Where Have You Gone, Horatio Alger?

The idea of meritocracy—a system in which the most deserving are recognized for their ability and results and thereby advance—is baked into the American character. The worthy win. Quality will tell. Or so the story goes. Business books embrace this spirit as part of their foundation: If you follow their advice, you’ll improve yourself and trump your competition, whether personally or professionally. That sentiment certainly infuses the latest release from the team that brought you Freakonomics and SuperFreakonomics, the University of Chicago economics professor Steven Levitt and the journalist Stephen Dubner. Their new book promises to teach you to “think like a freak,” using the strategies that gained them acclaim to sharpen your own outcome. It seems like a commendable project, but the authors fall well short of their goal. Really, you’d have to go through a couple of graduate-level social science programs—a little econometrics, some psychology, plus a lot of practice—to think the way they do, with discipline and creativity. You can’t just admit you don’t know something, approach a task with the joy of a child, understand someone else’s values well enough to design complicated incentive schemes (all techniques they suggest and illustrate but fail to teach), and win. Other new titles make equally seductive promises. The Obstacle Is the Way: The Timeless Art of Turning Trials into Triumph, from the marketing and media specialist Ryan Holiday, will tell you how to leverage adversity. The seasoned business writer Geoffrey James’s mission in Business Without the Bullsh*t: 49 Secrets and Shortcuts You Need to Know is self-explanatory. These offerings are as brash as they are baseless. Yes, you can usually find a few helpful tips, but books like these nearly always fail to deliver on their promise that you can work less to get ahead. There is rarely a shortcut to achievement—something that should cheer fans of meritocracy. But there’s bad news, too. Two other recent books, both based on impressive academic research—Thomas Piketty’s Capital in the Twenty-First Century and Gregory Clark’s The Son Also Rises —suggest that for most people, advancing through merit simply isn’t possible. First, let’s get the most obvious objection out of the way: We all know people who have pulled themselves up by their bootstraps. Horatio Alger made a living telling such stories. But Piketty, a Paris School of Economics professor, and Clark, of the University of California, Davis, don’t deal in anecdotes. They use reams of data and analysis to illuminate the underlying structures that facilitate or hamper meritorious advancement. And the picture they paint is devastating. Piketty’s 700-page work, based on a collaborative 15-year research project, argues that capitalism’s postwar heyday—from 1945 until about 1970, a period of rising economic and social equality—was an aberration. The more typical situation in the developed world, Piketty contends, is that returns on capital outpace economic growth, so the rich can invest and get richer while everyone else’s economic circumstances stagnate. From 2010 to 2012, he finds, 95% of economic growth went to the richest 1% of the population. (See “The Price of Wall Street’s Power,” by Gautam Mukunda, in this issue.) And it’s not some group of talented “superproducers”—people making more and better things—who are accumulating these high returns. Rather, the money is going to “supermanagers”: Corporate leaders account for some 70% of the top 1% of the population. At HBR we obviously believe that good managers are worth a great deal. But there can be no meritocracy when those in the top tier capture a disproportionate share of economic returns merely because of their position. And, as Piketty notes, individual contributions cannot be determined in what is by definition a group activity, so how we would even identify what supermanagers have done is fundamentally questionable. Indeed, the situation today threatens to generate extreme inequalities that stir discontent and undermine democratic values. It’s no surprise that the Gilded Age, a period of radical inequality in the United States, was marred by violence. Add to this Clark’s work, and the picture gets even grimmer. The thesis of The Son Also Rises is, fundamentally, that the apple doesn’t fall far from the tree. Ingeniously, Clark and his team of researchers look at the persistence of socioeconomic status through the lens of surnames in more than 20 societies. Tracing the movement of families across the centuries, Clark argues that social mobility is low—indeed, nearly nonexistent. Instead of taking three or four generations for a family to improve its position (or to fall in status), it takes more like 10 or 15. In fact, by his estimate, the socioeconomic standing of your family at the time of your birth can predict up to 50% of your adult income or education level. Success is largely inherited. “Our greatest satisfaction would be if [this book] helps you, even in some small way, to go out and right some wrong, to ease some burden, or even—if this is your thing—to eat more hot dogs.” Is there a solution? A way to break the iron cage of capital and inheritance? Both Piketty and Clark point to the redistribution of wealth to help curb inequality, but for radically different reasons. For Piketty, the system cannot right itself without redistribution—the only way to take the unearned gains of capital from the top 1%. Read this way, his is a call for the United States and other developed nations to turn to socialism. For Clark, redistribution is more of a lark. He argues that the successful got that way because they are in fact better than the rest of us—they inherited their ability as well as their social position—but that redistributing wealth doesn’t cost much and also improves overall social welfare. I’d argue for another path. This is where the optimism of Horatio Alger’s stories and Think Like a Freak, which promise (and sometimes deliver) self-improvement, becomes vitally important. If we think that Piketty and Clark are correct, we descend into a self-fulfilling prophecy of failure. Why bother working hard if ultimately it doesn’t matter? Why strive? We must believe that it’s possible to improve one’s lot in life, and business books, with their success stories, strategies, and tactics, help put us in that mind-set. The alternative—meekly accepting the economic and social hierarchies that Piketty and Clark describe and abandoning the idea of merit—is too grim to bear. Unrealistic optimism may not be sufficient to overcome the systems that limit the rise of merit, but it is surely necessary.

Where Have You Gone, Horatio Alger?

Partner Center