In a capitalistic economy in aggregate there will always be more winners than losers. In the stock market there will always be more winners than losers, even with transactions costs. Vegas in contrast is a negative sum game.  In chess there is one winner and one loser, this is a zero sum game. I do not know why people do not understand this. Economics is not a game of chance or chess, it is a nonzero sum game, it is a postive sum.

What is a zero sum game? A zero sum game is a game where for every winner there is a loser. Therefore in order for somebody to win they must take something from somebody else.

The funny thing is most people believe life and economics is a zero sum game. That is the reason I when you see your neighbor with ostentatious wealth you feel there is some sort of injustice which allow him to get this wealth. This is because you look at your neighbor and can not believe that he possibly accumulated this well on his own accord with his own brain power. He does not look too smart and you’re only conclusion is although he did not steal it someone must have lost for him to have won.

However, the economy does not work this way. Economics and trade when done with on an arm’s length transaction basis always results in two winners.

The reason this is true is and because wealth is first created in the primary sector. That is agriculture mining minerals oil etc. Food is grown, Oil is refined and this gives people the energy to transform the world based on their creative powers. The rest of economics is just a matter of exchange based on optimizing their indifference curves.

Of course this is a great simplification, however, on a theoretical level this is how the world works. Every time you do an economic transaction both parties engaged in economic exchange because there is some perceived benefit.

Zero sum economics exists only when there is large government. The win-win model works in a free capitalist economy. This model does not work in a controlled economy. Examples of a controlled economy are state-run economies, the socialist economies, oligarch economies. The reason this does not work in control economy is some one has been an unfair advantage. When a market is not free people use their intelligence and creativity to get around the system instead of creating value.

This is why it is important to keep the market free as possible. To give people the chance to express their creativity and life. This is the way the world works. When we are all doing are thing, the world has benefits which are unseen on a miro level but on a macro economic level we society as a whole wins. This is Adam Smith. Postive sum economics is capitalism and democracy and the ideals of the enlightenment.