Dogma Premise # 3
People will participate in group efforts only to the extent that they get a greater benefit than they would get from not participating.
Capitalism is based on individualist economic theory that ignores the power of groups.
Capitalism hypothesizes rational individuals who make decisions that will maximize their individual gain. To the extent that individuals join together in pursuit of some economic venture, the purpose is presumed to be to maximize their individual well-being and the terms negotiated are the most favorable for themselves.
This approach imagines that groups are merely the sum of their members’ aspirations, and that the group’s success is to be measured by the extent that the group members’ welfare is improved. This approach misunderstands group dynamics, and therefore inaccurately predicts the potential of group action to achieve collective gains.
When someone joins a group, they may be acting in a purely individualistic manner and attempting only to improve their personal welfare by collective action. For example, an individual might pool her money with others in a mutual fund to obtain a better investment return at a lower cost than could be achieved individually.
However, the same person might join another group for an entirely different purpose. For example, suppose that person believes that the use of local currencies will improve their community’s welfare, and she joins a group dedicated to creating and implementing a local currency.
Joining the group in this instance may be an expression of not only purpose, but identity. She may display messages advocating the local currency. She may have emotional bonds with other group members. She may feel a social expectation from members of the community that the local currency succeed.
These additional motivations are all in addition to any individual personal economic benefits that might be gained from the implementation of the local currency. They illustrate why public-oriented collective action may generate much higher levels of individual commitment and more efficient results than an organization motivated only by arms-length relationships and the prospect of individual profits.
Because it underestimates the power of group action, Capitalism overestimates the economic power of individual profit incentives, including the incentive to invent, develop, and sustain systems that provide long-term value to communities.
There have been many recent high-profile examples of non-profit organizations, such as Wikipedia, that outperform their for-profit counterparts. Because it ignores group dynamics, Capitalism’s claim to achieving superior economic efficiency and effectiveness by providing individual incentives is unreliable.