A leadership perspective on differences between economic systems

May 23, 2012 by Joshua
in Blog, Freedom, Leadership, NorthKorea

Watching people on the streets of North Korea, you see a different culture than in New York City. In three cumulative weeks in North Korea I saw almost no one hurrying or seeming like they wanted to get somewhere important. I was curious if I could find a root cause.

From a leadership perspective — that is, for someone who wants to motivate and lead others — how do capitalism and communism differ?

When you create your teams and organizations, you create systems that affect everyone in the team, whether you realize it or not. How do you motivate people? Will you have people hurrying to do something or free riding? Your choices may differ less than communism and capitalism, but a greater difference makes this example instructive.

I ask this for having seen how much the systems affect day-to-day behavior of everyone. Or at least as I saw it.

I know, if you’re reading this you’re likely living in a capitalist system. But not entirely. Every country has elements of each, whether you like it or not. North Korea has many capitalist elements and misses many communist ones. The U.S. has many communist elements and misses many capitalist ones. For this post, let’s say capitalism and communism differ as described in these two pages.

But those pages describe economic systems, which few people get to affect. How do they differ for you, a leader, someone who wants to influence and motivate people?

The main difference I saw

The mostly capitalist U.S. system seems to motivate people interested in success by personal gain. The somewhat communist North Korean system motivates people through threat of punishment. There are nuances — many Americans are motivated by fear of hunger and threat of jail. And some North Koreans are motivated by personal gain too. But that’s the general picture.

At the individual level the net difference may not be that great. A farmer still has to plant and harvest, independent of the economic system above.

All these little amounts accumulate when you combine everyone in the country. Along a product’s creation, if each stage slacks a little because no one is personally motivated for it to work, over the course of the product it will come out shoddy. Factories will run below capacity. The economy will run more slowly.

I picture a slinky toy, its length representing how much people get done. If you pull it from one end it will get long. If you push it from one end it stays short. Or think of a string. It works if you pull it. If you push it it goes nowhere.

How do you motivate yourself and your teams?

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