Markets, Productivity, and Happiness in a Historical Perspective

A Knightian Analysis of Meritocracy: How the Ubiquity of Competitive Games Negatively Shapes Us and Our Society

Dold Malte, Pomona College

Meritocracy has for centuries been an attractive alternative to hereditary aristocracy. Amartya Sen (2000: 9) rightly notes “the practice of rewarding good (or right) deeds for their incentive effects cannot but be an integral part of any well-functioning society.” Indeed, the claim is supported by a host of evidence that emphasizes the many benefits of meritocratic, incentive-driven societies. They facilitate growth and innovation and allow us to judge people not by race, gender, or socioeconomic background but on the basis of their efforts and talents. At the core of a meritocratic society lies the idea to reap incentive effects through ‘competitive games,’ i.e., selection contests. In a meritocratic society, such selection contests permeate all facets of life to identify and pick the ‘best and the brightest,’ for instance, by means of educational tests, school rankings, worker performance schemes, or likes on social media. In this sense, a truly meritocratic society is a competitive society. Following the arguments of Frank H. Knight’s seminal paper, The Ethics of Competition (1923), this paper argues that competitive games shape the players who play the game. The introduction of competitive contests and measurement ‘yardsticks’ highlight rivalry and individual instead of group achievement. Based on insights from social psychology and behavioral economics, this paper discusses the human cost of such a competitive, rivalrous society, both on the individual level (in terms of reduced individual well-being) and on the social level (in terms of crowding-out of social preferences). While the paper does not offer a blueprint to this development, is agrees with Frank Knight’s assessment that it is the task of scholars to highlight those trends and stimulate a public debate on what type of social games we want to play with each other. This is necessarily a collective task since none of the individual players has a unilateral incentive to opt out of the competitive social games they play due to high exit costs and the ‘arms races’ they are trapped in. To put it in Irving Fishers terms: it is in each individual’s interest to get ahead of others, but “the very intensity of such efforts in the aggregate defeat their own ends.”

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Keywords: Meritocracy, Frank Knight, The Ethics of Competition, Well-Being, Social Preferences, Intrinsic Motivation

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