- Invited Paper
- Open Access
Inequality and the Labor Market – Theories, opinions, models, and practices of unequal distribution and how they can be justified
© Institut für Arbeitsmarkt- und Berufsforschung 2010
- Published: 10 June 2010
The paper provides a multi-disciplinary overview of normative and empirical issues concerning labor markets and inequalities in contemporary capitalist democracies. It begins with a discussion of philosophical controversies in relation to issues of distributive justice. This is followed by a review of peoples' attitudes and opinions, as revealed in surveys and experiments, concerning inequality and fairness. In regard to contributions from economics, the question is discussed whether the relationship between equality/equity and efficiency should be seen as a trade-off. Finally, the thesis is advanced that most of the inequalities (for example in relation to income, job quality, job and income security) are reflected in but not caused by labor markets; instead, the institutional framework in which the labor market is embedded (labor law, education, training, wage determination, social security etc.) is responsible for the (in)equality of outcomes, as are managerial strategies positioning jobs and their holders in firms and other organizations. In his brief conclusion, the author refrains from advocating a normative solution to the issue of distributive fairness; instead, he highlights two axes of controversy that structure the debate.
Ungleichheit und der Arbeitsmarkt: Theorien, Meinungen, Modelle und Praktiken der ungleichen Verteilungsergebnisse und wie diese zu rechtfertigen sind
Dieser Beitrag bietet einen interdisziplinären Überblick über normative und empirische Fragen bezüglich der Arbeitsmärkte und Ungleichheiten in modernen kapitalistischen Demokratien. Anfangs werden philosophische Kontroversen über Fragen der Verteilungsgerechtigkeit betrachtet. Anschließend werden die Einstellungen und Meinungen „normaler“ Menschen bezüglich der Ungleichheit und der Gerechtigkeit, wie in Umfragen und Experimenten erkennbar, zusammengefasst. Was ökonomische Beiträge betrifft, wird die Frage diskutiert, ob es gilt, die Gleichheit und die Effizienz als in einer Trade-Off-Beziehung zueinander stehend zu verstehen. Schließlich wird die These aufgestellt, die besagt, dass sich die meisten Ungleichheiten (bezüglich Einkommen, Arbeitsbedingungen und Arbeitsplatz- und Einkommenssicherheit) zwar in den Arbeitsmärkten widerspiegeln, aber nicht von ihnen verursacht werden; stattdessen ist die (Un-)Gleichheit der Ergebnisse dem institutionellen Rahmen, in dem der Arbeitsmarkt eingebettet ist (Arbeitsrecht, Bildung, Ausbildung, Lohnfestsetzung, soziale Sicherheit usw.), zuzuschreiben und auch den betriebswirtschaftlichen Strategien, die Arbeitsplätze und deren Inhaber in Firmen und anderen Organisationen zu positionieren. In seinem kurzen Schlusswort verzichtet der Autor darauf, eine normative Lösung für das Problem der Verteilungsgerechtigkeit zu befürworten; stattdessen hebt er die zwei Achsen der Kontroverse hervor, die diese Debatte strukturieren.
- Labor Market
- Distributive Justice
- Work Organization
- Distributional Outcome
- Labor Market Policy
All societies face the dual challenge of solving two particular problems in a consistent and reliable way. The first problem is that of production, i.e., how and by whom are factors of production combined, and what division of labor is adopted, in order to generate and increase the overall output. The other is the problem of distribution: After production has taken place, its fruits must be allocated to those who have participated in the process, as well as others. Only the latter problem is what interests us here. There are, however, two evident links between the solutions of our two problems. First, and at least in the long run, the volume of production constrains the volume of what can be distributed. More interestingly, the pattern of distribution (say between workers and investors, or consumption and savings) has implications for the volume of future cycles of production.
Any nearly complete normative theory of what distributive justice demands in terms of equality and to what extent inequalities must be accepted as justified will have to answer at least three questions. The first concerns the moral duties (e.g., the due recognition of need, desert, or entitlement) or/and desirable consequences (such as efficiency, well-being, socio-economic security) that support the demand for or constitute exceptions from equality. Secondly, the question needs to be answered that was famously posed by Sen (1980): “Equality of What?”, with the alternative philosophical answers being “resources” (or “opportunities”), “welfare”, and “capabilities”. The answers that policy-makers are concerned with are equalisanda such as income, wealth, housing, access to the labor market and jobs, life expectancy, social protection, access to services (education, health, police protection) and infrastructure such as public transportation. In a different conceptualization, equality may mean the equal opportunity of persons to pursue freely chosen life plans. I'll briefly return below to the debate that Sen's work has triggered.
Thirdly, the universe of people must also be defined across whom valued resources are to be distributed in a justifiable manner. Most authors do not address this issue at all, implying that the answer is the citizenry of the nation state, the latter fulfilling the demands of justice through redistributive tax and other policies. But even if this (very limited) understanding of the scope of (in)equality is accepted, ambiguities remain as to who is to be equalized to whom. To illustrate, consider an example from pension policy. Here, the question is: Which universe do we want to equalize across? The answer can be, first, that all pensioners should receive the same (i.e., a flat rate) pension; second, that, in a longitudinal perspective, levels of individual transfers should mirror the relative income position that the pensioner has occupied previously during his or her active years, thus equalizing, in line with the “Bismarckian” ideal, relative status over biographical time slices; third, it can mean that the cohorts of present pensioners should be allowed to partake in the economic gains made by the presently active cohorts, as in any “dynamic”, or indexed, pension system with regular adjustments of pensions to increases of current real wages, a method that equalizes income gains from growth across the entire adult population. While all three of these design options are related to some understanding of “equality”, evidently not all of them are mutually compatible.
Issues of social and economic inequality are central to many debates in the social sciences. In my overview of some current problems, I shall proceed as follows. First, I wish to look at some of the recent normative debates among egalitarians and others on what justice requires concerning the distribution of resources. Apart from philosophical principles, there are also opinions, beliefs, and social norms, often strongly held, of ordinary citizens concerning the (un)desirability of (un)equal patterns of distribution; these beliefs and opinions are determined by a wide variety of causal factors. In the second part of the paper, I briefly discuss the question of to what extent the labor market, as opposed to the institutional arrangements in which it is embedded and which are essentially of a political nature (the educational system, by the political regime of taxation and subsidies, etc.) determine observable patterns of income and other inequalities. In the third part, I am going to address the question of how firms and other work organizations structure and justify inequalities among the holders of jobs and positions.
Market outcomes can be explained and they can be justified. In standard economic theory, justification draws upon the ultimate value of freedom. That is to say, as buyers cannot be forced by sellers (or vice versa) to enter into the transaction, this transaction is deemed to be entirely voluntary, thus preserving the freedom of either side. If the transaction were contrary to their free will, they could always refrain or exit from it. As far as the explanation is concerned, there is the issue of whether the interplay of free wills alone can explain prices and distributional outcomes. Chances are that those who seemingly exercise their free will do in fact have no choice other than to buy/sell the way they do. If that is found not to be the case (e.g., in cases of supply side or demand side monopolies or asymmetrical dependencies and power relations resulting from them), this finding will have implications for the validity of the justification of market outcomes. It is therefore of great political and moral interest to find out whether income differentials – be it the functional ones between owners of factors, be it interpersonal ones among categories of working people – can actually be explained in ways that effectively contribute to their justification.
In this section I shall suggest that labor markets, far from being the location of voluntary exchange, are basically institutional arrangements that register and enforce inequalities the origin of which are to be located outside the market transaction itself. Perhaps labor markets in all kinds of capitalist welfare states can best be described as “sorting machines” which function as catalysts of patterns of distribution and inequality that are already in place before, as it were, the market transaction begins and the labor contract is concluded. Labor markets are deeply embedded into a framework of public policies, as well as institutions created by such policies, which to a large extent assign the respective opportunities and distributional positions to actors as they encounter each other on the supply and demand sides of the labor market. Both sides are institutionally positioned (enabled or constrained) and endowed with all kinds of privileges, licenses, status rights, power positions, etc. before they become partners in contract. These pre-contractual conditions apply, for instance, to the shape of the wage scale that prevails in a sector of industry or location; the professional and vocational specification of the units of labor to be traded (which define, for instance, what an “electrician” is); institutional mechanisms of wage determination and the power of collective actors on either side of the market; the role of seniority in wage determination; the taxes and benefits that apply to labor, including minimum wages and employment or wage subsidies; the structure of family allowances and benefits; the facilities for education, vocational training, and other forms of skill acquisition and certification available;4 the levels of demand and supply for labor as determined by macro-economic policies and public sector employment; the extent to which ethnic, gender, and age differences determine the division of labor, access to jobs, and remuneration; the “luck” factors of family background and the presence/absence of social networks on which market participants can rely; the regime that regulates the temporal structure of the labor process, including rules applying to job and income security; the ease with which transitions from the status of employed labor to self-employment can be made, as well as the transition to unemployment or retirement; the overall cost and its distribution of social security and occupational benefits; the opportunities for labor-saving technical and organizational change employers in a particular sector or company enjoy; institutions and programs of active labor market policies; and many more. Paraphrasing Emile Durkheim, one might say that these and other parameters form a non-contractual and non-negotiable framework of the labor contract.
Virtually the only thing that can arguably be causally attributed to the labor market itself, rather than the multiple institutional arrangements in which it is embedded, is the volume and kind of people that are admitted to the status of being employed and the sorting out of those being either dismissed from jobs or denied access under given institutional and macro-economic conditions. Yet even this proposition is debatable at the macro level. For there are two equilibria that govern the dynamics of labor markets. First, the quantitative equilibrium between labor supply (the total of individuals in employment plus those currently seeking employment) and the demand for labor. Second, the equilibrium between wages earned, as well as other forms of income received, by households and the needs these households seek to satisfy. Both of these (dis)equilibria are massively shaped by political institutions and programs. As to the second equilibrium, it will be affected by welfare, EITC, and other transfer programs, including those of family policy and training and continuing education programs. These institutions and programs have indirect effects upon the first equilibrium, i.e., on the number of people showing up on the supply side of the labor market. The first equilibrium is also directly affected by a number of public policies, for instance by the migration regime and the definition of the retirement age.
These considerations allow for the interpretation that it is not the labor market as an anonymous mechanism of free transactions, but the set of politically installed (and hence politically contingent) institutional frameworks which determines the shape of distributional outcomes. If these outcomes are to be justified, the burden of justification cannot rest with the individuals and their freedom to enter or not to enter into contracts with each other, as is the case with markets for vegetables. Instead, this burden must be shouldered by political elites and according to democratic rules by which they can be held accountable, as it is them who bear the responsibility for (re)designing the institutional framework, be it at the national or the international/European level, within which the demand, supply, and price of labor is being shaped. If the gap between the lowest and the highest wages is ever-widening, as is the case with most countries of the OECD world, thereby violating prevailing norms of social equality as well as policy goals of “social cohesion”, it is within the political arena where responsibilities must be attributed and potential remedies sought.
The British New Economics Foundation (2009) has published a study with estimates on the relationship between earnings of six occupational groups (ranging from “bankers” to “waste recycling workers”) and what the authors term the “social value” or “worth” of those who perform these functions. They calculate ratios that indicate how much net worth (i.e., the balance of negative and positive externalities) a typical practitioner of these occupations generates per one unit of pay, measured in British pounds. While estimates of “social worth” involve potentially contested evaluations and quantifications of positive and negative externalities that enter into an overall social utility function, the results of these estimates are nevertheless striking and suggestive due to their orders of magnitude. For instance, “for every pound [childcare workers] are paid, [they] generate between 7 and 9.5 pounds worth to society”, while advertising executives, earning up to one thousand times higher incomes, are estimated to “destroy 11 pounds of value for every pound of value they generate”. The greatest social productivity is estimated to be connected with the work of hospital cleaners and waste recycling workers, both of which are near the bottom of the overall income scale.
As we have seen in the first section of this paper, egalitarian theories address themselves, at least implicitly, to the state as the agent of equalization. Through its policies of taxation, redistribution, infrastructural capability building, and not least the judicial enforcement of equal rights, it is the state that can provide for the implementation of what normative theorists describe as distributional fairness. The state also establishes, as I have shown in the second section, the vast institutional framework in which the labor market is embedded. Yet distributional (in)equalities are not the only generated direct and indirect consequences of state action. We therefore now turn to a discussion of the inequalities that are generated within work organizations, both private firms and public administrations, and their internal “labor markets”. These inequalities are constituted as the joint outcome of managerial decisions and the regulatory constraints individual and collective labor law imposes on managerial discretion. These inequalities apply to the three dimensions of monetary compensations (wages, salaries, benefits), intrinsic (positive and negative) job characteristics (including such items as autonomy, authority, opportunities for skill acquisition), and job or employment security. These dimensions can relate to each other as cumulative (e.g., when the most poorly paid jobs are the intrinsically least attractive) or as trade-offs (e.g., lower pay in exchange for greater job security as a deal made in concession bargaining). Work organizations such as firms are involved in a continuous process of ranking and positioning employees into complex hierarchies that are made up by these three dimensions. In the process, workers and jobs are inserted and vertically ranked through managerial decisions which in most cases cannot be derived from data given by the external labor market.5
How do we explain the hierarchies and inequalities thus established through managerial decision? Note that what needs to be explained is both the shape of the wage scale (stretched vs. compressed) and the position on that scale that is being assigned to individuals or categories of employees. Limiting my attention here to the latter issue, I find the economists' standard answer that workers are being rewarded according to their “marginal product” entirely unhelpful. How should managers/entrepreneurs be able to know, even to predict at the start of an employment relation, what a worker's “marginal product” is, given the fact that total output of a firm can rarely be disaggregated and linked to individual contributions? Rather, it must be seen as the outcome of a complex pattern of ongoing cooperation of many contributors of diverse ranks and positions. What is needed here, instead, is some managerial metric of proportionality that links a worker's characteristics, as well as job characteristics, to a particular hierarchical position. Ideally, such a “meritocratic” metric would not only explain the resulting hierarchical structure but also justify the resulting pattern of intra-organizational inequality as legitimate, and the inferior as well as superior positions of individuals as somehow “appropriate” and “well deserved”.
The theoretical claim I try to support in the remainder of this essay is twofold. First, not all organizational inequalities can be explained, i.e., accounted for in a non-tautological way, as following at all from some logic of managerial rationality. Second, to the limited extent they can, these explanations of how organizational inequalities come into being do not yield justificatory arguments, and issues of distributional fairness and “just” inequalities within work organizations remain essentially contested. (Offe 1976)
If status rights – remuneration, intrinsic job quality, security – are the main components of the dependent variable, what are the components of the independent variable? Leaving aside the important question of how the remuneration of investors, entrepreneurs, and managers is to be explained and justified (standard answers refer to the need to compensate them for refraining from consumption, to dividends being a premium for the risks they undergo, or to rewards for the performance of highly skilled and demanding entrepreneurial tasks), I concentrate on the remuneration and other aspects of the organizational status of non-managerial employees. The determinants that enter into the negotiation and definition of their hierarchical status include skills, experience, seniority, gender, time, and “responsibility”. Let me briefly try to disentangle some of the ambiguities inherent in this set of independent variables.
Common economic thinking, as well as much of the everyday debates and polemics over social and labor market policies, rests on the assumption (and attempted justification) that the rewards (wages, job security) workers receive somehow reflect their productivity. In addition, it might be stated that the productivity of a worker also, in addition to her skills and efforts, reflects the technical and organizational configuration of the job she performs. Productivity, in other words, is not a feature of persons alone; it is also a feature that owners, investors, and managers have determined when creating a job. Through designing jobs, investors/managers make workers more or less productive. For instance, the labor of room cleaners suddenly became much more productive after the invention and diffusion of the vacuum cleaner. It follows that interpersonal differences of labor productivity can only be assessed if we were to keep technology and organization constant – which amounts to a truly heroic assumption which negates the “job design” component of productivity. It further follows that under conditions of labor supply massively and chronically exceeding labor demand, it is at least an open (and arguably even unanswerable) question whether the spread of a low wage sector is due to the qualitatively low marginal productivity and lack of human capital of those working in that sector or whether the phenomenon can be better explained by the wage-depressing quantitative effect of job-seekers (whatever their skills and efforts) exceeding the volume of available jobs. Where conditions such as these prevail, skills, work effort, ambition, and responsibility as the putative fair generators of relative status in work organizations not only fail to play a plausible role in the explanation/justification of status differentials, instead, the opposite direction of causation may prevail: Not the lack of human capital causes either unemployment or low-wage employment, but the condition and expectation of labor market precariousness leads to the waste and degeneration of skills, while their acquisition is discouraged and opportunities to make “work efforts” are foreclosed or de-motivated by the evident absence of credible access routes to the “first” labor market in which meritocratic fairness is supposed to rule.
What workers are remunerated for (and actually claim proportionate remuneration for) is not just a) their productive contribution to the cooperative production of marketable goods and services, or the utility of labor to the firm, but also b) the intrinsic labor disutility they experience in the process and for which they claim compensation. Wages compensate workers for an uncertain mix of either of these aspects, with the question remaining hard to decide whether workers earn their remuneration by what they do (contribute) or by what they endure while doing it. Everyday evidence shows that there is no co-variation between these two variables. That is to say, jobs with relatively low skill requirements and low productivity are often associated with intrinsically highly undesirable characteristics (repetitiveness, physical stress, exhaustion, low autonomy, no authority, no opportunities for skill acquisition etc.), while others combine high skills requirements with high productivity and high intrinsic satisfaction. In such “good” jobs, not only negative features (health and accident hazards, dirty work environment, tedious routines) are absent, but the intrinsic valuation of “interesting” challenges is typically greater than it is in the case of jobs that require fewer qualifications and are less productive. In addition, intrinsically satisfying jobs are often also rewarded by higher wages and higher job security. One might object to this practice, from the point of view of intuitions about distributional fairness, that it amounts to unfairly duplicating the positive and negative rewards attached to positions within organizational hierarchies.
As the actual contribution an employee makes to the overall output of a firm or administrative public sector unit is typically impossible to measure in objective and uncontroversial terms, the meritocratic attribution of status operates predominantly through input measures, i.e., the certified skills employees have acquired (mostly) before entering a work organization. Apart from the acquisition of these skills being highly contingent upon “conditions” (endowment with talent, accessibility and quality of educational institutions, other “social mechanisms”), organizations partly reward efforts that employees have made, in the case of the median-aged employee, several decades before the (present) point in time at which they are being rewarded. Again, this mechanism cuts both ways: While academic certificates typically grant a life-long rent to employees as a return on investment in human capital, those who have failed to graduate from secondary school will have very limited chances to be ever considered for “better” jobs. Moreover, the skill requirements of the job an employee performs may or may not coincide with the skills s/he acquired at the time of her schooling or his professional training. Also, it is probably not too daring a speculation that most workers most of the time depend on skills and knowledge for the performance of their jobs that they have acquired on the job, while the human capital acquired through formal education may well be underutilized on the job. Finally, in most cases there is no objective algorithm that would allow management to derive the profile of formal skills that is “required” by a particular job; if such algorithm exists, it is typically established by legal regulation and standardization, not through managerial discretion. The answer to what one needs to be a nurse in a hospital (apprenticeship? college degree? university degree?) differs widely between national health systems, as does the job description and the division of labor between medical doctors and nurses itself. Skill “requirements” can also change with labor market conditions, with employers being both able to and interested in ratcheting-up skill requirements for given jobs when labor supply is plentiful relative to demand, a condition which tends to make skills “cheaper” to employ. Employers may also find it expedient to switch between criteria of formal skill requirements and informal measures of job experience, techniques of personality assessment, “suitability”, reference letters, the reputation of former employers, networks, the evidence of social skills and desired personality traits. While reliance on formal certificates and credentials may provide a (limited) measure of meritocratic justification, such less formal criteria play an at least equally significant role in managerial practices of recruitment, promotion, and organizational stratification.
In addition to past effort and ambition that has resulted in human capital formation, rewards can be tied to perceived levels of present efforts on the job or signals concerning future work behavior of job candidates. The display of discipline, punctuality, engagement for the organization's objectives, loyalty towards superiors, and reliability are subjective “work attitudes” which are obviously, and perhaps increasingly, appreciated and honored by employers and managers. The importance of these subjective features is also indicated by the emphasis that active labor market policies and programs attach to the inculcation of these industrial virtues in order to promote the somewhat nebulous quality of “employability” of job seekers. To be sure, there are also objective measures of effort. They seem to be limited, however, to temporal aspects of work. These include chronometrical aspects (“willingness to work extra hours”, working fast, spending leisure time on the acquisition of additional skills) and chronological ones (“being punctual, keeping deadlines, being ready to work night shifts” etc.). Yet the opportunity to display and practice these virtues is itself very much contingent upon the organizational structure of the tasks to be performed and the autonomy it affords.
The distinction of voluntary inputs (choice, effort, ambition) that in the liberal egalitarian discourse are being set apart from unchosen “conditions” and “luck” largely fail to make operational sense on the shop floor, in spite of its normative attractiveness. As Kymlicka (2006, p. 20) rightly observes: “There is no way in practice to implement these principles in a rigorous way. Public institutions cannot effectively track the choices/circumstances distinction” and, we might add, even less so can – nor have any reason to attempt – work organizations and their managements. While “winners” in organizational hierarchies will tend to attribute their status to their own efforts (or prudence, farsightedness, self-discipline, character etc.) and, correspondingly, that of “losers” to their lack of such qualities, losers will tend to describe themselves as being handicapped by circumstances, as having been deprived of fair opportunities, as having been discouraged or discriminated against, or working under conditions that render “effort” subjectively pointless. Moreover, they may also be inclined to perceive winners as being unfairly privileged by circumstances, such as a favorable family background and social networks.
An interesting further component of meritocratic practices of assigning bundles of differential rewards to particular jobs is the role of “responsibility” as a yardstick of desert and the attribution of status. The notion of responsibility matches the nature of tasks and of the persons that perform them. Some jobs are said to involve greater personal responsibility than others, which is usually intended to mean: If those performing them fail to apply the rules of their trade and to appropriately exert their cognitive and motivational capacities, the potential damage caused by such failure would be greater than in the case of others. Therefore, the greater the responsibility (as measured in terms of potential damage – think of an airline pilot) the greater the remuneration deserved. This reasoning assumes that “responsibility” is subjectively perceived as a kind of work disutility or burden that calls for an adequate compensation. This perception may or may not be present, which is anyway as hard to prove as any subjective assessment of (dis)utility: Perhaps the person entrusted with responsibility does not really perceive it as a burden, but as an honor, distinction, and mark of personal success – who knows or even can know? It further assumes that in the absence of such special compensation it would be either difficult to fill the position in question (because people shy away from responsible jobs unless there are special incentives) or that those who actually hold it would act less responsibly and become negligent in the performance of their task – both of which assumptions refer to counterfactuals which can at best be more or less plausible. Yet this latter proposition can only be stated (as the late Cohen  argued) in the third-person perspective, not in that of the first person, i.e., a speaker speaking about herself. For that would mean to say: “In case I were to be deprived of my responsibility bonus, I would either desert my job or fail to perform it responsibly” – which is a proposition that plainly betrays a massive level of irresponsibility. Similarly and more generally, when beneficiaries of privileged status claim that conceding advantages to them will ultimately benefit the less privileged, they are not speaking about some causality in the world “out there”, but about themselves: The reason that this claim is “true” is that beneficiaries are in a position to effectively decide it must be true, using a kind of blackmail in order to make it true. Such claims and propositions fail what Cohen (2008) calls the “interpersonality test”: responsible action (in contrast to “effort”) is not something that one can consistently turn on and off, depending on the level of reward. Nor can one justify one's own claim to privilege by threatening with one's own retaliatory power which will be deployed in case the claim is not honored.
My selective review of contributions from various social sciences to the explanation and justification of patterns of inequality has not resulted in a convergent perspective. This was neither my objective, nor could it be expected. Issues of distributive justice are essentially contested, and likely to remain so, given the great diversity of philosophical approaches, as well as of the interests involved. One axis of controversy is whether equality and economic performance are really conflicting values or whether, to the contrary, it is exactly egalitarian policies which can provide for “real” or “substantive” freedom and economic performance. Another set of issues concerns the normative viability and policy implications of the conditions vs. ambitions dichotomy. Furthermore, the question remains wide open as to what the most appropriate institutional site is for the promotion of equality (or rather justifiable patterns of inequality): the state and its budget, democratic citizenship, the labor market and its institutions, the educational system, the family, the business firm? It is exactly because there is no comprehensive answer in sight to the normative and analytical issues I have touched upon that we must see to it that the space for deliberation on these issues is not closed by false authority claims coming from any of the disciplines, doctrines, and intellectual traditions involved in it.
The paper represents an invited keynote address, held at a conference sponsored by the IAB. In line with this format, it does not address specific data and analysis but provides a wide-ranging overview of ongoing debates and persistent ambiguities in social philosophy, sociology, economics, and organization studies.
Social inequalities have been a core problem of the social sciences since their origin in the 19th century. The three issues are: How can they be explained, justified, and remedied (to the extent they can not be justified as fair and legitimate). Part I of the paper presents a condensed discussion of four normative philosophical arguments, ranging from individualistic-egalitarian to left-communitarian positions. In between these two extremes, we find liberal-egalitarian positions (based upon the important distinction between “conditions” vs. “ambitions” or “effort” as determinants of distributional outcomes) and the “capability perspective”, as inaugurated by Sen and others, which emphasizes the normative standard of public policies which enable/empower people to realize their reasoned life plans. Here, the author explores the conceptual problems of distinguishing in operational terms between negative and positive forms of discrimination, as well as between “conditions” and “choices”, as the two latter categories may well interact.
A second focus of the paper is a brief discussion of findings of empirical sociology as it proceeds from both survey and experimental data. What determines the degree to which ordinary people adhere to egalitarian, or “inequality-averse” social norms? Here, the distinction between “upward-looking” and envy-driven egalitarian norms vs. “downward-looking” and compassion-driven perspectives is introduced. Similarly, economists discuss the economic functions of unequal economic outcomes. While a majority of economists emphasize collectively beneficial incentive effects of unequal distributional outcomes, several dissenting authors are cited who provide arguments that it is, to the contrary, more egalitarian patterns of (income) distribution that can enhance overall efficiency.
Thirdly, the paper addresses the question whether or not it is the labor market itself that generates unequal outcomes in terms of three relevant bundles of variables, namely income/wealth, qualities of jobs (including work–life balance), and job/income security. The author adopts the somewhat unorthodox view that it is not the labor market that generates these distributional outcomes but the system of institutions in which the market is embedded and which are ultimately constituted by political decisions. Significant “pre-existing conditions” of labor market transactions are the educational system, institutions of social security, individual and collective labor law, and family related policies. It is argued that it is largely not the labor market, but regulatory and other public policies (or their politically determined absence) that are the ultimate causes of distributional outcomes in the above three dimensions.
The fourth and final section deals with distributional effects of managerial decisions and practices within firms and other (large scale) work organizations. The author presents arguments to the effect that economic variables (such as quantity and quality of supply and demand, marginal product, relative cost, individual productivity of workers) play at best a limited role in the determination of intra-organizational distributional rewards, thus questioning individualist and “meritocratic” justifications of pay and other status differences. These differences can neither be (fully) explained by reference to “choice” variables (such as effort, flexibility, ambition) nor by “condition” variables (“talent” and other aspects of personal “luck”), least of all in proportion to the somewhat mysterious yet widely invoked measure of “responsibility”. While it thus remains an open question how differential distributional outcomes can at all be justified, it also remains an open question at which institutional level (the family?, the state budget?, industrial relations?, the educational system?) poorly justified inequalities can possibly be remedied according to any standard of distributional fairness.
Dieser Beitrag ist die schriftliche Version eines Eröffnungsvortrages, der auf einer vom IAB gesponserten Konferenz gehalten wurde. Gemäß diesem Format konzentriert sich der Beitrag nicht auf spezielle Daten und Analysen, sondern bietet einen weitreichenden Überblick über laufende Debatten und anhaltende Ambiguitäten in der Sozialphilosophie, Soziologie, Ökonomie und Organisationstheorie.
Soziale Ungleichheiten sind ein Kernproblem der Sozialwissenschaften, seit diese im 19. Jahrhundert begründet wurden. Die drei Hauptfragen sind, wie diese Ungleichheiten zu erklären, zu rechtfertigen und zu beheben sind (sofern diese sich nicht als fair und legitim rechtfertigen lassen). Teil 1 präsentiert eine zusammengefasste Diskussion über vier normative philosophische Argumente, die sich von individualistisch-egalitären bis links-kommunitaristischen Positionen erstrecken. Zwischen diesen beiden Extremen finden wir liberal-egalitäre Positionen (basierend auf der wichtigen Unterscheidung zwischen vorgefundenen Bedingungen vs. gewählten Niveaus von Mühe und Anstrengung als Determinanten von Verteilungsergebnissen) und den von Sen und anderen entwickelten Verwirklichungschancen-Ansatz, welcher die normative Funktion von öffentlichen Politiken betont, die es Menschen ermöglichen/sie befähigen soll, die eigenen Lebenspläne zu verwirklichen. Hier untersucht der Autor die begrifflichen Probleme der operationellen Unterscheidung zwischen negativen und positiven Formen der Diskriminierung, und zwischen „Konditionen“ und „Entscheidungen“, da die zwei letzteren Kategorien durchaus miteinander interagieren können.
Einen zweiten Schwerpunkt bildet die kurze Erörterung der Ergebnisse der empirischen Soziologie, die sowohl auf Umfrage- als auch auf Untersuchungsdaten basieren. Was bestimmt inwieweit normale Menschen, sich an egalitäre oder „Ungleichheit-abgeneigte“ Sozialnormen zu halten? An dieser Stelle wird die Unterscheidung zwischen „nach oben schauenden“ und vom Neid getriebenen egalitären Normen vs. “nach unten schauenden“ und vom Mitgefühl getriebenen Ansätzen eingeführt. Auf ähnliche Art und Weise diskutieren Wirtschaftswissenschaftler die ökonomischen Funktionen von ungleichen wirtschaftlichen Ergebnissen. Während die Mehrheit der Wirtschaftswissenschaftler die für die Gesamtheit positiven Anreizwirkungen der ungleichen Verteilungsergebnisse betonen, werden in diesem Abschnitt mehrere abweichende Autoren zitiert, die argumentieren, dass es im Gegenteil eher egalitäre Muster der (Einkommens-)Verteilung sind, die die Gesamteffizienz steigern können.
Drittens setzt sich der Beitrag mit der Frage auseinander, ob der Arbeitsmarkt selber ungleiche Ergebnisse generiert, bezogen auf drei relevante Variablenbündel, nämlich Einkommen/Wohlstand, Arbeitsbedingungen (einschl. Work-Life-Balance), und Arbeitsplatz- und Einkommenssicherheit. Der Autor vertritt die etwas unorthodoxe Position, dass der Arbeitsmarkt nicht für diese Verteilungsergebnisse verantwortlich ist, sondern das System der Institutionen, in dem der Markt eingebettet ist und das letztendlich aus politischen Entscheidungen besteht. Signifikante „objektive“ Voraussetzungen der Arbeitsmarkttransaktionen sind das Bildungssystem, Institutionen der sozialen Sicherheit, Individualarbeitsrecht und kollektives Arbeitsrecht sowie familienbezogene Politiken. Es wird argumentiert, dass die Verteilungsergebnisse in den drei oben erwähnten Dimensionen vorwiegend nicht dem Arbeitsmarkt, sondern letztendlich Regulierungs- und anderen öffentlichen Politiken (oder deren politisch bedingtem Nichtvorhandensein) zuzuschreiben sind.
Der letzte Abschnitt beschäftigt sich mit den verteilungsbezogenen Auswirkungen von betriebswirtschaftlichen Entscheidungen und Praktiken in Firmen und anderen (größeren) Arbeitsorganisationen. Der Autor bringt Argumente vor, die besagen, dass ökonomische Variablen (wie die Quantität und Qualität des Angebots und der Nachfrage, das Grenzprodukt, Relativkosten und die Einzelproduktivität unter Arbeitern) höchstens eine begrenzte Rolle in der Festlegung von organisationsinternen Verteilungsbelohnungen spielen, und stellt dabei individualistische und „leistungsorientierte“ Rechtfertigungen für Lohn- und andere Statusunterschiede infrage. Solche Unterschiede sind weder (völlig) durch das Verweisen auf „Entscheidungsvariablen“ (wie Mühe, Flexibilität, Ambition) noch durch „Konditionsvariablen“ („Talent“ und andere Aspekte des persönlichen „Glücks“) zu erklären, vor allem nicht im Verhältnis zu dem etwas mysteriösen aber oft zitierten Faktor der „Verantwortung“. Während die Frage, wie ungleiche Verteilungsergebnisse überhaupt zu rechtfertigen sind, offen bleibt, gilt dies ebenfalls für die Frage, auf welcher institutionellen Ebene (Familie? Staatsbudget? industrielle Beziehungen? Bildungssystem?) schwer zu rechtfertigende Ungleichheiten nach irgendeinem Standard der Verteilungsgerechtigkeit zu beheben sind.
Note, however, that these normative and functional objections do not apply to left-libertarian proposals to create not a “right to work”, but a citizenship right to a (“basic”) income. For a recent contribution to this debate see Offe (2009).
“As much as a particularly short person exerts an incredible degree of effort to play basketball, realizing [his] ambition to play NBA basketball is unlikely” (Halliday 2008, p. 10).
“Public institutions cannot effectively track the choice/circumstances distinction. … We often cannot distinguish the voluntarily and the involuntarily disadvantaged” (Kymlicka 2006, p. 20 f.).
As “normal” markets reflect relative scarcities in prices, the scarcities in labor markets can be seen as artefacts of the educational system, license requirements, arrangements of social closure, etc.
They can be thus derived if an employee has the option to obtain a “better” package from an alternative employer, perhaps prompting the management to promote him/her to a higher position; or if management perceives that workers who quit can be easily replaced through new recruits from the external labor market, therefore denying them a pay rise. I assume here that such “externally dictated” decisions are the exception rather than the rule in the everyday operation of work organizations.
- Alesina, A., Giuliano, P.: Preferences for redistribution. NBER Working Paper 14825, Cambridge, MA (2009)Google Scholar
- Anderson, E.S.: What is the point of equality? Ethics 109, 287–337 (1999)View ArticleGoogle Scholar
- Cohen, G.A.: Rescuing Justice and Equality. Harvard University Press, Cambridge, MA (2008)Google Scholar
- Dworkin, R.: Sovereign Virtue. The Theory and Practice of Equality. Harvard University Press, Cambridge, MA (2000)Google Scholar
- Fehr, E., Naef, M., Schmidt, K.M.: Inequality aversion, efficiency, and maximin preferences in simple distribution experiments: Comment. AER 96(5), 1912–1917 (2006)Google Scholar
- Galbraith, J., Conceicao, P., Ferreira, P.: Inequality and unemployment in Europe: The American cure. New Left Rev. 237, 28–51 (1999)Google Scholar
- Halliday, S.: Equality of opportunity. Roemer's synthesis. http://simon.d.halliday.googlepages.com/EqOp.pdf (2008). Accessed 2 Apr 2010
- Jäntti, M., Bratsberg, B. et al.: American exceptionalism in a new light: A comparison of intergenerational earnings mobility in the nordic countries, the United Kingdom and the United States. IZA Discussion Paper No. 1938, Bonn (2006)Google Scholar
- Kymlicka, W.: Left liberalism revisited. In: Sypnowich, C. (ed.) The Egalitarian Conscience. Essays in Honour of G.A. Cohen, pp. 9–35. Oxford University Press, Oxford (2006)Google Scholar
- Miller, D.: Principles of Social Justice. Harvard University Press, Cambridge, MA (1999)Google Scholar
- New Economics Foundation: A bit rich. Calculating the real value of different professions. http://www.neweconomics.org/sites/neweconomics.org/files/A_Bit_Rich.pdf (2009). Accessed 2 Apr 2010
- Nozick, R.: Anarchy, State, and Utopia. Basic, New York (1974)Google Scholar
- Offe, C.: Industry and Inequality. The Achievement Principle in Work and Social Status. Edward Arnold, London (1976)Google Scholar
- Offe, C.: Basic income and the labor contract. Anal. Krit. 31(1), 49–79 (2009)Google Scholar
- Pierik, R., Robeyns, I.: Resources versus capabilities: Social endowments in egalitarian theory. Polit. Stud. 55, 133–152 (2007)View ArticleGoogle Scholar
- Roemer, J.: Equality of Opportunity. Harvard University Press, New York and Cambridge, MA (1998)Google Scholar
- Sen, A.: Equality of What? In: McMurrin, S.M. (ed.) The Tanner Lectures on Human Values, vol. 1. University of Utah Press, Salt Lake City (1980)Google Scholar
- Sen, A.: Inequality Re-examined. Clarendon Press, Oxford (1992)Google Scholar