The Psychology of Economic Progress

The human brain may not have evolved significantly in the last 35,000 years, but the human mind has evolved greatly in just the last 200, in many parts of the world.  This is apparent once we observe the world through Maslow's Hierarchy of Needs. 

Abraham Maslow was an eminent psychologist in the 20th century who realized tthat the spectrum of human needs is more universally straightforward than it might appear, irrespective of culture.  He constructed a hierarchy of human needs based on each level of prosperity and satisfaction, and the Maslow hierarchy became a foundation of modern psychology.  He categorized each bracket of need-driven behavior as follows (sometimes, there are five levels).

1. Survival : The most basic human urge to survive is one where a person may disregard courtesy, culture, or religion in the pursuit of urgent necessities. An otherwise normal person may become unreasonable or even violent when his survival itself is uncertain. Animalistic behaviors may manifest themselves in the most desperate times.
2. Belonging : Once a human has progressed to a level where his most fundamental needs are no longer a cause of daily concern, then he seeks to be part of a community, whether it be his place of work or his social community. Harming another person to seize his possessions is no longer tempting or worthwhile.
3. Esteem : Once a person is secure in his career and community, and has progressed beyond the need to feel accepted by his friends or respected at his workplace, he strives to excel in multiple areas of his life. Building and maintaining an ego become the most important priority. Thinking of new ways to entertain himself is high on the priority list of the person at this level, and surplus money translates into materialism.
4. Self-Actualization : A person who has reached a level where his means greatly exceed his requirements of material contentment then may choose to focus his energies on activities that permit him to achieve his full potential.  He is no longer concerned with pure material gain or enhancing the quality of his recreation, nor does he feel he needs to impress others beyond the extent that he already has.  He seeks to become everything that he has the potential to become, and any time not spent pursuing this is treated as a waste. He seeks the company of other actualized people, and in such groups respect is gained from intellectual or artistic accomplishment. 

In centuries past, killing another person in order to take his belongings was common.  Today, the downside risk to one's career of even petty theft or minor fraud is enough that most people in the US today don't consider it.  As the world economy accelerated from centuries of slow growth to a period of rapid growth starting from the middle of the 20th century, we have seen a general decline in violence and disorder in developed societies, and also a decline in large-scale warfare in general.  Simply put, when more people have a stake in the stability and health of the system, they are more interested in maintaining and strengthening it, rather than disrupting it or trying to bypass it.

At the same time, a large segment of US society is stuck within the third level, esteem.  The pursuit of fancier cars, bigger homes, and more material status symbols is seen as the ultimate achievement in life, through a belief that quality of life improves in direct proportion to the degree of conspicuous consumption.  Relatively few have broken out of esteem and rise to actualizaton, the level where the great ideas that move humanity forward can emerge. 

In the US, perhaps 3% still reside in survival, 65% in belonging, 30% in esteem, and just 2% in self-actualization.  There is no country in the world with any more than a tiny minority attaining self-actualization yet, and such a nation would have to emerge in order to surpass the US in global power and influence.  Similarly, some cultures make it difficult for individuals to rise out of survival or belonging at all, ensuring that some nations have systems that cannot reduce poverty or nurture knowledge-based businesses. 

This is why globalization can benefit the world greatly.  While anti-Americans deride the spread of American culture, this also means that people in cultures that inhibit upward psychological advancement are now presented with a guide on how to rise until esteem.  The rapid growth in India and China, despite their cultures being heavily organized along belonging to a family and a community, has featured young people rising to embrace American-style esteem.  Thus, massive reductions in both monetary and intellectual poverty are underway.  At the same time, the complacent Americans stuck in esteem are forced to compete harder with India and China to prosper within globalization, which could induce more Americans to innovate their way to self-actualization. 

As we evolve into an information economy, where more and more people are occupied in knowledge-based careers, self-actualization will be attainable for millions of people. Through actualization arises the greatest examples of social innovation, entrepreneurship, and charity, and these forces will be the key to creating the wondrous new technologies and robust economic growth that we expect in the 21st century. 

This is a vast subject, on which more articles will follow. 

Comments

[Assistant Village Idiot]

I was surprized at the numbers you assigned, and would suggest a different framing. I would say that the lines between the stages were highly permeable, and folks move across lines frequently, even in the course of a day.

The free market already allows many people - perhaps most - to make some other choice besides esteem/materialism. People sacrifice income to live in a particular area, work with congenial people, spend time with families, etc. Most people can and do rise above their base category frequently.

I work with the mentally ill, many of whom would inhabit the 3% "survival" category. Yet many put a great deal of energy into belonging, and some into building esteem.

None of this disputes your basic point about global interconnectedness providing benefit for societies which would have few in categories 3 and 4. That makes intuitive sense to me.

[GK]

AVI,

Yes, at the micro level, people oscillate between multiple levels in a day. A very wealthy person, if in the middle of a meeting and very hungry, will find it difficult to concentrate on many other things until he gets food.

At the same time, many people limit the level of what they aspire to. SOme people merely want to spend as much time as possible with members of their own ethnic group, even if they have ample resources. Others just strive for materialism and impressing others with conspicuous consumption. Only a few aspire to achieve everything they have the potential to achieve.

So while everyone's floor may be survival, people definitely set their ceilings at different levels.

[Sam Cannon]

Just wondering if you have discovered Abe Maslow's "eupsychian economics" and accounting in his "Eupsychian Management." This is the economics that would evolve in Eupsychia, a place where *healthy* people live!

[Psychology Bachelor]

I agree with once a human has progressed to a level where his most fundamental needs are no longer a cause of daily concern

[metin2 yang]

At the same time, many people limit the level of what they aspire to. SOme people merely want to spend as much time as possible with members of their own ethnic group, even if they have ample resources. Others just strive for materialism and impressing others with conspicuous consumption. Only a few aspire to achieve everything they have the potential to achieve.

[Barak]

amazing article.

In my opinion, the people in the western world, are still centralized around materialism.

This article raises many questions, when does the materialism of a person reach to the level, that people start to think of others ?

does the western world promote ideas like thinking of others before yourself ?

I have my own blog which talks about these ideas: http://blife4u.com/