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Posted by on Aug 11, 2014 in Equality, Featured, Politics | 8 comments

Does capitalism promote social mobility?

In debating this topic on another blog post with Geoff Roberts, I came across this book review of a book which seems to deal very much with this question. I think this review makes for a fascinating read. Let me know what you think:

The storyline of capitalism—and the technological innovation that simultaneously supports and drives it forward—is almost always one of ever-greater personal freedom and opportunity. Slaves and serfs, whose families had been chained to the plows of noble-born landowners generation after generation, are transformed into wage earners who sell their services in demand-driven labor markets. Wage owners pull themselves up by their bootstraps and educate their children, who then enter the professional ranks. With the liberal application of hard work, inventiveness, or entrepreneurial chutzpah, anyone can rise through the ranks of society. The sky is the limit. Or is it?

This is the question that Gregory Clark, economics professor at the University of California, Davis, seeks to answer in his new book, The Son Also Rises: Surnames and the History of Social Mobility (Princeton University Press, 2014). Clark has a predilection for investigating interesting questions, as well as for literary puns. His last book, A Farewell to Alms: A Brief Economic History of the World (Princeton University Press, 2007), sought to explain why the Industrial Revolution sparked and caught fire in England, and not in other parts of the world. His Darwinian answer was that England was peopled by descendants of the upper classes, who over hundreds of years had survived at higher rates than people in the lower classes. As a result, English upper class values, such as hard work, rationality, and education, which were conducive to an industrialized society, also survived.

Clark figured this out by collecting and analyzing data on the English economy from 1200 to 1870. In The Son Also Rises, he uses a similarly data-driven approach. This time, he uses uncommon surnames, such as Pepys, “to track the rich and poor through many generations in various societies—England, the United States, Sweden, India, Japan, Korea, China, Taiwan, and Chile.” Specifically, he matches up the wealth of parents and that of their offspring. The more correlation, the less social mobility.

Just as Thomas Piketty’s Capital in the 21st Century (Belknap Press, 2014), calls into question the role of capitalism in wealth creation, Clark calls into question the role of capitalism in social mobility. But both conservatives and liberals will find justification for their views in the facts uncovered in The Son Also Rises. Clark, who rightfully opens his preface with the words, “This book will be controversial,” found to his surprise that intergenerational social mobility cannot be taken for granted. Industrialization did not move wealth to the wider population, at least not as freely as the prevailing free enterprise storyline would suggest. (Clark basically says that “a hundred years of research by psychologists, sociologists, and economists” into social mobility has all been incorrect.)

Instead, Clark’s research reveals that the global level of social mobility is basically unchanged over the past 800 years. In England, for instance, he finds that the level of social mobility was the same after the Industrial Revolution as it was before it. “The rich beget the rich, the poor beget the poor,” Clark concludes. “Social status is inherited as strongly as any biological trait, such as height.”

But Clark does not say that mobility doesn’t exist, or that social positions never change. Indeed, his research reveals that upward and downward mobility are both continuously at play in human society. One critical factor is the intermarriage between rich and poor, which over time creates a constant regression to the mean. “In the end, the descendants of today’s rich and poor will achieve complete equality in their expected social position,” explains Clark. “This equality may require three hundred years to come about,” but it will inevitably come, unless a family takes dramatic steps (for example, through its choice of marriage partners) to maintain its position in society.

For me, the salient point is that social mobility is being driven by “innate inherited abilities,” not by the ascendancy of capitalism or democracy or any other economic or political ideology. People born rich may go on to be successful, but wealth is not the most important thing they inherit. Far more important are nature and nurture: the genetic abilities they get from their parents (which they will only pass on if they marry people as capable as themselves), and the confidence, education, and connections their families provide.

This is a difficult message for the unlucky people born to less capable parents; they have high barriers to social mobility, as they have throughout history. Capitalism may make it easier for some individuals to realize their potential, but it does not create that potential in the first place. That’s an insight worth remembering when you hear claims to the contrary.

  • Clare45

    Did Prof Gregory Clark examine the economic advantages of his own name? I am curious because Clark is one of my family names.

  • kraut2

    http://www.paulcraigroberts.org/2014/08/11/de-industrialization-america/

    “Between October 2008 and July 2014 the working age population grew by 13.4 million persons, but the US labor force grew by only 1.1 million. In other words, the unemployment rate among the increase in the working age population during the past six years is 91.8%.”

    http://www.globalresearch.ca/disastrous-financial-state-of-american-households-result-of-unemployment-low-wages/5395370

    “Crony capitalism is a term describing an economy in which success in business depends on close relationships between business people and government officials. It may be exhibited by favoritism in the distribution of legal permits, government grants, special tax breaks, or other forms of state interventionism.[1][2] Crony capitalism is believed to arise when business cronyism and related self-serving behavior by businesses or businesspeople spills over into politics and government,[3] or when self-serving friendships and family ties between businessmen and the government influence the economy and society to the extent that it corrupts public-serving economic and political ideals.”
    http://en.wikipedia.org/wiki/Crony_capitalism

    ‘nough said.

    • http://www.skepticink.com/tippling/ Jonathan MS Pearce

      the first link is a cracking article, kraut. Ta.

    • Geoff_Roberts

      I agree with the first article and the conclusions it reached. I’m amazed people have been able to hold it together financially with loss of jobs, decreased wages, decreased benefits, real inflation for things like housing, food, energy, and a general anti-business climate. Yes there are corporations doing very well from downsizing but they will need to soon invest in their businesses, hire new people, and grow their revenues. This is Obama’s economy. His policies of growing government, greatly expanding regulations, increasing the power of many government agencies, corruption, incompetence, and a failed ideology that penalizes the private sector have resulted in a lot of pain for millions of people.

  • Geoff_Roberts

    Clark’s book looks like an interesting read with a unique mechanism to measure social mobility. Just from reading about the book and the reviews it doesn’t appear Clark suggests an answer to the dilemma. Since no economic system is perfect, the question that should be asked is which economic system affords the best chance for improving the lot of ordinary people? Which system best taps into man’s natural desire to control his own destiny and to develop himself into a more productive, happy, and self-reliant individual? Is society better off with the type of individuals I previously described or with those who are dependent, unambitious, and content to simply take what comes their way?

  • http://www.AssafKoss.com Assaf Koss

    It’s strange that the popular opinion supports the notion that anyone can be socially & economically successful, in modern days, as compared to older days.

    Not only is this false, as evident by simple observation and statistics, people back then had many great possibilities that are no longer available to us.

    In the past, there were no passports, and social controls – through technology, were ridiculously easy to bypass. Pretty much, any healthy adult male or group could go and settle in a new land, a bit further away, and homestead. Get their own chance at living, without the oppression of others.

    http://www.AssafKoss.com

    • kraut2

      I have to assume that you refer to the US only. Social controls in feudal Europe were much harsher, violent and encompassing than todays. Why do you think that Marx saw capitalism as the tool that set free the productive potential of society?

      • http://www.AssafKoss.com Assaf Koss

        There were periods of time where some places were even more restricting, than now. However, during most of human history, and even during most of the last several thousand years, people were socially free to move and live, in any unpopulated area.

        Yes, just like now, we have family, friends, and all sorts of reasons that make us want to stay put, even when conditions are dire. Still, before modern society, unless you were specifically a slave, you were basically free to go and do whatever.

        That is exactly how so many Europeans became Americans.