Meritocracy & justice

"We have been taught that meritocratic institutions and societies are fair" said Ben Bernanke recently. It's a view that seems widely held. In his effort to defend (pdf) the 1% Greg Mankiw suggests that a big reason for increased inequality is that:

Changes in technology have allowed a small number of highly educated and exceptionally talented individuals to command superstar incomes in ways that were not possible a generation ago.

What this view misses is that meritocracy is no evidence whatsoever of the justice of a social system.

Imagine a Stalinist centrally planned economy. The dictator knows that central planning is a difficult job requiring intelligence, skill and hard work. He therefore ensures a system of rigorous exams and hiring to ensure that the best people occupy key positions.

Such a society will be highly meritocratic, in the sense that there'll be a strong correlation between individuals' success - their position in the hierarchy - and their "merit": their IQ, capacity for work or (if you like) the "soft skills" which enable individuals to move up the hierarchy.

Indeed, it's quite likely that this society will be more meritocratic than free market economies, where dumb luck is so important. For example, Jamie Barton got £5000 for winning last night's Cardiff singer of the world contest whereas losers in the first round at Wimbledon get £23,500. It's hard to call this meritocratic, unless you define "merit" circularly as "whatever makes money".

So, is our Stalinist economy just? Not at all. Most of us - including Professor Mankiw I suspect - would argue that it is unjust because nobody should have the power over others which a centrally planned economy gives them.

What made the USSR an unjust society was not that there were deviations from meritocracy, but that there was colossal unfreedom and inequality of power.

This brings me to another point of Mankiw's. He says:

The most natural explanation of high CEO pay is that the value of a good CEO is extraordinarily high.

But our Stalinist might have justified high pay for central planners with the exact same argument: the value of a good planner of the bread supply in Nizhny Novgorod is extraordinarily high.

And in both cases, the counter-argument is the same. It is unjust that any individual has so much power - and, we might add, inefficient too, but that's another story.

The point here is that you just cannot infer the fairness of an economic system from its degree of meritocracy. An unfair system might be very meritocratic - as in my example of an idealized centrally planned economy. And a fair system might be unmeritocratic; Nozickeans would claim this for free societies in which people freely give others' stuff willy-nilly.

The correlation between individuals' "merit" and their individual success is, logically, independent of the question of the justice or not of the basic social structure.

Comments

[Nonnoenzo]

There is a virus in your interesting TE (Thought Experiment).
It lacks an important dimension of realism, required if it is conceived and you want to use it as an answer to Mankiw.

Actual. historical stalinist systems were annihilated first of all by the ICT Revolution, then also by the libertarian critique. Therefore your thought system doesn't provide any potential social efficiency, like in Russia with the best maths but no computer science, andno user-oriented software.

I'd opt for a criticism to Mankiw in another direction: he doesn't know much of ICTs: technological markets have a win-win monopolisitc bias, but this has zero correlation with any merit or talents variable..

[SteveH]

"The most natural explanation of high CEO pay is that the value of a good CEO is extraordinarily high."

Probably the most powerful indictment of the capitalist system and it's values I have ever read. Put it on the posters!

[rogerh]

We can imagine a simple society long ago in which food was plentiful, jealousy and disease non existant and everyone got equal shares. Realistically as soon as pressures arose the more able would likely bash in the skulls of those seen as a drag - meritocracy wins out.

The key is the resource allocation mechanism and the power to enforce it - our simple society had no external constraints so simple allocation prevailed. The key is who holds the skull-bashing rights and the constraints put upon them.

[Boffy]

There is another point in relation to this discussed by Marx in the Critique of the Gotha Programme. Set aside the Stalinist example and consider the issue of meritcracy in its own right. Is it "fair"? No, of course not, because meritocracy simply reinforces natural advantages.

If A is "more intelligent" than B, they may have to work less hard to get good grades, and thereby go to a good University. As a result of going to a good University, they get a good well-paid job, whereas B ends up working 12 hours a day for bugger in McDonalds.

A's already good fortune over B in being born more naturally gifted, is reinforced by a meritocratic society giving them even greater material privileges over B, and of course, as all research shows those privileges will be passed on to future generations.

As Marx points out in the above, any society that wanted to be "fair", and to create equality would have to actually privilege B over A to overcome A's natural advantage. Some years ago when I sat on the Social Services Committee of the County Council, I similarly argued that we should give the kids in our care the best possible education to combat their existing disadvantages.

However, as Marx points out, not even the first stage of Communism could do this at a general level. This kind of inequality would have to continue until general abundance became possible. Part of the problem with reformist solutions - particularly Left reformist solutions that some "Marxists" propose - is that they demand that Capitalism provide this kind of real equality described by Marx, and which he argued not even Communism could provide.

Such solutions then are either simply Utopian, Left covering for Welfarism, or else simply the kind of "revolutionary phrasemongering" Marx criticised Guesde for engaging in i.e. they are designed to "expose" the nature of the capitalist state rather than provide practical, immediate solutions for workers problems.

[chris]

@ Boffy - I agree, and many would. However, a libertarian would ask: what's so wrong with someone benefiting from a natural advantage?
The point of my post was to show that meritocracy is no measure of justice even from a libertarian perspective.

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[Boffy]

Chris,

I agree. I had a debate about this with some Libertarians at the "Daily Reckoning" Discussion Board some years ago. They ended up in an irreconcilable contradiction in relation to the question of inheritance.

What counts as a natural advantage. Is it a "natural advantage" to have a shed load of money left to you? If people should receive benefits even just based on natural endowments, then shouldn't a Libertarian be in favour of all assets being either seized by the State to defray taxation and administration costs towards their goal of a minarchist state, or else distributed evenly amongst the population, because passing on to children means moral hazard due to free loading?