Toussaint, a few of your assumptions are flawed. For one, the assumption that free-market economies are free. This may be more or less true, but for us it's getting less and less true with each passing year. Government de-regulation, government interference, corporate collusion and monopolistic practices are limiting that free-market more and more over time. The result is less choice, not more.
Good cases in point are the lack of enforcement of anti-trust laws that are on the books and the FCC's history of deregulation of the media that has led to it's consolidation. You can find a history of this on PBS's web site here. Again, less choices.
And then there's the Microsoft fiasco and Sony/BMG's attempt to fix CD prices. Both received a literal slap on the wrist for what they did. I won't even touch the GM mess and what some of the best market analysts call a "management debacle".
Also, for any single corporation in any single year, income can be classified as a zero-sum game and here's why:
For any corporation, income is constant at the end of any given year, be it annual or fiscal. The more of that income that is used to pay workers, the less profit the corporation makes. The less profit, the less the stock will rise. The less the stock goes up, the less the CEO and the investors make. It's that simple.
Profit equals income minus expenses. No more, no less. Subtract the right side of the equation from the left side and the answer is always zero. Hence the term, "zero-sum."
To the extent a corporation can keep from sharing the wealth with workers, investors and executives win and get a bigger slice of the pie. One group wins, another loses.
Also, since we live in a society of auction markets, the more money other people have, in effect, the less you have.
Thus, "wealth" not being a zero-sum game comes into question. Without doubt, the people of India and China are better-off materially now then they were a decade ago. And thank goodness for that. But their increased wealth means that they can afford to pay more at the oil auctions and that will raise the cost of fuel for the rest of the world (not that I feel much pity for Americans driving fuel-guzzling Suburbans, SUVs, and living in 6000 sq. ft. houses).
But the point is that the cost of oil and fuel and heating costs goes up, and as usual, hurts those who can least afford it, the poor. They are the ones who are paying, especially if you believe the theory that a dollar to a poor person means more than a dollar to a rich one. The people of India and China "win", but those that cannot afford the price increases lose.
"A growing disparity in affluence can hurt the less well off, even if their incomes are also on the rise. In the San Francisco Bay area, where stock-driven wealth exploded in the 1990s, a middle-class family earns about 33% more than the national average"”but has to pay up to four times the national average to buy a home because of intensely competitive bidding from freshly minted millionaires.
Cornell University economist Robert Frank argues that Silicon Valley could, as it has in so many other ways, be foreshadowing a national trend. From bigger cars to higher tuition for the best schools, the richer rich will ratchet up prices for everyone else. "Extra spending at the top," he says, "raises the price of admission." (Wall Street Journal, Sept. 13, 1999)
Of course, you could argue that the last paragraph has proven to be untrue, since inflation has been more or less constant for the past decade. But that's only if you trust the government's newer methods of calculating inflation.