The pay you deserve

What does it mean to say that a worker is being paid more than they deserve, or less than they deserve?

​We hear it said all the time: junior doctors deserve to be paid more; corporate executives do not deserve to be paid as much as they earn. These observations are intuitive, not least because we all love a hardworking doctor who helps to save lives but feel furious about billionaire bankers who cruise about on their yachts all summer drinking champagne and eating caviar while all the poor people are forced to eat cake.
 
A better way of understanding the principle of ‘desert’ is to say that if you act according to certain principles with the rational expectation that your actions will lead to a particular outcome, then the expected outcome is precisely the outcome you deserved.

A well-ordered market rewards certain forms of behaviour that can be described as virtuous, and these results can thus be called ‘deserved’…

Markets clearly do not produce justice in the sense of perfect material equality, but can their results nevertheless be called just because they are deserved?

Lisa Herzog, Inventing the market: Smith, Hegel and political theory (Oxford, 2013) p. 85.
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The idea of a reward for 'virtuous behaviour' is intuitive and associated in most people's minds with the traits required to be successful in life: 'character traits like industry, frugality, and honesty in dealing with one's business partners' (Inventing the market, p. 90, 91) or otherwise known as D-factor traits – drive, dynamism, doggedness and determination... (Lydall, The structure of earnings, 1968); as well as 'enterprise, willingness to take risks, and ability to work with other people’  (Phelps Brown, The inequality of pay, p. 312).

Of course, not all this derring-do is entirely within our control; our fortunes in the market will also be affected by 'a variety of circumstances that are beyond the ability of any person to foresee or control, and whose impacts are usually comprehended under the title of luck' (Phelps Brown). On the whole, though, we teach our children that the harder and smarter they work, the luckier they will become. And so many successful people, when told how 'lucky' they are, respond with tales of years of hard graft to get where they are today.

So much for deserved outcomes. But the idea of ‘justice’ is odd in this context. If I go out in the rain, and get wet, it is odd to say that ‘justice’ has been served even though it is true that getting wet is precisely what would be expected upon venturing into the rain. Goods exchanged in the market may or may not be fairly priced, but even if the trader gets a fair price for his wares we wouldn’t really call that ‘justice’. We would call it a fair price. Similarly, unless you are forced to pay for things at gunpoint it is not ‘injustice’ for you to choose to buy overpriced frippery. It is simply what it is.

​And so it is, that different things have different prices depending on what people are prepared to pay for them. The only requirement is that exchanges should be voluntary – if anybody is being forced to do anything then the element of force introduces an element of injustice all by itself. Ah, you say, what is the meaning of 'force'? Don't people feel 'forced' by circumstances to live as they do? That is a story for another day because obviously there are people who feel that nothing in life is their choice and that they are therefore 'forced' to do everything that is part of their life including waking up in the morning and getting out of bed. If I don't get out of bed every morning I'm probably going to get fired: in that sense I could complain that I am 'forced' to go to work. But leaving that aside for now, let's stick with the idea that if exchanges are voluntary the outcomes cannot really be evaluated by reference to 'justice':

From this perspective, the idea of asking about the justice of a distribution that results from market interactions is flawed from the outset, as such a distribution stems from voluntary exchanges, the resulting patterns of which are both unpredictable and indifferent from the point of view of justice.

Inventing the market, p. 87.
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​Of course, it is self-evident that markets do not function perfectly in a well-ordered way. That is not something to get overly excited about, in the manner that people tend to when they think they’re the first person ever to notice that markets are never truly ‘free’. The appropriate response to the imperfection of markets is not to say that any intervention no matter how bonkers must be better than relying upon market outcomes. Instead, we try to acquire an intelligent sense of how market outcomes can be improved upon. For a start, market outcomes are certainly fairer than the pre-industrial outcomes for the vast majority of people. The world of work was governed for too long by the status-based law of owner and slave, then master and servant, and people were not free to attempt to achieve more than their perceived station in life merited. Everyone had to 'know their place' and be content with that. Open markets changed that:

The idea that markets match achievement and reward is a powerful one. Today, birth and status play a much smaller role in determining people’s place in society than in earlier epochs. It is part of the progressive narrative of the West that it is, instead, desert that determines who ends up in which position…

Don’t we have an implicit expectation that the free market provides an impartial judgment of people’s achievements, giving everyone a chance to prove what they are able to do, evaluating not origin, gender, or eye colour, but performance?

Inventing the market, p. 85, 86.
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Anybody who is disadvantaged by their social or ethnic background, their gender, or any other personal attributes that don't tend to meet with social favour like not being textbook 'attractive', should be the greatest fan of open markets and support as wide a scope for markets as possible.

Ok, so what about those who are not able to participate in markets because although they are supremely talented the number of employers who appreciate their potential is zero? If that's your situation you'd probably consider it to be evidence of a monumental market failure right there, because why else would nobody be prepared to pay good money for the amazing value you have to offer? But hold on a minute before you start filing multiple lawsuits complaining about various unfairnesses. Let's think a bit more about what's going on here.

When one speaks of desert with regard to the market, what is at stake for [Adam] Smith is not a matter of rights and their enforcement. It is rather a question of the structural features of the system being such that desirable behaviour is de facto rewarded. In a well-ordered Smithian market, people who practise the bourgeois virtues can expect to be successful in their professional lives, but they cannot claim a right to be rewarded merely on the basis of desert, unless some right has been fixed contractually. 

​Inventing the market, p. 93.

So here's what you do. Start by identifying a functioning market. You will notice that the more successful the society, the greater the scope for participation in various rewarding markets. Then get out there and peddle your wares. If nobody is buying, you don't decide that there must be a monumental market failure going on, and you don't lawyer up and sue all the employers for your plastic rights. That approach leads only to madness and to being eventually altogether replaced by a lower-maintenance robot that won't cause trouble. A better way is to go on google and get free information on how to repackage your amazing talents and recalibrate your marketing techniques. Long ago, before the world began, you'd have to go into an actual library and do some research or pay a consultant good money to achieve this sort of makeover. Only rich people could afford to better their circumstances. Now everyone can do it on google for free, using free wifi in the public libraries generously provided by the taxpayer. The internet is the great equalizer. This is the only way to get on if you want to work and earn the wages you deserve.
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