IDEAS home Printed from https://ideas.repec.org/a/eee/streco/v51y2019icp284-290.html
   My bibliography  Save this article

Can market inequalities be justified? The intrinsic shortcomings of meritocracy

Author

Listed:
  • Granaglia, Elena

Abstract

Justifications of market inequalities can appeal to several values. The main ones include efficiency, freedom, and meritocracy. This article focuses on meritocracy and highlights three limits of the meritocratic justification of market inequalities. First, markets cannot be meritocratic: if we abandon the simple economies of independent producers and homogeneous goods, market competition is inevitably lacking, giving rise to non-meritocratic rents. Second, market evaluations of merit present some ethical shortcomings, even if competition could unleash. Third, rewarding merit, no matter where this principle is applied, underrates the element of luck that is present in the individual merit as well as some undesirable consequences of meritocratic rewards. Acknowledging these limits does not deny that merit may have some role in justifying market inequalities. It means, however, to abandon the meritocratic justification.

Suggested Citation

  • Granaglia, Elena, 2019. "Can market inequalities be justified? The intrinsic shortcomings of meritocracy," Structural Change and Economic Dynamics, Elsevier, vol. 51(C), pages 284-290.
    • Handle: RePEc:eee:streco:v:51:y:2019:i:c:p:284-290
    DOI: 10.1016/j.strueco.2019.08.010
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0954349X19301523
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.strueco.2019.08.010?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Bartling, Björn & Cappelen, Alexander W & Ekström, Mathias & Sørensen, Erik Ø. & Tungodden, Bertil, 2018. "Fairness in Winner-Take-All Markets," Working Paper Series 1214, Research Institute of Industrial Economics.
    2. Xavier Gabaix & Augustin Landier, 2008. "Why has CEO Pay Increased So Much?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 123(1), pages 49-100.
    3. Roy van der Weide & Branko Milanovic, 2018. "Inequality is Bad for Growth of the Poor (but Not for That of the Rich)," The World Bank Economic Review, World Bank, vol. 32(3), pages 507-530.
    4. Mankiw, N. Gregory, 2010. "Spreading the Wealth Around: Reflections Inspired by Joe the Plumber," Scholarly Articles 34310083, Harvard University Department of Economics.
    5. Maurizio Franzini & Elena Granaglia & Michele Raitano, 2016. "Extreme Inequalities in Contemporary Capitalism," Springer Books, Springer, number 978-3-319-28811-6, September.
    6. Hannes Schwandt & Till von Wachter, 2019. "Unlucky Cohorts: Estimating the Long-Term Effects of Entering the Labor Market in a Recession in Large Cross-Sectional Data Sets," Journal of Labor Economics, University of Chicago Press, vol. 37(S1), pages 161-198.
    7. Todd L. Cherry & Peter Frykblom & Jason F. Shogren, 2002. "Hardnose the Dictator," American Economic Review, American Economic Association, vol. 92(4), pages 1218-1221, September.
    8. Frank H. Knight, 1923. "The Ethics of Competition," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 37(4), pages 579-624.
    9. David Autor & David Dorn & Lawrence F Katz & Christina Patterson & John Van Reenen, 2020. "The Fall of the Labor Share and the Rise of Superstar Firms [“Automation and New Tasks: How Technology Displaces and Reinstates Labor”]," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(2), pages 645-709.
    10. Eggertsson, Gauti B. & Robbins, Jacob A. & Wold, Ella Getz, 2021. "Kaldor and Piketty’s facts: The rise of monopoly power in the United States," Journal of Monetary Economics, Elsevier, vol. 124(S), pages 19-38.
    11. N. Gregory Mankiw, 2013. "Defending the One Percent," Journal of Economic Perspectives, American Economic Association, vol. 27(3), pages 21-34, Summer.
    12. Knight, Frank H., 1923. "The Ethics of Competition," History of Economic Thought Articles, McMaster University Archive for the History of Economic Thought, vol. 37, pages 579-624, August.
    13. Smith, Adam, 1776. "An Inquiry into the Nature and Causes of the Wealth of Nations," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number smith1776.
    14. N Gregory Mankiw, 2010. "Spreading the Wealth Around: Reflections Inspired by Joe the Plumber," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 36(3), pages 285-298.
    15. Atkinson, Anthony B., 2015. "Inequality: what can be done?," LSE Research Online Documents on Economics 101810, London School of Economics and Political Science, LSE Library.
    16. Rosen, Sherwin, 1981. "The Economics of Superstars," American Economic Review, American Economic Association, vol. 71(5), pages 845-858, December.
    17. Robert H. Frank, 2016. "Success and Luck: Good Fortune and the Myth of Meritocracy," Economics Books, Princeton University Press, edition 1, number 10663.
    18. Gregor Jarosch & Ezra Oberfield & Esteban Rossi‐Hansberg, 2021. "Learning From Coworkers," Econometrica, Econometric Society, vol. 89(2), pages 647-676, March.
    19. Alex Bell & Raj Chetty & Xavier Jaravel & Neviana Petkova & John Van Reenen, 2019. "Who Becomes an Inventor in America? The Importance of Exposure to Innovation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(2), pages 647-713.
    20. Moller, Dan, 2017. "Property And The Creation Of Value," Economics and Philosophy, Cambridge University Press, vol. 33(1), pages 1-23, March.
    21. Samuel Bowles & Herbert Gintis, 1993. "The Revenge of Homo Economicus: Contested Exchange and the Revival of Political Economy," Journal of Economic Perspectives, American Economic Association, vol. 7(1), pages 83-102, Winter.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bjorn Bartling & Alexander Cappelen & Mathias Ekström & Erik Ø. Sørensen & Bertil Tungodden, 2018. "Fairness in Winner-Take-All Markets," Working Papers 2018-031, Human Capital and Economic Opportunity Working Group.
    2. Andrew Lister, 2017. "Markets, desert, and reciprocity," Politics, Philosophy & Economics, , vol. 16(1), pages 47-69, February.
    3. Lockwood, Benjamin B. & Weinzierl, Matthew, 2016. "Positive and normative judgments implicit in U.S. tax policy, and the costs of unequal growth and recessions," Journal of Monetary Economics, Elsevier, vol. 77(C), pages 30-47.
    4. Clément Carbonnier, 2023. "Welfare Economics and Neoliberalism: Interpreting the ideal type of perfect competition general equilibrium," SciencePo Working papers Main hal-04062786, HAL.
    5. Hager, Sandy Brian, 2020. "Varieties of Top Incomes," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 18(4), pages 1175-1198.
    6. Kyle Glenn, 2021. "Social Labor vs Human Capital: Competing Theories of Skills," Working Papers 2115, New School for Social Research, Department of Economics.
    7. Maryann Feldman & Frederick Guy & Simona Iammarino, 2021. "Regional income disparities, monopoly and finance," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 14(1), pages 25-49.
    8. Corina Boar & Virgiliu Midrigan, 2019. "Markups and Inequality," 2019 Meeting Papers 1184, Society for Economic Dynamics.
    9. Dinara Alpysbayeva & Jozef Konings & Venkat Subramanian & Aigerim Yergabulova, 2022. "Wage dispersion and firm performance: evidence from Kazakhstan," Working Papers 2022/01, Nazarbayev University, Graduate School of Business.
    10. Florian Scheuer & Joel Slemrod, 2020. "Taxation and the Superrich," Annual Review of Economics, Annual Reviews, vol. 12(1), pages 189-211, August.
    11. Åsbjørn Melkevik, 2019. "A Theory of Business Eunomics: The Means–Ends Relation in Business Ethics," Journal of Business Ethics, Springer, vol. 160(1), pages 293-305, November.
    12. Gianluca Grimalda & Alain Trannoy & Fernando Filgueira & Karl Ove Moene, 2020. "Egalitarian redistribution in the era of hyper-globalization," Review of Social Economy, Taylor & Francis Journals, vol. 78(2), pages 151-184, April.
    13. Peter J. Stauvermann & Ronald R. Kumar, 2022. "Does more market competition lead to higher income and utility in the long run?," Bulletin of Economic Research, Wiley Blackwell, vol. 74(3), pages 761-782, July.
    14. Robert Lepenies, 2014. "Economists as political philosophers : a critique of normative trade theory," RSCAS Working Papers 2014/11, European University Institute.
    15. Wagner, Konstantin, 2020. "Competition, cost structure, and labour leverage: Evidence from the U.S. airline industry," IWH Discussion Papers 21/2020, Halle Institute for Economic Research (IWH).
    16. Dachs, Bernhard, 2017. "The impact of new technologies on the labour market and the social economy," MPRA Paper 90519, University Library of Munich, Germany.
    17. Benjamin B. Lockwood & Charles G. Nathanson & E. Glen Weyl, 2017. "Taxation and the Allocation of Talent," Journal of Political Economy, University of Chicago Press, vol. 125(5), pages 1635-1682.
    18. Peng, Baochun, 2021. "Positional competition: A theory of the Great Gatsby curve and the Easterlin paradox," Journal of Economic Behavior & Organization, Elsevier, vol. 186(C), pages 562-575.
    19. Yuichiro Matsumoto, 2018. "Endogenous Sunk Cost, Scale Economies, and Market Concentration," Discussion Papers in Economics and Business 18-20, Osaka University, Graduate School of Economics.
    20. Sudip Datta & Mai Iskandar-Datta, 2014. "Upper-echelon executive human capital and compensation: Generalist vs specialist skills," Strategic Management Journal, Wiley Blackwell, vol. 35(12), pages 1853-1866, December.

    More about this item

    Keywords

    D30; D60; D63; Market inequalities; Meritocracy; Distributive justice;
    All these keywords.

    JEL classification:

    • D30 - Microeconomics - - Distribution - - - General
    • D60 - Microeconomics - - Welfare Economics - - - General
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:streco:v:51:y:2019:i:c:p:284-290. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/525148 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.