The Dynamics of Development in a Zero-Sum World

This chapter examines the consequences of zero-sum environments for cultural change, innovation, and long-term economic growth. We introduce innovation into the framework developed by Bergeron et al. (forthcoming), in which zero-sum environments give rise to demotivating beliefs. Although demotivating beliefs improve static efficiency by limiting excessive competition in zero-sum environments, we show that they can also impede long-term growth. Because demotivating beliefs suppress effort, they can also reduce learning-by-doing and other production spillovers. Hence, they can inhibit innovation and act as a cultural evolutionary kludge. We apply the model to explain the cultural changes associated with Western Europe's economic rise after 1500.