Going beyond money: Part 2 (Birth of Incentives & usefulness of money) [Strange Solutions]
NOTE: This is a 3-part article:
Part 2: Birth of incentives & usefulness of money
Incentives from an evolutionary POV
From an evolutionary perspective, the core drive in all organisms can be distilled down to an urge to survive (de-risk) or thrive (enhance).
The next question becomes what exactly is it that we are trying to survive/thrive?
The obvious answer seems to be our bodies and DNA, but I think that is too simplistic. It is definitely part of the answer, and may be exceptionally true for most animals; but humans are more complex creatures.
Instead, I believe the answer lies in the particulars of the stories we tell ourselves — what I call as Sense of Self Worth (SoSW). Over time, repeated exposure to ideas, values, skills etc become a core part of our identity or SoSW. Something that we’d protect at all costs.
Furthermore, people with overlapping stories (parts of SoSWs) also tend to form tribes together. These tribes are a part of our evolutionary history as ape-descendants, and they help members co-operate against “outsiders”.
Historically the geographically-constrained human tribe was an exceptionally good proxy for a group of people with similar stories about the world. And each human clearly belonged to one specific tribe.
However, this has changed as humans went from a tribal setting to one dominated by empires and cities. With the result that in today’s world, one person can belong to as many tribes as the important components of his or her story/SoSW.
However, the underlying mechanism remains as true today as it did 2000 years ago. I.e., we still act like co-operative members of tribes who compete for scarce resources in an ever changing world.
It is this underlying mechanism that gives birth to many evolutionary incentives. Specifically in addition to protecting one’s genes, humans seem to have five additional “proto-incentives” — i.e., the innate evolutionary needs that humans need fulfilled.
Most incentives (including money) are tactical ways of solving for these proto-incentives. But an incentive is only effective if it tackles an underlying proto- incentive. Here are the five proto-incentives:
Personal lens proto-incentives
1. Act in conscious accordance with one’s stories/SoSW. If you don’t, you could inadvertently kill that part of your SoSW
2. Improve one’s access to resources designated as “important for success” in our unique internal stories.
3. Gain access to membership of tribes associated with our stories/SoSW and/or improve one’s status (ability to impact change) within that tribe
Tribal lens proto-incentives
4. Improve our tribes’ access to resources (that are considered important in the tribe’s shared story/SoSW)
5. Ensuring your tribe has higher status (ability to impact change) than other tribes
As you can see these proto-incentives are intricately tied to the stories we come to identify with / SoSW. Which makes sense, since it is these stories that we are trying to propagate.
It is important to note is that each of us tells different stories to ourselves & each tribe has a different story for its members as well.
Money — An exceptionally capable translator between different stories/SoSW
Capitalist extremists seem to suggest that most people will only do things if they are rewarded for it monetarily. But let’s explore the role of money in the context of the five proto-incentives we came across earlier.
Money in itself is just paper, but it fulfils a dual role:
(a) it is a convenient way to access resources considered important within one’s narrative (proto incentive 2 & 4), but more underappreciated is its other role…
(b) as a translation mechanism through which different stories/SoSWs can talk to each other.
Stories about identity (SoSWs) are complex & come in all shapes and sizes. Money is a rudimentary translation mechanism that helps them communicate with each other. The specifics of the stories or SoSW don’t matter; as long as most resources can be purchased with special paper (aka money).
However, getting access to resources in not the only proto-incentive — it is only two of five. And there should be other ways that a tribe’s (or individual’s) story may survive and thrive.
And this is a topic that is not discussed nearly enough.
Let’s take a couple of counter examples: consider smaller groups of people who will take on high-risk projects and don’t need to be “compensated” with money.
At an individual level, you could have artists who will work on their passion, even if no monetary reward is in sight. Or at a group level, there can exist social organisations like PETA or Doctors without Borders that engage in high-risk activities without expectation of monetary returns. What is it that’s incentivizing them?
In my view, these people are simply acting in accordance with their internal stories. One must continuously ‘water’ their SoSW lest it wither and die (proto-incentive #1).
The question then becomes — why is it that such story-led activities are rarities and not the norm in the broader economy?
I propose that it is because the modern economy (with all its complexities) often necessitates diverse groups of people working together, not lone wolves. And most diverse groups of people today are not tribes that share a common story. In fact tribal communities of people have become the exception rather than the norm.
In most large organisations, people who work together do not tell themselves the same stories. Rather they are a mish-mash of different people with unique stories & SoSWs. Basically the following logic applies for large organisations today:
More people -> More diverse set of stories -> Limited overlap between stories/SoSWs -> Need for a mechanism that can allow different SoSWs to talk to each other -> Enter money
This is the basic premise: money allows people of different tribes to communicate with each other effectively.
This is also why independent-minded scientists can do private research or an open source programmer could spend hours on product without any copyright protections in place. Each is motivated by their own SoSW. BUT a large pharmaceutical or software company with a diverse number of shareholders/investors would never put time or effort in anything without possibility of monetary payout down the line.
They don’t share a set of stories/SoSW to make that a viable option.
Till very recently it was also difficult (due to physical constraints) to get people with overlapping SoSWs to work together in a co-ordinated manner. It could be done, but was reserved for the die-hard fanatics.
This led to a situation where most large groups of people were diverse & needed the use of money to be able to align on a cause (because of the different stories they believed in/SoSW).
But the internet & telecommunication revolution has changed all that. It has never been easier to find your tribe & co-ordinate actions with them.
This technological change by itself should force us to re-examine if money is still the only tool that speaks to the proto-incentives mentioned before.
I suspect this is already happening in 2020. One way to interpret the Gamestop short-squeeze (to foil short-sellers) is that internet has allowed tribes to coalesce together and take co-ordinated action based on their belief systems. This is incentive enough.
Most people buying the Gamestop stock were in it (at least initially) to “stick it to the man”. Monetary returns were not the top priority (although this changed as more non-believers waded in to make a quick buck).
For the next part, we’ll move from the theoretical to the practical. And investigate what a non-monetary based incentive system could look like.
