Meritocrazy — a soft insurance system

Why Meritocracy Functions More Like a Psychological Insurance Than Moral Truth — Rethinking through Economics, Philosophy, and Biology

Spoiler: You can skip to the last section “TL; DR” in case the previous sections are too long.

The Human’s quest for certainty

We have the right to actions but not to the results thereof— a law that explains pretty much all effects and causes in the world. Uncertainty rules life. An uncountable number of factors play a role in causing an effect and we can barely track a few of them. A small leaf movement snowballs into a butterfly effect to cause a tornado. Even the greatest of multinational corporations haven’t been able to predict, which led to an invention of one of the greatest social constructs — Insurance.

The Insurance market in its usual interpretation covers enormous kinds of uncertainties that can come up across MnCs to individual lives. This in itself is a great achievement to think of and never has mankind seen a similar working model of financial institutions which ensure the future is predictable. The stress on economic stability was perhaps popularized by Keynes in his economic theories, but insurance markets have long existed. Earliest records are those of Chinese and Babylonian traders around ~1750 BC. But in a general interpretation, insurances have always existed in human civilization ever since the earliest nomads tried their risk aversion strategies in hunting. Harari’s ‘Sapiens’ argues how civilization started to ensure more predictable availability of food. All social structures were built around this principle — to make life more and more certain and it continues to be so. In the current macroscopic scenario, the dominant strategy of political and financial institutions is to maximize stability by using all kinds of insurance possible.

This global desire for resilience must have started at an individual level. We look for it in all facets of life. The general idea is to get a certain guarantee that things will not go wrong. The social structures of insurance cover the most critical ones like medical, financial, social security etc. But most important of all — where is the insurance that my efforts will bear fruit? (spoiler: there is none). Life feels like we are constantly waiting for something to happen. We are taught to work hard from childhood for a good future, but what is the guarantee that the hard work will pay off? And this in my opinion, is the birth of the idea of Meritocracy— the insurance that guarantees that the outcomes depend on the merit of an individual, or in other words, hard work will pay off.

In this economy?

Contemporary interpretations correlate meritocracy as a product of capitalism and that it is a story which is required for capitalism to function. Workers need to believe that the system is meant for their benefit for them to work, else the elites can’t profit. This is a very convenient logic to mass-brainwash people. We are told motivational stories of how people from underprivileged backgrounds found success and success is equated only to material gains (because that is the only incentive they can provide, so you must seek it). What this subconsciously instills in us is the idea that: If you end up broke, it is because you weren’t meritorious enough and not because the system is flawed.

However, if looked from a broader PoV, having such a belief is a general human tendency as seen in the first part. But do we need this belief for the growth of a country? Well, if growth is equated to financial gains, turns out we do. Here is an excerpt from the book Why Nations Fail (this idea won the noble prize in 2024) —

“A businessman who expects his output to be stolen, expropriated, or entirely taxed away will have little incentive to work, let alone any incentive to undertake investments and innovations. These institutions [extractive ones] also fail to provide a level playing field, and therefore they do not encourage sustained economic growth…”

If their conclusion is interpreted at an individual level, here is what it means — a nation grows if the residents have incentive in working hard. The direct conclusion, as the author points, is for nations to build inclusive institutions which “not only give people freedom to pursue the vocations in life that best suit their talents but also provide a level playing field that gives them the opportunity to do so”. This implies that a certain sense of meritocracy must exist in the society for it to function stably, no matter the type of economy, be it capitalist or socialist or any form of financial arrangement, the agents in the game must have incentives to device their strategy (game theory 101).

The Dictator’s Fantasy

But here is another way for the nations to do it — you either build institutions for people to have incentives, or you mass brainwash people into believing they have incentives, Eureka! If you have convinced your citizens to believe the systems rewards according to the merits, you achieve the best of all worlds — the citizens work their asses off to prove the merit, and you are not liable to reward them since you can just blame on their incompetency. All you need to do is, once a while, pop in stories of folks who presumably came from nothing and achieved a lot to reinforce the mass faith on the system. Why build a better future when you can narrate them a better past?

Alas, it is not that easy to ideologically capture the herd. While this method may show little success initially, sustaining is hard and empires collapse as they have done in the past. But the new empire? The fate isn’t very different for them, but a shift is attempted in the positive direction. Think of it as a spectrum — one end is the dictator’s dream and other end is a perfect meritocratic system (citizen’s dream). Current societies lie somewhere in between. In economic terms, it is analogous to a spectrum of extractive to inclusive institutions. However, this introduces 2 new notions:

1. The idea of a perfect meritocracy
2. A notion of measurement and comparison of meritocracy

Can absolute meritocracy exist?

Consider the sex testing controversy in Olympics. Not digging into all aspects, one theme that floated was the relation of testosterone with sports performance and a stance was that athletes should be gender tested based on testosterone levels before allowing them to participate. When scientifically verified, it was found that while testosterone helps in certain physical aspects, the overall sports performance depends on much more factors. For the purpose of our context, let's say hormone levels are the only deciding factor. So we have a range of athletes in a spectrum. Now to make it fair, say we divide it into 2 categories: male and female, based on a threshold value (note that this division is only for analysis of present context and does not match real life practices). Now notice how in both segments, there will be females with higher levels and men with lower levels. To make it fair for them, we can do another segmentation. And the problem still remains in the new categories formed (with a lesser delta of course). No matter the number of segmentations, the problem remains (unless you are a calculus genius who is able to find a differential equation for infinitesimal continuous sequence of genetic gifts).

Hormone is just one marker, considering other factors will make this a multidimensional spectrum and fragmentations get insolvably complex (even for a calculus genius). Even measuring one criterion is hard (the officials have changed the sex determining criteria several times over the past leading to different classifications, including cases like athletes who qualified for one tournament did not qualify for the same tournament next year since the criteria was changed). It is unfair to remove them from the sport since this was never in their control. But what about the others? Michael Phelps’ body reportedly produces half the lactic acid of a typical elite athlete. Research suggests elite sprinters like Usain Bolt likely carry the 577RR variant of the ACTN3 gene. This gene produces a protein (alpha-actinin-3) found only in fast-twitch muscle fibers. These fibers are responsible for explosive, “snap” movements. Approximately 80% of Bolt’s muscle fibers are fast-twitch. Of course genes alone don’t win gold medals. Thousands of people likely share these specific genetic markers but never become athletes. But what about the ones who become? Even if they put in as much effort as they did, they will always have a small genetic disadvantage. If someone is born with slightly weaker bones as a genetic trait, no matter how much effort he/she puts, there will always be practically someone who will serendipitously defeat them, and it is none’s fault. It is impossible to create such a system.

The very law that governs nature itself — “Survival of the fittest”, runs on pure luck. A progeny by chance receives a genetic blessing and ends up having a survival rate higher than its unblessed peers. Is it being ‘meritorious’ or just a superior* gene expression? This snowballs a butterfly effect, and a new specie is introduced and the old is wiped out. Popular discussion of meritocracy revolves around social and economic factors, but this shows how meritocracy is fundamentally a flawed concept by the very rules of nature.

Note here that superiority* is completely defined by the nature of environment of the specie. There is no inherent meaning to it. Similarly, merits have changed over history rewarding different skillsets differently according to the economic arrangements of that time, which also shows how there is no good or bad merit.

Further debates will lead to questioning free-will itself. I found a good video linked below which discusses a few more cases to explain this. The conclusion remains the same.

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But what about measurement and comparison of meritocracy?

Maybe meritocracy is not the right word, but one cannot deny the notion that some systems reward incentives better than others, which after all is the main cause of rise and fall of nations as we saw. Citizens must aspire and work to fulfill the aspirations to drive the economy forward. High aspiration and low meritocracy might drive the economy, but the disparity stays stagnant and perpetually kills the aspiration. This leaves behind generational loss and take decades to bring back. This therefore becomes a real threat for policy makers to consider.

How will be even consider an imitation to make real decisions? Maybe what the system is looking to reward needs some clarification. We found that Natural Selection rewards fit, not deserving since that is not quantifiable anyway. So, instead of saying system should rewards merit, a better way to put is — it rewards results which are quantifiable. Then we need to ensure 2 things for a growing nation:

1. Institutions that ensure better output gives more incentives in return.
2. Mechanisms to uplift the results of the unprivileged.

However as a society, we must understand that while results don’t lie, they do not tell the whole truth either. Worthy individuals (although we have pretty much unestablished the concept of worth) may not get recognition due to systemic defaults, and the system may favor less talented/skilled. We must accept that success and merit have little correlation to begin with and the only way to maximize probability to increase the number of chances (one can expect to get tails if they keep tossing the coin). Also on a side note, both success and merit are social constructs anyway. This does not mean one should stop working; while effort does not guarantee success, the absence of effort guarantees failure.

TL; DR

Here a point wise conclusion of everything so far:

1. Believing in meritocracy is a natural desire but it is an impractical concept by the Darwinian law. The society cannot guarantee something it cannot quantify.
2. It explores cases for policy makers showing merit changes based on definition and explores a kind of post-positivist constructivist take. The definition of merit itself is vague.
3. However, normal people need this insurance for them to work. Hence, this essay takes a pragmatic instrumentalist approach to show how it is related to aspiration which in turn affects growth of societies.

The main takeaway being — The myth of meritocracy is not that it does not exist, it is that it cannot exist. Hence, those of us who are born with luck, have an economic obligation to pass it on to those who weren’t.