The Economy of Human Nature

Adam Smith, author of An Inquiry into the Nature and Causes of the Wealth of Nations (aka The Wealth of Nations), is considered the father of modern economics. Since its publication in 1776, The Wealth of Nations has influenced virtually all modern economists and, to some extent, much of western philosophy. Smith argued that unregulated competition engenders unbridled, self-interested behavior that is ultimately good for the collective. This Darwinian, egocentric paradigm persisted for over 200 years as business leaders emphasized the division of labor, productivity, and efficient business processes while discounting the most consequential force on Earth — human nature. Indeed, the theoretical foundations of classical economics need qualified by recent ideas regarding human nature.

Although resembling later Darwinian thought, Smith’s invisible hand philosophy largely ignored universal human needs outside individual self-interest. On the other hand, socioanalytic theory — a theory that integrates research findings in sociobiology, psychology, human genetics, and evolutionary psychology — tells us that people are internally motivated to get along with others, achieve power and status (i.e., self-interest), and find meaning and purpose in life. These motives, while unconscious, are adaptive and increase the odds of survival and reproduction: the ultimate driving force and explanation of human behavior.

Survival and reproduction is the basic human need that drives behavior. If we look one level down, getting along, getting ahead, and finding meaning facilitate survival and reproduction. From these unconscious motives, people develop values — such as preferring recognition and fame or believing the major preoccupation in life is obtaining power and control of resources. At the next level down, and less abstract, values are expressed as interests through language and represent an individual’s identity and self-concept: “I like tennis” or “I enjoy visiting art museums.” Interests, such as sports or art, are pleasing because they fulfill our underlying values and needs — in fact, these preoccupations and institutions were created for the sole purpose of fulfilling our longing for social attachments, status, and meaning. In other words, they are projections of our motivational dynamics.

The goal of social interaction is to convince others of our identity (i.e., what we think about ourselves) and negotiate acceptance and status. Reputation — defined as what other people think — is how our efforts are evaluated. Reputation is exceedingly salient because it determines whether or not other people grant us belongingness and status; that is, personality and social skill largely influence if you’re fulfilled and happy in life and work. Moreover, it is the aggregate of past behavior and we know that past behavior is the best predictor of future behavior. And consequently, measuring reputation to predict job performance should be the major purpose of any personality assessment used in the workplace.

Reputation influences leadership performance because, to satisfy the universal human needs posited by socioanalytic theory, humans evolved a psychological template through the process of natural selection to identify leaders worth following. Across cultures, followers look for leaders with a reputation of good judgment, competence, vision, and integrity. To be sure, ratings of integrity are by far the best single predictor of employee engagement. As our evolutionary history would suggest, people prefer egalitarian environments and avoid those likely to abuse power and not share acceptance and status. An easy way to disengage your team, considering this fundamental psychology, is through an authoritarian leadership style that degrades trust by emphasizing only productivity, economics, and self-interest.

Adam Smith knew a great deal about money, but much less about people. One valid assertion by Karl Marx is that working in an egocentric, capitalistic society is inherently alienating. But, here’s the good news: Over time, psychology has exposed the limitations of classical economics — essentially that those espousing this individualistic paradigm projected their conceptualizations and theories about money onto people. Because researchers have found a strong empirical relationship between engagement and manifold aspects of team and organizational performance, economics — and the overall business community — at least partially accepts the utility of human psychology. Moving forward, the key for organizations is to satisfy follower needs by focusing on leadership reputation, values match, and the congruence between identity and job role. This is a worthwhile endeavor because engaged employees are energized, proud, and committed; they set aside self-dealing for the benefit of the collective while others sabotage, free ride, and shop on the Internet all day.