How Much Money You Make Equals to Your Value to Society

Photo by Erica_Marshall

On the Christmas lunch my little brother was intrigued about money. He couldn’t understand why every country in the world isn’t communist yet. He must have thought adults were either stupid or evil to choose to live in a society with differences.

At a certain point he asked me: isn’t it unfair that some people have a lot of money while others have none?

To which I answered: well, no.

Below there’s a more elaborated version of the explanation I gave him.

As we know, on a communist society there are no incentives to be different or better than other individuals. But we also know that each individual provides some value to the society. And that value differs.

Let’s use as an example the value of the average individual in a capitalist society.

From one side there are entrepreneurs. They provide massive positive value — providing products or services that help the lives of other people. They’re all responsible for researching new ways to solve problems or improving current ways to solve them.

From the other side there are criminals. They provide negative value to the society in two ways: making others’ life worse by adding problems and making them spend money to maintain prisons working.

Between those two groups there are employees, who provide some value through their hard work. Obviously there are many different employees sub-categories. There are waitresses, doctors and CEO’s. They all provide different value to the society and are paid accordingly.

Photo by Thiru Murugan

Their value is not only measured by the benefits of their labor, but also by the uniqueness of their skills. Many people can wash the dishes and bring a bottle of water to the table. But not that many can create a device like the iPod, that puts “a thousand songs in your pocket”.

The money reward is essential to stimulate individuals to work hard and implement ideas so that they not only enjoy moral success but financial success as well. Of course we would all like to see everyone happy and not suffering from lack of money. But in a society where the competent is rewarded the same money as the incompetent there’s no real reason to being competent — there’s no reason to innovate, no reason to study and no reason to work hard, all necessary actions for the society’s improvement e progress. Without those actions societies stagnate.

And there’s another nice thing about the money reward. If you think about it, it is always fair. Everyone makes as much money as they deserve to. The money an individual makes is directly correlated to the benefits given to others. Obviously you could list a gazillion things that impact that equation, but as a general rule that’s what we see in practice today.

The unfairness about the system is the good or bad inheritance — either financial, emotive or educational — a child receives from their family. But as we know most successful entrepreneurs actually came from poor families and had to fight tough obstacles in their infancies. In the end that only helped them find the motivation to succeed. Anyone can achieve anything if they work hard enough — and to work that hard you need to be heavily motivated. These now successful entrepreneurs turned their biggest passive — a tough infancy — into their biggest active — a huge motivation to succeed.

If you are not satisfied with how much society values your labor you shouldn’t blame the society, like most do. You should find innovative ways to give value to the society. You should find innovative ways to make your society a better place. After all, apart from making money, your goal as an entrepreneur is to improve others’ lives. As an online entrepreneur your goal remains the same — you’ll just achieve it through a website.

How much value are you bringing to other people? And can you bring more?

I guess you can. And I hope you do — so that you improve my life.

Good luck.

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