for me this relation between lost and gained seems valid...

• In your example yes, one firm's gain is the other's loss. However this is not the always the case. You may read about other situations in the other answers. – Giskard Jun 3 '15 at 19:52
• No one denies that there are transactions where one gains and the other loses. Stealing is a pretty obvious example: the thief gains something and the victim loses something. The question is not, "Is it possible for a person to lose something without getting something of equal or greater value in return?" The question is whether this is inevitable in every transaction. – Jay Jun 4 '15 at 3:16

I would say yes, I know everyone else is saying NO but it wont let me comment. So an Answer must be the way..

In given example

OK, let's say I prefer chocolate to wine gums and my brother likes wine gums better than chocolate. Then taking his chocolate away and giving him my wine gums is good for both of us, so we both win and no one looses.

well the guy selling chocolate looses cause now he lost a possible sell to you. And the wine gum seller lost a possible sell to your brother due to your trade. So yes someone lost

Next example

Your fridge is broken and you want to fix it. Let's say you know the problem, but it will cost you 100 dollars to fix it yourself. This can be because you do not have the tools to fix it or because you need to take time off from work to do so. Suppose the cost of fixing is merely 60 dollars for a repairman, because he already has the tools and/or has a lower hourly wage. Then if you pay him any amount between 60 and 100 dollars and he fixes your fridge you both benefit.

The guy you would of paid the 100 to for the tool did not benifit. Thus someone loss..If you had to take time off work, then someone else must pick up your work load for the day, or the company you work for is down 1 employee for the day.. either way someone loses

and the last answer, just cause two people gain from there trade does not mean someone else did not gain a loss...

• The guy losing the chocolate did not lose a sale, he makes one as he gets gums for the chocolate. In the fridge example you could make the cost be only about the loss of time then no one else is involved. (Even if the tool guy is involved there would be a solution, but it is more complicated because we have to look at three people.) – Giskard Jun 2 '15 at 10:24
• @Denesp dont think you understand what I was trying to say, in first example you have (Me, brother, guy selling chocolate, and guy selling wine guy) two have gained, and 2 have lost – user41758 Jun 2 '15 at 10:26
• Have you considered that perhaps you misunderstood the examples? In the first example there only two people, the brothers. There are no vendors. If you believe that your interpretation is correct and you want to make sure you can try to phrase your answer better. Btw. I do not agree with you at all but I did not downvote your answer, I gave a comment to explain why I disagreed. But even if someone downvotes you you should not feel offended, this is a marketplace of ideas. – Giskard Jun 2 '15 at 11:51
• Pretty obvious troll... – The Almighty Bob Jun 2 '15 at 13:42
• This is - imo - an answer, not a comment. Hence, I declined the request for deletion. If you disagree with the answer, just down vote it. – FooBar Jun 2 '15 at 20:03

## protected by FooBarJun 4 '15 at 13:13

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