Economist Motivational Quotes

If your expenditure brings you poverty, then you may call yourself a poor but the world will call you a fool.

Few people read coffee-table photo books, and indeed they are not intended to be read. I find the text in these books is often surprisingly good, perhaps because the author--or more importantly, the editor--feels no need to pander.

When economists base their models on their fantasies of an "economic man" motivated only by self-interest, they forget community--the all-important web of meaning we spin around each other--the inescapable context within which anything truly human has taken place.

Here’s a guess: anybody who bothers to change his name in the name of economic success is—like the high-school freshmen in Chicago who entered the school-choice lottery—at least highly motivated, and motivation is probably a stronger indicator of success than, well, a name.

Economists studied what people did, rather than what we said, because we did what was best for us.

(...) his (Adam Smith's) theory of sympathy rejected self-love as the basic motive for behaviour. He also defined virtue as consisting of three elements: propriety, prudence and benevolence. By this he meant propriety or the appropriate control and directing of our affections; prudence or the judicious pursuit of our private interests; and benevolence or the exercise of only those affections that encourage the happiness of others. How poor Adam Smith got stuck with disciples like the market economists and the neo-conservatives is hard to imagine. He is in profound disagreement with their view of society. (V - From Ideology Towards Equilibrium)

Markets are not just about the steam engine, iron foundries, or today’s silicon-chip factories. Markets also supported Shakespeare, Haydn, and the modern book superstore. The rise of oil painting, classical music, and print culture were all part of the same broad social and economic developments, namely the rise of capitalism, modern technology, rule of law, and consumer society.

ONE OF THE main differences between standard and behavioral economics involves this concept of “free lunches.” According to the assumptions of standard economics, all human decisions are rational and informed, motivated by an accurate concept of the worth of all goods and services and the amount of happiness (utility) all decisions are likely to produce. Under this set of assumptions, everyone in the marketplace is trying to maximize profit and striving to optimize his experiences. As a consequence, economic theory asserts that there are no free lunches—if there were any, someone would have already found them and extracted all their value. Behavioral economists, on the other hand, believe that people are susceptible to irrelevant influences from their immediate environment (which we call context effects), irrelevant emotions, shortsightedness, and other forms of irrationality (see any chapter in this book or any research paper in behavioral economics for more examples). What good news can accompany this realization? The good news is that these mistakes also provide opportunities for improvement. If we all make systematic mistakes in our decisions, then why not develop new strategies, tools, and methods to help us make better decisions and improve our overall well-being? That’s exactly the meaning of free lunches from the perspective of behavioral economics—the idea that there are tools, methods, and policies that can help all of us make better decisions and as a consequence achieve what we desire.

To an economist, the strategy is obvious. Since even a penny is more valuable than nothing, it makes sense for Zelda to accept an offer as low as a penny—and, therefore, it makes sense for Annika to offer just a penny, keeping $19.99 for herself. But, economists be damned, that’s not how normal people played the game. The Zeldas usually rejected offers below $3. They were apparently so disgusted by a lowball offer that they were willing to pay to express their disgust. Not that lowball offers happened very often. On average, the Annikas offered the Zeldas more than $6. Given how the game works, an offer this large was clearly meant to ward off rejection. But still, an average of $6—almost a third of the total amount—seemed pretty generous. Does that make it altruism? Maybe, but probably not. The Ultimatum player making the offer has something to gain—the avoidance of rejection—by giving more generously. As often happens in the real world, seemingly kind behaviors in Ultimatum are inextricably tied in with potentially selfish motivations.

In the 1970s, researchers conducted a study that pitted a moral incentive against an economic incentive. In this case, they wanted to learn about the motivation behind blood donations. Their discovery: when people are given a small stipend for donating blood rather than simply being praised for their altruism, they tend to donate less blood. The stipend turned a noble act of charity into a painful way to make a few dollars, and it wasn’t worth it. What if the blood donors had been offered an incentive of $50, or $500, or $5,000? Surely the number of donors would have changed dramatically. But something else would have changed dramatically as well, for every incentive has its dark side. If a pint of blood were suddenly worth $5,000, you can be sure that plenty of people would take note. They might literally steal blood at knifepoint. They might pass off pig blood as their own. They might circumvent donation limits by using fake IDs. Whatever the incentive, whatever the situation, dishonest people will try to gain an advantage by whatever means necessary. Or, as W. C. Fields once said: a thing worth having is a thing worth cheating for.

Taxes are often higher when price-sensitivity is low. For example, the government charges high taxes on petrol and cigarettes, not for environmental and health reasons but because people who buy these products need to drive and are addicted to smoking; they won’t change their behaviour much even in the face of large taxes. (If you think that taxes on petrol are motivated by environmental concerns, think again: despite the environmental impacts of air travel, electricity and domestic heating, 90 per cent of all ‘environmental’ taxes in the UK in 2009 were paid by motorists.)

Social entrepreneurs are among the most dynamic engines of the cooperative movement. Where corporate moguls work for personal enrichment, these civic-minded business leaders work for the cooperative equivalent, which is a desire to generate community self-reliance, abolish poverty, and enhance community economic well-being by improving housing, food, transportation, energy, health, finance, and a host of other products and services. Their motivations are not selfishly financial; they are far deeper, rooted in both the human spirit and the pervasive sense of community that human beings have striven to express throughout history. As the economist Jean Monnet once said, “Without community, there is crisis.

To recap, Motivation 2.0 suffers from three compatibility problems. It doesn't mesh with the way many new business models are organizing what we do - because we're intrinsically motivated purpose maximizers, not only extrinsically motivated profit maximizers. It doesn't comport with the way that twenty-first-century economics thinks about what we do - because economists are finally realizing tht we're full-fledged human beings, not single-minded economic robots. And perhaps most important, it's hard to reconcile with much of what we actually do at work - because for growing numbers of people, work is often creative, interesting, and self-directed rather than routine, boring and other-directed. Taken together, these compatibility problems warn us that something's gone awry in our motivational operating system.

Westerners, not just Lincoln Steffens. It took in the Central Intelligence Agency of the United States. It even took in the Soviet Union’s own leaders, such as Nikita Khrushchev, who famously boasted in a speech to Western diplomats in 1956 that “we will bury you [the West].” As late as 1977, a leading academic textbook by an English economist argued that Soviet-style economies were superior to capitalist ones in terms of economic growth, providing full employment and price stability and even in producing people with altruistic motivation. Poor old Western capitalism did better only at providing political freedom. Indeed, the most widely used university textbook in economics, written by Nobel Prize–winner Paul Samuelson, repeatedly predicted the coming economic dominance of the Soviet Union. In the 1961 edition, Samuelson predicted that Soviet national income would overtake that of the United States possibly by 1984, but probably by 1997. In the 1980 edition there was little change in the analysis, though the two dates were delayed to 2002 and 2012. Though the policies of Stalin and subsequent Soviet leaders could produce rapid economic growth, they could not do so in a sustained way. By the 1970s, economic growth had all but stopped. The most important lesson is that extractive institutions cannot generate sustained technological change for two reasons: the lack of economic incentives and resistance by the elites. In addition, once all the very inefficiently used resources had been reallocated to industry, there were few economic gains to be had by fiat. Then the Soviet system hit a roadblock, with lack of innovation and poor economic incentives preventing any further progress. The only area in which the Soviets did manage to sustain some innovation was through enormous efforts in military and aerospace technology. As a result they managed to put the first dog, Leika, and the first man, Yuri Gagarin, in space. They also left the world the AK-47 as one of their legacies. Gosplan was the supposedly all-powerful planning agency in charge of the central planning of the Soviet economy. One of the benefits of the sequence of five-year plans written and administered by Gosplan was supposed to have been the long time horizon necessary for rational investment and innovation. In reality, what got implemented in Soviet industry had little to do with the five-year plans, which were frequently revised and rewritten or simply ignored. The development of industry took place on the basis of commands by Stalin and the Politburo, who changed their minds frequently and often completely revised their previous decisions. All plans were labeled “draft” or “preliminary.” Only one copy of a plan labeled “final”—that for light industry in 1939—has ever come to light. Stalin himself said in 1937 that “only bureaucrats can think that planning work ends with the creation of the plan. The creation of the plan is just the beginning. The real direction of the plan develops only after the putting together of the plan.” Stalin wanted to maximize his discretion to reward people or groups who were politically loyal, and punish those who were not. As for Gosplan, its main role was to provide Stalin with information so he could better monitor his friends and enemies. It actually tried to avoid making decisions. If you made a decision that turned

gave up on the idea of creating “socialist men and women” who would work without monetary incentives. In a famous speech he criticized “equality mongering,” and thereafter not only did different jobs get paid different wages but also a bonus system was introduced. It is instructive to understand how this worked. Typically a firm under central planning had to meet an output target set under the plan, though such plans were often renegotiated and changed. From the 1930s, workers were paid bonuses if the output levels were attained. These could be quite high—for instance, as much as 37 percent of the wage for management or senior engineers. But paying such bonuses created all sorts of disincentives to technological change. For one thing, innovation, which took resources away from current production, risked the output targets not being met and the bonuses not being paid. For another, output targets were usually based on previous production levels. This created a huge incentive never to expand output, since this only meant having to produce more in the future, since future targets would be “ratcheted up.” Underachievement was always the best way to meet targets and get the bonus. The fact that bonuses were paid monthly also kept everyone focused on the present, while innovation is about making sacrifices today in order to have more tomorrow. Even when bonuses and incentives were effective in changing behavior, they often created other problems. Central planning was just not good at replacing what the great eighteenth-century economist Adam Smith called the “invisible hand” of the market. When the plan was formulated in tons of steel sheet, the sheet was made too heavy. When it was formulated in terms of area of steel sheet, the sheet was made too thin. When the plan for chandeliers was made in tons, they were so heavy, they could hardly hang from ceilings. By the 1940s, the leaders of the Soviet Union, even if not their admirers in the West, were well aware of these perverse incentives. The Soviet leaders acted as if they were due to technical problems, which could be fixed. For example, they moved away from paying bonuses based on output targets to allowing firms to set aside portions of profits to pay bonuses. But a “profit motive” was no more encouraging to innovation than one based on output targets. The system of prices used to calculate profits was almost completely unconnected to the value of new innovations or technology. Unlike in a market economy, prices in the Soviet Union were set by the government, and thus bore little relation to value. To more specifically create incentives for innovation, the Soviet Union introduced explicit innovation bonuses in 1946. As early as 1918, the principle had been recognized that an innovator should receive monetary rewards for his innovation, but the rewards set were small and unrelated to the value of the new technology. This changed only in 1956, when it was stipulated that the bonus should be proportional to the productivity of the innovation. However, since productivity was calculated in terms of economic benefits measured using the existing system of prices, this was again not much of an incentive to innovate. One could fill many pages with examples of the perverse incentives these schemes generated. For example, because the size of the innovation bonus fund was limited by the wage bill of a firm, this immediately reduced the incentive to produce or adopt any innovation that might have economized on labor.

Growth was so rapid that it took in generations of Westerners, not just Lincoln Steffens. It took in the Central Intelligence Agency of the United States. It even took in the Soviet Union’s own leaders, such as Nikita Khrushchev, who famously boasted in a speech to Western diplomats in 1956 that “we will bury you [the West].” As late as 1977, a leading academic textbook by an English economist argued that Soviet-style economies were superior to capitalist ones in terms of economic growth, providing full employment and price stability and even in producing people with altruistic motivation. Poor old Western capitalism did better only at providing political freedom. Indeed, the most widely used university textbook in economics, written by Nobel Prize–winner Paul Samuelson, repeatedly predicted the coming economic dominance of the Soviet Union. In the 1961 edition, Samuelson predicted that Soviet national income would overtake that of the United States possibly by 1984, but probably by 1997. In the 1980 edition there was little change in the analysis, though the two dates were delayed to 2002 and 2012. Though the policies of Stalin and subsequent Soviet leaders could produce rapid economic growth, they could not do so in a sustained way. By the 1970s, economic growth had all but stopped. The most important lesson is that extractive institutions cannot generate sustained technological change for two reasons: the lack of economic incentives and resistance by the elites. In addition, once all the very inefficiently used resources had been reallocated to industry, there were few economic gains to be had by fiat. Then the Soviet system hit a roadblock, with lack of innovation and poor economic incentives preventing any further progress. The only area in which the Soviets did manage to sustain some innovation was through enormous efforts in military and aerospace technology. As a result they managed to put the first dog, Leika, and the first man, Yuri Gagarin, in space. They also left the world the AK-47 as one of their legacies. Gosplan was the supposedly all-powerful planning agency in charge of the central planning of the Soviet economy. One of the benefits of the sequence of five-year plans written and administered by Gosplan was supposed to have been the long time horizon necessary for rational investment and innovation. In reality, what got implemented in Soviet industry had little to do with the five-year plans, which were frequently revised and rewritten or simply ignored. The development of industry took place on the basis of commands by Stalin and the Politburo, who changed their minds frequently and often completely revised their previous decisions. All plans were labeled “draft” or “preliminary.” Only one copy of a plan labeled “final”—that for light industry in 1939—has ever come to light. Stalin himself said in 1937 that “only bureaucrats can think that planning work ends with the creation of the plan. The creation of the plan is just the beginning. The real direction of the plan develops only after the putting together of the plan.” Stalin wanted to maximize his discretion to reward people or groups who were politically loyal, and punish those who were not. As for Gosplan, its main role was to provide Stalin with information so he could better monitor his friends and enemies. It actually tried to avoid making decisions. If you made a decision that turned out badly, you might get shot. Better to avoid all responsibility. An example of what could happen

The situation was similar in the Soviet Union, with industry playing the role of sugar in the Caribbean. Industrial growth in the Soviet Union was further facilitated because its technology was so backward relative to what was available in Europe and the United States, so large gains could be reaped by reallocating resources to the industrial sector, even if all this was done inefficiently and by force. Before 1928 most Russians lived in the countryside. The technology used by peasants was primitive, and there were few incentives to be productive. Indeed, the last vestiges of Russian feudalism were eradicated only shortly before the First World War. There was thus huge unrealized economic potential from reallocating this labor from agriculture to industry. Stalinist industrialization was one brutal way of unlocking this potential. By fiat, Stalin moved these very poorly used resources into industry, where they could be employed more productively, even if industry itself was very inefficiently organized relative to what could have been achieved. In fact, between 1928 and 1960 national income grew at 6 percent a year, probably the most rapid spurt of economic growth in history up until then. This quick economic growth was not created by technological change, but by reallocating labor and by capital accumulation through the creation of new tools and factories. Growth was so rapid that it took in generations of Westerners, not just Lincoln Steffens. It took in the Central Intelligence Agency of the United States. It even took in the Soviet Union’s own leaders, such as Nikita Khrushchev, who famously boasted in a speech to Western diplomats in 1956 that “we will bury you [the West].” As late as 1977, a leading academic textbook by an English economist argued that Soviet-style economies were superior to capitalist ones in terms of economic growth, providing full employment and price stability and even in producing people with altruistic motivation. Poor old Western capitalism did better only at providing political freedom. Indeed, the most widely used university textbook in economics, written by Nobel Prize–winner Paul Samuelson, repeatedly predicted the coming economic dominance of the Soviet Union. In the 1961 edition, Samuelson predicted that Soviet national income would overtake that of the United States possibly by 1984, but probably by 1997. In the 1980 edition there was little change in the analysis, though the two dates were delayed to 2002 and 2012. Though the policies of Stalin and subsequent Soviet leaders could produce rapid economic growth, they could not do so in a sustained way. By the 1970s, economic growth had all but stopped. The most important lesson is that extractive institutions cannot generate sustained technological change for two reasons: the lack of economic incentives and resistance by the elites. In addition, once all the very inefficiently used resources had been reallocated to industry, there were few economic gains to be had by fiat. Then the Soviet system hit a roadblock, with lack of innovation and poor economic incentives preventing any further progress. The only area in which the Soviets did manage to sustain some innovation was through enormous efforts in military and aerospace technology. As a result they managed to put the first dog, Leika, and the first man, Yuri Gagarin, in space. They also left the world the AK-47 as one of their legacies. Gosplan was the supposedly all-powerful planning agency in charge of the central planning of the Soviet economy.

Funny how in a material world full of pundits and economists obsessed with assets and liabilities -personally, economically and globally - few speak about the greatest of all these…YOU.

Indeed, the very premise of extrinsic incentives is that we’ll always respond rationally to them. But even most economists don’t believe that anymore. Sometimes these motivators work. Often they don’t. And many times, they inflict collateral damage. In short, the new way economists think about what we do is hard to reconcile with Motivation 2.0.

Markets aren’t real. They are mathematical models, created by imagining a self-contained world where everyone has exactly the same motivation and the same knowledge and is engaged in the same self-interested calculating exchange. Economists are aware that reality is always more complicated; but they are also aware that to come up with a mathematical model, one always has to make the world into a bit of a cartoon.

Westerners, not just Lincoln Steffens. It took in the Central Intelligence Agency of the United States. It even took in the Soviet Union’s own leaders, such as Nikita Khrushchev, who famously boasted in a speech to Western diplomats in 1956 that “we will bury you [the West].” As late as 1977, a leading academic textbook by an English economist argued that Soviet-style economies were superior to capitalist ones in terms of economic growth, providing full employment and price stability and even in producing people with altruistic motivation. Poor old Western capitalism did better only at providing political freedom. Indeed, the most widely used university textbook in economics, written by Nobel Prize–winner Paul Samuelson, repeatedly predicted the coming economic dominance of the Soviet Union. In the 1961 edition, Samuelson predicted that Soviet national income would overtake that of the United States possibly by 1984, but probably by 1997. In the 1980 edition there was little change in the analysis, though the two dates were delayed to 2002 and 2012. Though the policies of Stalin and subsequent Soviet leaders could produce rapid economic growth, they could not do so in a sustained way. By the 1970s, economic growth had all but stopped. The most important lesson is that extractive institutions cannot generate sustained technological change for two reasons: the lack of economic incentives and resistance by the elites. In addition, once all the very inefficiently used resources had been reallocated to industry, there were few economic gains to be had by fiat. Then the Soviet system hit a roadblock, with lack of innovation and poor economic incentives preventing any further progress. The only area in which the Soviets did manage to sustain some innovation was through enormous efforts in military and aerospace technology. As a result they managed to put the first dog, Leika, and the first man, Yuri Gagarin, in space. They also left the world the AK-47 as one of their legacies. Gosplan was the supposedly all-powerful planning agency in charge of the central planning of the Soviet economy. One of the benefits of the sequence of five-year plans written and administered by Gosplan was supposed to have been the long time horizon necessary for rational investment and innovation. In reality, what got implemented in Soviet industry had little to do with the five-year plans, which were frequently revised and rewritten or simply ignored. The development of industry took place on the basis of commands by Stalin and the Politburo, who changed their minds frequently and often completely revised their previous decisions. All plans were labeled “draft” or “preliminary.” Only one copy of a plan labeled “final”—that for light industry in 1939—has ever come to light. Stalin himself said in 1937 that “only bureaucrats can think that planning work ends with the creation of the plan. The creation of the plan is just the beginning. The real direction of the plan develops only after the putting together of the plan.” Stalin wanted to maximize his discretion to reward people or groups who were politically loyal, and punish those who were not. As for Gosplan, its main role was to provide Stalin with information so he could better monitor his friends and enemies. It actually tried to avoid making decisions. If you made a decision that turned out badly, you might get shot. Better to avoid all responsibility. An example of what could happen

Jean-Baptiste Say may have coined the term 'entrepreneur' but he totally missed the opportunity to put it on a t-shirt and sell it.

Karim Lakhani and Boston Consulting Group consultant Bob Wolf surveyed 684 open-source developers, mostly in North America and Europe, about why they participated in these projects. Lakhani and Wolf uncovered a range of motives, but they found “that enjoyment-based intrinsic motivation, namely how creative a person feels when working on the project, is the strongest and most pervasive driver.”2 A large majority of programmers, the researchers discovered, reported that they frequently reached the state of optimal challenge called “flow.” Likewise, three German economists who studied open-source projects around the world found that what drives participants is “a set of predominantly intrinsic motives”—in particular, “the fun . . . of mastering the challenge of a given software problem” and the “desire to give a gift to the programmer community.”3 Motivation 2.0 has little room for these sorts of impulses.

After the introduction of the fine we observed a steady increase in the number of parents coming late,” the economists wrote. “The rate finally settled, at a level that was higher, and almost twice as large as the initial one.”19

remind you that people of talent and ability are not generally motivated to rule others. They have better things to do. It is only the second-rate that crave power, because that is the only way that they can achieve distinction.

Addiction If some scientists believe that “if-then” motivators and other extrinsic rewards resemble prescription drugs that carry potentially dangerous side effects, others believe they’re more like illegal drugs that foster a deeper and more pernicious dependency. According to these scholars, cash rewards and shiny trophies can provide a delicious jolt of pleasure at first, but the feeling soon dissipates—and to keep it alive, the recipient requires ever larger and more frequent doses. The Russian economist Anton Suvorov has constructed an elaborate econometric model to demonstrate this effect, configured around what’s called “principal-agent theory.” Think of the principal as the motivator—the employer, the teacher, the parent. Think of the agent as the motivatee—the employee, the student, the child. A principal essentially tries to get the agent to do what the principal wants, while the agent balances his own interests with whatever the principal is offering. Using a blizzard of complicated equations that test a variety of scenarios between principal and agent, Suvorov has reached conclusions that make intuitive sense to any parent who’s tried to get her kids to empty the garbage. By offering a reward, a principal signals to the agent that the task is undesirable. (If the task were desirable, the agent wouldn’t need a prod.) But that initial signal, and the reward that goes with it, forces the principal onto a path that’s difficult to leave. Offer too small a reward and the agent won’t comply. But offer a reward that’s enticing enough to get the agent to act the first time, and the principal “is doomed to give it again in the second.” There’s no going back. Pay your son to take out the trash—and you’ve pretty much guaranteed the kid will never do it again for free. What’s more, once the initial money buzz tapers off, you’ll likely have to increase the payment to continue compliance. As Suvorov explains, “Rewards are addictive in that once offered, a contingent reward makes an agent expect it whenever a similar task is faced, which in turn compels the principal to use rewards over and over again.” And before long, the existing reward may no longer suffice. It will quickly feel less like a bonus and more like the status quo—which then forces the principal to offer larger rewards to achieve the same effect.

Black immigrants are more motivated, more hardworking, and “more entrepreneurial than native-born blacks,” wrote one commentator in The Economist in 1996. Their success shows “that racism does not account for all, or even most, of the difficulties encountered by native-born blacks.” Ethnically racist ideas, like all racist ideas, cover up the racist policies wielded against Black natives and immigrants. Whenever Black immigrants compare their economic standing to that of Black natives, whenever they agree that their success stories show that antiracist Americans are overstating racist policies against African Americans, they are tightening the handcuffs of racist policy around their own wrists. Black immigrants’ comparisons with Black natives conceal the racial inequities between Black immigrants and non-Black immigrants

Economist Paul Rosenstein-Rodan has pointed to the “tremble factor” in understanding human motivation. “In the building practices of ancient Rome, when scaffolding was removed from a completed Roman arch, the Roman engineer stood beneath. If the arch came crashing down, he was the first to know. Thus his concern for the quality of the arch was intensely personal, and it is not surprising that so many Roman arches have survived.” Why should investing be any different? Money managers who invested their own assets in parallel with clients would quickly abandon their relative-performance orientation.

But Anita Roddick had a different take on that. In 1976, before the words to say it had been found, she set out to create a business that was socially and environmentally regenerative by design. Opening The Body Shop in the British seaside town of Brighton, she sold natural plant-based cosmetics (never tested on animals) in refillable bottles and recycled boxes (why throw away when you can use again?) while paying a fair price to the communities worldwide that supplied cocoa butter, brazil nut oil and dried herbs. As production expanded, the business began to recycle its wastewater for using in its products and was an early investor in wind power. Meanwhile, company profits went to The Body Shop Foundation, which gave them to social and environmental causes. In all, a pretty generous enterprise. Roddick’s motivation? ‘I want to work for a company that contributes to and is part of the community,’ she later explained. ‘If I can’t do something for the public good, what the hell am I doing?’47 Such a values-driven mission is what the analyst Marjorie Kelly calls a company’s ‘living purpose’—turning on its head the neoliberal script that the business of business is simply business. Roddick proved that business can be far more than that, by embedding benevolent values and a regenerative intent at the company’s birth. ‘We dedicated the Articles of Association and Memoranda—which in England is the legal definition of the purpose of your company—to human rights advocacy and social and environmental change,’ she explained in 2005, ‘so everything the company did had that as its canopy.’48 Today’s most innovative enterprises are inspired by the same idea: that the business of business is to contribute to a thriving world. And the growing family of enterprise structures that are intentionally distributive by design—including cooperatives, not-for-profits, community interest companies, and benefit corporations—can be regenerative by design too.49 By explicitly making a regenerative commitment in their corporate by-laws and enshrining it in their governance, they can safeguard a ‘living purpose’ through times of leadership change and protect it from mission creep. Indeed the most profound act of corporate responsibility for any company today is to rewrite its corporate by-laws, or articles of association, in order to redefine itself with a living purpose, rooted in regenerative and distributive design, and then to live and work by it.

Economists have demonstrated that offering people an extrinsic reward (like money or prizes) for something they’re already doing—and already enjoying—actually makes them feel less motivated and less rewarded.

Trying to improve an already enjoyable activity by adding points, levels, and achievements has its risks. Economists have demonstrated that offering people an extrinsic reward (like money or prizes) for something they’re already doing—and already enjoying—actually makes them feel less motivated and less rewarded.

Michael Sandel has raised concerns about these very effects, arguing that cash payments can crowd out intrinsic motivations and the values that underpin them. He points, as an example, to the Earning by Learning programme, set up in low-achieving primary schools in Dallas, Texas, which paid six-year-old children $2 for every book that they read. Researchers found that the children’s literacy skills improved over the year, but what effect might such payments have on their longer-term motivation to learn? ‘The market is an instrument, but not an innocent one,’ Sandel remarks. ‘The obvious worry is that the payment may habituate children to think of reading books as a way of making money, and so erode, or crowd out, or corrupt the love of reading for its own sake.’51 Despite such concerns, financial incentives are increasingly being introduced in social realms, bringing our market identities—as consumers, customers, service providers and workers—to the forefront of our attention.

As a society, we pursue happiness and become measurably less happy over time. We privilege autonomy, and end up bound by rules to which we never assented, and more spied on than any people since the beginning of time. We pursue leisure through technology, and discover that the average working day is longer than ever, and that we have less time than we had before. The means to our ends are ever more available, while we have less sense of what our ends should be, or whether there is purpose in anything at all. Economists carefully model and monitor the financial markets in order to avoid any future crash: they promptly crash. We are so eager that all scientific research result in ‘positive findings’ that it has become progressively less adventurous and more predictable, and therefore discovers less and less that is a truly significant advance in scientific thinking. We grossly misconceive the nature of study in the humanities as utilitarian, in order to get value for money, and thus render it pointless and, in this form, certainly a waste of resource. We ‘improve’ education by dictating curricula and focussing on exam results to the point where free-thinking, arguably an overarching goal of true education, is discouraged; in our universities many students are, in any case, so frightened that the truth might turn out not to conform to their theoretical model that they demand to be protected from discussions that threaten to examine the model critically; and their teachers, who should know better, in a serious dereliction of duty, collude. We over-sanitise and cause vulnerability to infection; we over-use antibiotics, leading to super-bacteria that no antibiotic can kill; we make drugs illegal to protect society, and, while failing comprehensively to control the use of drugs, create a fertile field for crime; we protect children in such a way that they cannot cope with – let alone relish – uncertainty or risk, and are rendered vulnerable. The left hemisphere’s motivation is control; and its means of achieving it alarmingly linear, as though it could see only one of the arrows in a vastly complex network of interactions

JUSTIFYING OPPRESSION While history has proven Malthusianism empirically false, however, it provides the ideal foundation for justifying human oppression and tyranny. The theory holds that there isn’t enough to go around, and can never be. Therefore human aspirations and liberties must be constrained, and authorities must be empowered to enforce the constraining. During Malthus’s own time, his theory was used to justify regressive legislation directed against England’s lower classes, most notably the Poor Law Act of 1834, which forced hundreds of thousands of poor Britons into virtual slavery. 11 However, a far more horrifying example of the impact of Malthusianism was to occur a few years later, when the doctrine motivated the British government’s refusal to provide relief during the great Irish famine of 1846. In a letter to economist David Ricardo, Malthus laid out the basis for this policy: “The land in Ireland is infinitely more peopled than in England; and to give full effect to the natural resources of the country, a great part of the population should be swept from the soil.” 12 For the last century and a half, the Irish famine has been cited by Malthusians as proof of their theory of overpopulation, so a few words are in order here to set the record straight. 13 Ireland was certainly not overpopulated in 1846. In fact, based on census data from 1841 and 1851, the Emerald Isle boasted a mere 7.5 million people in 1846, less than half of England’s 15.8 million, living on a land mass about two-thirds that of England and of similar quality. So compared to England, Ireland before the famine was if anything somewhat underpopulated. 14 Nor, as is sometimes said, was the famine caused by a foolish decision of the Irish to confine their diet to potatoes, thereby exposing themselves to starvation when a blight destroyed their only crop. In fact, in 1846 alone, at the height of the famine, Ireland exported over 730,000 cattle and other livestock, and over 3 million quarts of corn and grain flour to Great Britain. 15 The Irish diet was confined to potatoes because—having had their land expropriated, having been forced to endure merciless rack-rents and taxes, and having been denied any opportunity to acquire income through manufactures or other means—tubers were the only food the Irish could afford. So when the potato crop failed, there was nothing for the Irish themselves to eat, despite the fact that throughout the famine, their homeland continued to export massive amounts of grain, butter, cheese, and meat for foreign consumption. As English reformer William Cobbett noted in his Political Register: Hundreds of thousands of living hogs, thousands upon thousands of sheep and oxen alive; thousands upon thousands of barrels of beef, pork, and butter; thousands upon thousands of sides of bacon; and thousands and thousands of hams; shiploads and boats coming daily and hourly from Ireland to feed the west of Scotland; to feed a million and a half people in the West Riding of Yorkshire, and in Lancashire; to feed London and its vicinity; and to fill the country shops in the southern counties of England; we beheld all this, while famine raged in Ireland amongst the raisers of this very food. 16 “The population should be swept from the soil.” Evicted from their homes, millions of Irish men, women, and children starved to death or died of exposure. (Contemporary drawings from Illustrated London News.)

Michael Spence, an NYU economist, the sharing economy’s motive is “exploiting under-utilized resources—be they physical and financial capital or human capital and talent.

It is interesting to note that Mesopotamian legal codes guaranteed property rights to an even greater extent than they guaranteed what we now call human rights. For instance, a person had the right to sell him- or herself into slavery or pledge his or her liberty as collateral for a loan. This seems cruel and exploitive, but it may have been efficient. A study by the economist M. Darling of the rural economy of the Punjab in modern times suggests a disturbing thing about human nature—people work harder and produce more when they are in debt.2 Darling found that crop yields for farmers in debt typically exceeded yields from unencumbered farmers. Farmers in the Punjab may have faced foreclosure, but for the ancient inhabitant of Ur, the motivation was even greater. Debtors were often forced to sell themselves into slavery.

Degradation of work. Compelling the people in an organization to focus their efforts on the narrow range of what gets measured leads to a degradation of the experience of work. Edmund Phelps, a Nobel Prize winning economist, claims in his book Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge, and Change that one of the virtues of capitalism is its ability to provide “the experience of mental stimulation, the challenge of new problems to solve, the chance to try the new, and the excitement of venturing into the unknown.”9 That is indeed a possibility under capitalism. But those subject to performance metrics are forced to focus their efforts on limited goals, imposed by others, who may not understand the work that they do. For the workers under scrutiny, mental stimulation is dulled, they decide neither the problems to be solved nor how to solve them, and there is no excitement of venturing into the unknown because the unknown is beyond the measureable. In short, the entrepreneurial element of human nature—which extends beyond the owners of enterprises—may be stifled by metric fixation.10 One result is to motivate those with greater initiative and enterprise to move out of mainstream, large-scale organizations where the culture of accountable performance prevails. Teachers move out of public schools to private schools and charter schools. Engineers move out of large corporations to boutique firms. Enterprising government employees become consultants. There is a healthy element in this. But surely the large-scale organizations of our society are the poorer for driving out those most likely to innovate and initiate. The more that work becomes a matter of filling in the boxes by which performance is to be measured and rewarded, the more it will repel those who think outside the box.

Psychologists and economists who study “irrationality” do not realize that humans may have an instinct to procrastinate only when no life is in danger. I do not procrastinate when I see a lion entering my bedroom or fire in my neighbor’s library. I do not procrastinate after a severe injury. I do so with unnatural duties and procedures. I once procrastinated and kept delaying a spinal cord operation as a response to a back injury—and was completely cured of the back problem after a hiking vacation in the Alps, followed by weight-lifting sessions. These psychologists and economists want me to kill my naturalistic instinct (the inner b****t detector) that allowed me to delay the elective operation and minimize the risks—an insult to the antifragility of our bodies. Since procrastination is a message from our natural willpower via low motivation, the cure is changing the environment, or one’s profession, by selecting one in which one does not have to fight one’s impulses. Few can grasp the logical consequence that, instead, one should lead a life in which procrastination is good, as a naturalistic-risk-based form of decision making.

many psychologists and economists have found that the correlation between money and happiness is weak—that past a certain (and quite modest) level, a larger pile of cash doesn’t bring people a higher level of satisfaction.

For almost a century, anthropologists like me have been pointing out that there is something very wrong with this picture. The standard economic-history version has little to do with anything we observe when we examine how economic life is actually conducted, in real communities and marketplaces, almost anywhere—where one is much more likely to discover everyone is in debt to everyone else in a dozen different ways, and that most transactions take place without the use of currency. Why the discrepancy? Some of it is just the nature of the evidence: coins are preserved in the archeological record; credit arrangements usually are not. Still, the problem runs deeper. The existence of credit and debt has always been something of a scandal for economists, since it’s almost impossible to pretend that those lending and borrowing money are acting on purely “economic” motivations (for instance, that a loan to a stranger is the same as a loan to one’s cousin);

It is here you'll find economists are not only a very myopic group, but a very timid group as well.  And the radical idea that sex is the primary driver of economic growth is just too...well...sexy for them.  However, just because an idea is radical doesn't mean it isn't correct or true.  Matter of fact, while economists, politicians, academics, and feminists are clutching their pearls over the concept that sex powers our economy, there's a street-smart, common-sense American blue collar Joe who is yelling, "You needed a study for that???" But this presents a problem, not only for economists, but all of society, and especially women.  Because if sex (which also includes love, family, children/progeny) is the primary motivator for men to maximize their economic production, no amount of government spending, monetary policy, stimulus checks, or any other economic measures are going to prompt men to produce.  The responsibility of motivating men to be economically productive falls solely into the hands of women.  And when you consider what would be required of women to fire up men's economic engines once again, you can see where such a "sex-based economic policy" might run into some issues.

So, when free-market economists say that a certain regulation should not be introduced because it would restrict the ‘freedom’ of a certain market, they are merely expressing a political opinion that they reject the rights that are to be defended by the proposed law. Their ideological cloak is to pretend that their politics is not really political, but rather is an objective economic truth, while other people’s politics is political. However, they are as politically motivated as their opponents. Breaking away from the illusion of market objectivity is the first step towards understanding capitalism.

The free market doesn’t exist. Every market has some rules and boundaries that restrict freedom of choice. A market looks free only because we so unconditionally accept its underlying restrictions that we fail to see them. How ‘free’ a market is cannot be objectively defined. It is a political definition. The usual claim by free-market economists that they are trying to defend the market from politically motivated interference by the government is false. Government is always involved and those free-marketeers are as politically motivated as anyone.

Where did this infamous character come from? His most intimate early portrait was created by Adam Smith in two major works, his 1759 Theory of Moral Sentiments and his 1776 book known as The Wealth of Nations. Today Smith is best remembered for having noted the human propensity to ‘truck, barter and exchange’ and the role of self-interest in making markets work.2 But although he believed self-interest was ‘of all virtues that which is most helpful to the individual’, Smith also believed it was far from the most admirable of our traits, knocked off that top spot by our ‘humanity, justice, generosity and public spirit . . . the qualities most useful to others’. Did he consider humankind to be motivated by self-interest alone? Not at all. ‘How selfish soever man may be supposed,’ he wrote, ‘there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it.’3 Furthermore, Smith believed that an individual’s self-interest and concern for others combined with their diverse talents, motivations and preferences to produce a complex moral character whose behaviour could not easily be predicted.

As our emerging self-portrait makes clear, we are motivated by far more than cost and price. So instead of turning first to markets to mediate our social and ecological relationships, the twenty-first-century economist would be wise to start by asking what social dynamics are already in play. What are the values, heuristics, norms and networks that currently shape human behaviour—and how could they be nurtured or nudged, rather than ignored and eroded?

The most comprehensive survey yet of research into the impacts of payments to promote ecological conservation—whether to collect more litter and plant more trees or harvest less timber and catch fewer fish—finds that most of the schemes studied were unintentionally crowding out, rather than crowding in, people’s intrinsic motivation to act.57 Instead of engaging existing intrinsic commitments, such as pride in cultural heritage, respect for the living world, and trust in the community, some schemes inadvertently serve to erode those very values and replace them with financial motivation. ‘Using money to motivate people can throw up surprising results,’ says Erik Gómez-Baggethun, one of the study’s authors. ‘We often don’t understand the complex interplay of human values and motivations well enough to anticipate what will happen, and so that calls for caution’.

This led the British economist John Maynard Keynes, writing on ‘Economic Possibilities for our Grandchildren’ in 1930, to hope that: When the accumulation of wealth is no longer of high social importance, there will be great changes in the code of morals. We shall be able to rid ourselves of many of the pseudo-moral principles which have hag-ridden us for two hundred years, by which we have exalted some of the most distasteful of human qualities into the position of the highest virtues. We shall be able to afford to dare to assess the money motive at its true value. The love of money as a possession – as distinguished from the love of money as a means to the enjoyments and realities of life – will be recognized for what it is, a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists on mental disease. All kinds of social customs and economic practices, affecting the distribution of wealth and of economic rewards and penalties, which we now maintain at all costs, however distasteful and unjust they may be in themselves, because they are tremendously useful in promoting accumulation of capital, we shall then be free, at last, to discard.2

Let us return to our initial problem. We may begin by asking why we assume that someone being paid to do nothing should consider himself fortunate. What is the basis of that theory of human nature from which this follows? The obvious place to look is at economic theory, which has turned this kind of thought into a science. According to classical economic theory, homo oeconomicus, or “economic man”—that is, the model human being that lies behind every prediction made by the discipline—is assumed to be motivated above all by a calculus of costs and benefits. All the mathematical equations by which economists bedazzle their clients, or the public, are founded on one simple assumption: that everyone, left to his own devices, will choose the course of action that provides the most of what he wants for the least expenditure of resources and effort. It is the simplicity of the formula that makes the equations possible: if one were to admit that humans have complicated motivations, there would be too many factors to take into account, it would be impossible to properly weight them, and predictions could not be made. Therefore, while an economist will say that while of course everyone is aware that human beings are not really selfish, calculating machines, assuming that they are makes it possible to explain a very large proportion of what humans do, and this proportion—and only this—is the subject matter of economic science.

Human beings have always been infatuated with gambling because it puts us head-to-head against the fates, with no holds barred. We enter this daunting battle because we are convinced that we have a powerful ally: Lady Luck will interpose herself between us and the fates (or the odds) to bring victory to our side. Adam Smith, a masterful student of human nature, defined the motivation: “The overweening conceit which the greater part of men have of their own abilities [and] their absurd presumption in their own good fortune.”1 Although Smith was keenly aware that the human propensity to take risk propelled economic progress, he feared that society would suffer when that propensity ran amuck. So he was careful to balance moral sentiments against the benefits of a free market. A hundred and sixty years later, another great English economist, John Maynard Keynes, agreed: “When the capital development of a country becomes the by-product of the activities of a casino, the job is likely to be ill-done.