The Market System as a Psychological Mechanism*
There is a widespread belief that economic efficiency of the market system is a result of the power of the self-interest motivation (“Greed is good”). This is because the market system creates a strong link between the productive activity of market participants (production and supply of goods) and their own access to goods. But, in reality, the size of wealth acquired does not depend directly on the improvement of productive activity: it depends on profit. Profit can be increased in various ways, not only by productivity. The imperfect connection between profit and productivity is the source of various pathological processes in the market if the only motivation of productive activities is self-interests. Alleged remedy for theses defects is extensive state intervention in the market. However, such interventions have their own serious faults. But it is not true that the only motivation of productivity is self-interest. The intrinsic motivation can play a very important role in productive activity if it is not suppressed by overstimulation the self-interest motives.