Is it possible to transform human greed and selfishness into a positive economic force that would create more and better jobs?

The actual economic system works under the premise that if each one seeks its own selfish goals, an "invisible hand" provides the better for the whole. It should be the other way around: if everyone seeks what is better for the whole, an invisible hand will provide what is better for oneself. The issue here is how do you do that, considering that humans DO have greed and selfishness as part of their dark side. 

Trying to change people in order to change the economic system seems the most sensitive way, but then again, how do you change people, if they are built this way? When Adam Smith made his theory, he was in fact taking human nature as is, and trying to find what would work best given that nature. His conclusion and theory, after 200 years of practice now seems a bit naïve. Capitalism does create wealth and does distribute wealth, but far from fair and far from just, so that anyone can have a decent living by the sole forces of the economy.

The central issue in my opinion is to acknowledge human nature's weaknesses and transform them into strengths. Yes, we are selfish and greedy, but can we transform selfishness and greed into a POSITIVE force? 

I believe I have found the answer in: 

• Some of the WWW business models and changes of paradigms, 
• Metcalfe´s law, a Law of Telecommunications which I found can be applied to human activities as well, 
• John Nash´s equilibrium, which deals with the issue of gaining more with a win/win strategy rather than a win/lose strategy, and 
• The Motivation at Work Theory by Juan Antonio Pérez López

In case you don´t know it, let me explain Metcalfe´s Law. It states that the value of a network rises exponentially as the number of access points grows arithmetically. Later studies show that the increase in value is less than exponentially, it is logarithmic. Anyhow, it is more than proportional. Applied to human activities, this means that any task undergone networked will produce a bigger value than the same task conducted individually. The sum of the individual values thus created will be less than the one created by the network. A strategy of working together and united will mean a bigger value than working in destructive competition. 

The first practical experience of this idea is what has been called "coompetition", that is, cooperation between competitors to create bigger value. One particular case is "Food Gardens". All the restaurants which gather together to compete in the same physical area earn more than if they were each one on its own in different physical areas. This happens because they create a Hub that brings in more customers than the sum of customers each would have on its own. And this happens because working in that way, they give more choices, and therefore more people are attracted. The same happens in Malls. They compete, but by sharing the same physical place they gain more than each one on its side. This supports Nash's theory of a win/win equilibrium which delivers a bigger value vs. a win/lose strategy. And the point is that acting in a networked, win/win strategy, what they are in fact doing is making the better for all in order to achieve the better for each. In other words, selfish optimization is to act selflessly. An economic paradox of overwhelming power. 

Take Wikipedia. Each one puts a bit of knowledge for free, and in return gets a huge amount of knowledge for free as well. Of course, this also benefits people who did not put an iota of knowledge for free, but the point is that there are people willing to work that way regardless of the "parasites" (in a good sense of the word) which will benefit from the outcome without contributing to the overall wealth. 

The very platform I am writing this article in - and I mean the World Wide Web, not LinkedIn - works sustained in that principle, and it has been the greenhouse for the biggest innovation and market value creation stream in human history... and only in 20 years!

How can we apply win/win situations and Metcalfe´s laws as a general economic theory that would boost value creation and allow all people to work on what they have more talent and like best, while caring for the environment? 

The foundations of the economic model in the last 200 years have been to optimize resources. Which resources? The ones that can be measured (i.e. land (natural resources), capital (financial resources), and work (process resources)).  

Yet, the biggest and less developed resource on the planet comes from human talent. Every human being is born with talents, and I deeply believe we come with the talents we need to fulfill our destiny. We have what Sir Ken Robinson calls "the element", that place and job where our talents are put to work in a natural way that provides us with the best we can achieve, and therefore create the best value we were meant to create. 

The point is, the economic model does not consider talent as a resource, therefore there is no model of allocation nor optimization of talents. We must be able to understand the overwhelming wealth that can be deployed and achieved by making each one on Earth be able to develop his/her talents to the full, and put them to work where it will create the biggest value, for each one and for all the rest. 

As an economist, I ask myself “How big would the Gross Domestic Product of the World be, if every human being could work where most talented and where each likes best to work?” I have made this question to economists, Presidents, and Presidents who are economists. Not one has refused the idea that whatever the outcome, it would be orders of magnitude bigger than it is now. So the first step is to acknowledge there is a huge bigger and cleaner wealth in this paradigm than in the actual one that leads to the overexploitation of natural resources and greed for capital.

Why do people work? Here I take the Theory of Work Motivation which was developed by a professor I had in my MBA at Barcelona. It helps to answer the main riddle in this equation, that is, how to direct the motivation to work off all humankind towards a nobler end than just making money. 

The Theory of Juan Antonio Perez Lopez states that people have three motivations: extrinsic, intrinsic, and transcendental. 

Extrinsic motivation is the motivation that lies with the results of my work to me. It has nothing to do with the work itself, but with what that works brings me as a result. Money, power, fame are the big drivers of this type of motivation. Regretfully, these have been the base for work in the actual economic system. Therefore, as this is the case, whatever happens with the environment or the other people is set aside. 

The second motivation is intrinsic motivation, that is, the work in itself. It is not making money, having power, or having fame. You just love what you do. You are okay with earning less money, having less power, or taking no fame, as long as you do what you love. The new entrepreneurs which have come from the Internet revolution have plenty of this. I was surprised by Mark Zuckenberg´s statement to the future shareholders of Facebook in the pre-IPO roadmap: "we don´t make great products to earn money: we earn money to make great products". That was also Steve Job´s main motivation. The perfection in the work. In his Stanford speech, he said that work is a love affair and that you must work in that which you love. You will know when you find that work because you will fall in love with it, just as you know which your life partner is when you fall in love with him/her. 

Yet, that is not enough to make this a fairer world. There is a bigger motivation in transcendent motivation. It is not for the money. It is not for the job. It is for how the job will affect others, the World. It is about making the world you leave a better place than the one you came into. Mother Teresa of Calcutta is a good example. She did what she did out of love for the poorest, where she found the face of Jesus. But it doesn´t necessarily have to do with religious motivation, nor a selfless one. It applies to any human activity, by which you want to make the world you live in a better one, selflessly or out of personal ambition ("to leave a footprint in history books").  

This is where the dots connect. Focusing on discovering, developing, and applying the world´s existing talents at a given time, will create more value, and if it is created with transcendent motivation as the leading motivation, all will work for making the world a better place than the one they found when born. With each one working where most talented and where he/she likes best, intrinsic motivation will be a driver as well. Since this leads to bigger value, profits also boost as compared to the baseline situation. So the path is to move towards human factors rather than financial ones, for there lays as well a bigger value. 

Milton Friedman's "free to choose" ideas also seemed very idealistic when they were launched, remember? Yet, there was sound argumentation beneath those ideas, and they became widely accepted. I'm just begun. 

My economic central argument is - although it cannot be proved using existing economic models - that World's GNP would be orders of magnitude higher if the economic focus was put into talent optimization instead of capital and natural resources optimization. And, if transcendent motivation was the driver behind it, it would also be harmless for the environment. And, both capital and natural resources would be better optimized than with the existing situation.

How long will it take until it is part of common wisdom and has an economic model behind it, I don´t know. I presented this for my PhD Thesis, and the committee told me this was not a thesis, it was a life's worth of investigation!



Alfredo Barriga
Santiago, Chile, June 19th 2012