A Novel Explanation for Rising Inequality

♠ Posted by Emmanuel in ,,, at 3/22/2010 12:01:00 AM
I serendipitously came across French economist Daniel Cohen's Three Lectures on Post-Industrial Society while looking for another book at the British Library of Political and Economic Science. Now, much has been made of how inequality is rising and, as a consequence, social immobility. That is, if you're poor, you're likely to stay that way and the other (usually more desirable for those able to have it) way around. Despite favourite delusions like the flexible labour market encouraging such mobility and that hopeless fraud called the "American Dream," the conclusion of repeated studies is that social mobility is usually worst in Anglo-Saxon economies. Here is a chart Economix pulls out of an OECD report touching on intergenerational mobility:

Why is this so, mon ami? The French often have unique perspectives, and Cohen deploys one that uses a metaphor its originator probably wouldn't appreciate, him being a longstanding cheerleader for American-style free market economics. Here is Cohen's explanation:

Some light is shed on this propensity for social endogamy by the theory of assortative mating. The University of Chicago economist Gary Becker, a professor at Chicago and Nobel laureate in economics, proposed this theory in his iconoclastic research on the economic analysis of marriage. It perfectly illustrates the forces that play when society is left to itself. Becker’s theory goes like this: When a man and a woman are each seeking a marriage partner, two kinds of mating (or “pairing”) are possible. In the first, a man who is good-looking and rich marries the woman who is also good-looking and rich. In this hypothesis, those best-endowed marry among themselves, and by doing so they set off a shock wave that propagates through the marriage market. For if the best endowed marry among themselves, those less endowed will have no other choice but to do the same. since there will be no more really good-looking and very rich people to marry. The same constraint works its way down the social chain, forming a pattern in which each stratum of society closes itself off to those living beneath it.

Becker shows, however, that another sequence is possible, one that leads to asymmetric pairings. It is logical to envision a marriage between an unprepossessing poor man and a beautiful rich woman. Why? In everyday language, we would say “because he is nice” (or kind, or sweet). In Becker’s terms, the reasoning is as follows: A marriage is both a pooling of resources over (time, affection, money) and a rule for sharing them out. In the case of a symmetric marriage, only one share-out rule is possible: that of parity. If two equally endowed persons marry, the concessions to be made will be equally distributed. But an unprepossessing man may quite possibly convince a beautiful woman that he will be more faithful than a handsome man, precisely because he has nothing else to offer. To say of an unprepossessing man that he is “nice” signifies, in economic terms, that he accepts a share-out rule more favorable to his partner (except if she is equally nice, in which case we are dealing with a natural trait they have in common). The share-out rules can transform the logic of marriage, and they create an asymmetric pairing.

Within the framework of this strange theory, we can interpret industrial society as an asymmetric marriage between highly endowed people (engineers) and less well-endowed ones (workers). The engineers gain from this arrangement if the workers are “nice.” When the workers become too demanding, the asymmetric pairing gets broken. The turn of the 1960s was the moment of this divorce, when the aspirations of workers and young people exacerbated the contradictions of Fordism. The union of opposites that had come about in the Fordist factory ceased to be socially pertinent. And so we pass over into another logic: that of assortative pairing, which puts an end to the previous exogamy. Those best endowed decide to remain among themselves. Those just below, in frustration, close off access to the level below them in turn. The secession of the richest reverberates down through the whole of society. Endogamy becomes the rule. The theory of assortative pairings throws into relief an important point: people find themselves grouped into homogeneous social classes, less out of self-love than out of rejection of the other, of those who are poorer [pp. 88-90].

I highly recommend reading this slim volume considering timely questions on globalization and inequality if you can get a hold of it. Elsewhere, Cohen also ponders the oft-noted phenomenon of how information technology allows segregation of labour across time zones, raising the value of "knowledge economy" processes and lowering that of low-skilled manufacturing.

The implication isn't that it pays to be rich and good-looking; I could have told you that...and I'm working on becoming those myself [bada bing!] Rather, it's an interesting theory that should pose testable sociological hypotheses. For instance, while racial discrimination was presumably more common in the past, the emergence of global elites may make intermingling more multicultural but also more homogeneous in terms of phenotype (appearance) and wealth. The rich, smart, and beautiful are different from you and me, dahling. At any rate, this theory is as good as any I've come at explaining inequality in post-industrial society. Give it a spin if you dare.

UPDATE: No, I don't advocate inequality, fer cryin' out loud--I'm just searching for better explanations of it than what we have right now. Certainly, this one looks plausible.