terms of economic remuneration, talent and hard work mean little if they are not granted the right conditions in which to flourish. Human potential is squandered on an enormous scale because of the extreme inequalities of opportunity that exist in the world. Countless people have perished from preventable diseases, died in senseless wars and starved in avoidable poverty. Billions have been denied the freedom necessary to realise even a fraction of their promise. Many potential Shakespeares and Einsteins, Maya Angelous and Emmy Noethers must have lived and died without ever knowing the wonders of which they were capable.
Just as we should reject the idea that a person deserves large rewards because of inherited wealth, we should not accept that a person deserves large rewards because of their genetic and social inheritance. Influential neoliberal economist Milton Friedman showed up the hypocrisy of rejecting one form of inheritance and not the other by asking, ‘Is there any greater ethical justification for the high returns to the individual who inherits from his parents a peculiar voice for which there is a great demand than for the high returns to the individual who inherits property?’25
However, there is a distinction to be made between inheriting wealth and inheriting the talent and opportunities to develop it. Becoming rich through inherited wealth requires no effort, whereas becoming rich through inherited talent does. It is not easy to develop talent or to use it to make a valuable contribution. Doctors, lawyers and scientists have to study for years to succeed in their professions; top athletes, artists and musicians must dedicate their lives to cultivating their abilities; and entrepreneurs must often work extremely hard to create successful businesses. But as soon as we bring effort into the equation, we have deviated from the principle of reward according to the market value of contribution. I may dedicate my life to playing tennis but it’s clear to anyone who’s seen me play that I will never be rewarded for my efforts. Top professionals are ultimately rewarded for what they achieve, not how hard they try.26
But would it be fairer to reward people according to effort? We neither choose our innate capacities nor the freedom we’re given to develop them; moreover, once these capacities are developed, we do not determine the value the market will assign to them. It all comes down to luck. So, what about the efforts we make? The first thing to say is that working hard is not in itself a virtue. Financial speculators, arms dealers, corporate lobbyists and fossil-fuel executives may work very hard, but they also make the world a worse place to live in for many others.
Some progressive economists have suggested that people should be rewarded in accordance with their socially useful efforts. However, the ability to make socially useful efforts is, nevertheless, an ability. It may be more evenly distributed throughout the population than other abilities, but, no matter how hard they try, the very old, the very young, the severely disabled and the sick are often unable to contribute in ways the market recognises or remunerates.27 Our capacity to be self-disciplined, to persevere, to focus, is just as much a part of our genetic and environmental inheritance as any other capacity. The treatment we receive as children – and whether we are prone to hyper-activity, have trouble maintaining our attention, lack confidence or self-esteem, suffer from severe headaches or depression, and so on – can all impact on our capacity to channel our energies in productive ways. Both the inclination and capacity to work hard reflect the way we are and, for that, we are not responsible. Even remuneration based on socially useful effort, then, fails the test of fairness.28
The problem lies with the notion of reward itself. A reward is given in return for something. But no concept of reward sits comfortably with our lack of ultimate responsibility.29 Since we are not truly responsible for what we do, it does not make sense to distribute ‘rewards’ on the basis of behaviour. It does not make sense to apportion rewards at all. The intuitively compelling notion of ‘getting what you give’ ignores the fact that what we can give depends on what we get from our genetic and social inheritance. Whichever way we look at it, all paths to wealth, status and success are paved with luck. This fact supercharges calls for increased equality across society.30
The hoarding of vast resources – resources that could save countless people and enrich numerous lives – has been normalised and celebrated in our society, but there is no moral justification for it. No path to extreme wealth entitles us to hold on to it – not in a world in which so many fundamental needs go unmet. The idea that we could ever be entitled to vast wealth – that a disproportionate amount of Earth’s riches could ever really belong to us – is a dangerous fiction, one that has been cultivated to mask naked greed. Great wealth is never deserved. The fact that some people attain it is merely the product of strange institutions, emerging from an odd culture, developed by a flawed species.
For a principle of distribution to satisfy the test of fairness, it has to be based on need. In a world that took a principle of fair distribution seriously, sickness would be reason enough to be treated, hunger would be reason enough to be fed, and homelessness reason enough to be housed. Resources would no longer be distributed according to the arbitrary lotteries of birth and opportunity. Instead, material inequalities would be used as a means of compensating for inequalities in more fundamental domains.31 For instance, people with disabilities or health problems may need extra resources to enjoy a similar degree of freedom to the non-disabled and physically healthy. Or imagine a society in which everyone is paid the same hourly wage. Some people may choose to work more hours than others and end up with more money. But those who work fewer hours are not necessarily worse off. The well-being accrued from time off work can offset the benefits of financial remuneration. In such cases, the financial inequality that arises is not a problem if the overall balance of well-being, enjoyment and freedom is roughly maintained.
Fairness is not the only important value. There are still trade-offs to be made and other factors to be considered. For instance, as with punishment, perhaps rewards could be used to incentivise people to behave in socially valuable ways (more on this below). Striking the right balance between fairness and other social goals is an ongoing experiment, one that should be directed democratically. But, in order to make informed judgements about these trade-offs, it is essential to dispense with spurious arguments and self-serving fictions. Accusations of the ‘undeserving poor’ and claims of the ‘wealth-creating rich’ are baseless attempts to conceal the injustice at the heart of the economic system. Arguments put forward to justify inequality based on notions of desert always have been, and always will be, fundamentally flawed.
A fair day’s pay
Rewarding people according to the market value of what they contribute is not fair because the value of our contribution is ultimately determined by forces for which we are not responsible. Whether we inherit a lot of money or property, are free from oppression and prejudice, are well educated, bright, strong, healthy, resourceful or beautiful, is ultimately down to luck.
Yet the idea that we are rewarded according to the market value of our contribution is not just unfair, it’s a myth.
Contribution to output is the key idea presented in economic textbooks to explain the income people receive for their labour (and capital). ‘Marginal Productivity Theory’ came to prominence in the nineteenth century and the idea is that under perfectly competitive market conditions, wages for a given worker are driven towards that worker’s marginal productivity, that is, the amount of value they add to the company or, put another way, the revenue that would be lost if they left. According to the theory, if you remove one worker from a team and the daily revenue drops from $1000 to $900, then that worker is worth $100 a day.32
If workers were paid according to contribution then two workers doing the same job, using the same tools, should earn the same wage. Entry-level jobs in McDonald’s restaurants across the globe are similar enough to provide a good way to test this prediction. In fact, just such a study was conducted by economists Orley Ashenfelter and Stepan Jurajda.33 To avoid problems of currency comparison,
