Are We Prisoners of Technological Fate?

This is the fourth post in our series discussing The Meritocracy Trap by Daniel Markovits. Click here to read all posts in the series. 

Daniel Markovits –

 The Meritocracy Trap’s account of the relationships among elite education, skill-biased technical change, and rising economic inequality is, in my mind, one of the book’s most important arguments, even as it is undoubtedly one of the least discussed. I’m therefore delighted and grateful that Gordon chose to focus his attention on these matters.

Gordon rightly emphasizes that The Meritocracy Trap combines two positions that are typically (but not by any necessary facts or logic) opposed—to embrace what Gordon calls a “materialist” theory of income inequality while rejecting what he calls a “determinist” theory of technological development. First, the book argues that, in Gordon’s words “technology has a predominant influence on social and economic structure.” Innovations have biased work in favor of a certain set of narrowly elite skills, and this bias accounts for the bulk of rising high-end economic inequality. And second, the book rejects what Gordon calls “the pervasive myth that technological change is natural, self-directing, or inevitable.” Rather, the innovations behind rising inequality are themselves produced by meritocracy, as the distribution of training influences the path of innovation and superordinate workers stimulate the demand for their own skills. This places policy that “guide[s] the course of technological change,” or as Gordon calls it, “industrial policy,” at the center of efforts to combat rising inequality.

As Gordon notes, The Meritocracy Trap devotes substantial attention to describing the technological developments that rationalize the massive increases in superordinate workers’ incomes. For example, innovations that cause firms to flatten managerial hierarchies, eliminating the army of middle managers that once dominated their administration, concentrate the management function in an increasingly small, hard-working, skilled, and productive cadre of super-elite executives. Once, even the worst CEOs could do little to harm their firms and even the best ones could do little to help them, but now CEOs wield powers that render their choices highly consequential. The management function, which was once dispersed across all of a firm’s workers, has been concentrated by technological innovation in a narrow elite. The economic returns to management have become similarly concentrated.

The Meritocracy Trap also explains why, even if superordinate workers’ immense incomes reflect the enormous productivity of their labor rather than rents, they nevertheless do not deserve their incomes. As the chapter on “The Myth of Merit” argues, productivity may be measured in two ways. On the conventional measure, a worker’s productivity equals the difference between output when she works and when she does not, where everyone else works in precisely the same way without her as they would with her. This is the measure that makes superordinate workers so productive. The book, by contrast, proposes an alternative measure, namely that the worker’s productivity equals the difference between output when she works and when she does not, but where everyone else reorganizes their work optimally in her absence. The book’s account of snowball inequality explains that the technologies of production that make superordinate workers so enormously productive and mid-skilled workers so much less productive would not exist but for economic inequality. If superordinate workers did not exist, everyone else would now deploy very different technologies at work, and these alternative technologies would increase the productivity of mid-skilled workers. In management, for example, the concentrated administrative technologies deployed today would be exchanged for the dispersed administrative technologies deployed by mid-century firms, or by improvements on those technologies, still operating in the same basic way.

Finally, the book develops a series of reasons for believing that total output is not higher in our world than it would be in this more-equal alternative. The superordinate workers whose productivity is so enormous on the conventional measure produce effectively nothing at all on the alternative measure that The Meritocracy Trap prefers. Elite productivity, the book argues, is an artifact of inequality. It therefore cannot justify inequality. Merit, as the book concludes, is a sham.

These arguments are no less critical of economic inequality than the more familiar view presented in Hart’s and Steinbaum’s post. They are, however, much less comforting. By focusing on income generated by capital and exploitation, the familiar view exonerates elite intellectuals of responsibility for rising inequality. It also apprehends, exquisitely, the resentment that merely very-rich “mind workers” feel towards super-rich capitalists. Hart’s and Steinbaum’s approach directs the left’s ire just above the incomes captured by the intellectuals who make up this view’s core constituency.

But if wishes were horses, then beggars would ride, and the left won’t win politics or policy by a combination of moralizing and wishful thinking. Humility counsels that mind workers should resolve doubts against the familiar view, and therefore also against themselves. Political prudence gives a similar counsel. Inequalities based on elite labor income are not nearly so politically vulnerable as inequalities based on capital, so that it will take new ideas to unseat economic inequality centered on the labor incomes of the working rich. The Meritocracy Trap pursues the arguments that resisting the new form of economic inequality requires, in the hope that a more accurate critique will sustain a more potent politics and more effective policies.

The book concludes by trying to vindicate this hope, proposing reforms that might cure the meritocratic inequality that it has diagnosed. One, which Gordon mentions, would change the payroll tax to replace that regime’s current disincentive for creating middle-class jobs with an incentive; the second would expand and redistribute education to bend the arc of innovation to favor mid-skilled workers. Gordon is right that book’s diagnosis invites many other cures besides these—and that a comprehensive egalitarian industrial policy could do a great deal to rebuild the middle class.

Gordon is also right to think that the technologies that increasingly enable surveillance, data harvesting, and algorithmic data processing are both substantial drivers of rising inequality today and, at the same time, offer potential for powerful egalitarian reforms. As Gordon says, the current versions of these focus on “stratifying and sorting” people. These functions substitute for the mid-skilled workers whose individualized judgments big data and algorithmic processing now displace and, at the same time, complement the super-skilled workers who design the technologies and above all manipulate and manage the stratified work-forces and customer-bases that the technologies create.

But data-processing might, in principle, function very differently, to favor mid-skilled, middle-class workers. Sorting technologies might be deployed to provide customized work-place training—identifying native talent and effective teaching methods—to enable middle-class workers to build their human capital, increase their productivity, and command higher wages. (Micro-credentialing, properly developed, might be a good step in this direction.) And algorithmic management might be deployed not to stratify and control but rather to facilitate coordination among horizontally situated workers. (Both peer production and networked contracting are first steps towards promoting coordination without hierarchy.)

Of course, Gordon’s modest suggestions, and my modest expansions on them, remain far from fully-leaved. In this, they follow The Meritocracy Trap itself, which lays the intellectual foundations for a politics and policies that can cure meritocratic inequality, but does not build the edifice it is designed to support.

That is not surprising. The book sets out from the premise that although economic inequality is not inevitable, the left has misunderstood the character and causes of the economic inequalities that it rightly resists. The Meritocracy Trap’s core intellectual commitment is that developing an effective cure requires correcting these errors, to reach an accurate diagnosis of the disease.

Daniel Markovits is Guido Calabresi Professor of Law at Yale Law School and author of The Meritocracy Trap