The influential and highly quotable 20th-century British economist John Maynard Keynes wrote, “Practical men who believe themselves quite exempt from any intellectual influence are usually the slaves of some defunct economist.”
As Keynes wrote in another place, “The difficulty lies not so much in developing new ideas as in escaping from the old ones.”
One old, old idea from which humans have not yet escaped is what the Austrian economist Ludwig von Mises referred to as “the Montaigne dogma.” Mises was referring to a teaching of the French philosopher Michel de Montaigne (1533–1592). Sounding the philosophical keynote for the Age of Mercantilism (roughly the 16th, 17th, and 18th centuries), Montaigne conceived of the world as a zero-sum place. As Montaigne put it in his essay “That The Profit Of One Man Is The Damage Of Another,” “no profit whatever can possibly be made but at the expense of another.”
Such a gloomy worldview might have been plausible in those precapitalistic times when Europe’s political elite rigged the economic game to enrich themselves at the expense of the masses. Indeed, life in the 16th century was bleak—at least it was for the masses of people who struggled to survive at subsistence-level standards of living. Those people were stuck in a world that was socially, politically, and economically static due to the stranglehold that the political elite had on the economic factors of production.
Indeed, a zero-sum world is intrinsically grim, since the only way to increase one’s own prosperity would be to reduce someone else’s. In such a harsh world, how could there be social harmony if the interests of one class are opposed to another? Such a social order could only be maintained via brutal oppression. Similarly, in regard to international relationships, as Mises observed, “As long as the peoples cling to the Montaigne dogma and think that they cannot prosper economically except at the expense of other nations, peace will never be anything other than a period of preparation for the next war.”
Fortunately for the human race, Montaigne’s depressing diagnosis turned out to be fallacious. A zero-sum world implies a more or less fixed amount of total wealth. The history of approximately two-and-a-half centuries of the Age of Capitalism has totally demolished that fallacy. Not only has the global population increased from fewer than 1 billion humans (a level at which it essentially had been capped for countless centuries) to 8 billion (a figure we are projected to arrive at next month) but those billions of people have standards of living that are many multiples higher than what prevailed during the Age of Mercantilism.
The human race has benefited immeasurably from the enlightened understanding that we can (if we choose) live in a positive-sum world. In the private-property order advocated by Adam Smith and the classical economists and on through Mises and the Austrian economists, exchanges are voluntary. Nobody surrenders their property unless they receive something of greater value in exchange. That is equally true for the party on the other side of the transaction. The result? In voluntary transactions, both sides gain. Those are positive-sum transactions going on daily and hourly, each one of them contributing to a general increase in prosperity.
There has also been notable progress on the international stage. Despite a history of centuries of destructive warfare, in which the winning side usually won by suffering less devastating losses than the losing side, the idea gradually took hold in many parts of the world that both sides are made better off by trading goods in peaceful commerce rather than through bloody conflict.
Although war is nowhere near extinct, we can derive great encouragement from examples such as the French and Germans who, after generations of waging war against each other, buried the hatchet. They now share open borders and a common currency—not to mention far higher standards of living, too. Just as prosperity spread to include ever-greater proportions of domestic populations in societies where positive-sum free enterprise was practiced, so prosperity has spread to a greater number of countries around the world due to the practice of a post-zero-sum policy of international trade instead of international war.
Unfortunately, the ghastly Montaigne dogma is far from gone. We see this most starkly in the hostile attitudes and actions of Vladimir Putin and Xi Jinping. Rather than observe how France and Germany have forged a more peaceful, prosperous relationship (and how they have become more pacifistic as a result), Putin seems to think that Russia’s future depends on subjugating neighboring populations through a zero-sum conflict at a great cost of human lives, many of them Russian.
For Xi, the overt turn toward a zero-sum world is even more tragic. China has achieved great economic development over the last four-plus decades due to its participation in trade and in expanding the international division of labor. Why, then, this atavistic policy of bludgeoning Hong Kong, threatening Taiwan, and assuming a bellicose posture toward the West? China has prospered greatly due to peaceful commerce with Hong Kong, Taiwan, and the West, and now Xi is ready to risk that prosperity in a vain effort to glorify himself as a great conqueror.
In short, Putin and Xi are primitive throwbacks to an earlier era and to Montaigne’s not-yet-defunct theory that the gain of one must come at the expense of another. For the sake of the world, including the peoples of Russia and China, let us hope that Putin and Xi (or their successors) experience either a spiritual revival or intellectual enlightenment that causes them to see the short-sighted, destructive error of their zero-sum view of the world.
