One powerful concept from economic theory is the idea of a “positive-sum gain” or, as Stephen Covey put it, the “win-win.” In contrast, negative-sum thinking — a feature of populism — encourages us to take a sinister view of our fellow citizens. To heal what’s wrong with our nation, we need to return to win-win.
Market transactions and human interactions, at their core, mutually benefit participants. This is true across the board. Consumers and producers, individuals in healthy marriages, and employers and employees all decide to collaborate in order to enhance productivity beyond individual capabilities.
Consider a furniture manufacturer. The firm acquires raw materials, hires employees and works tirelessly to produce quality tables and chairs, aiming to sell them to consumers. While the chairs themselves hold some value to the firm, they are more valuable when exchanged for revenue to reinvest in the next batch and compensate employees. Consumers evaluate the quality of the chairs and weigh their satisfaction from having them on their patio against the price. Only when both sides find the price satisfactory does a transaction occur. Thus, both the customer and the manufacturer “win” through the sale of the chair.
Free enterprise requires intelligent public policy to provide a platform that protects property rights and ensures fair play, but government cannot predict future market innovations.
A positive-sum mindset is not a natural way of thinking. Indeed, economies worldwide and throughout history have faltered because they were stuck in a zero-sum trap. Zero-sum thinking presupposes that to win, others must lose by an equal amount. The strong survive and exploit the weak, with power outside the rule of law, determining the goods produced by the economy and who obtains them.
Economists have a peculiar fondness for prices. Prices serve as information generators, guiding suppliers to allocate goods and services where consumers value them most and driving firms to maximize efficiency. Incentives influence human behavior, as the 18th-century economic philosopher Adam Smith wrote in “The Wealth of Nations,” his seminal book: “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest. We address ourselves not to their humanity but to their self-love, and never talk to them of our own necessities, but of their advantages.”
Self-interest and self-love may seem exploitative, but Smith teaches us in his other book, “The Theory of Moral Sentiments,” that “Man naturally desires, not only to be loved, but to be lovely; or to be that thing which is the natural and proper object of love. He naturally dreads, not only to be hated, but to be hateful; or to be that thing which is the natural and proper object of hatred.”
Most people don’t wake up every morning wanting to be Skeletor, but rather strive to feed their families, do right by their employer, and make the world a better place. Markets allow us to fulfill that desire by serving and producing for others what they cannot do alone. The paradigm shift provided by Adam Smith launched a new way of seeing the world: one built on cooperation rather than destruction.
The rise of populism presents a more sinister view of our fellow citizens: negative-sum thinking. Here, self-harm is tolerated if it inflicts more suffering on perceived enemies. The populist always needs someone to fight and a “victim” to protect. Populism offers no real product or marketplace value, instead convincing the citizenry that a shadowy bogeyman threatens them and only the populist can solve the problem.
The road to populism is sinister because there is no end to the depravity of the negative sum. If a foreign country is “exploiting” our trade, then we will tax ourselves via tariffs. If new immigrants don’t speak our language or share our customs, then we will preserve a convoluted and disgraceful immigration system. Never mind that Americans are quite happy to consume cheaper imported goods or hire workers willing to do more for less. In this system, we cut off our noses to spite our faces.
The late Stephen R. Covey wrote, “Win-win is a balancing act between courage and consideration … you not only have to be empathetic, but you also have to be confident. You not only have to be considerate and sensitive, you also have to be brave.” America possesses an abundance of these virtues. Let us reject the siren call of negative and zero-sum thinking and have the courage to seek win-win outcomes in our communities.
Michael S. Kofoed, @mikekofoed on X, is an assistant professor of economics at the University of Tennessee, Knoxville, and a research fellow at the Institute of Labor Economics. A Utah native, he holds degrees in economics from Weber State University and the University of Georgia.