The most famous expression of this idea is Maslow's hierarchy of needs. I've mentioned it briefly before here. It is often found in management or marketing or psychology textbooks, but rarely if ever in economics texts. And even then it is usually covered in a few paragraphs, with a chart of the pyramid of needs - like in this Wikipedia entry. For such a potentially profound idea, it generally gets cursory treatment.
On one level, it is one of those ideas which are so briliant they are obvious once you think about it. Maybe that explains why we don't devote more attention to potential implications.
But I wanted to go back and read about it in more detail, and think about potential objections. It is such an important idea it deserves more sustained attention. So I dug out his original book, Motivation and Personality, which is now out of print and hard to find. I found one tattered copy in the NYPL.
Maslow's idea is that people first need to satisfy basic physiological needs - hunger, thirst, shelter, or sex. Then once these are largely met they turn more attention to other needs at higher levels of the pyramid.
Above basic needs comes safety, and then emotional/love/ belonging needs, then esteem/ respect and finally "self-actualization" needs.
This highest level of need recalls Aquinas or Aristotle. Maslow says:
What human beings can be, they must be. They must be true to their own nature. This need we may call self-actualization. .. It refers to people's desire for self-fulfillment, namely the tendency for them to become actualized in what they are potentially. This tendency may be phrased as the desire to become more and more what one idiosyncratically is, to become everything that one is capable of becoming. p22
In other words, there is no one right end.
The hierarchy is not rigid. There can be exceptions, for instance.
At this level, individual differences are greatest. However, the common feature of the needs for self-actualization is that their emergence usually rests on some prior satisfaction of the physiological, safety, love and self-esteem needs. p22
We have spoken so far as if this hierarchy were a fixed order, but actually it is not nearly so rigid as we may have implied. It is true that most of the people with whom we have worked have seemed to have these basic needs in about the order that has been indicated. However, there have been a number of exceptions. p26. [eg martyrs, needs that are undervalued because always satisfied before}
And it is not as if all needs need to be satisfied at one level before turning attention to higher needs.
Importantly, however, satisfied needs do not tend to produce much motivational energy in people. They are taken for granted.
This statement might give the false impression that a need must be satisfied 100% before the next need emerges. In actual fact, most members of our society who are normal are partially satisfied in all their basic needs and partially unsatisfied in all their basic needs at the same time. A more realistic description of the hierarchy would be in terms of decreasing percentages of satisfaction as we go up the hierarchy of prepotency. For instance, to assign arbitrary figures for the sake of illustration, it is as if the average citizen is satisfied perhaps 85% in physiological needs, 70% in safety needs, 50% in love needs, 40% in self-esteem needs, and 10% in self-actualization needs. p27-28
If we are interested in what actually motivates us, and not in what has, will or might motivate us, then a satisfied need is not a motivator. It must be considered for all practical purposes simply not to exist, to have disappeared. p30The idea also leads to his definition of the good society:
The good or healthy society would then be defined as one that permitted people's highest purposes to emerge by satisfying all their basic needs. p31
There is another very important consequence of this idea, which is worth quoting at length. As needs are progressively satisfied, he says, human interests and values shift as well.
The most basic consequence of satiation of any need is that this need is submerged and a new and higher need emerges. .. This exchange of old satisfiers for new ones involves many tertiary consequences. Thus there are changes in interests. That is, certain phenomena become interesting for the first time and old phenomena become boring, or even repulsive. That is the same as saying there is a change in human values. In general, there tend to be: 1) overestimation of the satisfiers of the most powerful of the ungratified needs, 2) underestimation of satisfiers of the less powerful of the ungratified needs (and the strength of those needs) and 3) underestimationand even devaluation of the satisfiers of the needs already gratified (and of the strength of those needs). This shift in values involves, as a dependent phenomenon, reconstruction in philosophy of the future, of the Utopia, of the heaven andhell, of the good life, and of the unconscious wish-fulfillment state of the individual in a crudely predictable direction. In other words, we tend to take for granted the blessings we already have, especially if we don't have to work or struggle for them. p33
He does not provide any evidence or historical accounts here, and at least for now I am not aware of anyone else who has looked at history in this way. But it does make sense as a way to think about politics or recent history. Now that basic physiological needs are satisfied and security/defense is taken care of in most countries, life is no longer nasty, brutish and short in a Hobbesian way. The need for love and belonging is generally met within families and relationships and small groups. So national politics has increasingly revolved around issues of rights and equal respect and esteem.
The 19th and 20th centuries could be seen as about demands for national self-esteem, and the period since the 1960s which has seen the "rights revolutions" seeking racial, gender or sexual orientation equality could be seen as demands for personal self-esteem.
Of course, the need for self-actualization has been increasingly met by more education and more challenging jobs, together with more choice about which careers or goals to pursue.
It is no surprise, on this view, that college education has soared in expense in the United States. Self-development is more in demand than ever. Part of that is vocational competition, of course, as more jobs require credentials. But part of it must be the rotation in demand that one would expect to see if people find other needs are being satisfied more efficiently and cheaply. People devote more time and effort and resources to higher needs.
Our economy is still focused on the fading needs on the lower rungs
The trouble is our economic system is still largely focused on the lower rungs of the hierarchy - earning income to pay for food, shelter and basic transportation and healthcare. It is about putting bread on the table. Our system is optimized for dealing with scarcity of material goods.
So it should be no surprise the economy is getting into trouble if we get more and more efficient at satisfying the more basic needs, when actual demand and human needs are moving up the hierarchy to levels where we just don't have the right institutions and structures to deal with them.
Let's just assume that someday, soon, all physiological and safety needs can easily be met. We've talked about this many times on this blog, most recently here. Given that even the poorest people in the US often have cellphones and flat-screen tvs, let alone refrigerators and food stamps, that is not unrealistic.
That means it is the needs for love/belonging, esteem and self-actualization which will need to lead the economy. In other words, human flourishing.
And that's the problem with the assumption that some entrepreneur in a garage will always invent the next big thing, and some huge new industry will emerge which will employ millions. We increasingly want things which are less about selling stuff and more about selling self-development.
Won't that just mean more and more demand for new forms of education, which will employ many more people? It could work out that way. The highest form of learning is always in essence apprenticeship, emulating by osmosis some master.
But most basic forms of education could increasingly be automated, just the same as many other industries. Stanford and MIT are putting courses online, and it could well be that educational software will finally realize its promise. A student can go at their own pace, watch videos of superb teachers when necessary, and answer enough tests for the program to identify weaknesses and help fix them.
In other words, we'll still have a problem with running society based on labor market income in a few years.
I have much more to say about Maslow, but we can sum up this post in a line; human needs tend to change as we go up the hierarchy of needs, but our economic system hasn't kept up with that.