The Meritocracy Trap

by Daniel Markovits

  In such a case, the worker may be massively productive according to the commonplace measure but not productive at all—indeed, she may even have a negative product—according to the alternative measure. This will happen whenever the direct gains that she produces, with everyone else’s work fixed alongside her, are exceeded by the indirect losses that she produces, by preventing others from working more productively (as they could do without her).

  Today, the meritocratic elite, not individually but as a class, is in precisely this position. Superordinate labor is essential to production given the current state of technology, which causes the labor market to fetishize elite skills. This entails that total output is much greater when elites work than when the remaining less skilled workers attempt to deploy current technologies without the elite. Deskilled loan officers, for example, could not possibly manage modern home mortgage finance without super-skilled workers to construct and trade mortgage-backed securities. And the super-skilled workers who administer securitization expect pay commensurate to the gains from securitization, which they regard as specifically their product. Similarly, line workers in downsized firms stripped of their own managerial capacities now depend on top managers to coordinate production. And the elite executives who have monopolized the management function congratulate themselves on their vast and productive powers of command and again expect to be paid commensurately. Superordinate workers of all stripes therefore insist that the inequality that their wages produce is meritocratic.

  But the technologies that now fetishize increasingly extreme skill are not natural and inevitable. Rather, they are induced by the increasing concentration of training in a narrower and narrower elite—as the feedback loops between elite education and skill-biased innovation reveal. And in this case, superordinate workers as a class prevent everyone else from working in the ways—using the alternative technologies—that would be optimal without them. Securitization in home mortgage finance undermined and eventually eliminated the mid-skilled loan officer. Elite super-managers undermined and eventually eliminated middle management.

  The gains that elite workers produce in a meritocratic world—where inequality-induced innovation has biased production toward their peculiar skills—should therefore be discounted by the reduced productivity that these innovations impose on non-elite workers. The precise balance between gain and loss of course remains speculative. But the best evidence suggests that the elite’s true product may be near zero. For all its innovations, modern finance seems not to have reduced the total transaction costs of financial intermediation or to have reduced the share of fundamental economic risk borne by the median household, for example. And modern management seems not to have improved the overall performance of American firms (although it may have increased returns specifically to investors). More generally, rising meritocratic inequality has not been accompanied by accelerating economic growth or increasing productivity.

  A parable presents the same argument less carefully but perhaps more vividly. Imagine that a society is composed of farmers, who are nurturing and cooperative, and warriors, who are cunning and strong. For decades, the society lives in prosperous harmony with its neighbors, as farmers raise crops and warriors keep the peace, and both do well. Then, one day, some warriors commence a border skirmish and, through a stream of provocations, steadily escalate hostilities until eventually harmony has been replaced by pervasive and constant warfare.

  Once the society has adopted a war footing, the farmers become increasingly unproductive and the warriors increasingly essential to preserving safety and welfare. The warriors now claim disproportionate status, wealth, and power, on the ground that they deserve private advantages commensurate to their disproportionate contributions to the public good. To which the farmers might answer that the warriors would not be so productive if they had not started the wars. The warriors’ true product must be offset by the general costs of the war, and especially by its suppression of farming.

  The snowball mechanism behind meritocratic inequality casts middle-class workers in the role of farmers and superordinate workers in the role of warriors. Only after the rich have concentrated training in their children do the technologies of production adjust to fetishize elite skills. And superordinate workers who wish to justify their immense incomes on account of their productive merit will, like the warriors from the parable, falter over the observation that the elite would not be so exceptionally productive if it had not, through the intensive education it gives to its children, started the training war and set its consequences in motion. Like the warriors, the elite’s true product must be offset by the costs of meritocratic inequality, and especially by meritocracy’s suppression (through inducing innovation that fetishizes skill) of mid-skilled, middle-class production.

  This raises a final and fatal analogy between contemporary meritocracy and the aristocracy of the ancien régime. It is easy to forget that aristocracy was, within the social and moral frames of its time, true to its name—it connected caste to a conception of virtue or excellence, and aristocratic elites disproportionately and indeed almost exclusively possessed virtue, so conceived. The ancien régime was discredited in the end not so much because aristocratic notions of heredity created a birthright lottery that violated equality of opportunity, but rather because the bourgeois revolutions unmasked the aristocratic conception of excellence and virtue as at best ridiculous and in fact a sham.

  It is equally easy to accept the conception of merit at the heart of contemporary meritocracy as capturing genuine social contribution and real achievement. But the earlier accounts of training concentration and skill fetishism and of the ways in which the feedback loops between them constitute meritocratic inequality as snowball inequality unmask this conceit. The meritocratic achievement commonly celebrated today, no less than the aristocratic virtue acclaimed in the ancien régime, is a sham.

  The problem with economic inequality is not, as progressives commonly propose, that elites use force or fraud or some other form of bad faith to inflate their incomes in excess of their merit. Nor is the problem, as progressives also say, that elites have not earned the training (from parents, schools, and colleges) behind the skills and dispositions that superordinate labor requires. Indeed, no version of the thought that economic life strays from true meritocracy captures the basic wrong in rising economic inequality.

  Meritocratic inequality is wrong on account of meritocracy itself—even and indeed especially when fully realized—and the concept of merit is the taproot of the wrong. What is conventionally called merit is actually an ideological conceit, constructed to launder a fundamentally unjust allocation of advantage. Meritocracy is merely the most recent instance of the iron law of oligarchy. It is aristocracy’s commercial and republican analog, renovated for a world in which prestige, wealth, and power derive not from land but from skill—the human capital of free workers.

  A COLOSSAL WRECK

  These reflections transform the debate over economic inequality. They sidestep the difficult questions about individual desert, and they avoid the moralizing focus on private vices that befuddles meritocratic inequality’s conventional progressive critics. Instead of attacking meritocrats, they attack the idea of merit itself. The new beginning sets the argument on a fresh path, which reaches a new and different conclusion.

  Meritocracy—including the immense skill, effort, and industry of superordinate workers—increasingly clearly serves no one’s interests. It renders the working and middle classes who once occupied the charismatic center of economic life surplus to economic requirements. It imposes idleness on the mass of citizens, whom it condemns to join a massive and growing lumpenproletariat. At the same time, meritocracy casts superordinate workers as rentiers of their own human capital, which they mix with their alienated labor, and it subjects rich children to the rigors and afflictions of ruthlessly instrumental elite education. Meritocratic inequality divides society into the useless a
nd the used up.

  Together, these patterns establish an effective but immensely costly mechanism for the dynastic transmission of caste: effective because they deny ordinary citizens a meaningful opportunity to join the elite, and costly because they draft the elite into a constant, exhausting, and insecure effort to preserve its caste. Along the way, meritocratic inequality undermines social solidarity and corrupts democratic self-government. Increasingly, meritocracy fails even to deliver economic growth. All these costs arise, moreover, not on account of private vices or even collective failures perfectly to realize the meritocratic ideal, but rather directly and specifically on account of meritocracy’s structural commitments.

  The meritocrat insists that all these immense costs—whose reality, and indeed whose origins in meritocracy she does not deny—must be borne on account of merit’s moral footing: superordinate workers deserve incomes that reflect their immense skill and production; justice requires pay to track output and merit; and it is wrong to favor the less productive, less hardworking middle class over the more productive, harder-working rich. Meritocratic inequality must be accepted and should even be celebrated, notwithstanding all the distress that it imposes.

  But the sheer size of meritocracy’s burdens places such principled justifications of inequality—and the conception of merit at the heart of these justifications—under enormous pressure. And the conception of merit, once it is revealed as a sham, cannot withstand the pressure.

  Meritocratic inequality’s entire edifice—built, Ozymandias-like, on sand—comes tumbling down.

  CONCLUSION

  What Should We Do?

  When meritocracy transformed economic inequality, it also transformed politics.

  Equality’s champions were slow to recognize the transformation, and they have still not fully understood it. This creates a political opening, now filled by opportunists who instinctually sensed the change and moved to exploit meritocracy’s discontents.

  Demagogues inflame middle-class resentments by railing against a corrupt establishment and attacking vulnerable outsiders. They promise, through these attacks, to restore a mythical golden age. President Trump says that abandoning the rule of law and deporting millions of undocumented workers and families will Make America Great Again. Nigel Farage argues that closing the border to the European Union will restore Britain’s independence and self-respect. And German populists, seeking to recover “a thousand years of successful German history,” accuse Angela Merkel of betraying her country by admitting refugees.

  Meanwhile, charlatans line up to sell a wearied elite cheap cures for deep ills. Investment banks and other elite employers promise to restore work/life balance by building on-site gyms and nap rooms, or paying for breast milk to be shipped home from business trips, or even reimbursing the costs of freezing eggs to extend fertility later into life. Colleges announce that they will fix the admissions frenzy by considering applicants’ ethical and cooperative accomplishments, such as caring and communal engagement. And life coaches teach living in the present or promote New Year’s resolutions to cut down on long hours rather than alcohol.

  These promises are not really believed, even by those who for the moment embrace them. The rich and the rest both suspect, at the backs of their minds, that their self-professed advocates offer no real salvation and may even be playing them for fools.

  A Trump-supporting businessman from St. Clair Shores discounted the president’s promises and disdained his hard sell. And nearly half of Trump voters, surveyed after he won, expected that life in their communities would stay the same or get worse. Similarly, when the consulting firm Bain & Company recently asked more than a thousand elite workers what it takes to earn a promotion, a substantial majority, scorning work/life balance, answered “an unwavering commitment to long hours and constant work.”

  False prophets gain a foothold nevertheless because deeply discontented people care—often most and always first—about being heard and not just being helped. They will cling to the only ship that acknowledges the storm.

  Populists may not restore the middle class’s past glories, but they recognize that a form of life has been lost. They dignify the loss as a moral cost and place it at the center of their politics. And work/life programs may never achieve balance, but they recognize that superordinate workers yield alienated labor. They acknowledge that no amount of income can compensate a person for using herself up, for draining a resource that will in the end run dry.

  Progressives cannot answer because they remain under meritocracy’s thumb. They are captives who embrace their captor, through a sort of ideological Stockholm syndrome. As a result, progressives exacerbate problems that they do not even see.

  When they focus on identity politics and poverty relief, progressives dismiss middle-class discontent as special pleading. For progressives, middle-class longing for the affluence and security that St. Clair Shores provided at midcentury—for unchallenged abundance—is just nostalgia for a form of life that is no longer viable, or even for lost (white, male) privilege. In effect, this tells the middle class that it cannot measure up.

  And by focusing on purifying elite institutions of nonmeritocratic biases—on diversity and inclusion—progressives dismiss elite discontent as luxury’s disappointment. For progressives, hypercompetitive admissions tournaments or Stakhanovite work hours become really wrong only when they discriminate against minorities or working mothers, or mask the operation of insider networks and cultural capital, rather than because they are simply, directly, and generally inhumane. In effect, this tells the elite to keep its nose to the grindstone in order to validate its privilege.

  Both responses double down on meritocracy’s most insulting and alienating elements. And progressives thereby drive the middle class into the arms of demagogues and the elite to resort to ineffectual gimmicks. When benevolent forces cannot see the despair that stares them in the face, politics turns dark.

  Conventional views about how to cure economic inequality only compound the political problem.

  Orthodox policy insists that economic redistribution is fundamentally a competitive affair: where a benefit can be achieved for the rest only by extracting a corresponding cost from the rich, and where the cost invariably exceeds the benefit. As Arthur Okun (who had served as chairman of Lyndon Johnson’s Council of Economic Advisers) wrote in reflecting on the War on Poverty, the mechanisms of redistribution all carry money “from the rich to the poor in a leaky bucket.” Some of the redistributed money “will simply disappear in transit, so the poor will not receive all the money that is taken from the rich.”

  This way of thinking insists that helping the middle class today requires hurting the elite—and that the hurt will necessarily exceed the help. Moreover, because the rich are few, the hurt must be concentrated. Poverty might be eliminated, even using leaky buckets, by imposing widely shared and individually small burdens on a large affluent class. The War on Poverty targeted no one and required no substantial sacrifices in St. Clair Shores. But high-end inequality cannot, by its nature, be reduced except through individually large assessments against the rich. A new War on Inequality, the common frame insists, cannot rebuild the middle class except by attacking the elite. Curing meritocratic inequality seems to require ravaging Palo Alto.

  Orthodox opinion can neither muster the political will nor craft a policy to cure meritocratic inequality. Progressives inflame middle-class resentment and trigger elite resistance, while demagogues and charlatans monopolize and exploit meritocracy’s discontents. Meritocratic inequality therefore induces not only deep discontent but also widespread pessimism, verging on despair.

  When a recent book asked ten prominent economists (including four Nobel Prize winners) to predict what life will be like in a century, none expected economic inequality to recede; and several doubted society’s capacity for “large-scale redistribution of income,” because “those who are doing we
ll will organize to protect what they have, including in ways that benefit them at the expense of the majority.” A political scientist, after reviewing inequality across all of human experience, found only a single instance in which a society unwound concentrations of income and wealth as great as the United States suffers today without either losing a war or succumbing to a revolution. And a similar survey led a prominent historian to speculate that “only [an] all-out thermonuclear war might fundamentally reset the existing distribution of resources.”

  Nevertheless, in spite of all this, there are grounds for hope. The “single instance” of an orderly recovery from concentrated high-end inequality, it turns out, is the United States in the 1920s–1930s, which answered the Great Depression by adopting the New Deal framework that would eventually build the midcentury middle class. And human experience is anyway too limited to sustain iron laws (recorded history extends over only about fifty human life spans). Big things are still happening for the first time. And where the present is exceptional, what’s past need not be prologue.

  Most important, the orthodox frame is mistaken—about both politics and policy. Progressives can speak powerfully and directly to meritocracy’s discontents. The meritocracy trap paints a much more compelling picture of middle-class frustrations and elite alienation than demagogues and life coaches can ever do.

  This picture reveals that meritocracy has transformed not just inequality but also redistribution, so that it is no longer a competitive affair. Replenishing the middle class does not require draining the elite, and certainly not using leaky buckets. Instead, meritocracy’s discontents give the rich and the rest a shared interest in dismantling inequality. Middle-class aspirations to recover lost income and status and elite aspirations to restore authentic freedom no longer compete but harmonize. The middle class and the elite are differently tormented, but by a single oppressor.