Beating Zero Sum Games

When I was in high school, I learned about the economic theory of zero sum games. That one's gain was another's loss and individuals and groups where stuck trading and competing against each other in hopes of positive results. Although most would concede that such thinking isn't really applicable in modern economic thinking, I thought the idea had some merits in thinking about trade-offs.

Life at times revolves around the money game

In order to receive something of value, one has to give up something of value. A lot of us give up our time and effort to receive money which we can then in turn trade for other resources we desire. We can't really generate value out of nothingness. Something has to be given up to get something in return.

Such a system has changed little since the beginning of the Industrial Revolution, but here we are trading the strong and vibrant parts of our lives so that we can live good during the weak and frail parts. A lot of trading with winners and losers. Maybe investing and life aren't too different after all.

The smart ones among us seek ways to reduce costs by making things more efficient. Centralization makes things more efficient. Having more money makes investing more efficient as you can leverage larger sums to make decent gains with smaller movements in price. Expendable income at some point can become self-generating if put in the right places. But such engines of production require good luck and lots of patience which is another trade-off.

Back in high-school, I was convinced that robots would help to end this type of zero sum game. They would take the costs while humanity as a whole could rake in the gains. Automation would serve as the next step in improving how efficiently we could do things.

But the next step in efficiency requires a leap beyond the limitations of centralized systems. The problem with centralized systems is even though they are efficient, they come at the cost of being fragile to change and often exploit those in positions of lesser power. And these pressures introduce friction and prevent things from becoming as efficient as they could be. There is still inherent competition and we are still playing sum games in such systems.

But we have discovered something that is so efficient that has the potential to change our games. Something we can use to beat these games that we have been playing since the advent of Capitalism. The concept of the open network and related network effects.

Information today is cheaper and more available than ever before. We have the internet to thank for that. The best part of the internet is that anyone can create information which others can consume. Now a huge part of our economy is built around transactions of this information that happen at very low actual costs.

But what if we introduce open network concepts to currently centralized closed industries and networks. Like power grids. How long will it be until we can trade power with others by turning our homes into power plants using efficient solar panels? Or like transportation. How long will it be until we can rent away our self driving vehicles to others so they can transport goods and people around?

Throwing away our conceptions of the old ways of thinking will be important in taking the step in helping to build and adopt these new open networks where the network reduces costs and decentralizes the benefits amongst the participants. Who cares about decentralization in terms of making money when we can use it to reduce costs and beat the game that has kept us in constant fighting over the same resources.

For now I'm just waiting for the paradigm shift. Another cost, but one that future generations might never have to incur.

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A lot of ideas in this post were inspired by the following video. I would encourage you to listen to the talk if you have the time as it is well worth it. Also keep an open mind and focus on decentralization (as at times there are political interjections).

Link to the video