“The major incentive to productivity and efficiency are social and moral rather than financial.”

1930s- 1950s, The New Society (1950)

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Peter F. Drucker180

American business consultant 1909–2005

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“To the economically illiterate, if some company makes a million dollars in profit, this means that their products cost a million dollars more than they would have cost without profits. It never occurs to such people that these products might cost several million dollars more to produce if they were produced by enterprises operating without the incentives to be efficient created by the prospect of profits.”

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“We need to build incentives to virtue rather than incentives to vice, which prevail in the existing system and are self-interested, instrumental and unrelational. That’s the direction of travel. Towards the Common Good.”

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“The first economic revolution was not a revolution because it shifted man's major economic activity from hunting and gathering to settled agriculture. It was a revolution because the transition created an incentive change for mankind of fundamental proportions. The incentive change stems from the different property rights under the two systems. When common property rights over resources exist, there is little incentive for the acquisition of superior technology and learning. In contrast, exclusive property rights which reward the owners provide a direct incentive to improve efficiency and productivity, or, in more fundamental terms, to acquire more knowledge and new techniques. It is this change in incentive that explains the rapid progress made by mankind in the last 10,000 years in contrast to his slow development during the long era as a primitive hunter/gatherer.”

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“But what would become of mass production and its system of financial expansion if technical perfection, durability, social efficiency, and human satisfaction were the guiding aims. The very conditions for current financial success — constantly expanding production and replacement — works against these ends. To ensure the rapid absorption of its immense productivity, megatechnics resorts to a score of different devices: consumer credit, installment buying, multiple packaging, non-functional designs, meretricious novelties, shoddy materials, defective workmanship, built-in fragility, or forced obsolescence through frequent arbitrary changes of fashion. Without constant enticement and inveiglement by advertising, production would slow down and level off to normal replacement demand. Otherwise many products could reach a plateau of efficient design which would call for only minimal changes from year to year.”

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“The behavioral foundations of capitalism do, of course, continue to engage attention, and the pursuit of self-interest still occupies a central position in theories about the workings and successes of capitalism. But in these recent theories, interests are given a rather different—and much more "positive"—role in promoting efficient allocation of resources through informational economy as well as the smooth working of incentives, rather than the negative role of blocking harmful passions.”

Amartya Sen (1933) Indian economist

1990s, Foreword to The Passions and the Interests (1996)

“The major incentive to productivity and efficiency are social and moral rather than financial.”

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Peter F. Drucker180

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