This isn’t a zero-sum game

http://bluntobject.wordpress.com/2008/02/21/this-isnt-a-zero-sum-game/

by jmorin007 • 18 years ago

20 33 18 years ago

bluntobject.wordpress.com

bocajuniors3• 18 years ago

but still, not even america is a purelely capitalistic society,you do have some socialism in the blend.and the 20 or so western nations with higher standard of living are even less capitalistic.so in the trade off between the two ideas i think america should move towards socialism.of course there are other nations that should do the opposite

gibsonf15• 18 years ago

It is the socialism in the blend of the US economy that drags us down as well as in other blended countries such as in Europe.

brlittle6• 18 years ago

Please cite your evidence for how we are being "dragged down," and please cite a purely capitalist society that rivals our own (or those of Western Europe). I'm willing to consider evidence, but not an unfounded assertion like this.

bocajuniors3• 18 years ago

but it is a well established fact that the standard of living in norway, denmark, finland, germany... well exceeds that of america.do tou really think that any of these countries are more capitalistic than america?

duncanr4• 18 years ago

The kids in the post add value by building more complex structures out of the raw materials, no? Does the author of the article think we have an infinite supply of raw materials? I read the original article as an experiment into control of raw materials rather than an experiment of added value vs. zero-sum.

As much as economists may dislike it, these arguments seem to always boil down to 'who has control of the raw materials'; those that are empowered are happy with the current system, and those that are not empowered are not. The efficiencies of the market, and whether it's zero-sum or not, would seem to be a secondary concern for most participants.

gibsonf15• 18 years ago

Raw materials are less limited than most people think. The usual scenario is that as a raw material gets scarcer, the price for it goes up. With the price higher, firms are incentivized to spend more on technology to reach formerly unreachable raw resources, etc. This is why we've been running out of oil for about 100 years - the price goes up, technology is deployed, etc. And if we really did start to run out of oil, then the value of energy would go up creating demand for alternates as the price now pays for greater technological breakthroughs, etc.

So, to make a long story short, the idea that resources are a zero-sum game is also incorrect in the sense that the underlying value can be found given enough ingenuity unleashed with the profit motive.

So the lego example is in no way a reflection of the real world, and if I could give this blog post a larger up vote, I would.

mynameishere• 18 years ago

This is why resource reserves are usually accompanied by a price per unit:

http://www.euronuclear.org/info/encyclopedia/u/uranium-reser...

The global uranium reserves with mining costs up to US $ 80 per kilogram amount to about 2 million tonnes ... If mining costs of up to 130 $/kg are taken into consideration the global uranium reserves are increased by further 3 million tonnes.

At some price, it will become possible to extract trace uranium from ocean water, of which there is quite a bit.

duncanr4• 18 years ago

Would you be happier to say that the utilisation of raw materials 'tends towards' a zero-sum game, then? ;-)

I don't disagree with what you say (although I would argue the likelihood of this theory playing out in practice and over the long term seems low), however this is largely irrelevant to my original point which was that many people who aren't successful (by some measure) will complain that inequities 'in the system' are unfair, and much discussion will ensue because of that.

mightybyte5• 18 years ago

In the trading game that aided the formulation of the teachers' ideas, it didn't sound like there was a way for the children to add value.

It's interesting that the article's core attitude is based on the idea that eliminating inequality is (or should be) the main concern. It would seem that socialist societies have demonstrated that when you focus on inequality, you end up stifling productivity. Maybe there should be more focus on productivity and advancement rather than inequality, although that's harder to do in the domain of Legos. When you do this, it's not about control of the raw materials as much as it's about who contributes the greatest value at their link in the chain.

brlittle6• 18 years ago

It's interesting that the article's core attitude is based on the idea that eliminating inequality is (or should be) the main concern.

It would be appropriate at this point to zoom out a bit and remind everyone that we're talking about a playroom full of kids ranging from roughly kindergarten to third grade. Of course eliminating inequality (insofar as access to toys and play equipment is concered) is the point! As I stated in a previous comment, you can argue whether the teachers picked the best way to do it, but that argument does not change the underlying premise.

boredguy82• 18 years ago

"The kids in the post add value by building more complex structures out of the raw materials, no?"

The problem with using that as a refutation is that in the market of the classroom, the lego houses are "durable capital goods". The 'right' way for the teachers to shake up the classroom is to highlight the value of other toy markets. For instance: you can create far more diverse objects with play-doh than you can with legos - in some instances, that might make play-doh more valuable.

Helping the kids understand that makes a conversation like, "I'll trade you 1/3 of my green play-doh for your lego car," possible. It also would not only -empower- the other students, it would begin teaching the kids valuable lessons in determining value and how to negotiate. Skills and insights that are far more valuable than learning how to say, "But you should give x to me because you have more."

mightybyte5• 18 years ago

Excellent point. This is an excellent lead-in to teach kids that the value they place on things is not intrinsic. Once they start thinking this way, they will discover that by changing the value they assign to things, they can manipulate their amount of satisfaction and even the amount of power they possess.

Ironically, this comes full-circle to the article's mention of stepping outside rules that are bad. The kids can now say, "I don't have to assign more value to green legos just because your game assigns more points to them." Some things still do have a certain degree of intrinsic value, so this won't always work. But they have been empowered to the extent allowed by the value assignments of which that they have control.

BTW, startup founders use this type of understanding to prioritize ideas that have a better chance of success.

h34t3• 18 years ago

Do you have any evidence these arguments always boil down to who has control of the raw materials?

I think access to intellectual capital and social capital are far, far more important. In the future, perhaps, access to raw materials will become more important. But now, you can get access to raw materials easily if you have the rest (intellectual/social capital) -- people will sell them to you in exchange for renting out your brain & the smoothly operating institutions of your well-managed community.

It is nearly as simple for a man in China to order a container of wood as a man in Canada. But you cannot simply order a container of culture, or a container of civilization, or institutions, or habits, or education. And these things set the west apart far more than access to raw resources.

Low-resource cities fabulously wealthy due to great social/intellectual capital: Hong Kong (where I"m writing from, a city built on a rock with a great port and not much else), Singapore (built on swampland), numerous others.

High-resource locations mired in conflict, poverty, and struggle: Democratic Republic of Congo; Guatemala; numerous others.

duncanr4• 18 years ago

I agree with your post 100%, but I think I'm generalising more than you're thinking I am.

My cards out on the table: I'm not a student of Economics (a deficiency I intend to correct, as time permits).

In terms of evidence, I have none. However, I think I need to be clear as to what I mean when I say 'raw materials'. It's probably a poor phrase to use (I guess it has a well-defined meaning in Economics); I consider even intangibles to be 'raw materials'. As an example, education is the 'raw material' on which 'intellectual property' is built. As a web developer, the LAMP technology stack (for example) is the 'raw material' (along with many others, including education) on which websites are built (and aren't we hackers lucky that people make much of that technology available to us for no cost? There's huge value in those 'raw materials' for us. Most people in the world aren't so lucky). For me a raw material is anything that acts as an input into a process that leads to a monetisable output. Of course, money itself is perhaps the ultimate 'raw material' in this sense, creating an interesting situation where one of the raw materials used to create the desired product is the product itself. Perpetual motion machines may be a physical impossibility, but a perpetually expanding economy apparently is not.

There are certainly many examples of low-resource cities that do very well; at least, low in terms of the amount of stuff that can be dug out of the ground. These are obviously not the only saleable resources or those cities wouldn't exist (I'm not sure about Hong Kong, but didn't Singapore first become wealthy due to its strategic location?).

As to the high-resource locations mired in conflict and poverty, I would suggest that much of this conflict is indeed related to who controls the raw materials. Whilst this may or may not be true, I was more thinking originally about internet posts on economics and 'social justice' in my first comment, which seem to me to boil down to whether ownership of resources (of many types) should be 'more equitably shared' by some 'fairness' metric, or owned only by those able to compete effectively for them (or who just get lucky). Of course there are many threads on what is actually meant by 'more equitable sharing', since all participants seem to feel that their approach is the most equitable without exception :-)

Hopefully I've not led too many people down dead-ends with my rather wooly use of the term 'raw material'.

brlittle6• 18 years ago

How is it, I wonder, that so many people get bent around the idea of making an economic analysis out of this? We're talking here about a playroom, the very nature and substance of which means that the teachers should be primarily concerned with making sure everyone has equitable access to the "resources" -- i.e. the toys.

I think one can argue whether or not the teachers are doing that in an effective and appropriate way, certainly. But I believe that this one underlying fact is nonnegotiable.

Personally, and as a parent, I find the repeated and forceful attempts to turn this into some kind of capitalist vs. socialist laboratory are both ill-conceived and ill-advised. Whatever else may be true of the situation, I believe it is certainly no place to institute a Lego-fied re-enactment of Lord of the Flies.

h34t3• 18 years ago

Are you talking about the teachers making an economic analysis out of the lego game, or the internet-comments making economic analysis out of what the teachers did?

If the former, then I can at least understand your point, though I would disagree (I think that going through a simulation like this is a very interesting way to teach kids about economics and power, and I wish I'd had teachers who spent that much attention on trying to teach their students things they felt were important in life).

If the latter, than it sounds like you misunderstood what the teachers did and why they did it. They were not primarily interested in the organizing a system that would merely provide kids with equitable access to toys in the playroom. They were interested in teaching the children their own version of how economics and social justice should be understood in real life, a version which many people (including me) take issue with for its fundamental lack of awareness of how wealth is created, and the effects of a system of organization on that wealth creation process.

xirium• 18 years ago

From the article: "It's plenty obvious that free commerce is not a zero-sum game. I go to the liquor store to buy beer. I buy five bottles of Staropolskie Zlote for about ten bucks. I value the beer more than I value the ten bucks -- else I wouldn't have given the clerk my money. The liquor store values my ten bucks more than the beer -- else they wouldn't have sold it to me. We both come away from the exchange happier: I have my beer, they have their money. We both get what we wanted. The world is, in fact, a better place after that exchange than it was before... at least for me and for the liquor store."

From the article: "One firm adds value by trucking the beer from the brewery to a port. Another firm adds value by shipping the beer across the Atlantic. A third firm adds value by shipping the beer across Canada, and yet a fourth firm adds value by providing a broad selection of beers in a relatively convenient place for my buying pleasure."

Congratulations. You've discovered Pareto efficiency ( http://en.wikipedia.org/wiki/Pareto_efficiency ), the means by which goods are distributed.

davidw• 18 years ago

I thought that goods were distributed with trucks:->

toffer• 18 years ago

I keep seeing comments about how the original builders of Legotown were unjustly punished for being successful little proto-capitalists. The argument goes something like: "They added value to their raw materials and created something great and beautiful. Then they were struck down for being better than their peers, and all the children were doomed to a life of uniform mediocrity."

To me, the story of Legotown was not one about capitalism. The questions about whether the builders added value to their Lego brick raw materials, and whether the trading game only allowed zero-sum transactions are irrelevant to the larger point of the story.

To me, the story of Legotown is about legitimate and illegitimate authority.

By what right did the original builders of Legotown assert their authority over the Legos? Why were they able to make the rules about who could use the Legos and who couldn't? Because they got their first? Because they built the best, most elaborate structures? Because they were bigger? There were no classroom rules that allowed them to claim ownership of the Legos. Instead, they took control of the Legos by force and simply asserted their right to make the rules about them.

Yes, capitalism requires adding value to raw materials and ability to trade freely, but it also requires the rule of law that is accepted as legitimate by its participants. If there had been rules about claiming ownership of toys in the classroom, then the builders could have followed those rules and then enforced their own rules about things that they owned. But, in the absence of such a governing framework, they cannot simply assert that they own something, and then expect others to accept their authority.

That's also the real point of the trading game. It wasn't to model capitalism. It was to show the children how it felt to be treated in a system ruled by arbitrary, illegitimate power. By what right do the holders of all the green Legos get to make the rules? Why should their power be considered legitimate? The answer is it shouldn't, because tilting the game in favor of the green Lego holders is obviously arbitrary and unjust. And, if it's unfair for the green Lego holders to make the rules in the trading game, how is that different than the original builders making all the rules about who can and cannot participate in Legotown?

In the end, the children earned back the Legos. But, it wasn't because they agreed to a more "Socialist" set of rules imposed by the teachers. Instead, it was because the children came together and agreed to a set of rules that reflected their values of fairness and justice. And, because the rules were the result of their input, the children considered them to be legitimate.

This isn’t a zero-sum game

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