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Material and Non-Material Incentives

Material and Non-Material Incentives

By Dennis Loo (12/6/13)

A society that equates material rewards with success and that relies upon material success to motivate people is also saying—and must say—that success equals having things that others do not have. This turns society into a zero sum game of winners and losers and structurally encourages a sense of entitlement among the “winners” that they are better than the “losers” and that they merit goodies and respect that should not be granted to the less deserving hoi polloi. Is this the meaning of a good society: the leaders think of themselves as so much better than everyone else? (Globalization and the Demolition of Society, p. 314)

All societies, past, present, and future require incentives to get people to work. It’s an inescapable fact of existence that we must labor in some form or another or we will starve. Even infants have to exert themselves to suckle on their mother’s breasts. The Garden of Eden has never existed and never will.

This fundamental fact, however, is almost always incorrectly equated with the rule of material incentives: the only way to properly motivate people is to dangle money in front of them and to threaten them with privation if they don’t chase after the money.

This is the ruling dictum in the U.S. The most aggressive proponents of this view – the neoliberals – insist that there is no alternative to their cold-blooded ideology: cold hard cash and ultra-individualism are what make the world go ‘round. People are naturally lazy, they say, and the only way to get them to not be is to promise them material rewards. Moreover, they argue that innovation would disappear were we to not dangle money in front of people because people would stop being inventive if they weren’t promised riches in return. The ones who revel in riches are those who deserve it and those who struggle to survive from day-to-day have failed to show the proper attitude of striving and hard work.

Those who say that non-capitalist societies must eventually fail because they lack the requisite incentives are claiming that their worship of material incentives constitute the necessary and fundamental logic of any society. But this overlooks some very basic facts.

First, while incentives are necessary to any society to motivate people, those incentives do not necessarily have to be material. Indeed, before the advent of caste and class societies, when people lived in nomadic or tribal societies (which make up the vast majority of human existence), material incentives as a motivator was (or is, in the case of those tribal societies that still exist) non-existent. These societies do not see a collapse of human labor or human creativity. Somehow even without material incentives people still work together to provide the means for their existence, they create art, music, technical innovations, and survive interdependently. Why is that if material incentives and individualism supposedly make up the core of human existence?

Second, even in capitalist societies where material incentives govern in the official and dominant discourse, cooperation and actions based on non-material incentives still operate. In fact, even in the U.S. where the American Dream is equated with material wealth, non-material incentives still provide the primary motivation for most people in most forms of work, even among those who are ostensibly the most driven by material incentives. Parents, for example, do what they do without the promise of cash for what they do from their children. They do it because they love their children and wish them well (with, of course, some exceptions among parents who are extremely narcissistic or self-centered). Even in jobs where the nature of the organization of that work is such that few to none would do it if not for the pay, the workers have to cooperate with each other in order to get the work done.

As for those who work in professions such as stock trading where the money is key to their participation, they a) still must cooperate with others to at least some degree, and b) derive major satisfaction not from the money per se but from the relative comparisons that they engage in vis a vis their peers: they feel relatively gratified or relatively deprived when they are doing better than their reference group and derive satisfaction from a job well done. While the money might be the way that they “keep score,” their self-esteem in not fueled by the amount of the money in and of itself but by how they are doing in relation to and compared to others and by mastery of their job. Even those in the 1% are still social beings and feel satisfied by their deal-making skills, not only or even mainly because of the money.

Brain surgeons don’t primarily measure their self-worth and their life satisfaction by how much they’re paid but by the satisfaction that comes from performing intricate and difficult surgical procedures that save people’s lives. If an actor because of his or her name was paid $20 million for a particular film but the film flopped dramatically and their performance was terrible, they are not going to be laughing all the way to the bank.

Third, if you are organizing your society around trying to recruit the “best people” for “the most important” jobs based on how much you pay them for it, then what you are doing is making those who are the best paid tend to think that they are the “winners” and others are the “losers.” What kind of society will it be when those in the leading positions think that they are so much better than others and that they are explicitly rewarded for their superiority? What kind of leaders are you going to get in such an arrangement? What kind of social solidarity are you going to have when those who are in charge are animated by a zero sum game of winners and losers? Why should they care all that much about all of those “losers?” And how can you put the fate of everyone in the hands of those who are being schooled to care essentially about themselves alone, even if they have to present a public face that they are not motivated quite that selfishly? In other words, functionalist theory's - and the American Dream's - claim that disproportionately materially rewarding elites benefits the whole society and promotes social solidarity actually does the opposite - it undermines social solidarity, rends the social fabric, and encourages elites to act on their own behalf rather than that of the public interest.

One of the premises of functionalist theory is that the "most important" jobs have to be paid disproportionately well to attract the best and brightest because this is good for the welfare of the whole society. What functionalist theory overlooks, however, is the contradiction that I am pointing to here: by rewarding people disproportionately for elite positions supposedly to attract the best people, you are actually promoting attitudes inimical to the public interest. What you want if you're interested in societal welfare, is for the best and leading people to be defined by their devotion to and skill at promoting the public interest, not their interest in feathering their own nest and enriching themselves. The functionalist argument that inequality is functional is undermined by its own promotion of personal interest by dangling the incentive of getting rich and having privileges in order to get people to "serve the public interest." People who want to serve the public interest aren't drawn to such responsibilities because you are bribing them with money and personal privileges. The kind of people who are drawn to elite posts because of the money and privilege are the least likely to put the public interest first and foremost.

To sum up: if you organize your society around a zero-sum game (which is what making material incentives the governing ethic is), then you are inevitably creating a society that is divided up between the haves and the have-nots. The people who are elevated to the leading positions because they are supposedly the “most fit” and therefore will be the most beneficial for the whole society as its leaders, are actually going to largely be made up of people who do not care about the rest of the society except as fodder for their own narcissism. You will create an exploitive society that is fueled by envy, resentment and strife because it’s a zero sum game in which there are winners and losers.

I am not advocating a society that bans competition because being competitive is (generally) a positive and inescapable human trait. The question, however, is what are you competing for? Are you competing to prove that you are a great individual and others are losers? Or are you competing to excel in the sense of showing what humanity is capable of in ways that can serve as an inspiration to others? Non-material incentives such as serving others and contributing to the general welfare are not zero sum games but something that everyone can engage in and improve the quality of life for all, not just the privileged few. Following such a leading principle in the society will not stifle innovation and effort but will in fact enhance it because the leading doctrine and ethic will now actually reflect the needs and nature of social beings rather than do violence and harm to the social units that we rely upon for our very existence.

Capitalism, Socialism and Communism

In the transition from socialism to communism a mix of material and non-material incentives will continue to be necessary and appropriate. You cannot and would not want to abolish all material incentives and attempt to organize society exclusively around non-material incentives. Material incentives will continue to have relevance but the difference will be that the emphasis will no longer be on material incentives as THE organizing principle and the distribution of finite social resources will be governed by considering non-material incentives in overall the leading position with material incentives retained as appropriate for quite a long time (as in, generations). The socialist principle of “from each according to his ability, to each according to their work” does not overnight become the communist principle of “from each according to their ability, to each according to their need.” That is a protracted process that includes bridging the gaps between mental and manual labor and raising consciousness of people from that of spontaneously narrower concerns to more inclusive and broader concerns.

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