What science knows and business doesn?t — Leading world economists? scientific experiments prove socialist concepts correct

Modern psychology, anthropology and behavioral economics as well as other social and human sciences provide us hundreds of other examples that not only contradict the ruling ideology of the free market, but confirm socialist ideas.

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For instance, Daniel Kahneman, the Israeli-American psychologist and expert in behavioral economics, who won the Nobel Prize Economics in 2002, did a large Gallup survey on happiness amongst 600.000 Americans. The most interesting result — he never expected to get by the way — was the following. His team examined how feelings of happiness vary with income. It turned out that below an income of 60.000 dollars a year, people got progressively unhappier the poorer they got. But above that income, extra income did not make any difference for the so-called experiencing self. But for the remembering self, there was no limit like the more money you make, the more satisfaction you get.

It would lead to far to explain the difference between the two selves, but it goes like this: there is a difference between being happy in your life and being happy about your life. People can be very satisfied about their life, without experiencing happiness in their life. The first relates to the remembering self, the second to the experiencing self. This is for instance the reason why for the remembering self (your memory) there is absolutely no difference between a good holiday of two weeks and one of just one week or even a long weekend. The extra week of good times spent do not add extra happiness in your memory.

It seems logical that the same rule goes for having a good night out drinking beer. So, above a certain limit, extra money will not make you happier in experiencing your life. That is why rich people who go bust and even go to prison because they committed fraud often find themselves happier afterwards. Sometimes they write a book and become rich again, but this is another story.

Dan Ariely, another famous expert in behavioural economics, did an experiment with some students of the Massachusetts Institute of Technology. He gave them a bunch of games that involved creativity, motor skills and concentration. The students got three levels of rewards: a small reward, a medium reward and a large reward. The better the performance, the larger the reward.

What happened? As long as the tasks involved only mechanical skills, bonuses worked as expected: the higher the pay, the better the performance. But once the task called for even rudimentary cognitive skills, a larger reward led to poorer performance.

Then they said, okay, perhaps there is a cultural reason behind all this. So they went to Madurai in India and did the same test. After all, a modest reward according to American standards can be substantial there.

What happened? This time, people offered the medium reward did no better than people offered the small rewards. But people offered the highest rewards, did the worst of all. In 8 of the 9 tasks they examined across three experiments, higher incentives led to worse performance.

There was no socialist conspiracy behind this study. Economy professors from the IMT, Carnegie Mellon University of Pittsburgh and the University of Chicago carried it out. And the Federal Reserve Bank of the United States sponsored it. The London School of Economics, alma mater of 11 Nobel laureates in economics, looked at 51 studies of pay-for-performance plans inside of companies.

They came to the conclusion that financial incentives can result in a negative impact on overall performance. A lot of other examples can be given, not in the least the negative impact of big bonuses to bankers and CEO?s of multinational corporations. There is an enormous mismatch between what science knows and what capitalist businesses do.

And they do it because of ideological reasons, and, off course, greed.

And again, many other examples within modern capitalism can be given. Take the IT-people. The majority is not organised, although most of them — as many others that do not belong to the traditional industrial working class — are wage earners. There is a matter of fact, and these are old figures from 1990, 80% of the population in Europe and 90% of the population in the United States are wage earners. If you add to this figure the self-employed whose income depends often exclusively on the work they do for the big corporations, plus small business owners, the actual capitalist class is a very tiny, even insignificant proportion of the population.

Jean Lievens

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