Motivation

Motivation: By Love, Convincing, Command, Or Self-Interest

It is important to remind ourselves of the obvious fact that human beings interact with others—all human behavior has to be seen in a social context.

Indeed, very few people can function effectively if left on their own for more than very limited periods of time. They need the stimulation and control of how their fellows respond.

Humans thrive intellectually, morally, culturally, and emotionally only thanks to their personal connections with their fellow men. Indeed, most people are at their worst when they are isolated, anonymous and alienated from others.

The Individual and Social Bonds

By definition, the student of institutions rejects a position of ‘isolationist individualism’, that is, a position of seeing the individual as an island. Rather, one conceives people as ‘social animals’ who pursue their own ends in cooperation with others.

To adopt a position of individualism, as we have here, therefore does not mean that one studies people as stand-alone individuals.

Individualism means instead that individual aspirations are the ultimate objective of social and economic study, but of course of individuals who live in a social context and are constrained by institutions that largely define what is ‘social’.


The institutional-economics approach therefore acknowledges that individuals establish reciprocal relations and indeed need lasting communal bonds.

Association with others give us a sense of belonging, but also impose institutional structures. Such associations are perceived as deeply satisfying and give people a sense of identity and security (Hazlitt, 1988/1964, pp. 35-43).

Social connections serve, so to speak, to keep our selfish, atavistic, opportunistic and cognitively biased individual instincts on a leash; institutions form a central part in constraining instinct-driven opportunism.

What has been said about social bonds between individuals also applies to groups.

If various social groups are sharply delineated and in conflict with each other, sustained economic development is unlikely (Powelson, 1994).

What is needed is an open, tolerant society, in which the poor have a share in power and obey the sane rules as the rich and powerful (Popper, 1945).

Eric Jones, who studied episodes of economic growth in history, spoke in this context of the ‘relative connectedness’ of the community as a precondition to creative and effective interaction (Jones, 1988, p. 128).

It does not, of course, follow from recognizing these facts of human existence that the ‘herd’ has to be organized by a leader, commanded from the top down and directed to serve some predetermined goal(s).

Frequently, social bonds evolve because people discover spontaneously that they share interests.

People normally belong to numerous, overlapping groups, associations and networks that are governed by differing institutions Opens in new window (pluralist society).

Thus, we may be members of a family, various clubs, a religious community, different regional entities, such as local neighborhood, a city, a province, a nation state, and a transnational cultural community. We normally feel that such diverse and multiple associations best serve us to realize our potential.

Social aspect of human behavior is no doubt deeply embedded in the human heritage. Paleo-anthropologists Opens in new window believe that the gradual evolution of our ancestors from bands of Australopithecus Opens in new window, who probably fended for themselves in hordes like baboons, had much to do with social interaction when hunting, gathering or sharing the loot in camps.

Humans trained their differentiated cognitive abilities by social interaction; they gained evolutionary advantages in coordinating activity with others in order to survive better (Leakey, 1994).

Evolution thus favored people with good interactive and coordinative abilities who functioned well in social groups.

And tribes, which developed institutions and ensured that scarce food resources were shared evenly within a closely-knit, small group under a circumspect leader, had better survival chances. Thus, a ‘tribal mentality’ based on social bonding and sharing evolved over millions of years and got deeply embedded in the human psyche (Hayek, 1976, pp. 133 – 152; Jacobs, 1992; Giersch, 1996).

When studying human behavior, we therefore must not assume that humans are isolated individuals, but rather that they are social creatures whose interaction is essential to them. This leads us on to the next questions: namely, what motivates individuals to act for the benefit of others?

Four Types of Motivation

It is a basic premise of human behavior that individuals normally act in their own self-interest. They may pursue their aspirations in whatever way possible, whether this harms the aspirations of others or not.

Thus, the aspiration not to go hungry may be pursued by planting food, by buying and selling, or by theft.

Experience shows, however, that theft (and other types of opportunistic behavior Opens in new window) leads to costly conflicts and is wasteful: a society of thieves reaches lower satisfaction levels than an honestly cooperating community.

One therefore has to ask how individual autonomy to act should be constrained so that such opportunism  Opens in new windowis controlled. We of course already know that constraining opportunistic behavior is the function of institutions Opens in new window.

In principle, there are four ways in which people can be induced to make an effort in the interest of others (Boulding, 1969, p. 6; Hazlitt, 1988/1964, pp. 92-102):

  1. They make the effort to benefit others out of love, solidarity, or other variants of altruism.
  2. They are coerced by someone who threatens them with the use of force (command).
  3. They act out of their own freewill, but are more motivated out of enlightened self-interest because they can expect a sufficient reward. What they do for others is then the side effect of their selfishness.
  4. They act voluntarily for the benefit of others because someone has convinced them by rational argument to do so.

This latter case can, however, be submitted under one of the first three categories: it may appeal to love and solidarity, may be backed up by a threat of force or be based on an explanation of long-term, enlightened self-interest.

The first type of motivation works well in small groups such as a family, a small tribe and among friends.

Such behavior deserves social recognition and is often rewarded by respect, honor or prestige. It enables the division of labor and knowledge in small communities, without inflicting high coordination and monitoring costs.

As noted above, this type of behavior has been so essential for the survival of small bands of our distant ancestors during hundreds of thousands of generations that most humans have been instinctually conditioned to consider altruism as noble and praiseworthy.

But what works well in the small group—because of good knowledge about the others and direct mutual control that is tempered by personal empathy—cannot be transferred to the large group, such as the modern macro-society with industrial mass production and mass communication.

Some may regret that large communities such as nations do not function like a big family. They may regret that the baker does not simply provide the bread because he loves his hungry customers. They may regret that the Christian maxim of ‘love thy neighbor’ cannot be extended to millions of distant people whom we do not know. Yet, the evidence is clear:

When interacting with complete strangers, people usually need a motive other than love and solidarity.

This becomes apparent when the solidarity model of the small group is transferred to society at large under the doctrine of idealistic socialism Opens in new window.

The promise of communal sharing under the slogan ‘from each according to his ability, to each according to his need’ ineluctably leads to massive shirking of contributions of effort, massive claiming of benefits, and hence poor living standards.

Efforts to reform human nature and to create the new socialist man, who toils selflessly for others out of mere altruism, have failed abysmally. Consequently, people under socialism had to be coerced.

Authorities, however selected, assumed the power to punish others who did not produce to the targeted norm. Coercion and fear thus became the main motivation under socialism to get people to produce something that benefits others – and dissimulation and shirking wherever people could get away with it then became widespread.

In the Western Christian tradition and the Eastern Confucian and Buddist traditions, education and preaching are relied upon to encourage people to treat others with solidarity. This may have worked in small groups in early Christendom or small village communities in Asia, but it failed to ensure adequate living standards in bigger societies where solidarity inevitably declines with social distance.

The third possible motivation is self-interest. It works, for example, through voluntary exchange in the market place Opens in new window.

People share their knowledge and assets to help others because they want what the others have to offer in exchange.

The veterinarian Opens in new window, who gets up in the night to attend to a cow having trouble calving, does so normally for the money. But the beneficial side effect of his selfish action is that cow and calf survive.

It may be shocking to young people who are educated in solidarity mode of the family to discover that, in anonymous mass society, others do things that benefit them as by-product of a selfish pursuit of money.

But at least many different people, with different skills and assets, act to their benefit, even if they do not care personally for the people they serve.

People are thus guided as if by ‘an invisible hand’ to work for the benefit of others. The invisible hand of the market mechanism has of course to be supplemented by institutional constraints, such as an understanding of professional duty (for example in the medical profession) and the effort to keep a reputation of the profession intact out of a long term, extended self-interest.

Clearly, people will only be motivated to perform a service for others out of self-interest if they can keep the reward and if they are not coerced to share what they have earned with others.

This means that people must have the right to private, including to their own labor and skills.

Without a respected and protected right to own property—which also means the right to exclude others from its use and to dispose of the property as one decides—there would be insufficient motivations for the many specialists in a modern society to produce the goods and services that we want.

The useful knowledge that is held in millions of different human brains can only be exploited to the best of people’s abilities, if a set of institutions (rules) protects private property and its free use.

The long-term President of Uganda, Yoweri Museveni, expressed the motivation issue brilliantly when he remarked:

“I think that [collectivism] was a strategic mistake. They [the Marxists] chose a tool, which would not get human beings to produce. Do you make … [the people] … produce by appealing to the altruism which was very much in short supply? Or do you make them produce by making use of their selfishness, which was in abundance?” (reported in Time, 14 April 1997, p. 43).

Motivation in Micro and in Macro Societies

At this juncture in our discussion, we have reached several important conclusions:

  • Love and altruism, which have a very important place in motivating people in small groups, do not work among people in modern mass societies who do not know and cannot control each other directly.
  • The alternative of relying on coercion has the important drawback that those in authority often do not have the knowledge necessary for utilizing all available resources and that people who are coerced try to shirk their duties when they think they can get away with it.
  • The system of utilizing available knowledge and accumulating new information, which is a the heart of the economic growth process, requires incentives that appeal to self-interest and rely on voluntary action. The desirable outcomes of such action are often unintended by-products of the selfish pursuit of people’s own purposes.
  • Rational argument and education to convince people to do what others want can be important to improve the likelihood that we produce what benefits others.