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The political economy of meritocracy: a post-Kaleckian, post-Olsonian approach to unemployment and income inequality in modern varieties of capitalism

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  • Heise, Arne

Abstract

The 'big trade-off', described by Arthur Okun some thirty years ago, is back again. Equality or efficiency, or to put it differently again: modern highly developed economies and societies have to choose between the Scylla of income inequality or the Charybdis of unemployment. Furthermore, it looks like the continental European economies - foremost Germany and France - sided with more egalitarian ends accepting higher unemployment whilst the liberal economies such as the United States and the United Kingdom choose higher inequality for lower unemployment. In this paper it is argued, that the trade-off is not a supply-side necessity to maintain work effort in a situation of incomplete contracts, but is a politico-economic issue of particular interest groups to seek rents. However, unlike in Mancur Olson's seminal approach, it is not the trade unions which are forming distributional coalitions on the labour market but rather the meritoracy which is happy to use Keynesian-type demand management in order to advance their material interests by pursuing a 'Meritocratically Optimal Rate of Unemployment' (MORU).

Suggested Citation

  • Heise, Arne, 2005. "The political economy of meritocracy: a post-Kaleckian, post-Olsonian approach to unemployment and income inequality in modern varieties of capitalism," Working Papers on Economic Governance 16, University of Hamburg, Department of Socioeconomics.
  • Handle: RePEc:zbw:uhhafs:16
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    Cited by:

    1. Höpner, Martin & Petring, Alexander & Seikel, Daniel & Werner, Benjamin, 2014. "Liberalization policy: An empirical analysis of economic and social interventions in Western democracies," WSI Working Papers 192, The Institute of Economic and Social Research (WSI), Hans-Böckler-Foundation.

    More about this item

    Keywords

    Unemployment; Income inequality; Political Economy;

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
    • P51 - Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems

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