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Meritocracy

The term meritocracy refers to the practice of rewarding or allocating according to those who are excellent or deserving. The etymology of the word comes from the Latin merere, which means to receive one's share as pay for work done. Thus, in its simplest form meritocracy can be seen as a way to reward producers. For example, it is often the case that some of the highercompensated employees in a company are the top salespeople who are paid on commission. Most companies are happy to provide a competitive rate of commission to salespeople who produce for them. Given this incentive, there are many salespeople who are very talented and work very hard to earn handsome incomes—especially in such industries as financial services, real estate, and big-ticket manufacturing and services contracts.

On the next level, things become a little more difficult. How is it that we judge “merit” or “deserts”? This is the more difficult question and links the question of meritocracy with that of distributive justice. Three views will be examined: (1) the traditional position (represented by Daniel Bell), (2) a social welfare–based position (represented principally by John Rawls), and (3) a deserts-based position (represented principally by this author).

The Traditional Position

Daniel Bell says that meritocracy is made up of those who have earned their authority through individual achievement. This is a functionally based understanding. In a sales contest, a company might offer a vacation to Hawaii to anyone selling 50,000 widgets in the latest financial quarter. Under the traditional position, if Andy sells 50,000 widgets, then Andy merits or deserves the vacation. The traditional interpretation of meritocracy is behind much of American and global business assumptions. This is because of the strong link to classical models of capitalism. These models suggest a reward formula to each according to his valued work. Thus, within the rules of fair competition, a person is rewarded more if he produces tangible output that the society values. It is not the case that any means of production are allowable (since, at the extreme, one could kill another and snatch his output). Therefore, within the framework of rewarding according to work is a caveat that all the applicable rules of competition have been obeyed.

Implicit in classical models of capitalism is also a vision of useful synergy between various production engines within the society. Behind Andy's vacation reward, for example, is the notion that the company's functional standards should be seen in the context of larger interdependent markets. No single business can be accurately separated out. In macroeconomic terms, the traditional model supports distributing according to social usefulness (which fits the relatively unfettered operation of capitalism àla Friedrich A. Hayek or Milton Friedman). In theory, those who will acquire the most resources will be those who offer a social benefit to those who are able to compensate them for said benefit. In practice, the traditional understanding of meritocracy operates through a dynamic interaction between business and society.

The state steps in to establish fair rules and then acts as a referee only when someone breaks the rules. Apart from that, each person gets what she can with whatever resources she has at her disposal (such as her IQ or her hard work).

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