When libertarians and other free market fundamentalists are forced to offer a defense for the sort of unfettered capitalism that they advocate, they are almost guaranteed to invoke meritocracy in some form. Somewhat more surprising is that among the political left there are many who claim to be meritocrats at heart; probably this has something to do with the fact that the ranks of vocal liberals swell with educated technocrats, and it is common for people with a good education to believe that it (or, at a deeper level, their supposed intelligence) entitles them to a larger slice of the pie. What makes this surprising is that pure meritocracy is in effect at odds with core liberal ideals, among them social mobility, economic vitality and egalitarianism.
Most attacks against pure meritocracy revolve around an inherent difficulty in determining what makes some people more deserving of reward than others. While this is certainly a question worth pursuing, there is an even more fundamental problem in meritocracy worth addressing. To put it plainly, meritocracy is structurally infeasible. The ideological thrust behind meritocracy is that social capital—whether in the form of human talent, intelligence, or moral value—ought to be aligned with material wealth. Viewing matters macroscopically, the most salient rationale for instituting a meritocratic system is transparency: we want assurance that our rich men and women are not so by accident, that they really deserve their wealth and power. Otherwise the social order would appear simply unjust. Viewed in this light, meritocracy serves not only as a justification for inequality—it satisfies the itch for truth that is so central a part of Western thought.
Of course, as dozens if not hundreds of political scientists, economists, sociologists and philosophers of various stripes have suggested in one manner or another, the problem in attempting to align social capital with its material counterpart is that doing so creates a messy feedback loop. In short, wealth becomes a justification for itself; simply being rich implies that one is the superior sort of being deserving of being rich. Though this rather clearly reverses the intended directionality of the merit-wealth relationship (at least in name—few would be so stupid to think that the already-rich are ignorant of the benefits of a wealth-merit conflation), structurally there is no way to unravel it when money and social value are made tantamount. And any system that permits wealth to exist as a basis for itself will license the sort of speculative bubbles that threaten economic productivity and political stability. But this is just one of many emergent problems: economic hierarchies are crystalized and what’s more turned into classes; and because occupations are somewhat likely to select for certain ethnic groups or geographically privileged persons, racial segregation and regional disparities are extremely probable outcomes.
Think of it this way: in today’s major industrial countries there are plenty of people who do not self-identify as wealthy who yet are able to carve out a niche for themselves and attain purpose. Consider, for example, the teachers, artists and musicians you have met in your life. The argument goes that academics and intellectuals would fare much better under a true meritocracy, which might perhaps be true for some, but certainly wouldn’t for others; for there will always be writers, scientists and other thinkers whose work runs contrary to the status quo, who have trouble securing research funds for lack of interest or application despite the novelty and brilliance of their endeavors. But in a world where wealth is the only thing that matters, what incentives would they have to go on in the face of adversity? And supposing they slugged on and made some grand new discoveries anyway—who would bother to listen to them, given their poverty and obscurity?
It seems evident that the most structurally sound economic arrangement for society must take care to avoid equating material worth with social capital rather than trying to splice the two together. Only by maintaining a strict disconnect between social capital and wealth can we establish an adequate checks and balances between material worth and the various other abstract values we assign to individuals and institutions (i.e. cultural status, moral uprightness, etc.). Staggering social and economic capital also ensures that society be kept dynamic: creativity and innovation will not be kept down by artificial social hierarchies, but encouraged even among the most materially underprivileged members of society.
Economists have demonstrated that social mobility in general fosters growth, as it allows labor and talent to distribute optimally; economists slip up, however, by supposing that this mobility is strictly vertical, and in particular determined solely by income. A better model for social mobility should be multidimensional: the reality is that people have many incentives to action, among them the acquisition of material worth, certainly, but just as well the accruement of status and power and the attainment of moral righteousness. A dynamic society requires all these different variables be allowed to ‘slide’ independently of each other; by fixing status to wealth, we inhibit people’s freedom of action.
But, one might object, isn’t freedom of action just what unfettered capitalism is designed to do? No—while theoretically free market doctrines do nothing to assign status-values to material parallels, empirically it is clear that the invisible hand does nothing to keep them separate, and indeed more often than not weds the two. Who would you say has higher status: the doctor, or the teacher? The lawyer, or the engineer? Notice that neither education nor moral righteousness is the sole determinant of your judgments—income differences seem to play a key part. One could of course argue that those differences correspond to some difference in social value—doctors are generally smarter than teachers, one might argue—but then we enter chicken-egg territory, since the same people will tell you that the medical profession selects for smarter people precisely because of its higher wages. The proliferation of essentially poisonous fast food and the distension of certain segments of the entertainment industry should be proof enough that the free market, left to its own devices, does not simply reward the deserving. The only thing that could be said beyond doubt is that it rewards the profit-seeking.
Which mode of governance, then, would best serve to maintain the balance between material wealth and the various types of social capital? Pure socialism and communism should be rejected on the grounds that they attempt to eliminate material mobility altogether. The outcome of such a leveling would be not unlike trying to tether status to dollars, for it too would lead to the establishment of a rigid social hierarchy, this time on the basis of supposed innate worth. Whether this measure correspond to intelligence or some indicator of ‘talent,’ it is hard to imagine that determining the worth of human beings so narrowly could be a good thing.
The only sound option left us is some form of social democracy. Systems of social democracy are unique in that they self-consciously employ a system of social values to counter-balance excesses in wealth-accruement, neither obviating wealth disparities to the point that economic incentives disappear, nor allowing those disparities to build to the point where class lines become clearly defined. That this is important comes from the observable fact that the emergence of a clear class structure engenders social capital for those at the top, enhancing the prestige of money and thus inflating demand for it as an end in itself. (We might take this class-eradication function as the defining characteristic of social democracy, but that is beside the point.)
As a further thought, social democracy—despite its relative lack of technical pretense—is the only system of government that recognizes the truly complex nature of human decision making. Economics as a discipline will remain incomplete until it successfully incorporates the findings of sociology and psychology about how people interact and institutionalize. What I am recommending here is that academics and policy makers take the first steps toward formalizing a rather simple model for a hybrid sociological-economics which takes into account the role social capital plays as an incentive in people’s lives. The beauty of such a model is that through it the rational actor assumption (which underlies almost the entire field of economics, despite the obvious problem that human beings are not robots) could probably be preserved to some degree as a viable model, assuming one got the relative weights of money, status and power somewhat accurate. The world’s social democracies have proven to produce the highest living standards in the world; from this empirical evidence alone we have enough to weigh in against pure meritocracy, and also good reason to believe in the benefits of capital-staggering.
