Behind mercantilist and neo-mercantilist policies is the implicit notion that international economic transactions tend to be zero sum in nature. In many expressions of economics nationalism, for example, exports are a win, while imports are a loss. This formula is largely at variance with the results of international economics, but this kind of zero-sum thinking seems to be hardwired into human psychology. As it turns out, this is a field of inquiry in psychological sciences, and it shows that zero-sum thinking, if not universal, is a very real phenomenon with implications for understanding economic nationalism.

Game theory has been one of the most fundamental developments in the social sciences, and it had its origin in a paper by the mathematician John von Neumann on two-person, zero-sum games. In zero-sum games, the available resources and rewards are fixed, and one person's gain is another's loss. Subsequently, however, this original contribution was generalized to the possibility of non-zero-sum games by von Neumann and Oskar Morgenstern in their book Theory of Games and Economic Behavior. In this more general context, resources and rewards can increase, and there are win-win outcomes that can be achieved via cooperation.

Among researchers across many different fields, actual zero-sum games are considered to be rare. The problem is that even if a game is non-zero sum, it can be perceived as zero sum, limiting win-win outcomes and cutting off cooperative strategies. The possibility and perhaps prevalence of this zero-sum bias has profound implications. As stated by one set of researchers:

Economic nationalism is largely a zero-sum enterprise, and it can dramatically shape impressions and beliefs at both the individual and collective levels. This can have significant impacts in the form of lost potential gains in international economic relations and even in domestic political coherence. We will explore some of these implications in this chapter.

Market Transactions

Basic economics shows that, under a set of assumptions, market transactions provide gains for participants. These transactions also tend to provide positive social welfare.