How to Make Capitalism Better (part 2)

Intrinsic vs. Extrinsic Motivators and the Need for Regulation

You can think of this as analogous to the way children are raised. On the one hand, you can set up a system of rewards and punishments for everything you want a child to do. Not only in theory but in practice this works to some extent. The child, focused on these extrinsic motivators, can be made to behave or follow the course you’ve charted for him or her. It may take a lot of work and a lot of rewards and punishments but you can steer them along in the way your determined to do.

Alternatively, instead of relying strictly on carrots and sticks, you can teach a child why a certain act or behavior is desirable or not. You can help them to understand why doing good is beneficial even if not immediately. Such children are eventually led to acting in way that is guided by their intrinsic values. In essence, they are self motivated. Whereas they may need some initial investment in time, eventually they need far fewer rewards and punishments to live and function well in society.

Today we Rely More on Extrinsic Motivators

Intrinsic vs extrinsic motivators

This is not a perfect analogy but, I believe our system is something akin to the first way of parenting. As a result, we have to have many regulations, rules, rewards and punishments in place. The state thus is forced to regulate and enforce. But in the latter way of bringing up children, intrinsic motivators largely dictate actions and behaviors. Of course, we still need rules and regulations but far fewer. Likewise, if we have a system in place that relies more on intrinsic motivators, we tend to regulate ourselves.

Today, many on the political right argue for less regulation while those on the left favor more regulation. The left has seen the consequences of unrelated industry and in my opinion correctly conclude that more regulation is necessary. But, I don’t fall on the political left or right. Just as a child who is largely motivated by extrinsic factors either fails to thrive or shamelessly cheats his or her way through life without regulation, our society is built in a way that requires much more regulation than it ought.

A Better Way that Relies on Intrinsic Motivators


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