The Effects of Zero-Sum Games

I. The Geometry of Loss

There is a class of situations that is mathematically perfectly clear and politically almost always obscured: the zero-sum game. John von Neumann and Oskar Morgenstern formalized it in 1944 in Theory of Games and Economic Behavior. The definition is simple: what one gains, another loses. The sum of all gains and losses is zero. No value is created. No value disappears. It migrates.

Poker is the purest example: the pot at the end belongs to someone. The stakes were previously distributed among several players. Anyone who is not deceived: this applies to futures, to trade balances, to territorial claims, to political power. Someone always paid. The question analysis must ask is not: Is there a winner? It is: Who is the loser — and why are they not supposed to see it?

The answer to the second question is the origin of win-win rhetoric.

II. Pure Zero-Sum Games — Where the Arithmetic Holds

In certain fields the zero-sum game is unveiled. In chess there is no draw bonus; in the tennis world ranking, every point one player gains has migrated from another; in a poker game not a cent leaves the table that has not moved into someone else's pocket.

In financial markets it is derivatives and futures contracts that operate cleanly in the zero-sum domain: when the buyer of an oil future wins, the seller has lost exactly that amount — and vice versa. Options, credit default swaps, currency trades on price differentials: these instruments create no social added value. They redistribute risk — and therefore always money too. Goldman Sachs and J.P. Morgan are not value creators. They are redistributors. Their gain is another's loss.

The same applies to what is called market share. When in a saturated market — retail, automotive, telecommunications — one provider gains market share, another loses it. There is no other possibility. This sounds trivial; yet it is systematically ignored when mergers, acquisitions, and market concentration are discussed. The winners of this redistribution are called Amazon, Walmart, Apple. The losers are called retail, the middle market, the local economy.

III. Zero-Sum Games in Economics — The Hidden Redistribution

Orthodox economics long claimed that trade is always positive-sum: both sides gain, otherwise it would not come about. This is true at the level of a single voluntary exchange. It is not true at the level of national economies, sectors, and social classes.

An example: the relocation of industrial production from Germany and the United States to low-wage countries created global prosperity gains — in aggregate. But this aggregate was the sum of very unevenly distributed individual outcomes. The shareholders of the relocating corporations gained substantially. The Chinese working class gained through industrialization. The working class in Detroit, in Dortmund, in Sheffield lost their industrial jobs — and then, decades later, as a political reaction to this loss, their political representation too. An economist who says "free trade is positive-sum" describes an aggregate. He conceals the distribution. Those who do this do not lie — but they halve the truth, which amounts to the same thing.

Ownership of natural resources is a classic zero-sum field. When a state or corporation receives an oil concession, no other does. When water is pumped from an aquifer, it is gone. When land in a growing city is rezoned for value-enhancing purposes, the existing tenants pay the price. Real estate speculation is pure zero-sum: every euro of appreciation in land value is a euro that someone else — in the future — must pay more for the same land. The land speculator produces nothing. He watches and collects.

IV. Geopolitics — The Oldest Zero-Sum Table

Mercantilism — the economic doctrine of the 16th to 18th centuries — was an explicit zero-sum theory. Gold and silver were finite. A state that had more had taken it from another. Imperialism was the geopolitical consequence: raw materials, territory, labor were redistributed by force. The British Empire gained its textile export markets by destroying Indian weaving. That is not Marxist interpretation, it is economic history.

In the 20th century this logic was formalized: the East-West conflict was a zero-sum of strategic spheres of influence. Every country that shifted to the Western camp was a loss for the Eastern one — and vice versa. Henry Kissinger operated this mechanism masterfully, without ever for a moment believing that foreign policy was anything else.

Today: US-Chinese competition over semiconductors, over rare earths, over influence on the Global South — this is zero-sum in pure form. What China builds up in chip production capacity, Taiwan and the United States lose in strategic advantage. What the Belt and Road Initiative creates in debt dependencies in Africa is Western influence simultaneously waning. Territory, resources, strategic dependencies: this playing field has no free space. Every gained position was taken from another power.

The war in Ukraine has shown this with brutal clarity: every square kilometer Russia holds is one Ukraine has lost. Nobody here talks about win-win.

V. Society — Status, Power, Attention

Social hierarchies are zero-sum. Status is relative — it defines itself by the distance from others. A rise in the ranking order is always someone else's decline. That is not cynicism, it is geometry. In a company not everyone can be CEO. In a parliament there is only one majority. In a talk show there is only one microphone.

Political power is the purest social zero-sum game. What has accrued to one party was taken from another. With constant parliament size and constant 100% of votes, this is literally true. The metaphor of the "growing pie" — the favorite image of compromise politics — does not apply here. The pie is constitution, and constitution is paragraphs, and paragraphs are finite.

Attention is the new scarce resource of the media society. Every hour a user spends with TikTok is an hour less for all other platforms, books, conversations. The platform economy fights for attention in a closed system of 24 hours per person per day. Mark Zuckerberg won market shares of attention. The traditional media, the book publishers, the concert organizers: they lost it.

VI. The Dishonest Win-Win Situation

Win-win rhetoric is the perfect instrument for concealing zero-sum redistribution. It asserts: everyone wins. What it conceals: not everyone wins equally — and in its cleanest form it obscures that some lose while others gain.

The clearest example is the free trade ideology of the postwar decades. WTO, NAFTA, GATT: the institutional framework was founded with the promise that free trade enriches everyone. The aggregate was correct — the world economy grew. But the top 1% of US trading corporations — around 2,000 companies — handles over 80% of total US foreign trade. The profits flowed to shareholders of these corporations and to the well-educated professionals who managed their processes. Low-wage workers in import-exposed industries lost their jobs. A National Bureau of Economic Research study documented: substantial job losses in sectors facing import competition, almost no compensation through new jobs elsewhere. Win-win on paper. Redistribution in reality — from bottom to top.

The second example is Chinese win-win diplomacy. Xi Jinping in 2013 formulated the concept of "win-win cooperation" as the guiding principle of Chinese foreign policy. It is an elegant rhetorical instrument: it asserts that China's rise is not a zero-sum game because everyone benefits from it. The Belt and Road Initiative is the practical program behind it: infrastructure in developing countries, financed by Chinese loans, built by Chinese companies, with Chinese workers. The recipient gets a road, a port, a power plant. China gets strategic access, geopolitical influence, and repayment obligations that can be converted into concessions when needed. Sri Lanka in 2017 leased the port of Hambantota to China for 99 years — as debt repayment. That is the win-win situation after twenty years.

The third and perhaps deepest example is win-win rhetoric in corporate mergers and acquisitions. Almost every merger of the last thirty years was announced with the promise of synergies, efficiency gains, and growth. What followed: layoffs described as "rationalization"; competitors displaced and no longer in existence; consumers paying higher prices in the resulting oligopolies. Win-win for the investment banks that advised the merger. Win-win for the executives who received bonus payments for the transaction. For everyone else: structural deterioration.

The hallmark of the dishonest win-win situation is not the lie — it is selective silence. It is not claimed that everyone wins. It is simply not stated who wins how much, who loses how much, and on what time horizon the balance must really be struck. — beyond-decay.org

VII. The Invisible Losers

In almost every arrangement presented as win-win, there is a category of losers who are structurally made invisible: future generations, the spatially absent, and the politically voiceless.

National debt is the purest example of the first type. The present generation decides on expenditures that will be financed by future generations — people who cannot yet vote, cannot yet speak, cannot yet protest. Pension systems based on demographically no longer sustainable assumptions follow the same logic. The present wins. The future pays. The game is called a social achievement.

Climate change is the most extreme example: the industrial economy of the 20th century generated part of its prosperity by consuming atmospheric capacity that is now missing. That was a gain for producers of 1950–2000 and a loss for inhabitants of 2050–2100. The winners are dead. The losers are not yet born. The zero-sum game extends across generations — and the win-win rhetoric of growth completely concealed it.

For the second type — the spatially absent — consider mining in Congo or Bolivia that supplies lithium for European electric cars. Europe's climate strategy is partly an externalization of environmental costs to countries without political voice in Brussels. Win-win for the German car owner and the European climate discourse. Not win-win for the poisoned groundwater reserves in Atacama.

VIII. When the Game Is No Longer Zero

The analysis would be incomplete without the cases where genuine positive sums arise. Technological innovation is the paradigmatic example: the internet created value that did not previously exist. Medical progress — antibiotics, vaccines — saved lives without taking them elsewhere. Fundamental research, art, education: these fields have the potential to enlarge the total pie.

Yet caution applies here too. Value is created — but its distribution is again zero-sum. The patent system decides who profits from an invention. Copyright decides who profits from creative work. The tax system decides who pockets the social added value of an infrastructure investment. The positive sum of value creation and the zero sum of distribution exist simultaneously. Those who see only value creation are naive. Those who see only the distribution question overlook genuine progress. Reality is the interplay of both.

There are also negative-sum games: situations in which everyone loses. Trade wars with reciprocal tariffs, nuclear arms spirals, drug wars, revisionist wars over territories without economic value — here prosperity is destroyed without anyone permanently winning. This is the category game theorists know as the "prisoner's dilemma": rational self-interest leads to collective damage. Both players would be better off if they could cooperate — but the logic of mistrust does not allow it.

IX. Two Special Cases: Stock Markets and War

Two fields deserve closer examination, because the win-win rhetoric in them is particularly densely woven — and because the zero-sum reality behind it is particularly harsh.

The stock market. The standard answer is: positive-sum game, because companies create real value and the pie grows. This is true in the long aggregate — for someone who bought a broadly diversified index in 1970 and never sold. In the secondary market, the daily trade, however, every single transaction is zero-sum: one buys because they believe the price will rise. The other sells because they no longer believe it will. Exactly one is right. High-frequency trading is this logic in pure form: algorithms exploiting microsecond advantages to systematically offer other market participants worse prices. No value is created. Money migrates.

The deepest zero-sum dimension lies elsewhere: in asset price inflation through central bank policy. After 2008, after 2020, central banks pumped trillions into the markets — Quantitative Easing. Stock markets rose. Who benefited? The owners. In the United States, the top 10% hold around 93% of all stocks. Who paid? Savers without stock holdings, whose savings were eroded by low interest rates. Renters who own no real estate and whose rents rose with the inflated prices. The young, entering a market whose assets had been artificially inflated on credit. This was not a positive sum. It was one of the largest upward redistributions in modern history — disguised as economic stabilization.

And the crash: when a stock market collapses, it does not destroy values that really existed. It destroys valuations that were never real. But the losses fall unevenly. Those who sell in the panic — the small investors who need the money — lose in real terms. Those who can hold — the large players with liquidity reserves — buy cheaply. The zero-sum game runs along the liquidity line.

Who pays for wars? This is the purest zero-sum question — and the one most systematically concealed.

The bodies are provided disproportionately by the poor. In the US professional armies, the underclass that sees no other path upward; in Russia in 2022, the men from the provinces, from Buryatia and Dagestan. The sons of the powerful generally do not serve. This is not coincidence. It is the structure.

The costs are paid by taxpayers — present and future. The US wars in Afghanistan and Iraq have cost, by serious estimates, 6–8 trillion dollars, including veterans' care and long-term consequences. That is national debt to be serviced by generations who did not choose these wars. In the First and Second World Wars, wars were pre-financed through bonds and afterward eroded by inflation. Citizens paid twice: once as creditors, once as holders of devalued money. The wealthy who had fled in time to real assets paid less. Small savers paid the most.

The civilian population in the war zone pays with everything — infrastructure, health, generational trauma. This loss appears in none of the victorious side's war cost calculations.

Who wins: the arms industry, regardless of outcome. Lockheed Martin, Raytheon, Rheinmetall: their share price rises with every escalation report. That is accounting profit on the direct path from war. In the Iraq War, Halliburton collected billions in reconstruction contracts — while former CEO Dick Cheney co-bore responsibility for the decisions as Vice President. The zero-sum game was here literally built into the decision structure. In the Ukraine war, US liquefied natural gas exporters won through the explosion of European energy prices following the loss of Russian supplies. Europe paid. America delivered expensive LNG. This is not conspiracy thinking — it is trade statistics.

The Rothschild legend — that they financed both sides at Waterloo — is historically simplified but structurally precise: those who finance wars need not choose a winner. They need debtors on both sides. Capital is sovereign over the national. Wars are, viewed from the financial side, high-yield bond issuances with state guarantee — as long as the state survives.

X. Zero-Sum Thinking as a Worldview

The zero-sum game is not only an economic category — it is a cognitive mode that structures entire societies. Social-psychological studies show that people with a zero-sum worldview — the conviction that one's own gain always comes at the expense of others — tend toward more mistrust, more willingness to conflict, and less cooperative inclination. They see immigration as displacement, women's advancement as disadvantaging men, minority rights as majority loss.

This is not always wrong. In some fields — status, political representation, limited resources — it is even precise. The problem is the transfer to fields where it does not apply: to knowledge, to creativity, to social cohesion. Those who see zero-sum where there is none block the possibility of genuine cooperation.

Donald Trump elevated zero-sum thinking to political state religion. His trade policy mantra — every dollar in the trade deficit is a lost dollar — is classical 17th-century mercantilism translated into Twitter language. It is wrong when one considers the aggregate. It is not wrong when one sees what actually happened to the industrial workers of Detroit. Trump did not invent the zero-sum game — he addressed the losers of the real zero-sum game that the free trade consensus had concealed for decades with win-win rhetoric.

That is the real lesson. The problem was not the zero-sum thought itself. The problem was the lie before it: the systematic assertion that there were no losers. When the losers finally became visible — in election results, in populism, in systemic disillusionment — the language for clean analysis was missing. People had grown accustomed to win-win rhetoric. They had unlearned saying: this game had losers. Their names were such-and-such. They lived there. We financed their loss so that others could win.

The restoration of analytical vision begins there: with the willingness to ask the question that win-win rhetoric always suppresses. Who pays? Not abstractly. Concretely. With name and address. And on what time horizon is the bill really presented?

The answer to this question determines whether a society is still capable of governing itself — or whether it prefers to be governed by elegant language.