Mind the Economy/Justice 87

Friedrich von Hayek and the liberal critique of meritocracy

Hayek's critique of meritocracy as an ideal of justice

by Vittorio Pelligra

9' min read

9' min read

The idea of meritocracy, let us say right away with Nobel Prize winner Amartya Sen, 'has many merits but not that of clarity'. The term, first of all, denotes at least two different ideas: first, the 'government of the meritorious', i.e. a political and social order in which those who stand out for some quality, virtue or competence are placed in charge of making decisions that will influence the lives of everyone else. At the same time, and this is the second meaning of the term, meritocracy indicates an idea of justice: the deserving, whatever metric is used to determine their merit, are to be rewarded with fame, prestige, popularity or money, relatively more than those who have shown relatively less merit.

The meritocratic ideal is based on two premises: the first assumes that merit is something clear, transparent and easy to measure, and the second that the market with its competitive logic represents the most congenial environment for the best, the most deserving, to emerge and be rewarded.

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Both premises, as well as the idea of meritocracy that derives from them, are cornerstones of the conservative thought that from across the Atlantic has come to influence debate and political choices in Europe and in recent years also in Italy, perhaps more as a rhetorical exercise than as a convinced adhesion to a thought ideal. The interesting thing is that among the most convinced critics of the meritocratic ideal we find not only communitarist thinkers like Micheal Sandel or egalitarian liberals like John Rawls, but also figures like Friedrich von Hayek, the founding father of contemporary neo-liberalism, the one who has certainly been the most fierce defender of the free market in the last century. It is true that meritocratic rhetoric has infected different parts of the political spectrum, from the right to the left, but it certainly represents an essential feature of the narrative of conservatism. And this is perhaps why the Hayekian critique of merit as an ideal of justice is often perceived as anomalous. In reality it is in full continuity with liberal thought and is consistent with his defence of freedom and the market. Because for Hayek, the market order and meritocracy are not only not functional to each other, but the application of merit as a criterion for the allocation of wages would lead, as Pierluigi Barrotta rightly reminds us "to the destruction of the market order" (The Demerits of Merit. Una critica liberale alla meritocrazia, Rubettino, 1999, p. 29).

Let us return to the two assumptions on which meritocracy is based: measurability of merit and the role of the market. Regarding the first assumption Hayek is peremptory. He writes in The Free Society: 'No man or group of men has the capacity to decide, conclusively, the potentialities of other human beings and (...) we should certainly never entrust to anyone, invariably, the exercise of such a faculty'. For epistemological reasons, linked to the partiality and fallibility of our knowledge, assessing individual merit is logically impossible. As for the second point, then, this would mean that the wages that the market recognises for each individual are a function of the value of the good or service that he or she produces for the community, and that this value is linked to the talent and commitment that each individual puts into what he or she does. Those who are more committed and talented, it is then argued, are able to produce greater value than those who, for whatever reason, are less talented and less willing to commit themselves.

The mistakes of the 'meritocrats'

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On this point too, according to Hayek, the 'meritocrats' fall into a fundamental error. While, in fact, the merit given by the combination of talent and commitment is an attribute of the individual, the value of his contribution to society is a social fact. In fact, in a market logic, it depends on innumerable factors. In particular, on the interplay between supply and demand, i.e., as Barrotta writes 'the tastes and preferences of all other people, along with their talents and the way they choose to use them' (p. 31). What merit is there in being an influencer today in a society that idolises image, or what demerit can there be in knowing how to fix electronic devices now that nobody gets them repaired anymore? "Compensation for merit," Hayek writes, "is compensation for obeying the wills of others, not compensation for the benefits we have procured for others by doing what we thought best. What counts in determining the value recognised by the market is the ability of different individuals to satisfy with the product of their labour the needs of other individuals, whatever origin they have and whatever form they take. Merit and market value are distinct things and to try to combine them would simply lead to a collapse of its spontaneous order. Hayek again writes in The Free Society, 'Perhaps we would contribute more to human happiness if, instead of attempting the adjustment of rewards to merit, we made it clearer how uncertain the relationship between merit and value is. We are probably all too ready to attribute personal merit where in fact there is only a higher value' (p. 122).

What are the implications of this critique of the fundamental assumptions of meritocratic rhetoric? The first concerns the fact that stating that legally and morally all should be treated equally before the law cannot be confused with the assertion that 'all men are born equal'. But if we accept the truth that we are all born somehow different, we cannot fail to recognise that - as Don Lorenzo Milani also argued - treating unequals equally can only generate injustice. For this reason, Hayek continues, 'equality before the law and material equality are not only different, but even conflicting: and from time to time we can achieve one or the other separately, but never both together'. The reason is that redistribution on the basis of merit would interfere with the logic of the Hayekian 'catallaxy', i.e. the price mechanism that in a market economy produces an optimal outcome by coordinating individual production and consumption choices. Any interference with this process would not only jeopardise the emergence of spontaneous order but, above all, would illegitimately restrict individual freedom. This is why meritocracy is, according to the Austrian thinker, a form of illiberal authoritarianism.

Hayek again writes 'We have nothing against equality as such. It so happens, however, that the demand for equality is the confessed motive of almost all those who wish to impose a predetermined model of distribution on society. And we oppose all attempts to deliberately impose a given distributional model on society, whether or not it is an egalitarian order (...).) And indeed many of those who wish to extend equality do not then want equality, but a distribution more strictly in accordance with human convictions of individual merit, and their desires are as irreconcilable with liberty as the more explicitly egalitarian demands - and he continues - in a free system, it is not good to make material rewards correspond to what men recognise as merit; and it is an essential feature of a free society that the position of an individual should not necessarily depend upon the opinions of his fellows as to the merits he has acquired.

The fundamental question here concerns the logic of market functioning that presides over the processes of production and consumption in our advanced societies. Hayek states this explicitly when he writes that 'Our problem is whether it is good for individuals to enjoy advantages in proportion to the benefits that their peers derive from their activities [as is the case with the spontaneous market order] or whether, instead, the distribution of these advantages should not be based on the opinion that others have of their merit'. The market rewards the appreciation that others give with respect to what we produce and exchange - labour, ideas, services, goods, etc. - and not, instead, the moral value that others may attribute to us based solely on the idea of merit. "Deciding on merit," Hayek continues, "presupposes that we can judge whether individuals have exploited their possibilities as they should have and how much willpower or self-sacrifice it has cost them" and this is completely impossible to an outside observer and even if it were possible it would be completely arbitrary and therefore unjust.

The logic of the market in the Hayekian perspective, therefore, subverts that of common sense. "The rewards that a free society offers for achievements," the philosopher writes, "serve to tell those who strive for them what effort is worth making. However, the same rewards go to anyone who produces the same results, regardless of effort'. Rewards are a signal of the social utility of a certain behaviour and not a reward for supposed moral merit. This, according to Hayek, is the fatal error that vitiates the rhetoric of meritocracy. For 'the superior civilisation or education of an individual or group certainly represents an important value and is an asset to the community to which the individual or group belongs; but for the most part it does not constitute great merit. Popularity and esteem do not depend on merit any more than financial success does' (p. 122).

In light of this critique, it is easy to see how one of the most pervasive misunderstandings of the relationship between merit and the market concerns precisely the meaning we, as a society, should attribute to success and economic rewards. Merit may, in fact, have to do with the intrinsic nature of action. That is, actions can be judged by their correctness, appropriateness and value, not by results, and can be rewarded with respect to their intrinsic nature, regardless of the result they produce. Deontological ethics separates right conduct from the goodness of the consequences generated. From this perspective, we consider it meritorious, for example, to tell the truth, to behave honestly, to keep one's word. In a second perspective, however, rewarding merit is necessary to promote behaviour that generates social welfare, because a system of rewarding activities that generate good consequences tends to produce a better society. In this perspective, actions are meritorious in a derivative way, depending on the benefit they bring, and more specifically on the benefit that can be obtained by rewarding them. This perspective questions what is meant by 'meritorious consequences' or 'better society'. Are gender-inclusive policies meritorious or not? Are social policies of income support meritorious or not? Is it more meritorious to allocate resources to school support for a student with a disability or to promote advanced weapons research? Is it preferable to invest in protecting the landscape of unspoilt areas or to fight climate change by installing thousands of wind turbines and photovoltaic plants?

These are questions that highlight the contingent and socially determined nature of the merit metric. "A society in which the individual would be placed in the position corresponding to human ideas of moral merit would therefore be exactly the opposite of a free society," Hayek writes, "It would be a society in which people would be rewarded for duties performed rather than for success, in which every move of all individuals would be guided by what others think they should do, and in which the individual would thus be relieved of the responsibility and risk of making a decision. However, if no one has sufficient knowledge to guide all human activity, neither is there any human being who can reward all efforts on the basis of merit'.

The matter becomes even more serious, then, when we move from rewarding merit to punishing demerit. When it is said of someone who has made it that they have deserved it and with the same logic it is said of someone who has not made it that they have not tried hard enough. This 'symmetry of evaluation' can become problematic and worrying when it informs public policy, the health service or education, for example, or the institutional set-up itself. Consider how much meritocratic rhetoric has been used to justify the differentiated autonomy project, with the distinction between deserving and undeserving regions. Pulitzer Prize winner Nicholas Kristof writes in this regard that those who fail to recognise the role that luck has played in earning them privileges are often the same ones who forget the disadvantages that have penalised others. "The result," Kristof continues, "is a meanness or, at best, a lack of empathy for those struggling to survive, which translates into opposition to public health programmes, unemployment benefits or raising the minimum wage to keep up with inflation. Some think that success depends on 'choices' and 'personal responsibility'. This is partly true. But it is also true that if the children of the rich make bad choices, they simply do not suffer the same consequences as the children of the poor'.

We conclude with a quote from David Hume's Enquiry that Hayek places in the exergue to the chapter on distributive justice in Law, Legislation and Liberty. It is the great Scotsman who reminds us that 'so great is the uncertainty of merit, both because of its natural obscurity, and because of the presumption of each individual, that no precise rule of conduct could ever be derived from it; and the total dissolution of society would be the immediate consequence'.

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