Theoretical Perspectives: Competitive Versus Conflictual Inequality

There is a long tradition of theoretical approaches to inequality based on the sociological classics of Marx and Weber, and others. However, inequality research today is dominated by empirical studies. Empirical research on inequality is to some extent descriptive, aiming at mapping out the structures and developments of inequality and the landscape of social classes, strata or milieus. Yet, empirical research has gone much beyond these larger descriptive pictures. An ever-growing body of sophisticated and specialized empirical research has evolved that has led to the development of mid-range theoretical concepts. More recently, a strong focus on causal mechanisms has occurred in the quantitative domain based on advanced statistical models. In parallel and only seldom mixed with the quantitative mainstream is a rich and sophisticated qualitative strand of research.

Against this large body of empirical research, theoretical synopsis seems to be lacking. We highlight here a broad theoretical distinction that has to be made between conflictual and competitive approaches to inequality. With ‘conflictual approaches’ we refer to approaches that understand inequality in modern market societies as rooted in relations of domination and/or exploitation that create conflicts between groups. With ‘competitive approaches’, in contrast, we refer to approaches that explain inequalities as the aggregated outcome of competitive games.

The archetypal case of the competitive approach to inequality is represented by the standard neoclassical model. Under the assumption of free competitive markets and full access to relevant information, the resulting inequality should be a fair representation of differences in individual efforts and talents. Although the ideal world of standard economic theory does not match what we empirically know about modern market societies, it still provides a strong reference point so that deviations might be explained with particular circumstances or structures that violate the preconditions for, or intentionally correct the outcomes of, free competitive markets. The difficulty, then, is that the observed empirical inequality is a mixture of the inequality that arrives from free markets and the inequality that arrives from the social conditions that hinder free markets from working efficiently and unlimitedly, but there is no way to disentangle the two.

Market competition, however, can take various forms. One extreme is ‘winner-takes-all’ markets. In this conceptualization, the extent of resulting market inequality is largely outside the scope of social actors and rather a matter of technology and the laws of supply and demand.

From a sociological perspective, referring to economic equilibrium and/ or technological foundations of market inequality is suspect because it is assumed to mask power relations between social groups inscribed in institutions, including market structures.

In line with the general idea of competitive inequality, theories of rational choice aim to demonstrate how persistent relative inequalities result from the aggregation of ‘rational’ (in the sense of bounded rationality) individualistic preferences. The ‘maximally maintained inequality’ (Hout 2006) thesis, for example, assumes that parents aim to ensure that their offspring maintain at least the same level of education as they have attained, independent of what other parents want for their kids. The resulting patterns of class inequalities in educational attainment are then largely a function of saturation levels at certain educational levels. In a similar way, the theory of ‘statistical discrimination’ argues that discrimination based on ascriptive markers like race or ethnic background can be the result of rational decision-making under conditions of limited information and takes place even under the complete absence of any kind of prejudice, xenophobia or ‘discrimination by taste’.

Modern economists and sociologists alike often depart from the standard neoclassical model and attempt to explain inequality by means of conceptual extensions of the standard model. They acknowledge that societal institutions shape the unequal outcomes of market processes, mainly through social policy and welfare state institutions. These are explicitly meant to correct market outcomes by measures of redistribution and welfare benefits and intervene directly in the economy with the aim of preventing inequalities by, for example, restricting power imbalances in the labour market or the creation of monopolies. Sociological concepts typically go one step further in arguing that inequalities arise from systematic mechanisms of social closure (Parkin 1974). In general terms, ‘social closure’ refers to mechanisms that allow groups of individuals to extract higher returns from some sorts of assets than they would retain under conditions of free competition. Mechanisms of closure include, for example, monopolies, access control via educational credentials, collective bargaining and exclusive information circles. As social closure implies an intentional conflict over scarce resources, it even allows for reformulating the concept of exploitation (Sorensen 2000).

Exploitation, with its link to domination, is a prime example of conflic- tual approaches to inequality. While for most of human history inequalities within societies have been closely linked and the direct result of the prevailing system of domination, the relation between domination and inequality has become increasingly complex and (seemingly) independent with the evolution of markets and democracies. In Marxist theories, inequalities are at the core of the historical evolution and the dynamics of societies, as conflicts between social groups over scarce resources define the logics of how societies evolve and collapse. Marxist theories are distinct because of the concept of exploitation that interlinks the concepts of inequality and domination: the exploiting class has to provide for a stable order of domination in order to ensure economic exploitation. While this connection is obvious and evident in systems of slavery or feudal societies, it becomes invisible and indirect in systems of market exchange, in particular when they entail the commodification of the labour force. The Marxist value theory of labour, which aims at making this link explicit, has never been (success)fully translated into empirical research, mainly due to the difficulties of determining the value of the labour force (which includes a ‘moral’ component concerning what goods are necessary to reproduce the labour force). Yet, the general idea that capitalism involves exploitation is still prominent in Marxist concepts of inequality (Wright 1997). The concept of exploitation has been reformulated as an asymmetric social relation in which capitalists expropriate resources at the expense of the employed labourers. This is mainly due to the power imbalance in the labour market and the systematic entry barriers that prevent workers from becoming capitalists.

While social closure and rent seeking are theoretical concepts that aim at explaining how inequalities are generated (beyond the outcomes of fair market competition), concepts applied in empirical inequality research typically focus on the reproduction of already existing inequalities. A general but powerful concept is that of cumulative disadvantages (DiPrete and Eirich 2006). Mainly developed in the framework of life course research, the concept of cumulative disadvantages reformulates the well-known Matthaeus principle that ‘those who have will be given’. While there are stark and weak formulations of this concept, it generally implies that the accumulation of advantageous positions or resources critically depends on the already acquired starting position. This general idea is also prominent in more targeted concepts, as in the concepts of multiple deprivation or social exclusion in the area of poverty research. Moreover, culturalist class theories stress the fact that inequalities in living conditions shape cultural practices in a way that tend to reproduce the social structures of inequality.

The aforementioned concepts of social inequality basically aim at describing or explaining the forces that produce and/or reproduce inequalities. There are, of course, forces at work in the opposite direction of decreasing and/or levelling inequalities. Any existing structure or trend of inequality is probably best understood as an interference or resulting vector of highly complex and counteracting social dynamics. Obviously, the welfare state is the most important leveller—or at least reducer—of inequalities in modern market societies. Modernization theory provides a range of functional arguments as to why inequalities should become smaller as modernization progresses. A large part of the story is functional and related to efficiency. However, there is also a secular trend towards increasing validity of values of autonomy and respect, at least in family relations and friendship but also in politics, as evident with anti-discrimination policies. A value change from materialist to postmaterialist values is one indication of this trend, but the gradual diminishing of violence within intimate relationships is probably the most significant. There is a likely interrelation between these developments— often called ‘silent revolutions’—and decreasing gender inequalities, at least in terms of educational attainment and labour market participation. However, whether and to what extent these developments also exert an impact on social inequalities is much more questionable.

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