An essay on Essays of Montaigne (1588)
Michel de Montaigne articulates a zero-sum theory of market exchange as a special case of a general law of conservation in Nature:
THE PROFIT OF ONE MAN IS THE LOSS OF ANOTHER.
Demades the Athenian condemned one of his city, whose trade it was to sell the necessaries for funeral ceremonies, upon pretence that he demanded unreasonable profit, and that that profit could not accrue to him, but by the death of a great number of people. A judgment that appears to be ill grounded, forasmuch as no profit whatever can possibly be made but at the expense of another, and that by the same rule he should condemn all gain of what kind soever. The merchant only thrives by the debauchery of youth, the husbandman by the dearness of grain, the architect by the ruin of buildings, lawyers and officers of justice by the suits and contentions of men: nay, even the honor and office of divines are derived from our death and vices. A physician takes no pleasure in the health even of his friends, says the ancient Greek comic writer, nor a soldier in the peace of his country, and so of the rest. And, which is yet worse, let every one but dive into his own bosom, and he will find his private wishes spring and his secret hopes grow up at another’s expense. Upon which consideration it comes into my head, that nature does not in this swerve from her general polity; for physicians hold, that the birth, nourishment and increase of every thing is the dissolution and corruption of another.’”—Michel de Montaigne, Essays
At first glance, one might simply dismiss Montaigne’s theory, which shows its age. Zero-sum thinking reflects hardships and conflicts of16th-century France, marked by great wars of religion. Then came Adam Smith and the industrial revolution. The zero-sum theory of exchange is so yesterday after the invisible hand.
Not so fast. Let’s take a closer look.
Supply & Demand
Markets have a supply side and a demand side. Montaigne’s various examples of profit indicate several kinds of causes on the demand side:
- Vice: “The merchant only thrives by the debauchery of youth […] even the honor and office of divines are derived from our death and vices.”
- Disequilibrium shortages (famine, earthquake): “the husbandman by the dearness of grain, the architect by the ruin of buildings.”
- Sharp conflicts (torts, wars): “lawyers and officers of justice by the suits and contentions of men.” Montaigne also mentions soldiers.
- Illness. Montaigne mentions physicians.
It is striking that Montaigne focusses only on negative causes of demand.
Montaigne then impugns the motives of actors in every occupation on the supply side:
A physician takes no pleasure in the health even of his friends, says the ancient Greek comic writer, nor a soldier in the peace of his country, and so of the rest.
The psychology is subtle. Persons on the supply side (physicians, soldiers) “take no pleasure” if potential clients perchance enjoy blessings (health, peace) that reduce demand for their services. Given Montaigne’s emphasis on zero-sum interaction, it is notable that he does not portray any overt malice or fraud on the supply side. He makes no mention of unethical behaviors by suppliers to create or increase demand.
Were Montaigne to write today about the healthcare industry and about the military, might he highlight misleading advertising (e.g., the Oxycontin case), scare tactics (e.g., the WMD contrivance), and heavy lobbying by big pharma, the military-industrial complex, and so the rest?
Zero-Sum Self-Interest & Social Psychology
Next, Montaigne moves beyond markets and broadens the sociological scope of his observations about zero-sum psychology. To engage the reader intimately, Montaigne makes a plea for introspection. Soul-searching takes a plunge into innermost desires:
And, which is yet worse, let every one but dive into his own bosom, and he will find his private wishes spring and his secret hopes grow up at another’s expense.
Notice that Montaigne specifies private wishes and secret hopes. These are desires that cannot stand the light of day. Any culture or community has a characteristic normative hierarchy of motivations. For example, revenge is noble in traditional cultures of honor, but ambiguous in modern culture. Montaigne’s deep insight is that a particular social motivation, zero-sum self-interest, is at once part of human nature and contrary to social norms.
Social norms pressure a person to hide his zero-sum self-interest motive from others (deception) and even from himself (self-deception). A hidden ignoble motive might instead present itself in lofty camouflage. A well-known instance is the psychological transmutation of envy (an ugly motive) into righteous indignation (a noble motive). Similarly, the zero-sum self-interest motive might camouflage itself as a mission to use one’s special skills to serve persons in need. (And sometimes a cigar is also a cigar. Altruism, too, is real. Motives may be complex and plural.) Self-deception makes accurate introspection elusive. Because Montaigne convincingly makes himself an open book here, there, and everywhere in his Essays, we come to trust his remarks about introspection.
What fraction, and which domains, of a normal person’s behavior are motivated by zero-sum self-interest? Montaigne does not say. Nonetheless, he clearly does imply that the zero-sum self-interest motive governs market behavior.
Today, some critics of markets argue that ‘the market motive’ (self-interest) tends to crowd out nobler motives, such as altruism or the public good. For example, some critics say that a market for blood for transfusions will undermine willingness to donate blood. The thought is that markets corrupt community and human nature. By contrast, Montaigne argues that profit is a supply-side expression of a zero-sum self-interest motive, which is part of human nature and an expression of the cycle of Nature.
Montaigne after Adam Smith and Robert Sugden
Montaigne’s emphasis on the zero-sum nature of market exchange is indeed outdated and misplaced in various important ways. When buyer and seller are honest and tolerably well-informed, each side gains from voluntary exchange. Markets respond dynamically on the supply side to shortages and to consumer needs and preferences. The invisible hand is awesome. Producer surplus and consumer surplus are real. Monopoly on the supply side, not market exchange per se, stacks the deck. And so on—What Adam Smith said.
But Montaigne’s theory is a tonic reminder to scrutinize markets for any zero-sum aspects, too. Consider matching markets—markets in which one must choose and be chosen. The marriage market is an example. If A marries B, then C cannot marry A. C will hope to find (or endeavor to earn) a backup match. If we change the rules and allow polygamy (marriage of more than two persons), and if there emerges relatively high prevalence of polygyny (marriage of one man and more than one woman), then the market relegates a large fraction of men to involuntary celibacy (incels).
More generally, markets have an intrinsic element of unfairness in opportunity. Robert Sugden explains:
In a market, each person’s opportunities are opportunities to transact with willing others. Each individual is free to choose from his own opportunity set, but the contents of that set are largely determined by the choices that other individuals make from theirs. In a developed market economy, most people’s most valuable opportunities consist of the terms on which other people are willing to transact with them. It is an unavoidable consequence of this fact that everyone can have a wide range of opportunities only if everyone’s opportunity set is liable to expand or contract as a result of other people’s decisions about how to use their opportunities. In this sense, unfairness is intrinsic to markets.—Robert Sugden, The Community of Advantage: A Behavioural Economist’s Defence of the Market (Oxford U. Press, 2018) p. 192
Montaigne locates ‘the zero-sum’ in the direct outcome for participants in a particular market exchange. Profit and loss are two sides of the same coin, exchange. By contrast, Professor Sugden situates unfairness in an indirect outcome of particular exchanges, namely, any negative spillover effects of those exchanges on market opportunities of other persons. My profit and yours—our gains from two-sided exchange—may constitute something akin to a zero-sum situation for bystanders in the rest of the market.
Montaigne’s theory of profit ignores dynamic supply and neglects consumer surplus. Nonetheless, it displays a crucial saving grace. It rejects political suppression of profit-makers—because profit manifests Nature’s organic law of conservation. Thus, his theory is economically mistaken but politically correct. (See what I did there?) Montaigne’s theory of profit comes with a bonus, too, as his chain of reasoning also plumbs the depths of social psychology.
John Alcorn is Principal Lecturer in Formal Organizations, Shelby Cullom Davis Endowment, Trinity College, Connecticut. Scruples about principles of historical inquiry, and a stint teaching in Columbia’s ‘great books’ core curriculum led him to explore methodological individualism and the social sciences. As in the Dry Bones song, a concatenation of authors—Jon Elster, Diego Gambetta, Thomas C. Schelling, Robert Sugden, David Friedman, and Michael Munger—eventually brought him to discover EconTalk and EconLog.
