Labor vs. Capital: Continuing the Meritocracy Trap Debate

This post, an exchange between Andrew Hart, Marshall Steinbaum, and Daniel Markovits, continues their debate from our March 2020 series discussing The Meritocracy Trap by Daniel Markovits. Click here to read all posts in the series. 

Andrew Hart & Marshall Steinbaum: It seems to us that the issue is not whether one places income in buckets labeled “capital” or “labor,” but rather what those particular buckets signify when it comes to extremely wealthy people. We might all agree to call the $50 million that a healthcare CEO gets for working 80-hour weeks “labor” income, but the fact that the firm or the “economy” has seen fit to allocate $50 million as a proper compensation for a healthcare CEO does not, as far as we can tell, have much to do with the productive value of 4,200 hours of healthcare CEO work over the course of a year. To justify this income by reference to skill is a just-so story—part of the inequality regime of “hyper-capitalism,” as delineated in Thomas Piketty’s recent book Capital and Ideology.

But Markovits seems to accept at least some of the human capital justification for high salaries when he speaks of superordinate workers and their immense skills and training. Put another way, we think Markovits believes the operative question is whether a person needs to work 80-hour weeks to get the $50 million as a healthcare CEO, and if the answer is yes, then the money is labor income. By contrast, we believe that the question should be why a healthcare CEO is “worth” $50 million in the first place, and that the answer to that question may at least cast some doubt on the usefulness of the category “labor income” when a person’s yearly income is high enough.

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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.

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Are the Rich Rentiers or Superordinate Workers?

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

Daniel Markovits –

I am grateful to the LPE Blog for hosting this exchange about The Meritocracy Trap. Today’s post will take up Hart’s and Steinbaum’s post and focus on facts, and tomorrow’s will turn to Gordon’s post and take up values.

Hart and Steinbaum claim that The Meritocracy Trap fails to recognize deep “differences between rich professionals and the ultra-wealthy capitalist class.” They also propose that the book exaggerates meritocratic inequality’s economic rationality, that “[i]t is not the meritocrats’ skills that bring in their high salaries.” In short, Hart and Steinbaum propose that the rich are not superordinate workers paid on account of their enormous productivity but rather are rentiers who exploit their capital to extract rents.

Hart and Steinbaum suggest that The Meritocracy Trap overemphasizes the rising labor incomes of the merely very rich and underemphasizes the exploding capital incomes of the super-rich. But in fact, although the past half-century has seen a shift of income against labor and in favor of capital, this shift is much too small to account for rising top income shares. Instead, rising economic inequality is principally caused by a shift of income within labor’s share, away from middle-class and towards superordinate workers.

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Guiding Innovation’s Hand: Industrial Policy Against Inequality

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

Jeff Gordon – 

Most of the critical attention directed at Daniel Markovits’s The Meritocracy Trap has focused on its claim that well-off parents launder inequality through schooling. While Markovits brings masterfully comprehensive reams of data to bear on the concept of the “meritocratic inheritance,” the most original and provocative part of the book comes later, when Markovits offers his explanation of why educational sorting has come to matter so much: elite schooling leads to top jobs, and “[t]he top jobs pay so well because a raft of new technologies has fundamentally transformed work to make exceptional skills enormously more productive than they were at mid-century and ordinary skills relatively less productive.” This is provocative because it contradicts the pervasive myth that technological change is natural, self-directing, or inevitable. Few reviewers have remarked on this part of the book or reflected on what it suggests: that industrial policy will be vital to building a more equal economy.

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Liberate the Meritocrats—From Their Bosses

This week, we share two posts discussing The Meritocracy Trap by Professor Daniel Markovits. In his 2019 book, Professor Markovits argues that meritocracy is a straightforward mechanism of class reproduction and wealth concentration—and that it is making life worse for everyone, elites included. The Meritocracy Trap has generated productive conversations about the causes and implications of wealth inequality, and what this means about potential movements to upend the present hierarchy. Because the book centers the gap between elite and nonelite labor as today’s most salient class division, critics have been quick to push back. In particular, some have challenged the book’s downplaying of the role of capital in its class analysis, as well as its optimism about elite cooperation in any project aiming for economic justice. While these are crucial parts of the debate around the book, we want to avoid rehearsing those arguments here.

By examining the social and political valences of a seemingly neutral quantitative system, The Meritocracy Trap touches on several questions at the core of law and political economy. Today on the blog, Marshall Steinbaum and Andrew Hart argue that Professor Markovits omits capitalists from the story in part by relying too heavily on the flawed theory of human capital. Tomorrow, Jeff Gordon turns our attention to the book’s argument that industrial policy contributed to the technological innovations that over-reward elite workers at the expense of the poor and working class, and that industrial policy will be essential to build a fairer economy.


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

Andrew Hart and Marshall Steinbaum

There’s a big difference between the first Gilded Age and the second. Historically, rich people earned income from their capital and everyone else earned income from their labor, under the direction and control of the capitalists. This time around, the rich don’t just own capital; they also work. Daniel Markovits’s book The Meritocracy Trap is about just how hard they work, and what it says about them.

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Service Workers or Servile Workers? Migrant Reproductive Labor and Contemporary Global Racial Capitalism

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(via CNN)

Click here to read all posts in our Care Work series. 

Robyn Rodriguez—

Grassroots migrant worker activists, particularly those working as domestic workers or care workers, have characterized their labor experiences as “servitude,” “modern-day slavery,” and “bondage.” They use these terms to describe both their workplace conditions and the power dynamics that exist in their relationships with employers. A case study of the experiences of Filipino migrant workers, former U.S. colonial subjects, illustrates two key dynamics of contemporary global racial capitalism: first, that migrants’ reproductive labor entrenches social relations of servility—dually defined as “having or showing an excessive willingness to serve or please others” or “of or characteristic of a slave or slaves”; and second, that recent migration trends are intensifying the servile status of migrant workers from the third world. If we expand existing analyses of care and reproductive labor by migrants to account for service work more broadly, we are better able to grasp the enduring significance of relations of racialized servility in the 21st century. Continue reading

Law and Political Economy in Europe: Transnationalizing the Discourse

The following set of posts comes out of the early career workshop ‘Law and Political Economy in Europe’, which took place at the Centre for Socio-Legal Studies, at the University of Oxford, on the 7th of October 2019. For all the posts this series, click here.

Ioannis Kampourakis –

Politicsineurope.jpgThe normative vision of Law and Political Economy (LPE) and its commitment to a more egalitarian and democratic society is shaped by its fundamental presuppositions. Contrary to a liberal understanding of markets as natural and neutral – that is, as prepolitical and apolitical – LPE builds on the realist project to expose the function performed by the law in the production and distribution of wealth. Approaching the market as a product of legal ordering means not only that juridical relations are constituent of social relations of production, but also that law structures the bargaining power of the groups competing over the distribution of the output of the production process. In this direction, law’s permissions, alongside its prohibitions, have distributive importance – law is never absent from the question of distribution; there is no moment of apolitical, neutral exchange between market participants. The emphasis on law’s constitutive role in the economy entails an implicit assumption that the law can also generate social transformation. If it is legal rules that establish a regime of socio-economic inequality and hierarchy, legal rules could also undo it.

From these starting points, LPE develops as a methodology, rather than as an exclusive set of research topics. Considering the ever-presence of the law in questions of distribution means that every area of legal research and analysis will eventually have underlying distributive and power-structuring effects. While this is more obvious in certain fields than others, all legal structures have an unavoidable political economy aspect, manifested through the binary of prohibition/permission and its social consequences.

Nevertheless, LPE has so far remained framed by the priorities and theoretical inquiries of U.S. legal scholarship. The workshop at the Centre for Socio-Legal Studies, at the University of Oxford aspired to contribute to the transnationalization of the discourse by assessing its relevance for Europe.

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