Equality of opportunity requires equality of distribution

I will be responding to this tweet by Prager University. This is the perfect occasion to finally put this dichotomy to rest.

There is an argument from the right and center that they favor ‘’equality of opportunity’’ whereas it is the naive left that favors a malignant concept known as ‘’equality of outcome’’ or ‘’distribution.’’

While I don’t doubt that the right and center have some genuine belief in this idea because they lean towards market liberalism and work within an individualist framework that emphasizes personal choices; I believe that the most principled defense of ‘’equality of opportunity’’ actually comes from the welfare-loving, union-organizing, mad-taxing, workplace-democratizing, public-ownership-philic left.

We should strive to narrow class differences or to eliminate them entirely rather than putting those aims into conflict with equality of opportunity. I will show why this happens and a little bit on how this can be accomplished.

There are a few basic concepts and categories of class power that I think can help change the debate and make the point.

Definition

Wikipedia defines equality of opportunity as such:

‘’equal opportunity is a state of fairness in which individuals are treated similarly, unhampered by artificial barriers or prejudices or preferences, except when particular distinctions can be explicitly justified’’

Stanford defines it this way:

‘’Equality of opportunity is a political ideal that is opposed to caste hierarchy but not to hierarchy per se. The background assumption is that a society contains a hierarchy of more and less desirable, superior and inferior positions.’’

Vocabularly.com in turn defines a ‘’caste hierarchy’’ as a type of hierarchy that has limited or no entry for people outside of it.

‘’A caste system is a class structure that is determined by birth. Loosely, it means that in some societies, if your parents are poor, you’re going to be poor, too. Same goes for being rich, if you’re a glass-half-full person’’

However, I believe that most economic hierarchies are essentially like their more extreme caste hierarchy cousins. They need to be limited entry, otherwise they wouldn’t be hierarchies in the first place! Hierarchies are predicated on exclusivity.

Matthew Bruenig also distinguishes between different versions of the equality of opportunity concept, with ‘’bourgeois’’ (right-wing) and ‘’socialist’’ (left-wing) on opposite ends of the spectrum:

‘’Bourgeois equality of opportunity seeks the elimination of formal and informal status restrictions that affect life chances (e.g. caste positions and race). Left-liberal equality of opportunity takes it one step further, and seeks to eliminate all circumstances of birth that affect life chances, whether they derive from birth status or from the conditions of one’s birth position. So for instance, under left-liberal equality of opportunity, an effort is made to provide extra aid to poor children because of the hardships they face.

Socialist equality of opportunity takes it one last step, and seeks to eliminate all unchosen disadvantages that affect life chances. The net result is that differences between individuals merely reflect differences in taste and choice, not inherent differences in ability, differences in birth privileges, or differences in status. This, Cohen argues, is the most preferable and just approach to equal opportunity.’’

Regardless, all of these definitions will do.

Unequal sources of income

The first question we must ask ourselves, how do people earn their incomes? There are generally three categories of incomes: transfer, labor and capital.

Transfer incomes are those received from government programs, such as old-age pensions, disability pensions, unemployment insurance, accident insurance, so-called food stamps, welfare payments and more.

Labor incomes are those that arise from selling labor to a buyer and working a job, usually an employer. People who earn this type of income are usually called, ‘’workers,’’ ‘’wage-earners,’’ or ‘’working-class.’’

Capital incomes are those that arise from owning capital, including business enterprises, land and bonds. People who earn this type of income are usually called ‘’capitalists,’’ ‘’business owners,’’ ‘’investors,’’ or ‘’capitalist class.’’

This presents a problem. One of the worst failures of capitalism is that it only naturally distributes income to people who earn factor incomes, that being labor and capital. Matthew Bruenig writes:

‘’Under laissez-faire capitalism, income is only distributed to the factors of production, i.e. labor and capital. If you don’t own a whole bunch of capital or have the capacity and opportunity to work, capitalism has no use for you and would, left alone, starve you to death. The welfare state exists, not because some people just randomly fall on hard times, but rather because capitalism has no way of getting huge numbers of people (around half of the population is not working at any given time) the income and services that they need.’’

Almost 50 percent of the population does not work, what Matthew Bruenig calls ‘’nonworkers.’’ Therefore, they earn neither labor nor capital income. This presents a problem for equality of opportunity, because the external barrier to opportunity or ‘’caste’’ here is lack of a source of income. How is everyone supposed to have the same shot when half of the population cannot effectively participate in the economy at all and are usually dependent on support from a wage-earner?

Furthermore, many of these individuals who do work don’t necessarily work full-time jobs or at least some of them work less than others. The average employed adult works 1,811 hours a year. Many people who do work are functionally in a similar place (although not the same) as a nonworker.

This results in a bad distribution of earnings:

This is often because people cannot work. Nonworkers are as such, usually because of a disability, they are unemployed from their job or they have a role in society that does not conform to market expectations, such as being a carer or a student.

To achieve greater equality of opportunity here, it is thus necessary to engage in enormous redistribution to shift money to those who do not earn factor incomes, such as with programs such as universal child care and child benefits (children), greater old-age pensions (elderly and non-elderly retired), larger disability pension (disabled), free college education for both tuition and room-and-board as well as a possible Danish-style college stipend (students), a home care allowance (carers) and larger unemployment insurance (unemployment).

These policies create equality of opportunity (as a consequence of a desire to create greater equality of outcomes) because they abolish or narrow barriers between workers and non-workers. If income is thought of as being the ‘’caste’’ barrier here that is locking people in place, providing more income to people who do not otherwise possess it decreases the barriers between the classes and provides opportunity for upward mobility. It treats people fairly, rather than letting their relation to the means of production determine their entire economic path.

The policy of narrowing outcomes between the highest and lowest incomes necessitates the weakening or elimination of a low-entry caste system created by capitalist income sources and vice versa. Equality of opportunity requires equality of distribution.

Ownership also contributes to unequal access to incomes. It is in my view, the antithesis of equality of opportunity. The first problem is that people who own capital or the what is called the ‘’means of production’’ are unlikely to lose their source of income, if at all, provided their assets are properly diversified, compared to wage-laborers who bear the brunt of constant fluctuations in the market economy.

Karl Marx observed similar realities about the imbalances between labor and capital in the Economic and Philosophic Manuscripts of 1844:

‘’…The capitalist can live longer without the worker than can the worker without the capitalist.’’

‘’Thus in the gravitation of market price to natural price it is the worker who loses most of all and necessarily. And it is just the capacity of the capitalist to direct his capital into another channel which either renders the worker, who is restricted to some particular branch of labour, destitute, or forces him to submit to every demand of this capitalist.

‘’The worker need not necessarily gain when the capitalist does, but he necessarily loses when the latter loses. Thus, the worker does not gain if the capitalist keeps the market price above the natural price by virtue of some manufacturing or trading secret, or by virtue of monopoly or the favorable situation of his land.’’

And this especially this:

In general we should observe that in those cases where worker and capitalist equally suffer, the worker suffers in his very existence, the capitalist in the profit on his dead mammon.

The worker has to struggle not only for his physical means of subsistence; he has to struggle to get work, i.e., the possibility, the means, to perform his activity.’’

The second problem is that with private capital ownership there is an unequal relationship, the worker is technically more useful to the capital owner (receiving surplus value) than the capital owner is to the worker (renumeration in wages).

This is clearly against equality of opportunity, because the two parties are not entering into a free and equal arrangement. One party is using the power that their private property confers upon them to extract unequal terms. The other option of the wage-earner is work or starve, or mostly subsist miserably. How can there be equality of opportunity when one class obtains better terms from the same arrangement merely as a consequence of his or her status?

The final problem is that capital ownership is mostly a low-entry hierarchy, so that status of ‘’owner’’ is controlled by a small number of people. 84% of stocks are owned by 10% of the population.

What this shows that capital incomes from ownership are much more remunerative relative to labor incomes from employment (an unequal source of income) because of an exploitative aspect in property relations and the concentration of property. Thus the key to greater equality of opportunity is, once again, greater equality of distribution or outcome. The social ownership of property instead transfers profits / surplus value to workers or society as a whole. Public enterprises and co-operatives alike would also redistribute incomes because they would provide greater job security, addressing my first point on fluctuations in income for those who receive labor and capital incomes.

Social ownership would enhance equality of opportunity because property would not serve as an unequal source of income for competing groups or classes if it is owned by no class (society) or one equal class (working class).

Since we may not bring all enterprises into social ownership (not even the Soviet Union had total state ownership), we should also employ strategies such as progressive taxation to soak up missing capital income not appropriated by society or the workers.

Necessities and services

Unequal distribution of necessities and services must also interfere with equality of opportunity. People need basic necessities (and for free, ideally) such as healthcare, housing and education in order to have equality of opportunity.

Services and necessities tend to be the most costly areas of expenditure. This means if that they are less than free, they would disadvantage poorer relative to richer people because they would make up a larger share of the incomes of poorer people. A sharply regressive tax, if you will. Equality of opportunity and the provision of necessities and services for free, therefore, entails a redistribution of incomes. This is because the poorer people see their burdens lessened relative to richer people. Provision of these goods increases equality of opportunity in so far as it improves the equality of distribution.

It is also important to note, that in many markets such as healthcare and housing, there is not only unequal distribution of payments or expenditures, but also of access and more physical distribution.

Housing since the early 2000’s has been predominantly constructed for higher incomes, because it is more profitable to do so. Redistribution in the provision of housing (which can be dramatically improved with publicly-owned social housing) is essential for equality of opportunity. Everyone must have the very basics necessary to live their lives, be treated equally and have the same employment opportunities etc.

Housing instability worsens job opportunities.

Healthcare is also rigidly class controlled. Due to the fact that the distribution mechanism happens through markets, the upper classes are prioritized in the distribution of medical services. The richest American patients received approximately 43 percent more healthcare than their poorest counterparts:

“In 2012, the wealthiest fifth of Americans got 43 percent more health care ($1,743 more per person) than the poorest fifth of Americans, and 23 percent more care ($1,082 per person) than middle-income people,” the paper published in “Health Affairs” stated. “These numbers reflect a striking reversal of a long-term trend toward greater equality in health care use by all income groups.”

This severly unequal distribution of medical services almost certainly harms equality of opportunity. The two factors, health outcomes and opportunity, are linked together in several studies and people with worse health conditions are less economically well-off (and vice versa) according to the Urban Institute:

‘’Using a U.S. data set, Hertz (2006) suggests that health accounts for 8 percent of the intergenerational correlation of income.’’

Inequality of distribution is also associated with worse health outcomes.

‘’A high degree of inequality in a given location (e.g., country, state, county, district, city) may itself be a health hazard. The countries with the smallest spread of incomes and the smallest proportion of the population in relative poverty have the longest life expectancies (Wilkinson, 1994). Evidence from multiple sources suggests that the greater the concentration of income at the upper end of the income distribution, the higher the mortality and morbidity rates (Wilkinson, 1994; Kaplan et al., 1996; Lynch et al., 1998).’’

Much of what I am arguing can be visualized in this chart:

Solving this problem, however, is a fundamentally a distributive struggle not only because we seek to eliminate class distinctions within healthcare, but to eliminate class control of it as well. The versions of universal healthcare most favored in contemporary American political debates (known as single-payer or ‘’medicare-for-all’’) would require the outright nationalization of the entire health insurance industry, if not the whole of the providers. The latter would be the case if we seek to emulate Britain’s National Health Service.

Inheritances

Inheritance, and especially by the wealthy, is probably one of the most straight froward foes of equality of opportunity. There is not much to explain here. This is quite literally the closest thing to the definitions above. A ‘’caste hierarchy’’ is defined as:

‘’…a class structure that is determined by birth.’’

Inheritances (35–45 of wealth is inherited) define people’s status in the economy not by their work or even their merits, but by their birth and their class. This is once again a distributive issue, because inheritances worsen the disparity of opportunities between the richer and the poorer in so far as the inheritances are unequally distributed and concentrated among the wealthy.

Other notes on opportunity and wage scales

I’ve also tweeted about this issue before. Upward mobility is heavily correlated with lower inequality. Countries with more equality of distribution (as measured by the GINI index) also have more equality of opportunity.

These countries with greater equality of opportunity have more equality of outcome, in one sense that they have lesser hierarchies. The wage scale is significantly more compressed in the Nordic countries than elsehwhere. My theory is that with lesser employment hierarchies (equality of outcome or distribution), ascending these hierarchies is both less difficult (because there is less to ascend!) and less advantageous to those who accomplish it.

Employment hierarchies, in part as a result of unequal wage scales, can be thought of as an example of an artificial barrier described in the Wikipedia definition above. The greater they are, the more their effects compound and worsen pre-existing inequalitues.

Therefore, the equality of distribution or outcomes contributes to equality of opportunity.

Conclusion and how this article should be interpreted

To conclude, I am not arguing for equality of opportunity, at least on its own. I am arguing for equality of distribution or outcome as the core objective of economic policy. Economic policy should be a relentless drive to reorganize society on more equitable grounds.‘’Equality of opportunity’’ as we think of it is really not a divergent objective or strategy for economic policy, but rather it is usually a positive consequence of greater equality of distribution or outcome.

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Tristam Pratorius the Social Democrat🌹

Social democrat. Socialist. I like Karl Marx, Friedrich Engels and Eduard Bernstein. Social democracy as a theory is aimed at achieving socialism democratically