23 Things they Don't Tell You About CapitalismBy: Chang Ha-Joon
Major Topic: Economics
Minor Topic: Politics
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Thing 5: Assume the worst about people and you get the worst
Free market economists often base their economic theories on the notion that we are all selfish all the time. They show the great achievements of the modern world as examples of selfish self interested competition. The greatness of the modern world (which dwarfs everything in history) is the result of an economic system that treats everyone as inherently selfish.
However the truth is that we are not only selfish: we are also altruistic and a whole host of other qualities. If we were only selfish all of the time our economic system would not work – nothing would work at all.
Most bureaucracies are so big that no one person in them actually knows what is happening in the whole organization. Work needs to be delegated and responsibility must be defused throughout the organization in order to get the benefits of a bureaucracy. However these benefits would not be forthcoming if everyone were to act selfishly. If people did act selfishly all the time then people would not work more than the minimum necessary. Most people would slack off and/or goof off. The fact that most people do not is a sign that people can be trusted to act beyond their narrow self interest.
Certainly from time to time we hear of selfish people who take advantage of the system but they are a minority; certainly we all have been less than perfect in our jobs or have made mistakes in our job but again this is a minority of the time (if it were a majority of the time we would be fired and or our businesses would fail).
Some free market economists have argued that this is only a myth; that altruistic actions are really deep down selfish actions that are controlled by invisible rewards or threats. However a strike in which workers 'work to rule' that is work to the letter of the law can show how much modern production depends on the good will of the workers themselves: In such strikes production drops significantly. The fact is that people have other motivations than just pure selfishness. Further evidence is presented in the Japanese production system model in which workers are treated as moral agents. The result is that the Japanese production system is the envy of the whole world.
There are some situations in which there are no rewards and penalties and yet people still act morally. Paying your taxi fare is one example. A system of rewards and punishments can only work when people are not selfish because if everyone were selfish the cost-benefit analysis of rewarding or punishing someone would be prohibitively high in terms of time, risk and money: there is no selfish benefit to spend your resources on rewarding and punishing others – so no one would do it.
Added on: 2012-10-05 12:04:55
Text Crawl by: James McLaren
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