Markets and communities: the social cost of the meritocracy

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.

Introduction to the symposium on institutional analysis, market processes, and interdisciplinary social science

“…Their contribution exemplifies the complementarity between non-formalist methods and non-formalist subject matters, as non-quantifiable trust exists as a non-priced and non-market-based social resource. Kaminski (2021) and Carvalho (2021) both leverage game theory to conduct a comparative political economy. Carvalho, 'set[s] out a… model rooted in Austrian economics and cultural evolutionary theory, called the 'experimental society'.'…”