Date: 2025-01-18 Page is: DBtxt003.php txt00015521
Economics
Economics ... more religion than science
The Zero-Sum Economy ... Adair Turner from the Institute for New Economic Thinking
Burgess COMMENTARY
Peter Burgess
; much of financial trading and asset management; tax accountants and revenue officials; advertising and marketing to build brand X at the expense of brand Y; rival policy campaigners and think tanks; even teachers seeking to ensure that their students achieve the higher relative grades that underpin future success.
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Measuring what share of all economic activity is zero sum is inherently difficult. Many jobs involve both truly creative and merely distributive activities. And zero-sum activities can be found in all sectors; manufacturing companies can employ tax accountants to minimize liabilities and top executives who focus on financial engineering.
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But available figures suggest that zero-sum activities have grown significantly. As Gary Hamel and Michele Zanini point out in a recent Harvard Business Review article, some 17.6% of all US jobs, receiving 30% of all compensation, are in “management and administrative” functions likely to involve significant zero-sum activity. Meanwhile employment in financial and “business services” firms has grown from 15% to 18% of all US jobs in the last 20 years, and from 20% to 24% of measured output.
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Hamel and Zanini argue that if we could only strip out unnecessary management jobs, productivity could soar. But the growth of zero-sum activities may be more inherent than they believe. As technological progress makes us ever richer in terms of many basic goods and services – whether cars or household appliances, restaurant meals or mobile phone calls – it may be inevitable that more human activity is devoted to zero-sum competition for available income and assets.1
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As our ability to produce higher-quality goods with fewer people increases, value may come to lie more and more in subjective brands, and rational firms will devote resources to activities like market analysis, financial engineering, and tax planning. Eventually, almost all human work might be devoted to zero-sum activities.1
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Whether or not robots will ever achieve human-level intelligence, it is illuminating to consider what an economy would look like if we could automate almost all the work required to produce the goods and services human welfare requires. There are two possibilities: one is a dramatic increase in leisure; the other is that ever more work would be devoted to zero-sum competition. Given what we know about human nature, the second development seems likely to play a significant role.2
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As I argued in a recent lecture, such an economy would probably be a very unequal one, with a small number of IT experts, fashion designers, brand creators, lawyers, and financial traders earning enormous incomes. Paradoxically, the most physical thing of all – locationally desirable land – would dominate asset values, and rules on inheritance would be a key determinant of relative wealth.1
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In John Maynard Keynes’s words, we would have solved “the economic problem” of how to produce as many goods and services as we want , but would face the more difficult and essentially political questions of how to achieve meaning in a world where work is no longer needed, and how to govern fairly the inherent human tendency toward status competition. Seeking to resolve these challenges through accelerated technological development and faster productivity growth would be like pursuing a mirage.
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Adair Turner
ADAIR TURNER
Writing for PS since 2010
52 Commentaries
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