Not a Zero-Sum Game - Ludwig von Mises Institute

Preface
THE PARADOX OF EXCHANGE
This book deals with the economic law lcnown as the Law of
Comparative Costs. It is a "law" that concerns many social
issues that have far reaching implications. As will be evident,
it would be more appropriately named the General Theory of
Exchange (as it is called by Professor Pascal Salin),2 or the Law
of Association (Ludwig von Mises).3
Most textbooks on economics leave the explanation of the
Theory of Exchange almost exclusively to those chapters that
deal with international trade. Apparently, they mistakenly take
for granted that people already understand the basic principle
of exchange and its relation to the exercise of property rights,
its implications regarding the distribution of wealth and distrib-
utive justice, its relevance to the allocation of human and mate-
rial resources, taxation, and other important issues of modern
and primitive societies.4
In Part I, Exchange, I focus on several of these "taken for
granted" aspects of the phenomenon of exchange. I point out
that division of labor and exchange result in two distinct and
separate effects: one is the generally recognized gain from
increased individual sltills (productivity) that results from
2. Paper presented at the meeting of the Mont Pelerin Society, Salt Lake City, Utah,
August 2004.
3. Ludwig von Mises, Hzlrnan Action (Indianapolis: Liberty Fund Inc., 2007).
4. Interestingly though, both Adam Smith and Ludwig von Mises begin their discussions
of economics proper with the division of labor. Mises subtitled "The division of labor,"
in Part I1 of Human Action, "Action within the Framework of Society." It begins with the
phrase: "The fundamental social phenomenon is the division of labor and its counterpart
human cooperation." His treatise does not include a specific chapter on international trade.