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2 Internal & External Motivation Beyond Homo economicus Toward a Critique of Agency Theory In the World Bank, I have heard it said that if economists understand anything, it is incentives. Effective development assistance is supposed to lie in engineering the right motivation—“getting the incentives right.” The economic model of Homo economicus as a utility-maximizing or incentive-driven creature is, however, incomplete in one basic respect: it leaves out the question of whether the human source of the incentives or motivation is external (other people) or internal (own self). It is this matter of source, internal or external, that turns out to be key to the helping relationship. Development aid laden with conditions can provide the incentives to engineer certain behaviors of the doers. But in the end, it will typically not bring real change because the source of the motivation is external and thus the effort is not “owned” by the doers. In the philosophical language of Kant, the motivation is heteronomous. Autonomous activity is based on the doers’ internal or own motivation (i.e., motivation not being manipulated by some external will). Autonomyrespecting assistance must therefore take a different form; it is not a matter of getting the (external) incentives right. This lesson is not unique to development; it is an old theme in education and is increasingly understood in management. For our purposes, heteronomy must be based on some other human 25 will,1 not natural events. This dependence on other human wills is familiar in the notions of oppression or coercion. “The nature of things does not madden us, only ill will does,” said Rousseau. The criterion of oppression is the part that I believe to be played by other human beings, directly or indirectly, with or without the intention of doing so, in frustrating my wishes. (Berlin 1969, 123) Freidrich Hayek makes the same point about coercion. In this sense “freedom” refers solely to a relation of men to other men, and the only infringement of it is coercion by men. This means, in particular , that the range of physical possibilities from which a person can choose at a given moment has no direct relevance to freedom. (Hayek 1960, 12) Natural events on Robinson Crusoe’s island might lead to hardship and suffering but never coercion or oppression. Thus in the juxtaposition of self with “other” as a source of motivation, other refers to other human wills. For our purposes, “external” motivation is motivation sourced in the will of others. Thus our basic contrast between external and internal (or own) motivation is relational and thus is not exactly the same as but is closely related to the contrast of extrinsic with intrinsic motivation . Intrinsic motivation could not be external; any external motivation would have to operate through extrinsic incentives. But all motivation for Crusoe would be internal or own motivation (prior to the arrival of Friday) even though much of it was concerned with obtaining food, clothing, and shelter—activities not done for their own sake. The most sophisticated development of this engineered-incentives view in current economics is in “agency theory,” which is relational (unlike the simple notion of Homo economicus). The theory is about how a “principal” can design contracts and organizations (or institutions ) with the appropriate carrots and sticks so that by following their own interests the “agents” will do the principal’s bidding.2 The problem in agency theory is the neglect of the effects of the human source of the agent’s motivation; if the source of the motivation is in the human will of the principal, then it cannot be the agent’s own motivation . The alternative to this principal-agent relationship is the autonomy -respecting helper-doer relationship. 26 HELPING PEOPLE HELP THEMSELVES The principal-agent language is borrowed from the legal relationship of agency and is used in economics in a much broader context.3 Douglas McGregor, writing in 1948 before the principal-agent language was established in the economics and management literature, refers to the principal and agent respectively as A and B: “A always refers to the individual (or group) who is attempting to induce a behavior change, and B always refers to the individual (or group) whose behavior is affected” (McGregor 1948; reprinted in 1966, 155). Agency theory is certainly based on Homo economicus or, in McGregor ’s terms, on the Theory X view of people (McGregor 1960, 1966, 1967). Positive and negative external economic incentives (carrots and sticks) must be supplied by...


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