Capitalism, Meritocracy, and Social

Stratification: A Radical Reformulation

of the Davis-Moore Thesis*
By COSTAS PANAYOTAKIS, PH.D.†

ABSTRACT. This article advances a reconceptualization of the Davis-

Moore thesis, which adresses the weaknesses of Davis and Moore’s
original formulation and can function not as a causal explanation of
inequality but as a normative yardstick, against which the efficiency
of capitalist society’s use of human talents can be measured. I argue
that the nonmeritocratic nature of capitalist society prevents it from
using human talents efficiently and that this fact is obscured by a
“meritocratic illusion” that is systematically generated by the structural
logic of capitalist society. After briefly exploring one way in which
capitalism’s ecological contradictions impinge on the Davis-Moore
thesis, I conclude by arguing that it is the mediation of capitalism’s
contradictions through social struggles that will determine whether a
more meritocratic society consistent with the reconceptualized version
of the Davis-Moore thesis will ever emerge.

Introduction

The continuing economic crisis has drawn attention to economic

inequality and the development of a hypertrophic financial sector
diverting human talent from more productive uses. While conserva-
tives still defend inequality as a means to job creation, economists
increasingly view it as both an obstacle to economic growth and a
contributing factor to the current crisis (Porter 2011; Kotz 2007, 2008).
Moreover, as the rise of the Occupy movement has ensured that
*Address correspondence to: Costas Panayotakis, 836 Washington Avenue, 3B,
Brooklyn, NY 11238. Tel: 718-857-2652. Email:cpanayotakis@gmail.com
†Costas Panayotakis teaches sociology at CUNY’s New York City College of
Technology. He has published a number of scholarly articles on political economy,
social movements, and ecology and is the author of Remaking Scarcity: From Capitalist
Inefficiency to Economic Democracy.
American Journal of Economics and Sociology, Vol. 73, No. 1 (January, 2014).
DOI: 10.1111/ajes.12068
© 2014 American Journal of Economics and Sociology, Inc.
 Capitalism, Meritocracy, and Social Stratification 127

economic inequality is no longer the exclusive province of policy or

academic experts, this article seeks to contribute to today’s discussion
through a reexamination of an earlier debate triggered by an article by
sociologists Kingsley Davis and Wilbert Moore (1945). While Davis
and Moore’s intention was to present the useful functions of stratifi-
cation for society, I will argue that these functions are best served
not by stratification but by a fundamental social shift towards a
meritocratic society that is consistent with economic democracy, or the
principle that all human beings should have an equal say over the
operation of the economic system.

The Davis-Moore Thesis

In their article Davis and Moore (1945: 242) explore “the universal
necessity which calls forth stratification in any social system.” This
necessity is traced to the need of all human societies both to place the
most talented and qualified of their members in the functionally most
important positions and to motivate them to perform the duties of
these positions conscientiously. Davis and Moore (1945) thus imply
that it is possible to compare different social positions in terms of their
functional importance. Secondly, they argue that, in the competi-
tion for scarce human talent, societies have to ensure that the more
important positions prevail over the less important ones. According to
Davis and Moore (1945), social inequality makes it possible to assign
generally high (material and nonmaterial) rewards to the most impor-
tant positions, thus pulling talented individuals into those positions.
Since Davis and Moore published their article, both aspects of their
thesis have been challenged. My purpose is not to provide a historical
overview of the debate. Instead, building on some of the criticisms of
the Davis-Moore thesis that were articulated during the debate, I argue
that the social needs that correspond to the two assumptions struc-
turing the Davis-Moore thesis point towards the necessity not of social
stratification but of economic democracy.

The Functional Importance Assumption

Regarding Davis and Moore’s assumption that not all positions in the
social division of labor are of equal importance, critics have raised a
128 The American Journal of Economics and Sociology

number of objections. Huaco (1966: 236) argued that “[t]here [wa]s not
a shred of evidence that different positions make different degrees of
contribution to societal preservation or survival” while Randall Collins
(1975: 421) described the very concept of functional importance as a
reification that views society not as the product of competing social
forces and the interaction of various social actors, but as an entity with
needs that are normally satisfied. For Collins, the concept of functional
importance is a value judgment posing as a descriptive statement.
If society is a meaningless abstraction, so is the notion that some
positions do more to meet society’s needs than others. From that
standpoint, therefore, the function of the claim that one position is
more “functionally important” than another is to justify existing
inequalities by attributing them to the fact that some positions are
supposedly more important.
The concern about the contamination of the notion of “functional
importance” by the analyst’s value preferences has also been raised by
Tumin (1953). Unlike Collins, who rejects the notion of social needs
altogether, Tumin (1985: 19–20) has identified six functions that have
to be fulfilled in any given society and argues that, insofar as different
societies do not pay equal attention to each of these “functional
prerequisites,” they can be said to have different “institutional empha-
ses.” In elaborating the concept of institutional emphasis, however,
Tumin (1985: 27–28) avoids the reification of society that Collins
warns against by making clear that it is not society in the abstract that
selects some institutional emphases over others, but rather the groups
that are powerful enough to turn their priorities into the organizing
principles of social life.
Much of the disagreement in the Davis-Moore debate had to do
with whether the claims on either side represented positive statements
about the world or normative statements about what ought to be.
A common sentiment among critics was that Davis and Moore justi-
fied social inequality by presenting “any scheme of stratification [a]s
somehow the best that could be had” (Simpson 1956: 132). Davis
(1953: 394), on the other hand, argued that Melvin Tumin, whose 1953
response to Davis and Moore’s original article got the debate rolling,
was “not so much interested in understanding institutionalized
inequality as in getting rid of it. By insinuating that we are ‘justifying”
 Capitalism, Meritocracy, and Social Stratification 129

social inequality, he falls into the usual error of regarding a causal

explanation of something as a justification of it.”
While, in the statement just quoted, Davis presents his and Moore’s
theory of stratification as a purely positive, purely causal account, his
defense of the theory is much more ambiguous. In the original article
the concept of functional importance could be interpreted as not
value-laden. In claiming that some positions may be more important
than others, Davis and Moore are not appealing to a set of values on
the basis of which different positions can be ranked. Instead, they
claim that not all positions equally contribute to “societal survival”
(Davis and Moore 1945: 243). Although it could be criticized as
theoretically vague (Tumin 1953: 388), this criterion does not neces-
sarily have normative implications. To say that a position makes a
great contribution to societal survival is not a valorization of that
position unless one assumes that the society in question deserves to
survive. On the other hand, it is precisely this assumption that Davis
(1953: 396) makes when, in his response to Tumin’s critique, he claims
that the Davis-Moore theory explains how social inequality serves as
the means through which self-interest and social interest come to
coincide. In advancing this claim, Davis turns social stratification into
the sociological equivalent of Adam Smith’s invisible hand, glossing
over the fact that the survival of stratified societies is often made
possible not by reconciling individual self-interest with general social
interest but rather by subordinating the interests of individuals belong-
ing to oppressed and disenfranchised social groups to those of indi-
viduals belonging to privileged and powerful groups.
The problems with Davis and Moore’s concept of functional impor-
tance do not, however, mean that this concept is unsalvageable.
Indeed, these problems disappear if we accept that the concept of
functional importance does have a normative side and if we define
this functional importance not in terms of societal survival but in terms
of the impact that the adequate (or inadequate) performance of an
individual holding a given position will have on others.
For example, consider the following positions within American
society: pizza delivery person, heart surgeon, president of the United
States. Clearly, the potential to harm others through inadequate
performance is not the same for these three positions. An inept or
130 The American Journal of Economics and Sociology

dishonest president of the United States can start unnecessary wars

that kill hundreds of thousands of people or a nuclear war that wipes
out humanity altogether. An inept heart surgeon could kill dozens of
patients. By contrast, an inept pizza delivery person might mar the
culinary enjoyment of the individuals who get their pizza delivered
late and cold. All three outcomes could be said to be bad (a value
judgment). And some of these outcomes (for example, humanity
being wiped out by a nuclear war or dozens of patients dying in the
hands of an incompetent heart surgeon) could be said to be worse
than others (for example, pizza customers having to eat cold pizza).
This is a value judgment too. If everybody (or most people) in a given
society shared these value judgments, it could be said that, for the
society in question, adequate performance of the president or heart
surgeon roles is more urgent than adequate performance of the pizza
delivery role. It could, then, also be said that, in the judgment of the
society in question, the positions of president or heart surgeon are
more functionally important than that of a pizza delivery person.
While the value judgments just mentioned may seem uncon-
troversial, this would not always be the case, especially since judg-
ments regarding the importance of different positions are likely to be
affected by the interests of the individuals who pass these judgments.
This is a reality recognized by functionalist theorists, like Robert
Merton (1967: 84) and Herbert Gans (1972), who have long pointed
out that a social phenomenon that may be functional for one group
of people may not be functional for another group that occupies a
different position within society.
Consider a corporate lawyer hired by a corporation seeking to avoid
taxes or an advertising professional tasked to convince the general
public to replace last year’s still perfectly functioning gadgets with the
latest model. Inept performance by the professionals in question will
clearly not affect everyone in the same way. The corporation seeking
to avoid taxes as well as the one selling the gadgets may lose millions
of dollars as a result of not hiring the right professionals but the
general public may benefit by having more funds available for socially
useful public services or for goods and services that are more urgently
needed than this year’s slightly improved gadget. In these examples,
the question to ask is not whether the positions of a corporate lawyer
 Capitalism, Meritocracy, and Social Stratification 131

or an advertising professional are important but who they are impor-

tant to. This is a point that we will return to.

Davis and Moore’s View of the Allocative Function of High Rewards

The second assumption underlying Davis and Moore’s argument was

that high rewards for important positions both facilitate the recruit-
ment of talented individuals to such positions and encourage these
individuals to perform their function diligently. Rewarding important
positions well is necessary so that “less essential positions do not
compete successfully with more essential ones” (Davis and Moore
1945: 243). As we have just seen, however, the question of what
position is essential and what is not is by no means straightforward.
An advertising executive whose activity may be functionally very
important to the corporation hiring him/her may in fact be detrimental
for the public that is influenced by his/her campaign.
Moreover, one problem with stratified societies, like capitalism, is
that they endow privileged minorities with a disproportionate amount of
power when it comes to determining the relative rewards of the different
positions (Tumin with Feldman 1971: 491). In the case of capitalism, this
means that corporate capital is more than willing to pay very high
rewards for services that do more to increase profit than to meet the
general public’s needs. As Simpson (1956: 134–135) points out:
Corporation executives can hire lawyers to thwart the antitrust laws. They
can employ advertisers to hoodwink the public into acting against its own
best interests.
One could add to Simpson’s examples. Corporate capital can, and
does, hire lobbyists against environmental legislation or legislation
protecting labor rights. Capital also can, and does, hire consultants
providing advice on how to bust unions, corporate tax lawyers
providing advice on how to avoid taxes, and so on.
In other words, the possibility that positions that serve the privi-
leged elite will compete successfully with positions that serve the
majority of people should be as much a concern for us as the
possibility that unambiguously “less essential positions . . . compete
successfully with more essential ones” (Davis and Moore 1945: 243).
132 The American Journal of Economics and Sociology

This truth should be evident to us in view of the current crisis. To

quote Barack Obama (2009) during his March 2009 appearance on the
Jay Leno show:
we need . . . a smart kid coming out of school, instead of wanting to be an
investment banker, we need them to decide they want to be an engineer,
they want to be a scientist, they want to be a doctor or a teacher.
And if we’re rewarding those kinds of things that actually contribute to
making things and making people’s lives better, that’s going to put our
economy on solid footing.
What President Obama would not admit, of course, is that the lavish
pay of Wall Street bankers is not a mistake that can easily be fixed
within the framework of the present system. On the contrary, their pay
flowed precisely from that system’s orientation towards the pursuit of
profit. Those who can help capitalist elites reap high profits will be
handsomely rewarded, even if the harm their activity inflicts on the
majority of the population exceeds the benefits it confers on those
who hire them. This means, however, that capitalism does not reward
positions according to the impact they make on the welfare of the
population as a whole but rather according to their impact on the
welfare of the tiny capitalist elite that controls the economy. In other
words, capitalism does not reward positions according to the majo-
rity’s understanding of what the most important positions are but
according to a tiny privileged minority’s economic interests.
At this point, an initial reevaluation of the Davis-Moore thesis is
possible. Davis and Moore are right to argue that societies may have
good reasons to differentiate between positions according to their
functional importance. However, as far as this article is concerned,
functional importance is better understood not in terms of its contri-
bution to societal survival but in terms of the impact that the adequate
(or inadequate) performance of the holder of a position has on others.
This article also recognizes, however, that what may seem as a
functionally important position to one group may not be experienced
as such by another.
When such disagreement occurs, it can be resolved either through
democratic deliberation and debate, in which all citizens have equal
voice, or through imposition by powerful groups that control political,
economic, and social institutions. In stratified societies, it is usually the
 Capitalism, Meritocracy, and Social Stratification 133

latter scenario that prevails. In the stratified capitalist society we

currently live under, this scenario is also informed by the single-
minded pursuit of profit. If we want the rewards bestowed upon
different positions to reflect the contribution these positions make to
the welfare of the many rather than the few, we have to move beyond
capitalism and towards a socioeconomic system consistent with
economic democracy, or the principle that all human beings have an
equal say over the operation of the economic system.1
Defining functional importance in terms of the impact that different
positions have on the general welfare is not the only way that the
Davis-Moore thesis has to be modified. As a number of critics of the
Davis-Moore thesis (Tumin 1953; Huaco 1966; Buckley 1963) correctly
pointed out, the ability of an unequal social system to fulfill the
allocative function identified by Davis and Moore crucially depends
on whether people’s positions in that system are ascribed or achieved.
For different positions to compete for the most talented individuals,
those individuals must also be allowed to compete for the most
important (and highly rewarded) positions. In closed societies, based
on ascription rather than achievement, this condition is not fulfilled,
thus calling into question Davis and Moore’s (1945: 242) claim to
account for “the universal necessity” of social stratification.

A Modification of the Davis-Moore Thesis

This has led some critics to the conclusion that Davis and Moore make
the false “teleological assumption that any existing scheme of strati-
fication is somehow the best that could be had,” glossing over the fact
that “societies can tolerate some degree of inefficiency” (Simpson
1956: 133). Against this claim, one could point out Davis and Moore’s
(1945: 248) recognition that “the efficiency of a stratified structure may
be affected by the modes of recruitment for positions.”
Nonetheless, Simpson’s reading of Davis and Moore does point to
an ambiguity in their original analysis. In introducing their argument
Davis and Moore (1945: 242) argue that to motivate its members to
perform well in their respective positions society must, among other
things, “instill in the proper individuals the desire to fill certain
positions.” Later on, however, Davis and Moore (1945: 243) claim that
134 The American Journal of Economics and Sociology

inequality helps to “insure that the most important positions are

conscientiously filled by the most qualified persons.” What is striking
about these two passages is that the first one is both more vague than
and possibly in contradiction with the second one. Indeed, “proper
people” could be, as in the second passage, the most qualified ones
for the position, or it could be the individuals with the greatest
potential.2 The importance of this distinction is great indeed, since
only in a society that provides equal opportunity to all its members
would the people most qualified for the highly rewarded (and “impor-
tant”) positions closely correspond to the people with the greatest
potential. Indeed, one of the main arguments in favor of a meritocratic
society giving everybody equal chance to cultivate their talents is the
efficiency with which such a society would put these talents to use
(Young 1994).
For Davis and Moore an unambiguous explanation of who exactly
they had in mind when they referred to the “proper people” may not
have seemed essential, since their concern was societal survival rather
than societies’ optimal use of the human talent available to them. For
our purposes, however, the definition of “proper” people in terms of
talent is important because it points to the possibility of an alternative,
“normative” version of the Davis-Moore thesis. Davis and Moore’s own
version of the thesis is intended as “a causal explanation” (Davis 1953:
394) of social inequality in terms of the contribution that inequality
makes to society’s ability to reproduce itself. By contrast, this article’s
version of the thesis, which defines the “proper people” in terms of
potential, rather than qualifications, does have an important normative
implication, namely, that an optimal use of available human talent
is only possible in a society that offers equal opportunity to all its
members. Only in this way would those who end up being the most
qualified for what the majority views as important positions do so
because of their talents and effort rather than because their ascribed
characteristics or privileged background earned them higher than
average opportunities to achieve success. And only in this way would
the performance of those in important positions not be merely adequate
but as high as possible given the range of talent available to society.
The closest that Davis (1949: 387) comes to addressing this issue is
in the following passage:
 Capitalism, Meritocracy, and Social Stratification 135

like the idea of caste, this idea [of equal opportunity] is never fully
embodied in actual practice. The reason is that in every human society the
family is the reproductive unit, so that the parental status unavoidably
affects the status of the child. A boy reared by professional parents in a
suburban home, sent to a good high school, enrolled in a good university,
and given a stake when he starts his career has an inestimable advantage
over the boy born in the slums. His mode of speech, his manner of dress,
his fund of knowledge, his confidence in himself, his acquaintances
and contacts—all give him an overwhelming advantage in the struggle for
prestige. This is why, for example, . . . [i]n proportion to the number of
each class in the population, professional families contribute twice as many
notables as do business families, 20 times as many as do farming families,
and 45 times as many as do unskilled labor families. Our system has,
then, a caste element that keeps it from being entirely open, despite our
democratic ideal.
This passage explains why, for Davis (1949: 378), a society just based
on achievement is impossible. In his view, the fact that reproduction
and socialization of children are carried out by the family inevitably
means that people’s family background will positively or negatively
affect their chances in life.
This argument has interesting implications that Davis never really
explores. If the family transmits inequality from one generation to the
next, then equality of opportunity cannot be separated from equality
of outcome. Even if equality of opportunity and meritocracy were
achieved at some point in the future, their preservation would still
be an uphill struggle, in view of the temptation, recognized even
by Moore (1963a: 83, 1963b: 17), for parents to turn meritocratically
based advantages into hereditary social hierarchies that subvert
equality of opportunity. In fact, one scholar has gone as far as to
suggest that “meritocracy is self-defeating in that the inequality
associated with it as a distributional principle undermines it as an
allocative principle” (Lister 2006: 233).
In this respect, Kariya and Dore’s (2006: 142) contrast between
“communal egalitarians who are concerned about differences in
outcomes—in income and power—and meritocratic egalitarians who
are interested primarily in equality of opportunity to compete for
outcomes that may be vastly unequal” may be largely illusory, since
a meritocratic society that tolerates large inequalities of outcome
is bound to lose its meritocratic character in short order. Even for
136 The American Journal of Economics and Sociology

meritocracy and equality of opportunity to be attained, what is needed

is a society consistent with economic democracy. Such a society
would empower all people to have an equal say over the opera-
tion of the socioeconomic system, thus also preventing some of
them from becoming a self-perpetuating elite that quickly undercuts
any meritocratic elements that a new socioeconomic system might
institute.
The fact that economic democracy precludes large economic
inequalities that would allow the wealthy to have a greater in-
fluence on the economic system than the poor is only one of the
reasons why meritocracy without economic democracy is hard to
conceive. More than that, economic democracy, as I have argued
elsewhere,3 implies a challenge to capitalist hierarchies within the
workplace that separate the population into two groups: a relatively
small economic and technocratic elite that makes decisions and
organizes productive activity by issuing orders and the majority of
workers who are consigned to tasks that are repetitive and routine
and that require them to pass their day-to-day lives following orders
(Albert and Hahnel 1991: 13–14). This division of labor does not
empower all individuals to have an equal voice over economic
decisions and that is why Michael Albert and Robin Hahnel have
called for a noncapitalist economic system that includes “balanced
job complexes.” Such complexes would not make empowering
tasks the exclusive province of a few highly placed and prestigious
jobs while filling the days of most workers with repetitive and
disempowering tasks. Instead, they would require that everyone’s
job description included both some empowering and some repetitive
tasks (Albert 2004: 103–111). Such a change would imply a complete
rethinking of the education system and the tendency of capitalist
societies to produce two separate types of schools, a well-financed,
high-quality one for the students trained to join the directive eco-
nomic and political elite, and a less well-financed, often low-quality
one, for those trained to hold a subordinate position in the labor
process (Kozol 1992).
By requiring a new division of labor and an education system
that prepared all people to actively participate in economic decision-
making, economic democracy thus implies a challenge of the great
 Capitalism, Meritocracy, and Social Stratification 137

inequalities in educational levels and cultural capital that capitalism

produces. In so doing, it addresses the concern of pessimistic com-
mentators who, echoing Davis’s passage above, argue that meritocracy
is impossible because it would require either “abolishing the family”
(Saunders 2006: 184) or allowing the state “to stop parents reading
bedtime stories to their children” (Reeves 2004). Parents’ socialization
of their children does not prove that meritocracy is impossible but that
it is impossible within our inegalitarian capitalist system. What meri-
tocracy requires, in other words, is not that the state impose draconian
restrictions on family life but that a shift towards economic democracy
make it possible to overcome the great inequalities in cultural capital
that currently do not allow all parents to prepare their children for
success.
In any case, it is worth noting that, in the course of the debate, both
Davis and Moore ended up conceding many of the points raised
by their critics. Responding to Tumin’s (1953) identification of the
dysfunctions of social stratification, Davis (1953: 397) agreed that “any
aspect of society is functional in some ways and disfunctional in
others.” Moore also recognized the widespread waste of human
talent in all stratified societies and accepted Walter Buckley’s (1958:
370) critique of their original article for conflating unequal rewards
between different positions with social stratification involving inequal-
ity between social groups “that continue through several generations
to occupy the same relative amounts of material ends, prestige, and
power.” Moore’s concession with respect to the last point is especially
striking, since it goes as far as to contradict Davis’s (1949) naturaliza-
tion of nonmeritocratic societies in the long passage quoted earlier
in this article. In his rejoinder to an article by Tumin (1963), Moore
(1963c: 26) concedes that
the relationship between such ubiquitous “inequalities” on the one hand
and “stratification” as generalized and ranked social categories on the other
is subject to investigation but by no means definitionally the same. Thus,
one may theoretically imagine and, here and there, empirically encounter
social differentiation with unequal rewards without this becoming a com-
ponent of a “generalized” social status.
According to Moore (1963c: 26), this represents “a substantial modi-
fication of ‘original positions’ on both sides of the controversy.” For
138 The American Journal of Economics and Sociology

our purposes, however, what is most important is that, in view of this

rejection of Davis’s earlier pronouncement that the existence of family
made a perfectly meritocratic, achievement-based society impossible,
the meaning of social stratification’s “functionality” changes. If the
ability of the family to fulfill its functions does not necessarily
imply the existence of unequal opportunities, then any contribution
that unequal opportunities may make to the reproduction of
nonmeritocratic systems is only functional for the groups within those
systems that benefit from the absence of meritocracy. Functionality
then does not refer to universally beneficial effects of social stratifi-
cation but to the contribution that social stratification makes to the
reproduction of a social order that confers benefits on those at the top
while denying them to those at the bottom.
This means, however, that the only compelling version of the
Davis-Moore thesis that we are left with is not Davis and Moore’s
original, causal, version, but what we have referred to as its normative
version. The alternative version of the Davis-Moore thesis here pro-
posed does not pose as a causal explanation of inequality but as the
formulation of the conditions under which the existence of some
degree of economic inequality could promote society’s most efficient
use of the human talent available. These conditions include a non-
stratified, democratic social and economic order, in which prioritized
positions do not just reflect the interests of a privileged elite while
rewards are distributed in a meritocratic way.
As this discussion indicates, the implications of a critical reevalu-
ation of the Davis-Moore thesis contradict Davis and Moore’s claim
to have demonstrated the impossibility of a “classless” society (1945:
242). Having found the original version of the Davis-Moore thesis
highly problematic, this article does not only advance an alternative,
normative, version of that thesis. It also reaches the somewhat
surprising conclusion that, far from disproving the possibility of a
classless society, the alternative version of the Davis-Moore thesis
here proposed in fact points in the direction of economic democ-
racy and the abolition of the class, gender, and racial inequalities
that prevent all people from having an equal say over the operation
of the economy as well as rewards from being distributed in a
meritocratic way.
 Capitalism, Meritocracy, and Social Stratification 139

Capitalism’s Meritocratic Illusion

As we saw earlier, the proponents of the Davis-Moore thesis evolved

from a position that a classless society is impossible (Davis and Moore
1945), to a claim that even a purely meritocratic, achievement-based
society was impossible (Davis 1949), finally to the recognition that
there are no compelling theoretical reasons to consider a meritocratic
social system impossible (Moore 1963c). Davis’s (1949) position is
particularly instructive for our purposes because it creates an opening
for exploring the implications of this article’s normative version of the
Davis-Moore thesis for the analysis of contemporary capitalism.
It will be recalled that, in discussing American society, Davis rec-
ognized that a privileged class background could increase a child’s life
chances by an order of 20 to 45. The rest of this article takes the step
that Davis refused to take when he chose not to proceed from this
insight to a hard look at capitalism’s class inequalities.
One of the distinctive features of capitalist society is that its repro-
duction of class relations is mediated by market competition. This
competition is between companies as well as between workers in
the labor market. To the extent that even individuals from privileged
backgrounds must remain competitive to retain their class position,
capitalism supplements (rather than replaces) the principle of ascrip-
tion with that of achievement. The principle of ascription remains
operative not only through intergenerational inheritance of wealth and
privilege, but also through discrimination on the basis of gender, race,
religion, national origin, and so on (Panayotakis 2011: chapter 5).
Competition is functional for the capitalist system in a number
of ways. First, to the extent that market competition injects capitalist
society with a strong sense of insecurity, it also contributes to this
society’s unprecedented dynamism. The capitalist compulsion to accu-
mulate and “constantly revolutionis[e] the instruments of production”
(Marx and Engels 1978: 476) derives from the threat of economic
extinction facing any capitalist or company failing “to conform to
capitalistic rules of action” (Weber 1976: 54).
The dynamic and competitive nature of capitalist society tends to
generate what can be described as a “meritocratic illusion.” According
to Marx and Engels (1978: 476), the revolutionary function of the
140 The American Journal of Economics and Sociology

bourgeoisie distinguishes it from precapitalist ruling classes that

depended, for their survival, on a “[c]onservation of the old modes of
production in unaltered form.” Having in a relatively short period
of time “created more massive and more colossal productive forces
than have all preceding generations together” (Marx and Engels 1978:
477), the bourgeoisie compares favorably to the “slothful indolence”
(Marx and Engels 1978: 476) characteristic of the ruling groups in
precapitalist societies.
Thus, one of the effects of the structural logic of capitalist society
is to underplay the commonalities between the bourgeoisie and the
ruling classes of precapitalist societies, while bringing to the fore-
ground their differences. The bourgeoisie appears as a force for
progress, even as precapitalist ruling classes appear as slothful para-
sites. The fact, by contrast, that class relations both in capitalist and in
precapitalist societies are based on the exploitation of direct producers
is pushed to the background. If the pursuit of profit is at the root of
modern society’s economic and technological dynamism, then cap-
ital’s appropriation of a large part of the social product appears as an
engine of progress. Thus, the first way in which the structural logic of
capitalist society leads to a meritocratic illusion is by engendering the
appearance that capitalists are not exploiters but the source of con-
tinued human prosperity and “progress.”
The second way the structural logic of capitalist society gives rise to
a meritocratic illusion is through the room for social mobility created
once competition in the market starts to mediate the reproduction of
class relations. As Marx (1977: 1079) points out, “in this bourgeois
society every workman, if he is an exceedingly clever and shrewd
fellow, and grafted with bourgeois instincts and favored by an excep-
tional fortune, can possibly be converted himself into an exploiteur du
travail d’autrui.” The greater fluidity of capitalist society as compared
to precapitalist ones inevitably foregrounds the element of achieve-
ment operative in this society, while simultaneously downplaying the
continuing presence of ascription.4
As Claus Offe (1985: 170–172) has pointed out, the operation of
ascriptive inequalities was much more transparent in precapitalist
societies, such as feudalism. To uncover such inequalities, one had
“only to look into the codes and statutes that regulated the privileges
 Capitalism, Meritocracy, and Social Stratification 141

and hierarchies of feudal society” (Offe 1985: 170–171). In a capitalist

society, by contrast, the absence of equal opportunity is not readily
visible but requires sociological research capable of exposing the
“causal links” by which the absence of overtly institutionalized
inequalities nevertheless “lead[s] . . . to the inequality of classes and
groups” (Offe 1985: 171–172). Needless to say, the meritocratic illusion
is amplified by the ideological function of public education in the
United States and other capitalist countries (compare Collins 1975:
415). Here, again, sociological research becomes necessary, as the
various ways in which socioeconomic inequality, in general (Noguera
2003), and inequality within the education system, in particular (Kozol
1992), subvert the principle of equal opportunity are less immediately
visible than the fact that every child can go to school for free.

The Implications and Effects of the Meritocratic Illusion and of the

Nonmeritocratic Realities of Capitalist Society

Building on this article’s earlier point that what is functional for

members of a privileged group will not necessarily be functional
for members of underprivileged groups, I will now briefly examine
the differing effects that capitalism’s nonmeritocratic inequalities and
meritocratic illusion have on different social groups.
One effect of nonmeritocratic inequalities is reduced efficiency, an
effect that can be thought of as dysfunctional for society as a whole
(with the possible exception of professionals, such as sociologists and
economists, who make a living analyzing social inefficiencies and their
implications). This dysfunction stems from capitalism’s failure to make
the most of people’s talents, with all the negative effects that this
failure has on economic output.5
The second effect, by contrast, does not have to do with the size
of the economic pie but with its distribution. In a nonmeritocratic
society, such as capitalism, some people end up with higher rewards
than they would in a purely meritocratic society, while others end
up with rewards that are lower. The people who benefit from a
nonmeritocratic society are the ones who get a slice of the pie that is
large enough to compensate for the fact that it is coming from a pie
that is not as large as it could be. A second possible group may benefit
142 The American Journal of Economics and Sociology

from the larger share of the pie that capitalism’s nonmeritocratic

nature bestows upon it, but this benefit may, because of the lower
efficiency a nonmeritocratic society entails, be lower than the loss
this group suffers from the fact that the economic pie available for
distribution is not as big as it would have been in a more efficient
meritocratic society. Finally, a third group suffers both from the
injustice and from the inefficiency of a nonmeritocratic society.
The inefficiency of a nonmeritocratic society is dysfunctional for
all three groups discussed above. By contrast, the effect of the second
aspect of capitalism’s nonmeritocratic inequalities is not the same for
all these groups. The first two groups benefit from the injustices of
capitalist society, so these injustices are functional for them, while not
functional for the third group, made up as this group is of all the
people enjoying less opportunity than they would in a meritocratic
society.
Based on this, we could say that the first, most privileged, group has
an interest in the perpetuation of the nonmeritocratic aspects of
capitalist society, despite the inefficient use of human talent that these
entail. By contrast, a meritocratic social order is consistent with the
interests of the second group, despite the (limited) benefits that this
group derives from capitalism’s unequal distribution of opportunities.
The same is true for the third group, which suffers both from capita-
lism’s injustices and from its inefficient use of people’s talents.
This alignment of interests creates a potential division of the popu-
lation into two camps, the pro-capitalist, anti-meritocratic camp made
up of the members of the first group, and the potentially anti-capitalist,
pro-meritocratic camp made up of the second and third groups. There
is of course no guarantee that people will act on the basis of those
interests. The fact that people share interests may not lead them to
join forces and push for action consistent with these interests if the
relationship between the underlying social structure and their life
chances is not immediately transparent.
The possibility of such a disconnect between a group’s objective
interests and its actions has been emphasized by Max Weber (1978:
929–930) as well as by Marxist theorists, such as Lukacs (1971).
Building on this insight, the concept of a “meritocratic illusion” adds
to the intellectual arsenal of critical Marxist theorists interested in
 Capitalism, Meritocracy, and Social Stratification 143

capitalism’s ability to generate ideological appearances that mystify

the social relations on which that system is based. By obscuring
capitalism’s nonmeritocratic nature, the meritocratic illusion makes it
harder for the groups with an interest in a more meritocratic social
order to recognize this interest and act on it. Thus, the meritocratic
illusion makes it harder to build a unified movement of all individuals
and oppressed social groups that would benefit from a challenge of
capitalism’s nonmeritocratic inequalities.
In discussing some of the consequences of the meritocratic illusion,
Merton (1938: 679) describes it as nothing but an ideology that
helps to “[maintain] the status quo.”6 Moreover, both Merton (1938)
and Cloward and Ohlin (1966) argue that the clash of capitalism’s
meritocratic pretensions with the realities of unequal opportunity can
have serious dysfunctional consequences, including crime and delin-
quency, but also retreatist behaviors, such as alcoholism and drug
addiction. Indeed, in a capitalist society that increases material aspi-
rations and inculcates all individuals with the importance of material
success, it becomes tempting for those who are not given the oppor-
tunity to achieve success in legitimate ways to either do so through
illegal means, or to attempt to resolve the conflict between culturally
sanctioned goals and legitimate means through behavior that confines
them to the margins of society.
Thus, the meritocratic appearances of capitalist society combine
with its nonmeritocratic realities to push large segments of the
poor towards crime, delinquency, and self-destructive behaviors.
In strengthening the general perception of the poor as “undeserv-
ing” or as forming part of “the dangerous classes” (Shelden 2000),
the meritocratic illusion both confirms the “deservingness” of the
privileged groups (Gans 1995: 95) and encourages working people
and the middle class to view the poor not as potential allies in the
struggle for a more meritocratic society, but as a threat to their
well-being.
In any case, there is a number of ways that individuals from
underprivileged backgrounds can respond to the nonmeritocratic
nature of capitalist society. The first way is implicit in Cloward and
Ohlin’s discussion of the function of capitalism’s meritocratic preten-
sions. If widespread belief in capitalism’s meritocratic claims increases
144 The American Journal of Economics and Sociology

the likelihood that talented underprivileged individuals will seek

social mobility through the pursuit, for example, of education
(Cloward and Ohlin 1966: 81–82), it may be functional for such
individuals to be in denial regarding capitalism’s nonmeritocratic
nature. Indeed, in the same way that belief in capitalism’s meritocratic
claims can increase the motivation of the underprivileged to compete
for highly rewarded positions, underestimation of the obstacles they
will have to overcome may make the prospect of competing less
daunting.
The functionality of the meritocratic illusion for the poor may help
to explain why “lowest-income respondents” are among the groups
“most likely to see the poor and homeless as at fault behaviorally”
(Gans 1995: 89). It may also help to explain the tendency, reported by
Elijah Anderson (2000: 324), of many residents in poor, inner-city
communities “to blame those who have not been successful for not
having made enough of an effort” and to dismiss structural explana-
tions of poverty in favor of explanations that do not “make it too easy
for those victims of inner-city problems.” Moreover, in settings where
inequality and lack of opportunity give rise to delinquent subcultures
that pose a constant temptation for the young (Cloward and Ohlin
1966: 188), it is understandable that many parents and “old heads”
(Anderson 2000: 324) in the community would be inclined to overstate
the opportunities provided by capitalist society, while understating its
injustices.
This does not mean that the “meritocratic illusion” is universally
accepted in poor, inner-city communities. Thus, for example, Ander-
son shows that poor inner-city communities are not monolithic
but divided between two groups, “decent” and “street” people.7 It is
those self-described as “decent” people who are better integrated in
mainstream society and who are more likely to accept capitalism’s
meritocratic claims. “Street people,” as described by Anderson, are
more likely to subscribe to an oppositional culture, which makes them
suspicious of mainstream society and weary of structural obstacles to
social mobility, such as racism and discrimination. Moreover, “street
people” are also more likely to adapt to capitalism’s nonmeritocratic
inequalities via the criminal, delinquent, or retreatist behaviors dis-
cussed by both Merton and Cloward and Ohlin.
 Capitalism, Meritocracy, and Social Stratification 145

Anderson’s depiction of “street people” is consistent with Cloward

and Ohlin’s (1966: 117–118) suggestion that delinquency is often
triggered by the delinquent’s ability to see through capitalist society’s
meritocratic pretensions. While, however, the delinquent’s recognition
of capitalism’s pseudo-meritocratic nature may be cause for discontent,
the possibility of pursuing a criminal career may help to contain the
frustrations that such a recognition might otherwise provoke. “Because
alternative routes to higher status are made available to those who are
ambitious, diligent, and meritorious, the frustrations of youth in these
neighborhoods are drained off” (Cloward and Ohlin 1966: 158–159).
By draining off the frustrations of young people who can see
through capitalism’s meritocratic pretensions, delinquency and crime
prevent these frustrations from being channeled into political action
against the existence of nonmeritocratic inequalities. In this respect,
the functionality of the first two adaptive strategies to capitalist
inequalities has to be qualified. While both the underestimation of
objective obstacles to mobility and the pursuit of success through
illegal methods may be functional for individuals qua individuals, they
are not functional for them qua members of the underprivileged group
denied equal opportunity. While, from a collective point of view, the
optimal strategy when faced with such inequalities is political protest,
individual members of the group are often deterred by the fact that the
costs protest entails are incurred by the individuals undertaking it,
while its benefits are enjoyed by the entire collectivity of which the
protestors are a part.
In particular, for a talented individual from a modest background,
the “conformist” strategy of accepting capitalism’s meritocratic claims
and working hard to move up the social ladder will usually seem more
promising than political protest. Indeed, the former strategy is likely to
allow talented individuals to make some gains without incurring any
risks. Political protest, on the other hand, is a more risky proposition
for a number of reasons. The risks for the individual are high because
protest activity can be penalized in a number of ways. Union activists
may lose their jobs or worse, community activists can be sent to
prison, and so on. Moreover, the payoff for risky protest activities is
uncertain, both because the adversaries are powerful and because any
results are contingent on far from certain support from others.
146 The American Journal of Economics and Sociology

As far as crime is concerned, the risks are certainly high but so

are the potential rewards. This explains why, from the standpoint of
many young people from underprivileged backgrounds who can see
through the meritocratic pretensions of the capitalist society, a crime
career may seem a more compelling option than political protest. This,
however, creates the possibility of an association in the public mind
between critical perspectives on society and the “undeserving poor,”
an association that, as Gans (1995: 98–99) recognizes, can discredit
such perspectives and strengthen the hold of the meritocratic illusion
on people’s imagination.
In this sense, the functionality of both the conformist and the
criminal strategy for the individuals adopting them only holds to the
extent that the balance between potential benefits and risks that
these two strategies entail seems more favorable than that of political
action. Both these “nonpolitical” adaptations on the part of individ-
uals from underprivileged backgrounds are, however, second-best
solutions to the extent that, however superior they may seem to
political protest, they are still inferior to the situation these individ-
uals would find themselves in if they lived in a meritocratic society
providing equal opportunity to all. It is clear, then, that, even though
capitalism’s nonmeritocratic inequalities lead to an inefficient use of
human talents, the meritocratic illusion generated by the operation
of capitalist society adds to the obstacles to collective action that
individuals suffering from the nonmeritocratic realities of capitalist
society would have been faced with even in the absence of this
illusion.

Conclusion

In critically rethinking and reformulating the Davis-Moore thesis this

article has discussed capitalism’s generation of a meritocratic illusion,
which functions as an ideological impediment to the struggle against
the exploitative and nonmeritocratic nature of capitalist society. It
goes without saying, however, that neither the meritocratic illusion nor
any of the other ideological appearances that capitalism generates
will ever be successful in completely extinguishing resistance by
the exploited and the oppressed. As recent social movements in the
 Capitalism, Meritocracy, and Social Stratification 147

United States and around the world remind us, despite the obstacles
that they usually have to overcome, social justice struggles often erupt
when least expected.
These eruptions usually bear witness to the multiplicity of contra-
dictions that traverse capitalist society. These contradictions stem
from class divisions and the way these divisions interact both with
other forms of social oppression and with the contradictory logic
of a dynamic but crisis-ridden capitalist economy. It is the complex
interaction between all these contradictions, as well as the media-
tion of these contradictions by human agency, that will determine
whether a meritocratic society consistent with the modified, norma-
tive version of the Davis-Moore thesis here proposed will ever come
to fruition.

Notes
1. For an extended discussion of economic democracy, what it might
look like, and how we might get from here to there, see Panayotakis (2011:
chapters 8–9).
2. This important distinction also figured in the debate that followed the
Davis-Moore article, since it was implicit in Tumin’s (1953) discussion of the
dysfunctions of social stratification, including the obstacles to the discovery of
individual talent (especially that of members of underprivileged groups) that
social stratification often places.
3. See Panayotakis (2011: chapters 8–9).
4. The ideological function of socioeconomic mobility in capitalist society
is also discussed by Tumin (1985: 126–127).
5. Note, however, that meritocracy is a necessary but not sufficient con-
dition for the efficient use of people’s talents. As Frank and Cook (1995) point
out, even a meritocratic allocation of individuals into the positions available
within the economy can lead to great economic inefficiency if winner-take-all
markets that translate small differences in skill into huge differences in
compensation are pervasive.
6. Merton (1938: 679), however, does not see the meritocratic illusion as an
ideological appearance intrinsic to the operation of capitalist society. Instead,
he sees it as a survival from an earlier, more meritocratic period of American
capitalism.
7. It should be noted here that both these two categories and the stand-
point that Anderson’s ethnography is written from are those of “decent”
people.
148 The American Journal of Economics and Sociology

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