No, the Rich Don’t Deserve Their Wealth

Capitalism is built on the meritocratic idea that everyone gets what they deserve in the marketplace. This May Day, let’s reject that idea — wealth creation is a fundamentally social process, and the rich have no right to hoard all the resources and power.

Cartoon of Andrew Carnegie, 1900. (Udo J. Keppler / Library of Congress via Wikimedia Commons)

A foundational belief in capitalist societies is the notion that individuals deserve the income they receive in the market: your bank account reflects your talent and efforts and is therefore rightly yours, and yours alone.

A recent survey found that 66 percent of Republicans believe the rich are rich because they “worked harder” than other people, not because of other advantages in life. As the late conservative activist Herman Cain put it, “Don’t blame Wall Street. Don’t blame the big banks. If you don’t have a job and you’re not rich, blame yourself.”

Hence Bill Gates and Elon Musk truly deserve their mountains of wealth ($110 billion and $190 billion, respectively), whereas disabled people supposedly deserve their paltry earnings of only $25,000 on average per year. Such ideas of deservingness and merit are the mortar between the bricks of our society’s foundation.

But on International Workers’ Day, it’s worth asking: do the rich really deserve their piles of lucre?

The Ideological Origins of Meritocracy

The notion that inequality is justified because it reflects individual merit is an old one. Beginning in the decades after the French Revolution, as the old bastions of feudal privilege were decaying, a panicky elite worried that the masses might use their growing democratic powers to equalize wealth. Conservative thinkers started marshaling novel justifications for their riches. In 1872, Émile Boutmy, the founder of the prestigious Parisian university Sciences Po, expressed the mounting elite anxiety like this:

The classes that call themselves superior can preserve their political hegemony only by invoking the law of the most capable. Because the walls of their prerogatives and tradition are crumbling, the democratic tide must be held back by a second rampart made up of brilliant and useful merits, of superiority whose prestige command obedience, of capacities of which it would be folly for society to deprive itself.

The rising discipline of economics would provide much of the ideological ammunition for which the Right was desperately searching. In 1899, the economist John Bates Clark fretted that “workmen” were increasingly embracing the socialist idea that they “are regularly robbed of what they produce” and would thus “become revolutionists.”

John Bates Clark. (Gunton’s Magazine, Vol. 19, 1900 via Wikimedia Commons)

To counteract the dreadful possibility of human beings sharing the fruits of their labor, Clark developed what came to be known as marginal productivity theory. His core claim was that a competitive market will distribute income to each “factor of production” — each worker or each business owner — in accordance with the marginal contribution of each person. Capitalism could thus be portrayed not an exploitative system but a deeply moral one: it gives every person precisely the value they have created.

That meritocratic shibboleth still has deep purchase today. When Occupy Wall Street protests broke out against economic inequality a decade ago, Greg Mankiw, chairman of the Council of Economic Advisers under President George W. Bush, published an influential article entitled “Defending the One Percent.” He repeated Clark’s argument that market incomes, even for the very rich, are not a problem because they simply reflect the enormous value gifts the rich have made to our wellbeing.

The Root Problem of Meritocracy

Progressives typically reject the meritocratic argument, pointing out that the economic rat race is extremely unfair. Some people are blessed with private inheritance, elite schools, and well-connected family networks, while others are obstructed at every turn by economic insecurity, sexism, and racism. Since there is nothing like equal opportunity, the economy is an uneven playing field, and so the “winners” don’t really deserve their income any more than a heavyweight boxer “deserves” a prize for beating a featherweight, or a Lamborghini driver would “deserve” the yellow jersey for outracing cyclists in the Tour de France.
These progressive arguments are correct as far as they go. The problem is that they don’t go nearly far enough in diagnosing what is wrong with meritocracy.

The fundamental problem is that mainstream economics, as well as the dominant culture, typically conceives of earning an income as if we were Robinson Crusoes, producing our own private property out of nothing but the sweat of our brow, then trading newly created property with others in a free market.

This is deeply misleading. Economic production in a modern society is never a solo effort. No one produces anything by themselves. All production is, at root, a fundamentally social and collaborative process.

The often ignored — but truly vast — contribution of other people’s labor is what I call the “understructure.” Consider one mundane example: every day in every city in the Global North, thousands of semitrucks shuttle back and forth carrying our goods. Each one of these trucks can haul roughly seventy-eight thousand pounds and travel approximately two thousand miles before needing to refill its tank. Yet this stupendous feat is not just due to the individual truck driver alone; it is made possible by the countless miles of concrete highways, the years of labor that built them, and the generations of learning that developed concrete; so too with the trucks, with their fuel, and so on.

To get a sense of the potency of this single example, we can ask what it would take for human beings to accomplish this one simple task by simply carrying the goods on our backs. What one truck driver can accomplish in a single day today would take an individual without our modern understructure about 2,700 years.

All production relies on this understructure — the combination of infrastructures, physical assets, institutions, laws, norms, intellectual concepts, emotional supports, and natural resources that underlie and enable production.

What Powers the Economy

Start looking, and you’ll see it everywhere:

The physical infrastructure (such as roads, bridges, railways, water systems, sewers, electricity grids, and telecommunication networks) magnifies the productive capacity of any individual participating in the economy.

The political-legal infrastructure of the state provides the social stability and predictability that is necessary for any market to function well. There is no such thing as a literally “free market.” All market systems are embedded in a political-legal infrastructure; they are shaped and defined by rules, regulations, and institutions. These include a system of property rights that defines who owns what, what is allowed to be sold and what is not, the types of businesses that are permitted to operate (such as corporations or worker cooperatives), the various rights of business owners versus workers (do owners have full or limited liability? Do workers have rights to participate in board governance?), the taxes that must be paid by different parties, a police force to enforce such rights, and a judicial system to adjudicate them.

Workers on the southwestern pylon of the Sydney Harbor Bridge, Sydney, Australia, 1932. (Powerhouse Museum via Wikimedia Commons)

This means that the state and all the various workers who administer and maintain it are “silent partners” in the production of every new piece of private property. They are its cocreators.

Knowledge infrastructure. A major source of modern prosperity (if not the most important one) is the accumulated collective knowledge that we inherit from the past. The bulk of our modern wealth cannot be attributed to the effort or investment decisions of isolated individuals, but is rather the result of individuals building on the immense knowledge infrastructure passed down to us via vast networks of engineers, scientists, theorists, technicians, teachers, scholars, practitioners, and so on.

Care infrastructure. Perhaps the most commonly neglected of this bunch, care is, among other things, the production of human capacity. None of us could walk, talk, or think were it not for our caregivers. This is most obvious in early childhood, but it persists more subtly throughout our lives as we rely on friends, families, and lovers. Care is thus the invisible infrastructure of (mostly feminine) labor that we all climb on to reach our goals.

Even the very paragon of liberalism, Adam Smith, would not have been able to walk, talk, or sit upright (much less produce economic theory) were it not for Margaret Douglas, his mother (and the broader web of care). Though Smith despised “dependency,” he was deeply dependent on his mother, who cooked his meals every day and provided continual emotional sustenance, allowing him to work away on the book — The Wealth of Nations — that would celebrate economic independence.

The estimated cost of parenting (in other words, how much one would have to pay others to do it) is roughly 30 percent of GDP, a truly gigantic cost. Yet the true magnitude for private business is arguably even higher, since if there were literally no care, no business could function at all. If workers (and consumers) were not nurtured and socialized by their caregivers, they would either be dead or extremely debilitated. We see this in rare tragic cases like that of Genie — the mid-twentieth-century child locked away by her father from the age of twenty months to thirteen years. Her isolation left her severely disabled, incontinent, and unable to speak or make any noise beyond a croaking sound. Although she has now gone through over forty years of attempted rehabilitation, she continues to live as a ward of the state and, according to recent reports, is still speechless and severely impaired.

Natural environment. Ecological systems are a vital component of the understructure in that they provide the basic prerequisites for life itself. The environment is a vital support, a container, and a fixed boundary for every economic system. Natural resources — in particular, energy resources (oil, gas, coal, wood, sun, wind, etc.) — furnish the basic fuel for the economy.

Our cars, homes, workplaces — indeed, much of complex industrial life itself — are only possible because they are powered by a massive natural inheritance of fossil fuels. And if we are able to transform our economies to use renewable energy, they will still be fed and sustained by the immense power contained within various natural resources.

Wealth Creation Is a Social Process . . .

Defenders of meritocracy love holding up Bill Gates or Jeff Bezos or Elon Musk, justifying their wealth by pointing out that millions of people voluntarily, and eagerly, purchase their products.

But we can now see the truth of the matter. Bill Gates, for instance, was only able to create Microsoft products with the help of an immense understructure: a wide network of parents and teachers who socialized him; a safe community; generations of scientists and computer engineers who created the vast intellectual edifice for him to build on (plus the countless ancillary workers and caregivers supporting them); and a political-legal infrastructure providing him with all kinds of legal rights, such as “shareholder primacy” (allowing him to appropriate the bulk of the profits made by thousands of workers while depriving those workers of any say in firm governance), and perhaps even more important in this case, the privilege of copyright.

Without copyright protection Microsoft products would simply be shared for free, and profits would tank. Copyright is a state-provided monopoly, but there is nothing natural about it. If it were replaced by open-source access (an arguably more efficient system) and coupled with public funding and prizes to reward innovation, Gates’s income would plummet.

Bill Gates is not a giant. He is a regular human being, but one sitting in an operating cabin, controlling a giant and powerful tower crane, looming over all of us.

The essential point is this: one’s total productivity comes in small part from personal inputs (such as talent and effort) but in large part from the societal inputs that one can access. Not only are the societal inputs much more important in terms of one’s total productivity, but they are also a matter of luck, which dramatically advantages some over others, and so undermines any claim of deservingness. The understructure is really a vast social inheritance.

. . . And So It Belongs to Us All

Imagine living in simple hunter-gatherer societies with little accumulated capital, technology, and legal structures. All the “income” generated in such societies stems entirely from the talents and efforts of individuals working in that society. Such income, in other words, may be said to be completely deserved.

How large is this “income”? Angus Maddison has estimated subsistence at roughly $810 per person per year (in 2020 dollars); the World Bank defines “extreme poverty” or “absolute poverty” by the international poverty line of $2.15 per day (in 2017 USD PPP), or $783 per year. So let’s use $800 as a very rough ballpark approximation and compare it to the median income in the United States today — $38,000 — and the average income of the top 1 percent, which was roughly $824,000 (it would be much higher if we included accumulated wealth in addition to income). This means that 98 percent of the income of the contemporary median worker, and a whopping 99.9 percent of the income of the top centile, cannot be attributed to individual effort or talent but is in fact due to the social inheritance provided by the understructure. It is therefore entirely underserved.

The standard meritocratic view of deservingness is a lie and a deception. Modern production is a deeply interdependent process involving the background labor and background institutions of much of the community as well as millions of our ancestors long dead.

The wealth of the rich is not deserved. It is our social inheritance. And we have every right to take it back.