In game theory, a zero sum game is one in which the gains of one are exactly balanced by the losses of another. In economics, a zero sum game is aptly described by the saying, “As the rich get richer, the poor get poorer.” Many assume that our “economic pie” is static, so that if some take more of the pie, there is less for others to share. But capitalism increases the size of the pie, and although some may get bigger pieces than others, all gain.
Wealth is not money. In the economic sense, wealth is created from natural resources to produce capital goods and services. The more goods available to a society, the wealthier that society is. Reasonably unfettered capitalism is the best engine to produce those goods. In a capitalist society, even the poor are better off than those in non-capitalist countries; just compare the U.S. with some African countries.
Many politicians, including the current crop, think the economy is a zero sum game. Hence they attempt to “redistribute the wealth” in the name of fairness. But this attempt to make things “fair” just decreases the size of the economic pie, to the detriment of all.
The federal government, and some state governments, are hindering creation of wealth through a myriad of regulations that make creation of capital goods, and hence wealth, much more difficult than it could or should be.
About 80% of the U.S. economy is now in the service sector. While many services are valuable and may help producers of wealth; services, themselves, are not intrinsically wealth producers. In our economy, about 71% of GDP is made up of consumer spending which is highly sensitive to job creation, personal wealth, and after tax income. As the real wealth creators, the manufacturing and energy sectors decline, the service sector will feed on itself and eventually our economy will become a zero sum game.
The best way out of our economic mess is to unfetter and unleash the capitalists so that our “economic pie” becomes bigger. Government is currently a large part of the problem. It should just get out of the way.
wryheat 
There are some things more important than letting the markets run their course.
If it comes to someone dying of starvation we shouldn’t say “see, the market is right! There are winners and losers and you lost!”
Our government is made up of WE the people, of Americans. I’d like to think that despite all the problems and corporate control of government, there’s still some humanity left.
I’d like to think that we can still help Americans in need or in times of emergency not just when there is a financial gain to be made…
Also consider the top 5 employers in Tucson. Without government, Tucson would be broke. Numbers 2-5 are: UA, City of Tucson, Pima county, State of Arizona.
The number one? Raytheon, and they get all their money from the government also… unless private citizens are making huge purchases of deadly missiles and bombs?
In the economic sense, wealth is created from natural resources to produce capital goods and services.
The labor theory of value, originating perhaps as far back as Aristotle and common to Adam Smith and Benjamin Franklin, as well as Karl Marx, holds that wealth is created from the surplus value of labor. That is, natural resources have no value (use value) until acted upon by labor. The surplus value is that value created by labor above the cost of the labor to produce whatever the commodity being created is. In simplest terms, profit comes from paying the worker less than what the product of their labors creates in a capitalist society. This is why socialists say that all wealth is created only by labor and all wealth is stolen from labor. So, wealth is not created by capitalists but by labor. It is also true that capital is indifferent to the welfare of labor except as a means to an end. This refutes the tired “trickle-down” theory of wealth distribution, which simple observation also proves to be a lie.
Aside from all that, I am unaware of any capitalist society in which wealth fails to concentrate upwards over time, except in the case of government intervention.
Like the man said, “Workers of the world unite. You have nothing to lose but your chains”!
Oh my. I forgot the best part. To wit: “You have a world to win”!
Profit is the compensation to the entrepreneur for taking the risk and providing the opportunity and the working capital to create jobs. That’s why socialists are wrong to say all wealth is created by labor, unless you also count in the risks and expenses of the entrepreneur.
I have no problem with those who disagree with Adam Smith’s ideas and I expect folks to reject Marx’s, but I think it is dishonest of the Right to go on and on about Adam Smith’s “invisible hand of the free market” when they wish to be free of public interference in their relentless drive for more and greater profit; profit lusted after regardless of cost to the people and the planet, yet blithely ignore other aspects of Smith’s work when it suits them.
In a capitalist society, even the poor are better off than those in non-capitalist countries; just compare the U.S. with some African countries.
“Socialist” African countries ?
A better comparison is with everyone (including the poor) in more “socialist” countries like Denmark, Finland, Sweden, Norway…
What the capitalist risks in making an investment is capital, money that is used to make more money. In the end, that money is generated from labor and, also in the end, that money is used to buy cheaply and resell dearly the commodity that is the source of all wealth – labor. So, what the capitalist risks and what he spends all derive from the same end source – labor. A rich vein of coal or copper, a bag of seed, a forest of trees – none have exchange or use value until acted upon by labor.
During the great Irish Potato famine, plenty of food was available sitting in British warehouses, controlled by speculators waiting for the “free market” to increase the value of their holdings. When the suggestion was made by some that England should provide relief to the starving Irish, Capital responded that the “free market” should be allowed to solve the problem of Irish famine. And solve the problem it did. Men, women and children died on the streets, their mouths and stomachs full of grass eaten in desperate effort to relieve the pain of their hunger.
Today in this very country, millions upon millions of children go to bed hungry every night, and millions more, adults and children, live in poverty though working full time while the speculators on Wall Street “create” wealth for themselves and others of the capitalist class. Then, when their “risks” run afoul, the worker is robbed again to pay for the reckless speculation of the capitalist. What is the speculator risking but the welfare of the nameless and faceless worker?”The worker becomes all the poorer the more wealth he produces, the more his production increases in power and range. The worker becomes an ever cheaper commodity the more commodities he creates. The increasing value of the world of things proceeds in direct proportion to the devaluation of the world of men. Labour produces not only commodities; it produces itself and the worker as a commodity — and does so in the proportion in which it produces commodities generally”.
Karl Marx
The Irish potato famine was made much worse than it should have been as a direct result of policies of the British government with their restriction of trade for example and their on-again, off-again make work projects.
I agree with another of your points. I don’t think that wall-street should have been bailed out. But then again, that was a government decision.
There is not much room for agreement when it comes to this struggle between the great economic systems of our time. Still, I appreciate the opportunity to post on the subject. It’s an odd thing to me, but even to mention the word “capitalism” is an almost guaranteed conversation-stopper and to discuss pros and cons (yes, I actually believe it has aspects that are positive) generally makes people more uncomfortable than a discussion of the prostate gland.
Keep up the good work. Trying to stimulate people to think has to be exhausting at times.