Javier Reyes speaking at Utopia 2048 seminar: We are not profit-maximizers: we are social maximizers, we seek social relationships and meaning. Yet our economy is built around maximizing profit, shifting our perspective and causing our thoughts to focus on that.
My thoughts on the above:
First the caveats and disagreements with the claim.
I do think that in general, "making profit" correlates reasonably well with "creating value for people", for people pay for what they find to be valuable. Similarly, I do also think that free markets are one of the best ways to aggregate information about what people want, that prices are a powerful signal of things that there's an insufficient supply of, and that aiming to make profit by seizing upon a market opportunity often ends up making lots of people better off.
I also think that the often-repeated criticism of classical economics assuming that people are pure profit maximizers reflects a misunderstanding of economics, in that even classical economics viewed people as seeking to satisfy a large number of needs, with money just being the most effective way of collaborating with other people to get your needs met.
Those things said, I think the claim also made valuable points. The speaker had a nice example of four friends who decide to build a house for someone else. After doing it once, they decide that hey, now they could make a living of this, and go register themselves as a corporation.
Now their whole social dynamic changes. Maybe someone loans the new corporation money and becomes a majority shareholder; maybe someone else becomes the chief executive. Possibly their incorporation is a net benefit for them and the world overall, but regardless, when they meet next Sunday to play Xbox games together, their whole relationships with each other are very likely affected by the legal fiction of them now forming a corporate entity.
More generally there's the whole question of how market norms are different than social norms, and how these interact: there was a chapter in Freakanomics about a daycare that instituted a fine for parents who came to get their children late and kept the workers there overtime. The end result was that more parents ended up being late, because their mental frame had changed into one of market norms: they felt that paying the fine was how they bought themselves the right to be late, whereas earlier they had been on time out of a sense of duty and as a social norm.
And while I do think that profit-maximizing correlates reasonably well with value-creation, there is always Goodhart's law: "When a measure becomes a target, it ceases to be a good measure." Probably all of us can think of countless of examples that produce lots of profit while not being particularly socially beneficial, or outright harmful for people's well-being. The way our society is structured, people have to focus their energies on making sure that they manage to make a living and get money from somewhere. When money becomes what enables you to live, if you're lucky and privileged you may look for the things that earn you a living and contribute value to others: but if you're less lucky and privileged, you're forced to just look for anything that turns a profit, and an increasing part of your attention and focus will be centered on that, as opposed to the other things that would provide you with value.
I'm not saying that having a market economy would be a bad thing, on net: nor do I have any particular suggestions (other than a basic income made possible by increasing automatization). But thinking in monetary terms does alter people's mindset, and whenever the basic thing that our society incentivizes is only roughly correlated with well-being, that's always a good thing to be aware of.
s an interesting alternative incentive structure, look at how people interact online. A lot of creativity is driven not for the desire for monetary profit, but for the desire for attention and respect. Post something online and hope that other people will like it and appreciate it in return.
Could you run a whole economy this way? No, at least not with our current technology level. Does it work for everything? Ditto. Is it an interesting alternative incentive structure that's arguably more close to "social maximization" than "profit maximization"? Yes. Is that a good thing? Maybe.