What makes an idea economically valuable?

Economic values ​​(1)
The concept of achievement in our society - some remarks

The current grand coalition is willing to make further state interventions in the market economy. This should make the market economy even more social. Ideas such as minimum wages and maternal pensions are on the federal government's new social agenda. It is interesting that this does not even move away from the idea of ​​demanding and promoting the often scolded Hartz laws. Because minimum wages or maternal pensions do not want to support those who do not work, but those who do work, but whose work is not believed to be sufficiently recognized within the previous rules. In order to shed more light on this, a brief discussion about the value of performance is appropriate.

What defines our economy as performance?

Performance or willingness to perform is a central value for the continued existence of any market economy. Only if the population accepts the performance principle will they agree to the rules of a competition regime. Achievement is rewarded in a market economy. Because the market economy system is based on incentives. Incentives promote motivation. Achievement is rewarded through consideration, it leads to prosperity and success. However, performance is specified differently than in normal usage. There are three possible definitions of performance:

  • Achievement can mean effort. Those who exert themselves more physically, mentally or mentally perform better (first definition).
  • Performance can also mean expenditure of time. Those who work longer perform better. The benefit includes the waiver of free time (second definition).
  • However, performance can also be defined in terms of results. Anyone who produces something that is scarce and in high demand also performs - possibly without making the above-mentioned efforts or spending time (third definition).

In a market economy, the concept of performance is defined according to productivity in the provision of goods and services and according to the willingness of buyers to pay for the goods produced. According to Erhard Kantzenbach, competition fulfills five functions, including, from a static point of view, guaranteeing consumer sovereignty, the optimal allocation of production factors and the performance-based distribution of market income (Schmidt, 2012, p.14f.). Market incomes are distributed according to performance. Achievement is defined in a result-oriented manner, the evaluation of the achievement depends on the value that the person attaches to it to whom it benefits.

A performance society is a society in which the personal achievements of the individual in this sense are decisive for his social position, his reputation, his success and his prosperity. If performance is perceived as positive in society, it is one of the values ​​that bind society together. However, even if society regards performance as value, willingness to perform is not a matter of course for the individual. Because performance usually costs the above-mentioned efforts, forces you to forego free time or requires good ideas and creativity. This means that performance is usually accompanied by hardship. Accordingly, incentives are required to motivate yourself or other people to perform. A functioning market economy rewards performance and thus provides incentives. The decisive factor here is the price mechanism. Anyone who creates something valuable from the buyer's point of view receives a high price for it. Those who are particularly productive in the workplace from the perspective of their employer receive a high wage. Wages, interest and prices reward market performance. However, they only reward performance according to the third definition mentioned. The task of the competition regulation is to enable performance competition within the framework of a functioning price system. This is intended, on the one hand, to encourage the best possible fulfillment of consumer wishes and, on the other hand, to produce goods and services with minimal costs.

How important do we consider motivation to be?

The value of performance is perceived differently by every German. The following graphic shows the result of a survey by the Friedrich Naumann Foundation (2012). It provides information about the extent to which performance is seen as very important in this country.


- please click on the graphic to enlarge it -

A willingness to perform is perceived by 46% of the respondents as very important for a well-functioning society, although there are hardly any differences between the view of this value in the West (45%) and in the East (47%). The age-specific differences are striking: Among the 25 to 34 year olds, only 40% see willingness to perform as an important value, whereas among those over 60, the agreement to the statement that commitment is very important is above average at 50%. This allows two different possible interpretations: On the one hand, it is conceivable that young people do not yet understand the value of performance to the same extent as older people. On the other hand, it is also a plausible explanation that today's young generation has different values ​​than the older generation. This would imply a change in the performance value.

With regard to the various educational groups, it can be seen that secondary school students (49%) and secondary school students (48%) attach greater importance to the value of performance than graduates from grammar school (43%) and university or technical college (43%). In a comparison of the occupational groups, the freelancers and self-employed (50%) find willingness to perform as very important for a well-functioning society, while only 38% of civil servants attach great importance to willingness to perform. This coincides with the different demands of economic life on these two groups: While freelancers and self-employed are continuously exposed to the competitive process and thus forced to perform, civil servants are largely withdrawn from this process.

Unfortunately, the figures from the Friedrich Naumann Foundation do not provide any information about which of the above three definitions of the term performance form the basis for the respondents' assessment of the importance of performance. Probably, however, the respondents think of physical or mental exertion as well as expenditure of time as higher productivity under the term performance.

Do we want gifts from society without our own counterpart?

For the long-term existence of a competitive system, it is a cornerstone that people want to see performance as valuable and rewarded according to the third definition. If this is not the case - the majority of people are of the opinion that performance according to the third definition should not be rewarded - the implementation of a competitive system in a society is difficult. The discussion about the idea of ​​an unconditional basic income makes this particularly clear: its proponents are of the opinion that income can or should even be paid decoupled from performance. Your opponents, on the other hand, place the incentive problem at the center of their reasons for rejection. An unconditional basic income robs people of incentives to perform.

What is the unconditional basic income?

The unconditional basic income is a state benefit that should be paid to every individual citizen from birth. The unconditional basic income should serve not only to secure the bare existence, but also to enable participation in social life. The payment of the unconditional basic income does not require an examination of the citizens' means; the unconditional basic income is independent of age, income, marital status or employment status. The receipt of the unconditional basic income does not require any willingness to perform.

Of the multitude of suggestions and ideas, the following have been particularly prominent in recent years: The former Thuringian Prime Minister Dieter Althaus (CDU) is committed to solidarity citizens' money. His model provides for a basic income (maximum 600 €) plus a flat-rate health premium. The basic income is paid out as negative income tax. Based on the idea of ​​self-determination, the entrepreneur Götz W. Werner proposes a basic income that should largely replace all previous social benefits. The DIE LINKE party is discussing a basic income model that, due to the targeted amount of up to € 1,000, is primarily intended to reduce poverty. The “Green Basic Security” provides for a lump sum income of € 500-700 per month as well as additional services and offers in the area of ​​social infrastructure. The Heinrich Böll Foundation or the article by Dominik H. Enste (2008) offer a brief overview of the idea and concrete suggestions.

The introduction of an unconditional basic income is as controversial among Germans as the importance of the performance value. Many Germans are of the opinion that those who do a lot should be rewarded accordingly well, whereas those who do little or not at all should receive less or no consideration at all. The World Values ​​Survey, which asked whether it was shameful to receive money without working for it, shows that 41% of Germans are of the opinion that state cash benefits without any consideration from the recipient are shameful. On the other hand, 32.8% - i.e. at least one in three - do not see any problem in state services without consideration.


- please click on the graphic to enlarge it -

The question of what motives some people do not find it shameful to receive state benefits without any consideration remains open. Many people who receive a government benefit without working for it receive it because they are sick or unable to work and are therefore unable to work. Anyone who is unable to achieve something has a right to social help and should not be ashamed of it. This could be just as much a reason as the view that every person has a right to the allocation of societal resources even without their own performance. The survey does not explain this.


- please click on the graphic to enlarge it -

The German population is fundamentally positive about the introduction of an unconditional basic income. The approval rate among the unemployed, housewives, trainees and those who are not employed for other reasons is above average. Employees and pensioners, on the other hand, are less supportive of the basic income. In the introduction of the unconditional basic income, the danger is seen that the recipients of a basic income lose motivation to work and are completely satisfied with the state benefits. According to a 2010 study on the unconditional basic income of the Gesellschaft für Angewandte Wirtschaftsforschung mbH, 45% of Germans expect a decline in the total number of jobs. 31% assume that there will be no relevant change (Gesellschaft für Angewandte Wirtschaftsforschung mbH, 2010). 39% of Germans are also of the opinion that if the unconditional basic income is introduced, the performance incentives will fall.


- please click on the graphic to enlarge it -

Is performance a duty to society?

In a market economy, it is basically up to everyone whether they want to perform and accordingly receive something in return in order to secure a higher standard of living as well as success and recognition. This is a consequence of the fact that freedom and self-realization are also central values ​​in our society. However, the achievement ethos is important for the advancement and advancement of a society. Therefore, performance can also be viewed as a social duty. The following graphic illustrates the extent to which performance is viewed as mandatory in this country. 66.2% of all Germans feel that performance is a duty to society. 12.1% do not see the value of performance as a social duty.


- please click on the graphic to enlarge it -

Should more work be better rewarded?

First of all, it seems plausible that someone who works more physically, mentally or mentally than others, who spends more time or does their job more productively, also receives higher remuneration than others. If, for example, one looks at two secretaries who both do the same office work, whereby one secretary works much faster, more carefully and consequently more effectively than the other, then it basically seems plausible that the more productive work will be rewarded correspondingly better. The following graphic shows the extent to which the Germans consider higher wages to be justified in this case. The evaluation clearly shows that if a higher performance is provided, a correspondingly higher remuneration is viewed as fair by almost all respondents (82.9%).


- please click on the graphic to enlarge it -

If people are not adequately rewarded, this often meets with a lack of understanding in our society. This can have different causes. First, it may be due to the different definitions of the term `` service '':

  • A hairdresser, for example, provides services to which the population attaches little value and which are correspondingly low paid. These are mainly benefits according to the first and second definition. However, many people feel that the low wages that result from willingness to pay are not fair. This is reflected in the broad approval of the population for the introduction of a statutory minimum wage.
  • Some top athletes who, on the other hand, may only pursue their hobby, receive a very high salary. This does not coincide with the service term according to the first and second definition and is therefore often viewed critically by the population. However, the willingness to pay for their appearances is very high, which justifies their remuneration on the market according to the third definition. The discussion about whether some football players should not earn too much after all and whether there should be upper salary limits, however, does not end.

The idea of ​​introducing the pension at the age of 63 also follows this feeling. Anyone who has paid contributions for 45 years has rendered their (life) work and is entitled to retire without any deductions. The Federal Ministry of Labor and Social Affairs explicitly states that the pension at 63 is a reward for people who started working at a young age and who have made their contribution to the statutory pension insurance over decades through employment, care and child-rearing.
Second, a reward that is perceived as unfair can also be wrong from a productivity point of view. This is either the case when there is a situation of market power or of the abnormal labor supply that has not been corrected by the state, or (which is likely to be the case far more often) when the area in which the service is to be provided is not organized as a market. This is therefore noticeable, for example, with government employees who do not have to face competition, or in the household, where the division of labor also does not follow market laws.

  • The laziness of the German official is almost proverbial. Government employees receive remuneration that is not directly related to their performance, and accordingly their performance incentive is considered to be low. This leads to the popular wisdom that the work of the civil servant is not worth his salary.
  • In the household, however, a service is provided for which no remuneration is paid. The upbringing of children is taken for granted, although a good upbringing is the basis for motivated and high-performing offspring. However, in a household it is usually decided jointly (democratically or dictatorially) by one person about the allocation of resources and the services to be provided. The kind of trade that characterizes market economies does not come about in this way. This promotes the impression among the population that performance in the household is not valued accordingly. This is the point at which the idea of ​​maternal pensions comes into play. It is intended to improve the social security of pensioners who raised children before 1992. According to the Ministry of Labor and Social Affairs, the mother's pension should recognize the educational achievement.

Overall, it becomes clear that the value of the service in this country does not receive the approval that it should have in a market economy. On the one hand, this is due to the fact that many people would rather see efforts and time expenditure rewarded than high productivity; on the other hand, many population groups apparently believe that performance is not necessary for earning an income and is only of limited importance for society Living together. Nevertheless, the survey results are generally encouraging: There is a broad consensus in society that performance is important and should be rewarded accordingly.

swell

Enste, Dominik H.(2008), Unconditional Basic Income - Dream or Nightmare for the Social Market Economy, Roman Herzog Institute Information No. 5, Munich

Eucken, Walter (1990): Principles of Economic Policy, 6th edition, Tübingen

Friedrich Naumann Foundation for Freedom (2012), German Value Monitor, Berlin

Fritsch, Michael, Thomas Wein and Hans-Jürgen Ewers (1993): Market failure and economic policy, 1st edition, Munich
Gesellschaft für Angewandte Wirtschaftsforschung mbH (2010), study on the unconditional basic income, Gesellschaft für Angewandte Wirtschaftsforschung mbH, Innsbruck

Schmidt, Ingo (2012): Competition Policy and Antitrust Law, 9th edition, Stuttgart

World Values ​​Survey, database accessed on January 5, 2014

CategoriesAll categories, Distributives, Ethical, Regulatory, Political, Scientific TheoryTagsUnconditional Basic Income, Performance Principle, Social Market Economy