Capitalism, Education, and Inequality

The lead article in the latest issue of Foreign Affairs is written by Jerry Z. Muller and is titled Capitalism and Inequality. Muller’s intention is to provide a history of the development of capitalism that leads to the conclusion that economic inequality and insecurity are inevitable byproducts. Muller then argues that people of all political persuasions must recognize this inevitability and take steps to ensure that the inequality does not exceed the bounds at which social unrest becomes possible.
"Inequality is an inevitable product of capitalist activity, and expanding equality of opportunity only increases it -- because some individuals and communities are simply better able than others to exploit the opportunities for development and advancement that capitalism affords. Despite what many on the right think, however, this is a problem for everybody, not just those who are doing poorly or those who are ideologically committed to egalitarianism -- because if left unaddressed, rising inequality and economic insecurity can erode social order and generate a populist backlash against the capitalist system at large."

"Contemporary capitalist polities need to accept that inequality and insecurity will continue to be the inevitable result of market operations and find ways to shield citizens from their consequences -- while somehow still preserving the dynamism that produces capitalism's vast economic and cultural benefits in the first place."

Note the comment stating that inequality is exacerbated by attempts to counter it. Is this claim fact or opinion? Is it meant to enlighten the reader or is it just another component of the campaign to convince readers that inequality is not as bad as it appears?

Muller’s description of the development of capitalism and the side effects of inequality and uncertainty is crisp and compelling. However, he injects some conclusions about the causes and degree of economic inequality that seem more like personal observations than history. In particular, his description of the role played by the education system seems designed to convince the reader that our schools are doing the job of rewarding those most capable, therefore we need not worry about the unequal educational outcomes.

He makes this statement about the attributes required for success, which he refers to as human capital.

"All of this has been taking place during a period of growing equality of access to education and increasing stratification of marketplace rewards, both of which have increased the importance of human capital. One element of human capital is cognitive ability: quickness of mind, the ability to infer and apply patterns drawn from experience, and the ability to deal with mental complexity. Another is character and social skills: self-discipline, persistence, responsibility. And a third is actual knowledge. All of these are becoming increasingly crucial for success in the postindustrial marketplace."

Note that he uses the term equality of access to education, not equality of educational opportunity. He will later confuse those two quite different things.

Muller seems to believe that we are operating in a perfect meritocracy where the more capable are rewarded and the less capable are not. He concludes that education, by providing equality of opportunity, serves to enhance the inequality of outcomes.

"The fact is, however, that the greater equality of institutional opportunity there is, the more families' human capital endowments matter. As the political scientist Edward Banfield noted a generation ago in The Unheavenly City Revisited, ‘All education favors the middle- and upper-class child, because to be middle- or upper-class is to have qualities that make one particularly educable.’ Improvements in the quality of schools may improve overall educational outcomes, but they tend to increase, rather than diminish, the gap in achievement between children from families with different levels of human capital. Recent investigations that purport to demonstrate less intergenerational mobility in the United States today than in the past (or than in some European nations) fail to note that this may in fact be a perverse product of generations of increasing equality of opportunity."

The mechanism by which the middle and upper classes produce more exceptional outcomes is partly by genetic heredity, but also by being better at creating human capital. Muller points to the family as the main site for capital development.

"The role of the family in shaping individuals' ability and inclination to make use of the means of cultivation that capitalism offers is hard to overstate. The household is not only a site of consumption and of biological reproduction. It is also the main setting in which children are socialized, civilized, and educated, in which habits are developed that influence their subsequent fates as people and as market actors. To use the language of contemporary economics, the family is a workshop in which human capital is produced."

Muller concludes that attempting to counter this inequality in educational outcomes is destined to fail.

"Even if some or all of these measures might be desirable for other reasons, none has been shown to significantly diminish the gaps between students and between social groups -- because formal schooling itself plays a relatively minor role in creating or perpetuating achievement gaps."

Nothing one might due to try to modify the unequal outcomes, or, to use the phrase Muller prefers, achievement gaps, will work because the child enters school preordained for a certain level of success.

"The gaps turn out to have their origins in the different levels of human capital children possess when they enter school...."

This is a rather astounding statement given his earlier claim that human capital is developed in the family and it includes social attributes and knowledge as well as cognitive capabilities. One would not expect "self-discipline, persistence, responsibility" to have been imprinted already in a five-year-old.

Muller lists a few programs such as Head Start and the Harlem Children’s Zone project as showing some potential to alleviate this gap in human capital in kindergarten, but writes them off as being ineffective, incompatible with scaling to large sizes, or, incredibly, as being not worth the investment.

"Many programs show short-term gains in cognitive ability, but most of these gains tend to fade out over time, and those that remain tend to be marginal. It is more plausible that such programs improve the noncognitive skills and character traits conducive to economic success -- but at a significant cost and investment, employing resources extracted from the more successful parts of the population (thus lowering the resources available to them) or diverted from other potential uses."

Muller seems to be assuming that cognitive skills, things that can be tested and graded, are the only things that are important in education. He admits that non-cognitive skills (self-discipline, persistence, responsibility) can be developed outside the family environment, and that they are beneficial for success, but then seems to suggest that they are too expensive. But how does one take advantage of cognitive skills without having learned self-discipline, persistence, and responsibility?

Muller seems willing to throw away the intelligent children that come from a disadvantaged background and lack those noncognitive skills that he says are so important; or, perhaps, he assumes that if they come from a disadvantaged background they can’t be intelligent—the meritocracy would have already promoted their genes to at least middle class status.

There is emerging a school of thought that claims the non-cognitive traits—the ones Muller agrees can be taught—are the ones most critical for success. An article in The Economist reviews the content of a book by Paul Tough: How Children Succeed: Grit, Curiosity, and the Hidden Power of Character.

"The problem, he writes, is that academic success is believed to be a product of cognitive skills—the kind of intelligence that gets measured in IQ tests. This view has spawned a vibrant market for brain-building baby toys, and an education-reform movement that sweats over test scores. But new research from a spate of economists, psychologists, neuroscientists and educators has found that the skills that see a student through college and beyond have less to do with smarts than with more ordinary personality traits, like an ability to stay focused and control impulses."

"So non-cognitive skills like persistence and curiosity are highly predictive of future success."

The task then becomes one of learning how to develop these character traits. This seems a much more hopeful and realistic outlook to build a future on. In this view, the attributes of "self-discipline, persistence, responsibility" that Muller sees being generated in his middle-class homes, are even more important than he indicates.

Muller’s contention that our educational system provides equal access or equal opportunity is a perversion of the reality of our educational process. We discussed a number of ways in which our system of education seems designed to magnify inequality of outcomes rather than to equalize opportunity in Education and the Propagation of Inequality.

Muller’s notion that our capitalist system thrives because it operates in concert with a meritocratic society is either hopelessly naive or a mere genuflection before the established power structure. As Christopher Hayes so eloquently detailed in Twilight of the Elites: America After Meritocracy, what we think of as a meritocracy will always evolve to a system that works to preserve and pass on privilege. Those who are successful will do what is necessary to preserve their status and pass it on to family and friends.

After the last financial crisis, can anyone still believe that the best and the brightest are really in charge?

　

JERRY Z. MULLER is Professor of History at the Catholic University of America and the author of The Mind and the Market: Capitalism in Western Thought.