Widening economic inequality is the academic topic du jour, but the trend of growing wealth and income disparity has been underway for several decades. How did mounting inequality succeed in proving culturally and politically attractive for as long as it did? Will Davies writes that rather than speak in terms of generating more inequality, policy-makers have always favoured another term, which effectively comes to the same thing: competitiveness. In this article, and in a new book, he attempts to understand the ways in which political authority has been reconfigured in terms of the promotion of competitiveness.
The years since the banking meltdown of 2008 have witnessed a dawning awareness, that our model of capitalism is not simply producing widening inequality, but is apparently governed by the interests of a tiny minority of the population. The post-crisis period has spawned its own sociological category – ‘the 1%’ – and recently delivered its first work of grand economic theory, in Thomas Piketty’s Capital in the Twenty-first Century, a book dedicated to understanding why inequality keeps on growing.
What seems to be provoking the most outrage right now is not inequality as such, which has, after all, been rising in the UK (give or take Tony Blair’s second term) since 1979, but the sense that the economic game is now being rigged. If we can put our outrage to one side for a second, this poses a couple of questions, for those interested in the sociology of legitimation. Firstly, how did mounting inequality succeed in proving culturally and politically attractive for as long as it did? And secondly, how and why has that model of justification now broken down?
In some ways, the concept of inequality is unhelpful here. There has rarely been a political or business leader who has stood up and publicly said, “society needs more inequality”. And yet, most of the policies and regulations which have driven inequality since the 1970s have been publicly known. Although it is tempting to look back and feel duped by the pre-2008 era, it was relatively clear what was going on, and how it was being justified. But rather than speak in terms of generating more inequality, policy-makers have always favoured another term, which effectively comes to the same thing: competitiveness.
My new book, The Limits of Neoliberalism: Sovereignty, Authority & The Logic of Competition, is an attempt to understand the ways in which political authority has been reconfigured in terms of the promotion of competitiveness. Competitiveness is an interesting concept, and an interesting principle on which to base social and economic institutions. When we view situations as ‘competitions’, we are assuming that participants have some vaguely equal opportunity at the outset. But we are also assuming that they are striving for maximum inequality at the conclusion. To demand ‘competitiveness’ is to demand that people prove themselves relative to one other.
It struck me, when I began my Sociology PhD on which the book is based, that competitiveness had become one of the great unquestioned virtues of contemporary culture, especially in the UK. We celebrate London because it is a competitive world city; we worship sportsmen for having won; we turn on our televisions and watch contestants competitively cooking against each other. In TV shows such as the Dragons Den or sporting contests such as the Premier League, the division between competitive entertainment and capitalism dissolves altogether. Why would it be remotely surprising, to discover that a society in which competitiveness was a supreme moral and cultural virtue, should also be one which generates increasing levels of inequality?
Unless one wants to descend into biological reductionism, the question then has to be posed: how did this state of affairs come about? To answer this, we need to turn firstly to the roots of neoliberal thinking in the 1930s. For Friedrich Hayek in London, the ordoliberals in Freiburg and Henry Simons in Chicago, competition wasn’t just one feature of a market amongst many. It was the fundamental reason why markets were politically desirable, because it conserved the uncertainty of the future. What united all forms of totalitarianism and planning, according to Hayek, was that they refused to tolerate competition. And hence a neoliberal state would be defined first and foremost as one which used its sovereign powers to defend competitive processes, using anti-trust law and other instruments.
One way of understanding neoliberalism, as Foucault has best highlighted, is as the extension of competitive principles into all walks of life, with the force of the state behind them. Sovereign power does not recede, and nor is it replaced by ‘governance’; it is reconfigured in such a way that society becomes a form of ‘game’, which produces winners and losers. My aim in The Limits of Neoliberalism is to understand some of the ways in which this comes about.
In particular, I examine how the Chicago School Law and Economics tradition achieved an overhaul (and drastic shrinkage) in the role of market regulation. And I look at how Michael Porter’s theory of ‘national competitiveness’ led to a new form of policy orientation, as the search for competitive advantage. Both of these processes have their intellectual roots in the post-War period, but achieved significant political influence from the late 1970s onwards. They are, if you like, major components of neoliberalism.
By studying these intellectual traditions, it becomes possible to see how an entire moral and philosophical worldview has developed, which assumes that inequalities are both a fair and an exciting outcome of a capitalist process which is overseen by political authorities. In that respect, the state is a constant accomplice of rising inequality, although corporations, their managers and shareholders, were the obvious beneficiaries. Drawing on the work of Luc Boltanski, I suggest that we need to understand how competition, competitiveness and, ultimately, inequality are rendered justifiable and acceptable – otherwise their sustained presence in public and private life appears simply inexplicable.
And yet, this approach also helps us to understand what exactly has broken down over recent years, which I would argue is the following: At a key moment in the history of neoliberal thought, its advocates shifted from defending markets as competitive arenas amongst many, to viewing society-as-a-whole as one big competitive arena. Under the latter model, there is no distinction between arenas of politics, economics and society. To convert money into political power, or into legal muscle, or into media influence, or into educational advantage, is justifiable, within this more brutal, capitalist model of neoliberalism. The problem that we now know as the ‘1%’ is, as has been argued of America recently, a problem of oligarchy.
Underlying it is the problem that there are no longer any external, separate or higher principles to appeal to, through which oligarchs might be challenged. Legitimate powers need other powers through which their legitimacy can be tested; this is the basic principle on which the separation of executive, legislature and judiciary is based. The same thing holds true with respect to economic power, but this is what has been lost.
Regulators, accountants, tax collectors, lawyers, public institutions, have been drawn into the economic contest, and become available to buy. To use the sort of sporting metaphor much-loved by business leaders; it’s as if the top football team has bought not only the best coaches, physios and facilities, but also bought the referee and the journalists as well. The bodies responsible for judging economic competition have lost all authority, which leaves the dream of ‘meritocracy’ or a ‘level playing field’ (crucial ideals within the neoliberal imaginary) in tatters. Politically speaking, this is as much a failure of legitimation as it is a problem of spiralling material inequality.
The result is a condition that I term ‘contingent neoliberalism’, contingent in the sense that it no longer operates with any spirit of fairness or inclusiveness. The priority is simply to prop it up at all costs. If people are irrational, then nudge them. If banks don’t lend money, then inflate their balance sheets through artificial means. If a currency is no longer taken seriously, political leaders must repeatedly guarantee it as a sovereign priority. If people protest, buy a water canon. This is a system whose own conditions are constantly falling apart, and which governments must do constant repair work on.
The outrage with the ‘1%’ (and, more accurately, with the 0.1%), the sense that even the rich are scarcely benefiting, is to be welcomed. It is also overdue. For several years, we have operated with a cultural and moral worldview which finds value only in ‘winners’. Our cities must be ‘world-leading’ to matter. Universities must be ‘excellent’, or else they dwindle. This is a philosophy which condemns the majority of spaces, people and organizations to the status of ‘losers’. It also seems entirely unable to live up to its own meritocratic ideal any longer. The discovery that, if you cut a ‘winner’ enough slack, eventually they’ll try to close down the game once and for all, should throw our obsession with competitiveness into question. And then we can consider how else to find value in things, other than their being ‘better’ than something else.
Note: This article gives the views of the author, and not the position of the British Politics and Policy blog, nor of the London School of Economics. Please read our comments policy before posting. Homepage image credit: Toffehoff
About the Author
William Davies is a Senior Lecturer at Goldsmiths, University of London, where he is leading the development of a new PPE Degree. His book, The Limits of Neoliberalism: Authority, Sovereignty & The Logic of Competition, is available in the Theory Culture & Society series at Sage. To buy it for the reduced price of £29.75, visit the Sage website and use discount code UK14SM08.
This seems to come up a lot lately. I just read this article by Jens Meiert (ex Google) who said that we are but *cooperative*: https://meiert.com/en/blog/competition/
I tend to believe that more than that we are competitive, much like what you suggest with society having *become* this ‘one big competitive arena’.
But how do we get out of this?
“The result is a condition that I term ‘contingent neoliberalism’, contingent in the sense that it no longer operates with any spirit of fairness or inclusiveness. The priority is simply to prop it up at all costs. If people are irrational, then nudge them. If banks don’t lend money, then inflate their balance sheets through artificial means. If a currency is no longer taken seriously, political leaders must repeatedly guarantee it as a sovereign priority. If people protest, buy a water canon. This is a system whose own conditions are constantly falling apart, and which governments must do constant repair work on.”
Have you met a libertarian or classic liberal who would point to any of this as a liberal characteristic?
Frankly, this paragraph makes me worried about the book’s take. It’s a straw-man of what Liberalism stands for that I’ve never seen a prominent liberal thinker support. You would be hard pressed to find a anyone at a liberal or free market think tank who thinks any of this is anything but deeply illiberal, and a key plank of what liberals are now fighting to end.
I would have thought that human life has always been competitive, it’s just that opinions are diverging as to what makes competition fair (or not), and what the losers of that competition are entitled to.
It seemed like quite an advance to go from defining winning as coming from the right family and then developing manners and connections… to winning through intelligence, education and hard work. However, this advance in civilization is increasingly revealed to be more a myth than a reality, and people divide ideologically as to how this ought to be repaired. Is the problem that government introduces corruption into what would otherwise be an idyllic free market competition? Or is the problem that government needs to do more to make level the playing field? The two sides do agree, however, that intense anger is called for.
As to what the losers get, the Cold War certainly influenced the West to soften the divide between winners and losers, but now that communism no longer threatens, winners are emboldened to expect ever increasing shares of the pie. (Charles Murray says many foolish and self-contradictory things in Coming Apart, but he does a good job tracking the divergence between haves and have nots.)
“Competition is a sin” = “afraid of the competition and stamp it out before it gets to you”.
Economics makes no sense absent inequality of outcomes. The entire discipline depends upon the realizations that people have different desires, values, needs, tradeoffs,contextual circumstances and comparative advantages.
Inequality is both real and necessary for the advancement of prosperity, science (scientists compete for status) and politics (ditto).
I am aware that people have been massively brainwashed that inequality is intrinsically bad. They should probably think about it more.
What is true is that equality and fairness in the rules is essential. We should drop the silly speak about equal outcomes and focus our attention on fairness of rules and institutions.
“What is true is that equality and fairness in the rules is essential. We should drop the silly speak about equal outcomes and focus our attention on fairness of rules and institutions.”
… which is exactly what the post argued for. I don’t think anyone outside of Karl Marx is arguing for equality of outcomes — certainly nothing in Davies’ post suggests that he is — but for enough regulation that the people currently at the top of the leaderboard aren’t able to change the rules to keep it that way forever.
The simple truth is that you only get a free market when a government regulates to keep it free. Otherwise the first thing that happens is that whoever gets ahead uses the resulting power to erode the freedom of the market and prevent competition.
Hi Mike, I agree with your comment.
When I said “what is true” I should have said “where I do agree”, to make my meaning clearer.
Oh, I see! My mistake.
Competition conserves the uncertainty of the future. Inequality does the opposite. They are *not* the same.
Another aspect of this is “gamification” – i.e. routinely treating non-competitive social interactions as if they were competitive. The now famous “urinal fly” is a better example of gamification than of nudging.
This is so profoundly true, and everyone has missed it. We’ve been thinking along very similar lines – mostly from a tax perspective, but the general insights could be applied in many other areas.
Competition between countries is nothing at all to do with market competition between companies. The latter is widely regarded as beneficial, for all its faults, while the former is more along the lines of currency wars or trade wars. They are generally harmful, both for the world as a whole, and for each participant in the race.
See also here: why a competitive tax system is a bad tax system.
Very true insights,as any observer of the American political social public squere can attest too. Losers are those who donot understand how rigged the game is.
This is a fundamental psychological educational anti fairness mode of behavior that Americans find very difficult to change. Actually they donot see a reason to reexamine this mode of life.
The achilles heal in your defence of competition is this: “When the institutional rules are properly established…”
One of the things that has happened over the last 35 years or so is that the authority to establish such rules has been progressively weakened. We now have a model of capitalism in which forms of low level fraud are a normal and expected way of making money, in areas such as investment banking and public service outsourcing. The problem in these areas is that the division between the rule-makers and the competitors gets very murky indeed – partly because of revolving doors between the two, partly because rule-makers can’t keep up with the salaries being paid to those they’re trying to regulate, and so on. Most of all, the notion that empirical evaluations (i.e. economics analysis) should be the ultimate measure of right and wrong creates a consultancy circuit, for experts wanting to make money by helping clients develop a convincing economic justification for what they’re doing.
So everything you say remains perfectly plausible, it’s just that it has less and less purchase on the world that we actually inhabit. It’s no longer clear what the correct institutional rules even means any more, nor how they would be enforced in a way that would actually work. Hence, what we have is a situation where everybody is being ‘competitive’, but there is no clearly identifiable arena in which to locate ‘competition’, in any meaningful sense.
Thanks for the reply.
I agree with you in several places. First, it is essential that institutions and the terms of competition be structured in ways which are fair and constructive. There are obviously places where this is not the case. Oddly my recommended solution is that the institutional rules themselves be improved via the process of constructive competition and choice. For brevity’s sake I will not expound.
Second, crony capitalism is indeed a huge problem. We have too much regulation with too much interference between the refs and the participants. Way too much. This emasculates the competition. However it is again a defense of better competition and less regulatory interference, not an argument against competition.
Now to our disagreement. Implicit in your comment is that institutions are working less well on average today vs any other time period. I am sure that is true for some institutions in some places, but let us consider the world at large.
Average worldwide human prosperity is better this year than at any other time in the history of …well of history. Per capita incomes, poverty levels, life span, education level, and so on are all up substantially over any other era in history. Even worldwide inequality is dropping (in country inequality has increased primarily due to increased competition with unskilled labor in previously unprivileged countries).
The recent focus on inequality is simply amazing considering that the last generation has finally seen worldwide inequality begin to improve. Why? Funny, it is due to competition. Sometimes I suspect the tirades against competition and inequality is just intellectual pharmaceuticals being peddled to those who are upset at losing their previously privileged status (of not competing with foreigners).
With all due respect, you seem to be missing the point of competition. At its most basic, competition is about selecting between alternatives. Competition can be destructive, zero sum, or constructive.
For example, two businesses can compete to sell coffee in my neighborhood. The terms of competition are set up to be constructive — they effectively compete to cooperate with me by selling me the best cup with the finest service at the best price. When the institutional rules are properly established, we can effectively establish a system where firms compete to solve problems better for fellow humans.
Well running markets are thus an example of constructive competition. So too are sports. So too is science (scientists compete with others to discover natural regularities or good explanations). All have positive externalities.
Yes, the first things incumbent winners try to do is call a halt to competition so as to lock in their privileged status. In other words they want to pull up the ladder of constructive competition behind them. His however is not an attack of competition — it a a defense of protecting competition from the enemies of progress and the improvement of human welfare.
With all due respect Roger, you are completely missing the point.
The piece is about the invasion of competition from the economic sphere to all the spheres.
Competition is about to be better, thus the rankings of schools, hospitals, people, kids etc against indicators nobody really understand.
What is the outcome of competition? Selection. And when you keep selecting only the best, you end-up with having only one proposition: Starbucks. You end-up with thousands of workers making pennies while the franchise owner makes millions while before hundreds of coffee-owners were making thousands and more hundreds of “garcons de café” were making a bit more than in Starbucks thanks to pennies.
I come back to my main point, humanity is not about becoming the best, it is about becoming good.
The role of a university is to train good students, shape good citizens not to deliver the best at math or at physics.
Rationalism has killed spirituality. Any great civilization was built on a real equilibrium of power between the secular power (necessarily a competitive one to ensure wealth and security of his people) and the spiritual power whose role was to protect the soul and ensure inclusion. What is left, the craziness of competition without boundaries, we can already rank everything, tomorrow, google will encourage us to rate our baker, our caretaker, our boss, the baristo real time just by nodding. We will be complete slaves of the leviathan we will have created and humanity will die. AND WE ARE ALL PART OF THIS PROCESS OF ALIENATION.
Thanks for the excellent and thought provoking reply, Philippe.
Here is where we part company: you seem to assume that competition leads to a single winner. This is simply not true unless built specifically in yo the institutional rules. It may lead to fewer winners as less efficient competitors switch to fields of their comparative advantage, but it would only lead to one winner if every person on earth had the exact same (and frozen) preferences.
If this was the case (that competition eliminates all competitors) it would mean that one producer managed to deliver superior value compared to every alternative real or imagined to every human on earth, according to the standards of each individual. This is not a cult of competition, it is a cult of valuing the prosperity and well being of humanity. It condenses to utilitarianism, and/or pursuit of quality.
Implicit in the above essay and your comment is that people agree what is best — that they have the same standards. They don’t (though sports do of course require everyone to agree what the standard is for enjoyment of the crowd). Competition is another way of saying choice is decentralized. Each consumer gets to use their standards and values and contextual situation to determine not what is good, but that which is best for them.
The other side of the authors (and your?) paradigm is that we all agree to what the “good” is as opposed to the oddly denigrated “best.” You guys simply assumed that this is known. A good university education is X. Says who? Says you. I reject this paradigm in total.
I do not see a cult of competition. I see institutions which value constructive competition, individual choice, experimentation, and human welfare. Just as importantly, I see an ethos which respects that individuals differ in values and that competition and choice give them ways to fulfill their personal values without dependence upon their betters telling them what is “good” for them.
Thanks for your down to the point reply, it will help me to point further my thoughts. I have no problems with competition per say, I have a problem with competition being the end of everything. I will never argue that competition leads to innovation but I will be able to stand an argument to you that competition is just as much an ideology than class war was and leads very easily to totalitarianism.
I have the feeling that a word where you have basically the choice between being competitive and fight to be an insider or be left over as an outsider is a totalitarian world, just because in the end we lose freedom. Don’t misunderstand me, it is quite not yet but it will be soon. The world where we live in, a world where you need to pay big bucks to put your kids in kindergarden to be sure they will be able to go to the good elementary school and so on is suicidal.
A world where your company will be able to overload you with e-learning modules and monitor you are taking them, your marks etc means you will have no more time available to develop your own views of the world, different thinking.
That is what is threatening me, and the root of it is competition.
I’m living in Asia for quite sometime, and you know what, poor people without ambition of any sort tends to be happy. Why? They are living with their families and large bench of relatives and friends, they feel comforted and supported at any time and are not looking at anything else. I think this is the real aspiration of human beings in their large majority. Kings and monarchs could understand that and make sure their fellows will be. Then, comes competition, and here we are imposing our standards to these peoples to perform better. We value performance above well being and I think this is bad and dangerous.
I believe that a world must balance performance, discovery, growth innovation with well-being and that we have far too much neglected the latter. I believe that we need boundaries and commandments to limit the realm of the former because it is a monster that never stops. Religions were doing so, imposing time to communities to rest, respirations. Every week, during festivals, they were shaping the society, keeping it together. This is destroyed in the West and will be everywhere else with religions competing at the individual level with their different virtues (stupid stance for a spiritual practice isn’t it, any religion has the same virtue, linking the being with the self/soul through practices documented by masters/priests/messis or whatever).
I very often wonder if the incredible set of innovations humanity has been through during the last three centuries have given a real progress to individuals. We have earned a lot but lost just as much. The great think is that individuals we can chose to gain from these experiences and balance our lives, the challenge is how to do this collectively in a world that tells us that we need first to compete before we can do the good…
Thanks again for sharing. Your comments were heartfelt and even inspirational.
I too am a person who has personally jumped off the status treadmill. I did it consciously. I decided that I would re-prioritize my life away from making big bucks and getting the next promotion and instead focus on personal knowledge, family and surfing. Of course I used the assets generated and saved during my “competitive” years to fund my early retirement, and my fellow humans are no longer benefitting from my contributions (I designed products which sold quite well).
But going back to competition…
If there was one person who could be identified as germinating this ethos, it would probably be the enlightenment philosopher Adam Smith. He noticed that with the proper institutional incentives, it is possible to channel this competitive urge for status and wealth into well being for others. He referred to it as the invisible hand. This breakthrough idea — with both good and bad aspects– led to the creation of modern economics which contributed to the modern world.
We channel the competitive drives of people into constructive results. Billions of people competing and cooperating with each other with proper institutional incentives led to standards of living which are about twenty times higher than pre-Smith, for about eight times as many people. We live longer, healthier, are better educated, have more opportunities than the emperors of pre modern times.
I certainly agree that everyone should have a choice. However, the “competition”, status games and quest for productivity are currently foundational properties of our current living standards and population. If everyone chooses to go back to a simpler life, it would be romantic. But it would also lead to about five or six billion deaths and wide scale misery. Indeed absent this ethos of competition, you and I would probably never have been born.