My previous post was criticized in the comments on the grounds that I “confuse inequality with unfairness.” That’s actually not the case, and in the book I talk about different aspects of inequality (something I did not have a chance to develop in an 800-word blog post). But the point is important because there is a tendency today to blame all kinds of social ills on inequality without carefully explaining what one means by that. So let’s talk about it.
To keep things focused, I am interested in the effect of inequality on cooperation, and ultimately on generating broad-based improvement of well-being. At the most basic level, people are unequal because everybody is different. That’s not necessarily a bad thing, because many cooperative tasks are better performed by a mix of people with diverse skills (which is obvious), or even inclinations (slightly less obvious). For example, in a family one person may hate cooking, but doesn’t mind washing dishes, while the other actually likes cooking, but hates washing dishes. It would be natural to divide up chores so that one cooks and the other washes dishes, according to their inclinations.
Then there are differences between people in more important ways—power and wealth. Actually, “well-being” is a more broadly important category than one that is purely economic, such as wealth, or income. After all, if I like living in the countryside, where I can enjoy fresh air and peace and quiet, I may prefer a smaller income, compared to what I would need if I was forced to live in a megalopolis. Let’s stick with wealth for simplicity, but with an understanding that I talk about something more general.
OK, the major point I want to make is that both power and wealth (rewards) may be distributed unequally and that is not necessarily bad. In particular, wealth may be distributed unequally, and that can be either fair or unfair. In fact, most people agree that when someone contributes more effort and more skill to a cooperative enterprise, or bears greater risks, this individual should be rewarded with a greater share of the proceeds from cooperation.
How much more such a contributor should get is a big question that doesn’t have a general answer, because the degree of inequality that any particular group is willing to support is culturally determined. Even such closely related cultures as American and Australian have very different ideas of fairness (Australians systematically favor more egalitarian outcomes than Americans).
Similarly with power, but here the question is not fairness, but legitimacy. Sociologists distinguish between legitimate authority (or leadership), power that is used in a consensual way for the common benefit, and illegitimate power—dominance or despotism. Any kind of cooperative venture, especially one involving huge numbers of people, will put a huge amount of power in somebody’s hands. Complex societies organized on a hierarchical principle (which is the only way humans can cooperate in huge groups – we are not ants) must have huge inequalities of power. The big question is how it is used.
And this takes me back to the topic of my previous post. It was about how inequality resulting from the exercise of illegitimate power—domination—is destructive of cooperation. In the experiment, some subjects were given a lot of power over others, and it was not legitimate for two reasons. First, it was arbitrary—rank was assigned either randomly, or as a result of qualities (success in playing Tetris) that were irrelevant to the cooperative venture in the experiment (money contributed to the pot were doubled the same, no matter how well you did in Tetris). Second, inequality of power only affected how the rewards were distributed (again, having high rank did not contribute to the common benefit).
So the experiment combined two kinds of “bad” inequalities: arbitrary, illegitimate power and unfair distribution of rewards. The combination turned out to be corrosive for cooperation.
In the future, it would be important to design experiments that would tease apart the effects of illegitimate power and unfair distribution of rewards on cooperation.