‘Zero Sum Game’ is the idea that if there is a winner, there must also be an outright loser and no in between. The idea originates in ‘Game theory’, in which the gain of one is offset by the loss of another for a sum of zero. Since the sum of both in the game equals zero, there is no net gain. Some might refer to this is a ‘zero sum gain’.
Examples of a Zero Sum Game are gambling, and a corporate takeover of fixed market share at the loss of another business. Quid Pro Quo is more like fair valuation for something; examples of this are barter, cost of goods sold, negotiated contracts, and service fees. Zero Sum Game is absolute whereas Quid Pro Quo is more open to interpretation and relative. Both these concepts represent strong realities that are alive and well in our economic environment.
The reason both Zero Sum Game and Quid Pro Quo exist is a matter of human nature and motivation. If human motivation is seated in personal gain whether it be lust for life, desire for money, yearning for love etc. Many human motivations seek to achieve gain in some form or another. Economically speaking, these gains can either be partial, full or non-existent; That is to say either a Zero Sum Game or Quid Pro Quo. For example, if two people have $1000.00 each, and 1 bets the other $1000.00 that he can drive a whole in one and does this. The net gain does not increase, only the winner of the bet now holds the total sum of $2000.00
Accepting these two variables in the function of economics play a role one may subsequently ask to what degree each of these elements are present in the majority of economic transactions i.e. is zero sum game the primary form of economic transaction or is it quid pro quo or some other unmentioned variable? That is a good question and to state the answer with any certainty of fact would require an exhaustive compilation of evidence from a minimum of an economic cross section to be of any statistical validity.
Having said that we can work with what we already know, specifically the World around us and our own experience and knowledge. We know that goods and services cost money and the value of those goods and services are arrived at through market forces. The market forces that determine price include production and distribution costs, profit, operating overhead, competition, pricing power and supply and demand. After all these factors are weighed a price is arrived at and if someone pays that price, that someone receives a good or service in return making the transaction quid pro quo, an exchange of one thing i.e. money, for another thing of value. Thus much of our business economic environment is supported by the idea of quid pro quo.
If however, we zoom out our lens of analysis to the macro-economic level we see that zero sum gain is also a powerful reality. We already know Zero Sum Game is win or lose, so a question becomes is economic reality a win or lose scenario? That would depend on who you ask, but assuming that losing economically means rarely, if ever having enough money to simply and instantly be self-sufficient and/or retire comfortably, then there are indeed a great many losers.
This is not to say working is not a profitable venture over the long run and not rewarding in some immaterial way, but rather it is to claim that if such a scenario were to be considered a loss, then the winners in such a game would be perhaps marginal. It can be considered a loss under the premise we are socially mandated to maintain the minimum standard of living for our economic environment or be castout legally, socially and economically. In other words and for example, paying multiple utility bills simply for homes to be on par with North American living standards, not to mention legally habitable. In addition to this, the necessity for food, clothing, hygiene and transportation are all considered quite important increasing the value of the quid pro quo multiple required to live a sustained life.
After having added all these multiples, a net value or expense is arrived at. Incomes tend to rise in proportion with cost of living for of a city or region making the only way to profit dependent on income from investments, savings and money left over from living below one’s means. This balancing act is easier said than done, though not impossible for many. In American culture we are surrounded by temptation and the social norm to advance materially and culturally. Combined with limited incomes this makes living the American dream ‘difficult’ at least in the economic sense.
To better understand the idea of difficult economic reality we can better define loss as time spent working, and dollars paid to maintain standard of living (individual operation costs). Having made two assumptions for analysis’ sake, namely minimum standard of living requirement and difficult economic reality, we can then look at the economic reality and indeed discover the potential for a heavily biased economic environment in favor of zero sum game despite the ever present quid pro quo. That is to say, with the cultural mind set often looking forward materially, and socially, having more is the norm and less the taboo.
As a function this might be expressed as multiples of quid pro quo where quid pro quo (Y), is either equal to, greater than or less than money left over from quid pro quo expenses i.e income (X). Numerically, 4Y>(X-4Y), 4Y=(X-4Y), or 4Y. Under this purely subjective and cultural economic ethos we still remain free to choose the material lifestyle that fits our means. However, many times we submit to economic temptation and spend beyond our means. The path to financial victory is clearly to live consistently under one’s means so that one continuously gains and does not entirely fall prey to the ‘zero sum game’ scenario.
The nature of economy requires that a quid pro quo matrix always exist, otherwise there would never be enough labor or resources to sustain a culture or civilization. Inevitably this creates a bottle neck which can be perceived as low sum game depending on how one looks at it. To maximize the gain of this bottleneck, Quid Pro Quo must exist, however to minimize the monetary restrictiveness of this bottleneck and free up individual resources, it is necessary for those subject to it to live under their means for a long enough time to allow for Y or find alternate ways to surpass the economic scenario of maximum efficiency. To overcome the economic throttle that ensures quid pro quo never favors the proletariat, but also maintains zero sum game is ineffective at encouraging the proletariat to have hope enough in quid pro quo to see it as both reasonable and fair.