Market theory - money as the only motivator

The theory of free markets that has dictated US policy for decades is based on the assumption that people are motivated to work and achieve almost exclusively by economic considerations, or, more succinctly, money.  So law should view money as the primary way to motivate people.


In my experience this assumption is correct as to some percentage of the population but completely wrong as the large portions of the population.


Certainly we all like money, very few of us would turn down a raise in pay if it was offered.  But some of us like it a whole lot more than others.


Many people work to make money, and where they can make the most money is the sole determinant of their job.  In some cases it is just having lots of money to play with, in some cases it is because making more money than others is the way they validate their importance.  Paying these people more as a carrot to increase productivity works if productivity goals are easily quantified (like increasing profits).  If necessary they will sacrifice family, health and endure stress to achieve their single most important goal.


But many other people have a more diverse set of values, where making lots of money may be far down the list of values.  Things like liking what they do.  Treating other people with honesty and consideration.  Having time to spend with family and friends.  Taking care of their health.  Taking pride in being good at what they do.  There is a point where once they have a reasonable level of security paying people more will not lead them to be more productive, because they are unwilling to sacrifice their other values.


Using money as a motivator generally is pretty effective in the private sector, because the goal is so easily quantifiable (make more money).  In the public sector where goals are diffuse and complex, paying too much money attracts the folks motivated by money, and crowds out very competent people whose basic inclinations are more in line with the service nature of the public sector.  Public sector compensation should be structured to provide long term security, not riches.