Hostname: page-component-586b7cd67f-gb8f7 Total loading time: 0 Render date: 2024-11-25T18:58:07.349Z Has data issue: false hasContentIssue false
  • English
  • Français

Markets and communities: the social cost of the meritocracy

Published online by Cambridge University Press:  07 July 2021

Jean-Paul Carvalho
Jean-Paul Carvalho*
Affiliation:
University of Oxford, Oxford, UK
*
Corresponding author. Email: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

Critiques of the meritocracy have centered on its narrow definition and biased assessment of merit, its stigmatization of the unsuccessful, and excessive competition. This paper identifies a different mechanism that could have pernicious social and political consequences. Economic mobility sorts people based on certain ‘productive’ traits, separating them into classes, and thus alters social externalities. This sorting–separation–externalities mechanism can produce between-class polarization in social outcomes (e.g. alcoholism and drug abuse) and worsen aggregate outcomes over all classes, consistent with rising ‘deaths of despair’ in the United States (Case and Deaton, 2020, Deaths of Despair and the Future of Capitalism. Princeton University Press). When traits are endogenous, transition out of a caste-based society produces an initial burst of economic mobility which dissipates over time. Thus, a dynamic meritocratic society devolves into a static class-based society. I set out an alternative model called the ‘experimental society’, which is less susceptible to these problems.

Keywords

Austrian economicscultural evolutionmeritocracysocial economicssocial mobilitytime preferencesZ13P00
Type
Symposium on Institutional Analysis, Market Processes, and Interdisciplinary Social Science
Information
Journal of Institutional Economics , Volume 18 , Issue 3 , June 2022 , pp. 501 - 519
Copyright
Copyright © The Author(s), 2021. Published by Cambridge University Press on behalf of Millennium Economics Ltd.

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Acemoglu, D. and Restrepo, P. (2019), ‘Automation and New Tasks: How Technology Displaces and Reinstates Labor’, Journal of Economic Perspectives, 33(2): 3–30.10.1257/jep.33.2.3CrossRefGoogle Scholar
Acemoglu, D. and Robinson, J. A. (2005), Economic Origins of Dictatorship and Democracy, Cambridge, UK: Cambridge University Press.CrossRefGoogle Scholar
Acemoglu, D. and Robinson, J. A. (2012), Why Nations Fail: The Origins of Power, Prosperity, and Poverty, New York, NY: Currency.Google Scholar
Akerlof, G. A. (2020), ‘Sins of Omission and the Practice of Economics’, Journal of Economic Literature, 58(2): 405–418.CrossRefGoogle Scholar
Akerlof, R., Matouschek, N. and Rayo, L. (2020), ‘Stories at work’, AEA Papers and Proceedings, vol. 110, pp. 199–204.CrossRefGoogle Scholar
Almlund, M., Duckworth, A. L., Heckman, J., and Kautz, T. (2011) ‘Personality Psychology and Economics’, in Handbook of the Economics of Education (Vol. 4), Oxford, UK: Elsevier, pp. 1–181.CrossRefGoogle Scholar
Aoki, M. (2007), ‘Endogenizing Institutions and Institutional Changes’, Journal of Institutional Economics, 3(1): 1–31.CrossRefGoogle Scholar
Arrow, K., Bowles, S., and Durlauf, S. N. eds. (2018), Meritocracy and Economic Inequality. Princeton, NJ: Princeton University Press.CrossRefGoogle Scholar
Beaumarchais, P. (1964), The Marriage of Figaro (J. Wood, Trans.), London, UK: Penguin.Google Scholar
Bell, D. (1972), ‘Meritocracy and Equality’, The Public Interest, 29: 29–68.Google Scholar
Bell, D. A. (2016), The China Model: Political Meritocracy and the Limits of Democracy, Princeton, NJ: Princeton University Press.CrossRefGoogle Scholar
Bénabou, R. (1993), ‘Workings of a City: Location, Education, and Production’, Quarterly Journal of Economics, 108(3): 619–652.CrossRefGoogle Scholar
Bénabou, R. and Tirole, J. (2006), ‘Belief in a Just World and Redistributive Politics’, Quarterly Journal of Economics, 121(2): 699–746.CrossRefGoogle Scholar
Bisin, A. and Verdier, T. (2000), ‘Beyond the Melting Pot: Cultural Transmission, Marriage, and the Evolution of Ethnic and Religious Traits’, Quarterly Journal of Economics, 115(3): 955–988.CrossRefGoogle Scholar
Bisin, A. and Verdier, T. (2017) ‘On the Joint Evolution of Culture and Institutions’, Working paper, National Bureau of Economic Research.CrossRefGoogle Scholar
Boettke, P. J. (2018) F.A. Hayek: Economics, Political Economy and Social Philosophy, London, UK: Palgrave Macmillan.CrossRefGoogle Scholar
Boettke, P. J. and Fink, A. (2011), ‘Institutions First’, Journal of Institutional Economics, 7(4): 499–504.CrossRefGoogle Scholar
Bordalo, P., Coffman, K., Gennaioli, N. and Shleifer, A. (2016), ‘Stereotypes’, Quarterly Journal of Economics, 131(4): 1753–1794.10.1093/qje/qjw029CrossRefGoogle Scholar
Bowles, S. and Gintis, H. (1976), Schooling in Capitalist America, New York, NY: Basic.Google Scholar
Boyd, R. and Richerson, P. J. (1985), Culture and the Evolutionary Process, Chicago, IL: University of Chicago Press.Google Scholar
Carpenter, C. S., McClellan, C. B. and Rees, D. I. (2017), ‘Economic Conditions, Illicit Drug use, and Substance use Disorders in the United States’, Journal of Health Economics, 52: 63–73.CrossRefGoogle ScholarPubMed
Carvalho, J. P. (2016), ‘Identity-Based Organizations’, American Economic Review Papers and Proceedings, 106(5): 410–414.CrossRefGoogle Scholar
Carvalho, J. P. and Koyama, M. (2010), ‘Instincts and Institutions: The Rise of the Market’, in The Social Science of Hayek's ‘The Sensory Order’. Bingley, UK: Emerald Group, pp. 285–309.CrossRefGoogle Scholar
Carvalho, J. P. and Pradelski, B. (2020), ‘Identity and Underrepresentation: Interactions between Race and Gender’, Working paper, UC Irvine.Google Scholar
Case, A. and Deaton, A. (2020), Deaths of Despair and the Future of Capitalism, Princeton, NJ: Princeton University Press.Google Scholar
Cavalli-Sforza, L. L. and Feldman, M. W. (1981), Cultural Transmission and Evolution: A Quantitative Approach, Princeton, NJ: Princeton University Press.Google ScholarPubMed
Chetty, R., Hendren, N., Kline, P. and Saez, E. (2014), ‘Where is the Land of Opportunity? The Geography of Intergenerational Mobility in the United States’, Quarterly Journal of Economics, 129(4): 1553–1623.CrossRefGoogle Scholar
Clark, G. (2008), A Farewell to Alms: A Brief Economic History of the World, Princeton, NJ: Princeton University Press.Google Scholar
Coase, R.H. (1960), ‘The Problem of Social Cost’, in Gopalakrishnan, C. (ed.), Classic Papers in Natural Resource Economics, New York, NY: Springer, pp. 87–137.CrossRefGoogle Scholar
Dash, G. F., Slutske, W. S., Martin, N. G., Statham, D. J., Agrawal, A. and Lynskey, M. T. (2019), ‘Big Five Personality Traits and Alcohol, Nicotine, cannabis, and Gambling Disorder Comorbidity’, Psychology of Addictive Behaviors, 33(4): 420.CrossRefGoogle ScholarPubMed
Demsetz, H. (1967), ‘Toward a Theory of Property Rights’, American Economic Review, 1(2): 347–359.Google Scholar
Desierto, D. and Koyama, M. (2020), ‘The Political Economy of Status Competition: Sumptuary Laws in Preindustrial Europe’, CEPR Discussion Papers.CrossRefGoogle Scholar
De Walque, D. (2007), ‘Does Education Affect Smoking Behaviors?: Evidence Using the Vietnam Draft as an Instrument for College Education’, Journal of Health Economics, 26(5): 877–895.CrossRefGoogle ScholarPubMed
Domina, T. (2006), ‘Brain Drain and Brain Gain: Rising Educational Segregation in the United States, 1940–2000’, City & Community, 5(4): 387–407.CrossRefGoogle Scholar
Durkheim, E. (2002), Suicide: A Study in Sociology, Abingdon, UK: Routledge Classics.CrossRefGoogle Scholar
Fogel, R. W. (2004a) The Escape From Hunger and Premature Death, 1700–2100: Europe, America, and the Third World (Vol. 38), Cambridge, UK: Cambridge University Press.CrossRefGoogle Scholar
Fogel, R. W. (2004b), ‘Technophysio Evolution and the Measurement of Economic Growth’, Journal of Evolutionary Economics, 14(2): 217.CrossRefGoogle Scholar
Francesconi, M., Ghiglino, C. and Perry, M. (2016), ‘An Evolutionary Theory of Monogamy’, Journal of Economic Theory, 166: 605–628.CrossRefGoogle Scholar
Frank, R. H. (2012), The Darwin Economy: Liberty, Competition, and the Common Good, Princeton, NJ: Princeton University Press.Google Scholar
Fryer, R. G. (2007), ‘A Model of Social Interactions and Endogenous Poverty Traps’, Rationality and Society, 19(3): 335–366.CrossRefGoogle Scholar
Giuliano, P. and Nunn, N. (forthcoming), ‘Understanding Cultural Persistence and Change’, Review of Economic Studies.Google Scholar
Glaeser, E. L., Ponzetto, G. A. and Shleifer, A. (2007), ‘Why Does Democracy Need Education?’, Journal of Economic Growth, 12(2): 77–99.CrossRefGoogle Scholar
Goldin, C. and Katz, L. F. (2008), The Race Between Education and Technology, Boston, MA: Belknap Press.Google Scholar
Goodhart, D. (2020) Head, Hand, Heart: Why Intelligence is Over-Rewarded, Manual Workers Matter, and Caregivers Deserve More Respect, New York, NY: Free Press.Google Scholar
Greif, A. and Laitin, D. D. (2004), ‘A Theory of Endogenous Institutional Change’, American Political Science Review, 98(4): 633–652.CrossRefGoogle Scholar
Greif, A. and Mokyr, J. (2017), ‘Cognitive Rules, Institutions, and Economic Growth: Douglass North and Beyond’, Journal of Institutional Economics, 13(1): 25–52.10.1017/S1744137416000370CrossRefGoogle Scholar
Güell, M., Pellizzari, M., Pica, G. and Rodríguez Mora, J. V. (2018), ‘Correlating Social Mobility and Economic Outcomes’, The Economic Journal, 128(612): F353–F403.CrossRefGoogle Scholar
Gul, F. and Pesendorfer, W. (2001), ‘Temptation and Self-Control’, Econometrica, 69(6): 1403–1435.CrossRefGoogle Scholar
Gul, F. and Pesendorfer, W. (2004), ‘Self-control and the Theory of Consumption’, Econometrica, 72(1): 119–158.CrossRefGoogle Scholar
Guriev, S. and Treisman, D. (2019), ‘Informational Autocrats’, Journal of Economic Perspectives, 33(4): 100–127.CrossRefGoogle Scholar
Hagger-Johnson, G., Bewick, B. M., Conner, M., O'Connor, D. B. and Shickle, D. (2011), ‘Alcohol, Conscientiousness and Event-Level Condom Use’, British Journal of Health Psychology, 16(4): 828–845.10.1111/j.2044-8287.2011.02019.xCrossRefGoogle ScholarPubMed
Hammond, R. A. and Ornstein, J. T. (2014), ‘A Model of Social Influence on Body Mass Index’, Annals of the New York Academy of Sciences, 1331(1): 34–42.CrossRefGoogle Scholar
Harper, D. A. (2018), ‘Innovation and Institutions from the Bottom up: An Introduction’, Journal of Institutional Economics, 14(6): 975–1001.CrossRefGoogle Scholar
Hayek, F. A. (1945), ‘The use of Knowledge in Society’, American Economic Review, 35(4): 519–530.Google Scholar
Hayek, F. A. (1960), The Constitution of Liberty, Chicago, IL: University of Chicago Press.Google Scholar
Hayek, F. A. (1988), The Fatal Conceit, Chicago, IL: University of Chicago Press.CrossRefGoogle Scholar
Henrich, J. (2017), The Secret of our Success: How Culture is Driving Human Evolution, Domesticating our Species, and Making us Smarter, Princeton, NJ: Princeton University Press.Google Scholar
Hoffman, P. T. (2017), Why did Europe Conquer the World?, Princeton, NJ: Princeton University Press.Google Scholar
Hoffman, E., McCabe, K., Shachat, K. and Smith, V. (1994), ‘Preferences, Property Rights, and Anonymity in Bargaining Games’, Games and Economic Behavior, 7(3): 346–380.CrossRefGoogle Scholar
Hopkins, E. (2019) ‘College as a Signal of Self-Control: Self-Control Preferences in a High Temptation environment’, Working paper, University of Edinburgh.Google Scholar
Iannaccone, L. R. (1992), ‘Sacrifice and Stigma: Reducing Free-Riding in Cults, Communes, and Other Collectives’, Journal of Political Economy, 100(2): 271–291.CrossRefGoogle Scholar
Ibrahim, S. E. (1980), ‘Anatomy of Egypt's Militant Islamic Groups: Methodological Note and Preliminary Findings’, International Journal of Middle East Studies, 12(4): 423–453.CrossRefGoogle Scholar
Jiang, Y. H. (2018), ‘Confucian Political Theory in Contemporary China’, Annual Review of Political Science, 21: 155–173.CrossRefGoogle Scholar
Johnson, N. D. and Koyama, M. (2019), Persecution & Toleration: The Long Road to Religious Freedom, Cambridge, UK: Cambridge University Press.CrossRefGoogle Scholar
Jones, E. (2003), The European Miracle, Cambridge, UK: Cambridge University Press.CrossRefGoogle Scholar
Kirzner, I. M. (2015), Competition and Entrepreneurship, Chicago, IL: University of Chicago press.Google Scholar
Knight, F. H. (1921), Risk, Uncertainty and Profit, Boston, MA: Houghton Mifflin.Google Scholar
Koyama, M. (2010), ‘Evading the “Taint of Usury”: The Usury Prohibition as Barrier to Entry’, Explorations in Economic History, 47(4): 420–442.CrossRefGoogle Scholar
Kreindler, G. E. and Young, H. P. (2014), ‘Rapid Innovation Diffusion in Social Networks’, Proceedings of the National Academy of Sciences, 111(Supplement 3): 10881–10888.CrossRefGoogle ScholarPubMed
Kuran, T. (2010), The Long Divergence: How Islamic Law Held Back the Middle East, Princeton, NJ: Princeton University Press.Google Scholar
Laibson, D. (1997), ‘Golden Eggs and Hyperbolic Discounting’, Quarterly Journal of Economics, 112(2): 443–478.CrossRefGoogle Scholar
Lima de Miranda, K. and Snower, D. J. (2020), ‘Recoupling Economic and Social Prosperity’, Global Perspectives, 1(1): 118–167.CrossRefGoogle Scholar
Mankiw, N. G., Romer, D. and Weil, D. N. (1992), ‘A Contribution to the Empirics of Economic Growth’, Quarterly Journal of Economics, 107(2): 407–437.CrossRefGoogle Scholar
Markovits, D. (2020), The Meritocracy Trap: How America's Foundational Myth Feeds Inequality, Dismantles the Middle Class, and Devours the Elite, New York, NY: Penguin Books.Google Scholar
Marx, K. and Engels, F. (1992), The Communist Manifesto, Oxford, UK: Oxford University Press, Originally published in 1848.Google Scholar
Marx, K. and Engels, F. (2009), The Economic and Philosophic Manuscripts of 1844 and the Communist Manifesto, New York, NY: Prometheus Books.Google Scholar
McBride, M. (2007), ‘Club Mormon: Free-Riders, Monitoring, and Exclusion in the LDS Church’, Rationality and Society, 19(4): 395–424.CrossRefGoogle Scholar
McCloskey, D. N. (2010), Bourgeois Dignity: Why Economics Can't Explain the Modern World, Chicago, IL: University of Chicago Press.CrossRefGoogle Scholar
McElreath, R. and Boyd, R. (2008), Mathematical Models of Social Evolution: A Guide for the Perplexed, University of Chicago Press.Google Scholar
Menger, C. (1892), ‘On the Origin of Money’, The Economic Journal, 2(6): 239–255.CrossRefGoogle Scholar
Miron, J. A. and Zwiebel, J. (1991), ‘Alcohol Consumption During Prohibition’, American Economic Review, 81(2): 242–247.Google Scholar
Mises, L.v. (1996/1949), Human Action. Auburn, Alabama: Ludwig von Mises Institute.Google Scholar
Mokyr, J. (2002), The Gift of Athena: Historical Origins of the Knowledge Economy, Princeton, NJ: Princeton University Press.Google Scholar
Moykr, J. (1990), The Lever of Riches, Oxford, UK: Oxford University Press.Google Scholar
Mullainathan, S., Schwartzstein, J. and Shleifer, A. (2008), ‘Coarse Thinking and Persuasion’, Quarterly Journal of Economics, 123(2): 577–619.CrossRefGoogle Scholar
Nelson, R. R. and Winter, S. G. (1982), An Evolutionary Theory of Economic Change, Cambridge, MA: Harvard University Press.Google Scholar
North, D. C. (1981), Structure and Change in Economic History, New York, NY: Norton.Google Scholar
North, D. C. (1990), Institutions, Institutional Change, and Economic Performance, Cambridge, UK: Cambridge University Press.CrossRefGoogle Scholar
Phelps, E. S. and Pollak, R. A. (1968), ‘On Second-Best National Saving and Game-Equilibrium Growth’, Review of Economic Studies, 35(2): 185–199.CrossRefGoogle Scholar
Polanyi, K. (2001), The Great Transformation, Boston, MA: Beacon Press, Originally published in 1944.Google Scholar
Pollak, R. A. (1968), ‘Consistent Planning’, Review of Economic Studies, 35(2): 201–208.CrossRefGoogle Scholar
Putnam, R. D. (2000), Bowling Alone: The Collapse and Revival of American Community, New York, NY: Simon and Schuster.Google Scholar
Rajan, R. (2019), The Third Pillar: How Markets and the State Leave the Community Behind, New York, NY: Penguin.Google Scholar
Rogers, A. R. (1988), ‘Does Biology Constrain Culture?’, American Anthropologist, 90(4): 819–831.CrossRefGoogle Scholar
Sandel, M. J. (2020), The Tyranny of Merit: What's Become of the Common Good?, New York, NY: Farrar, Straus and Giroux.Google Scholar
Sandholm, W. H. (2010), Population Games and Evolutionary Dynamics, Cambridge, MA: MIT Press.Google Scholar
Sarsons, H., Gërxhani, K., Reuben, E. and Schram, A. (2021), ‘Gender Differences in Recognition for Group Work’, Journal of Political Economy, 129(1): 101–147.CrossRefGoogle Scholar
Schmidtz, D. (2006), The Elements of Justice, Cambridge, UK: Cambridge University Press.CrossRefGoogle Scholar
Searle, J. R. (2005), ‘What is an Institution?’, Journal of Institutional Economics, 1(1): 1–22.CrossRefGoogle Scholar
Simon, H. A. (1997), Models of Bounded Rationality: Empirically Grounded Economic Reason, Cambridge, MA: MIT press.CrossRefGoogle Scholar
Skaperdas, S. (1996), ‘Contest Success Functions’, Economic Theory, 7(2): 283–290.CrossRefGoogle Scholar
Skaperdas, S. (2003), Turning ‘Citizens’ into ‘Consumers’: Economic Growth and the Level of Public Discourse, Cambridge, UK: Cambridge University Press, pp. 30–43.Google Scholar
Stark, R. (2002), America's Blessings: How Religion Benefits Everyone, Including Atheists, West Conshohocken, PA: Templeton Foundation Press.Google Scholar
Tabellini, G. (2016), ‘Ideas or Institutions? – A Comment’, Journal of Institutional Economics, 12(1): 43–48.CrossRefGoogle Scholar
Tilly, C. (1992), Coercion, Capital, and European States, AD 990–1992, Oxford, UK: Blackwell.Google Scholar
Weber, E. (1976), Peasants Into Frenchmen: The Modernization of Rural France, 1870–1914, Stanford, CA: Stanford University Press.CrossRefGoogle Scholar
Weil, D. N. (2014), ‘Health and Economic Growth’, in Handbook of Economic Growth (Vol. 2 vols, Oxford, UK: Elsevier, pp. 623–682.Google Scholar
Wilson, W. J. (2011) When Work Disappears: The World of the New Urban Poor, New York, NY: Vintage.Google Scholar
Witt, U. (2008), ‘Observational Learning, Group Selection, and Societal Evolution’, Journal of Institutional Economics, 4(1): 1–24.CrossRefGoogle Scholar
Young, H. P. (1998), Individual Strategy and Social Structure, Princeton, NJ: Princeton University Press.CrossRefGoogle Scholar
Young, H. P. (2011), ‘The Dynamics of Social Innovation’, Proceedings of the National Academy of Sciences, 108(Supplement 4): 21285–21291.CrossRefGoogle ScholarPubMed
Young, M. (2017), The Rise of the Meritocracy, London, UK: Routledge.CrossRefGoogle Scholar