From win-win to lose-lose?

Living in zero-sum times.

Inspired by a recent CEPR working paper “Populist Rule and the Formation of Zero-Sum Beliefs”, https://cepr.org/publications/dp21929, the Bureau conversation explored the relation between an apparently growing inclination towards zero-sum mindsets in broad strata of the population and a seemingly inexorable rise of populist forces.

The lead speaker argued that the adoption of zero-sum mindsets can be traced back to three fundamental sources: (i) Evolutionary Roots: For most of human history, resources like food, fertile land, and mates were strictly limited. Surviving often meant taking resources from a rival group, embedding zero-sum thinking deeply into human psychology. (ii) Perceived Scarcity: When people experience economic hardship, high inflation, or job insecurity, they naturally view the world through a lens of scarcity, making them extremely sensitive to the gains of others. (iii) Status Anxiety: Status is inherently zero-sum; not everyone can be in the top 10%. When people conflate financial success with social status, they view wealth creation as a zero-sum battle. Similarly, from that perspective, advancing the rights or status of a marginalized group means reducing the status and rights of the dominant group. 

The lead speaker continued to argue that several socio-economic trends over the past decades have strengthened these drivers in an interactive manner. Shifts in geopolitical power structures have generated new rivalries fostering hostile competition and non-cooperative behaviour among nation states. The climate challenge, in its focus on planetary boundaries, has also often framed the debate in zero-sum terms of a fixed pie; limits to growth, or even de-growth, inevitably implies that someone’s gains must be some other one’s losses. Gender policies, and identity politics in general, have also come under attack for promoting opportunities for women and other disadvantaged groups, factually or allegedly coming at the expense of the hitherto privileged set of people. Last but not least, unfavourable trends in the distribution of income and wealth, against a backdrop of weak overall income gains, have rightly or wrongly supported the perception that the super-rich and the elites are “milking the system” at the expense of the wider population, which sees itself getting more and more squeezed from the bottom, typically equated with immigrant groups.

In her conclusions, the lead speaker argued that populist parties to the left and the right of the political spectrum have successfully exploited the resulting “us versus “them” mentality, using disruptive and confrontational strategies which the traditional consensus-oriented coalition-building parties of the centre-left and centre-right find very difficult to counter.

The Chairman suggested to organise the discussion around two core questions: (i) Is the diagnosis correct that we are at present indeed confronted with factually more insurmountable zero-sum problems than in the past? (ii) How best to deal with factual or perceived zero-sum situations in an economically sustainable, democratic and civilized manner?

In the ensuing quite lively debate, several participants pointed out that many apparently zero-sum games could be turned into positive-sum games. Green growth strategies and climate policies were mentioned as a prominent example in this context, although others cautioned against exuberant techno-optimism to deal with global warming and other environmental challenges. While there was broad agreement on the necessity to strive for positive-sum solutions wherever possible, some more sceptical participants suggested that zero-sum structured diverging interests will become even more prevalent, wondering what kind of rules other than kraterocracy might be feasible to govern the outcomes.

Views also diverged with respect to suitable strategies for centrist parties in this context. Several participants warned against falling into the trap of implicitly accepting the fixed-pie fallacy by imitating populist policies in a somewhat moderated manner; others argued for a more offensive acknowledgement of existing trade-offs combined with an offering for fair burden-sharing arrangements. Both groups, though, agreed on the need to develop and emphasise a positive future narrative of a society not entrapped in a stagnant zero-sum world.