Egalitarianism and Economic Rents in Distributional Inequalities

My starting premise is that the concept of social inequality has normative presuppositions guiding its conceptualization, and so sociologists must choose, explicitly or implicitly, a particular set of normative assumptions just to talk coherently about it. For many sociologists, it may seem irrelevant or unnecessary to consider the normative content of social scientific concepts. But inherent in many, if not most, of our theoretical concepts are underlying normative assumptions and implications, and these get amplified when translating those theoretical concepts into empirical measures (Putnam 2004; Anderson 2004, 1995; Longino 1990). Recognizing theoretical concepts as value laden does not undermine the need for empirically valid and verifiable sociological theories but instead adds normative criteria to assess when using particular concepts. The alternative to value-free science is not dogmatism (which ignores or distorts evidence that contradicts hypotheses) but value-laden science, which requires normative justification in addition to empirical adequacy in research programs (Anderson 2004, 1995).

The role of normative assumptions comes into sharp relief when thinking about inequality. Inequality is a state that is defined by the absence of its opposite state, equality. But philosophers have developed numerous conceptualizations of equality. Core debates center on whether equality resides in opportunities or outcomes, material resources or well-being, distributions or social relations, and whether it is inequality per se or poverty that is of moral and political concern (e.g., Casal 2007; Anderson 1999; Fleurbaey 1995; Frankfurt 1987; Sen 1979). Sociologists have only occasionally engaged in these debates (e.g., Segal 2022; Abbott 2016; Green 1988), but how we specify what equality is will shape when and where we observe what we are willing to call inequality. Thus, inequality is a value-laden concept that cannot be uttered without specifying particular moral content that shapes empirical analyses.

If this is the case for inequality, we should expect that the related concept of economic rent has normative content underneath it that must be scrutinized. Sociologists have taken up the concept of rent in a variety of research programs including class analysis (Morgan and Tang 2007; Weeden and Grusky 2005; Morgan and McKerrow 2004), occupational closure (Redbird 2017; Bol and Weeden 2015; Weeden 2002), exploitation (Liu, Sakamoto, and Su 2010; Sakamoto and Kim 2010), income inequalities (Lin and Neely 2020; Dencker and Fang 2016; Lin 2015; Sakamoto and Kim 2014; Weeden and Grusky 2014; Tomaskovic-Devey and Lin 2011; DiPrete, Eirich, and Pittinsky 2010; Morgan and Cha 2007), inequalities in bonuses and fringe benefits (Schweiker and Groß 2017; Kristal, Cohen, and Mundlak 2011), and the dynamics of market institutions (Sayer 2020; Muennich 2019; Avent-Holt 2012).

The concept of economic rent diffused to sociology from economics largely through Sørensen’s (1996) formulation of a structural theory of inequality (see also Sørensen 2000). Sørensen’s primary goal in developing this concept in sociology is to explain how advantages flow to individuals independent of the effort, ability, and sacrifice of the individual in obtaining those advantages. He argues that inequality should be understood broadly through the effects that generate advantages for incumbents of particular positions. Rents are conceptualized as that advantage and are understood as the portion of an income stream that is derived from a person’s ownership of a resource rather than their actions in producing goods or services. Thus, rents are a structural source of inequality in that they are “…obtained independently of the efforts of whoever owns the rent-producing resources” (Sørensen 1996, 1338).

The structural condition that determines advantage, and thus the existence of rents, is the perfectly competitive market. In a perfectly competitive market, all potential buyers and sellers can freely and easily enter into the market, ensuring that prices are held at their lowest competitive equilibrium. Under such conditions, economic rents are unsustainable as others discover the opportunity for profit and enter the market, thereby reducing the rent to zero. As barriers to entry into a market go up, the supply of the good or service falls and the price thereby increases. The difference between the existing price and the hypothesized price under conditions of perfect competition is the rent portion of an income stream (Sørensen 2000, 1996). Thus, rents for Sørensen define the structural advantages related to the particular assets that one commands on a market, operating through the competitiveness of market institutions.

Thus, the concept of economic rent has at its core the perfectly competitive market, which provides theoretical leverage for analysts to define if rents, and thus distributional inequalities, exist. Varied research programs around economic rents specify rent in different ways, primarily based on how stringently the analyst empirically treats the perfectly competitive market baseline. Some sociologists measure marginal productivity as the empirically observable outcome of perfectly competitive markets (Dencker and Fang 2016; Sakamoto and Kim 2014), while others use going market rates as a baseline (Desmond and Wilmers 2019; Brady, Biradavolu, and Blankenship 2015; Morgan and Tang 2007; Weeden 2002). Finally, some adopt a more abstract conceptualization of rent as deviations from what one obtains in a counterfactual where rents are not expected to be present (Lin and Neely 2020; Tomaskovic-Devey and Lin 2011).³

For all of these cases there is normative content implicated in the use of the term, however loosely related to the perfectly competitive market baseline. It is, therefore, to the perfectly competitive market that much of the normative examination of economic rents needs to be directed. Sørensen argues that the perfectly competitive market is simply a heuristic device for analyzing inequality, and that it does not imply that perfectly competitive markets are to be normatively preferred (Sørensen 1996, n. 7 and p. 1362). In fact, he argues explicitly in constructing the concept of exploitation around rents that reducing or eliminating economic rents may turn out to be bad for even the poorest in a society (Sørensen 2000, 1553). The value of using the concept, he argues, is that under perfectly competitive markets inequality cannot be said to be socially structured, and all differences in income or wealth will reflect personal choice differences rather than location in the social structure (Sørensen 1996, 1345–46).

However, I argue that the construct of perfectly competitive markets does have normative content, and that this is a necessary rather than an incidental feature of the concept. In using the competitive market heuristic inequality is defined exclusively around distributions organized through market structures, to the exclusion of inequalities at the level of personal traits or in the institutions that undergird market structures such as private property. This is a normative claim about what kinds of inequalities in the distribution of resources matter. And so in linking the concept of inequality to competitive market institutions, the rent construct defines equality as distributions organized exclusively through individual effort and defines perfectly competitive markets as the institutional form that links individual effort and distributional reward.⁴ This is the normative core of the concept of economic rent, and this normative core becomes even clearer in policy arguments to address rising income inequality by moving toward more competitive market structures (e.g., Rothwell 2019; Weeden and Grusky 2014).

If the normative core of economic rent is the perfectly competitive market, how does this conceptualization hold up to contemporary normative philosophies of egalitarianism and distributive justice? Since Anderson (1999), two perspectives have dominated philosophical discussions of egalitarianism, and they are typically pitted against each other: luck egalitarianism and relational egalitarianism.⁵ Their core disagreement is over the nature of equality, a disagreement that emerges out of a fundamental difference in the philosophical methods used to justify moral claims themselves (Anderson 2010). But our primary concern here is with how each justifies or fails to justify the existence of some forms of distributional inequality and how this relates to the concept of economic rent. Below I will sketch each perspective and then ask if it can be used to justify the rent theoretic conceptualization of distributional inequality.

The core claim of luck egalitarianism is that distributional inequalities should be allowed to emerge only through the choices for which individuals can reasonably be held responsible (Dworkin 2000, 1981; Roemer 1993; Arneson 1989; Cohen 1989). This means that if an individual becomes better off or worse off than others through no fault of their own, but instead because of the particular circumstances in which they find themselves, we have an obligation to redistribute resources from those who are made better off by those circumstances to those who are made worse off. However, if that individual becomes worse off or better off because of decisions for which they are responsible, then we can allow this distributional inequality to emerge. The core distinction within the luck egalitarian framework then is choice versus luck, as choices are things for which people can be held responsible, whether a good or a bad outcome, while individuals cannot be held responsible for lucky or unlucky situations and circumstances.

All luck egalitarians follow the above logic but are divided over (1) whether resources or welfare should be equalized and (2) what should count on the luck side of the luck-choice dichotomy. I will outline the particular form of luck egalitarianism that I think most closely conforms to the logic of rent theory, Ronald Dworkin’s resource variant of luck egalitarianism, as a means to provide the best-case scenario for a version of luck egalitarianism that can normatively ground the concept of economic rent. Dworkin’s (2000, 1981) resource egalitarianism is most closely aligned with rent theory for two reasons. First, its starting premise is an auction that takes on the features of a perfectly competitive market, though I show how it deviates quickly from that market. Second, the resource equalisandum it proposes is conceptualized fairly close to the material assets and income streams associated with economic rents.

Dworkin’s resource egalitarianism proposes to find a means to fairly distribute the material resources of a society. He begins with a thought experiment imagining an auction, explicitly conceptualized as a perfectly competitive market, in which actors have equal purchasing power and then bid on the sum total of items in society in order to construct the kind of lives they prefer to live. This initial market is conceptualized as the preferred means for ensuring that everyone captures a basket of goods that most closely conforms to their preferred version of a good life, which is the necessary condition of equality according to Dworkin. And that endpoint is realized in a market distribution that passes the envy test, in which no individual would prefer the basket of goods that another individual possesses over their own.

In real market societies, however, Dworkin realizes that over time, market outcomes will fail the envy test as luck will shape the winners and losers of production and trade. Some actors are more talented or have certain skills and capacities that enable them to outperform others in production, and then through trade they acquire baskets of goods that, all else equal, the less talented, skilled, and capable would prefer over their own basket. One can think of this talent problem as individuals facing luck in the genetic lottery, where some happen to be born with the genetic material to make them better at certain more valued activities.⁶ But, even without a talent discrepancy, some will simply face situations that produce bad luck, such as a welder losing their sight or a carpenter losing their hands or an academic losing their memory.

Within the luck category Dworkin distinguishes between what he calls “brute luck” and “option luck.” Brute luck is an outcome that no person could have foreseen and for which no person could have made any calculated decision to accept or avoid the risk of the outcome occurring. These are the equivalent of unpredictable chance events. To the extent that individual traits more highly rewarded in the labor market, such as conscientiousness and intelligence, have a strong genetic component, they are partially forms of brute luck. Option luck, on the other hand, reflects positive or negative outcomes that arise because individuals make a decision to accept a risk and then bear the cost or benefit of that risk. Venture capitalists engage in a form of option luck, as they know there is a chance of losing the money they invest and are willing to accept that risk for the chance at large gains.

Dworkin’s core claim is that because brute luck, unlike option luck, cannot be calculated and potentially mitigated against, an individual cannot be held responsible for its outcomes and therefore it is brute luck that must be neutralized. His initial strategy of neutralization is to create private insurance markets, such as private death and dismemberment insurance, that convert brute luck into option luck. There individuals have the option of assessing the risks of something and then choosing to purchase insurance against those risks or not, and accepting the consequences of this choice. However, some forms of brute luck, such as talents and impairments one is born with, are impossible to insure in private markets. Where this is the case, Dworkin proposes that the state act as an effective insurance company to insure citizens against all forms of such brute luck. Taxes become the equivalent of insurance premiums and social welfare payments the equivalent of insurance payouts.

Dworkinian resource egalitarianism then is an attempt to derive a conception of distributional equality that begins with a perfectly competitive market, but that introduces a tax and redistribution scheme in instances of brute luck that shape the outcomes of that market. Can this resource variant of luck egalitarianism normatively ground the rent concept?

There are two problems with using Dworkin’s luck egalitarianism to normatively ground economic rents. The first is that economic rents are too thin a conceptualization of luck, even for the less demanding resource variant of luck egalitarianism. While resource egalitarians agree that rents are a product of luck, they would also argue that more than just rents are products of luck. The core generators of rents in Sørensen’s model are tied to social structural features that limit the supply of a good and thereby generate monopolies, ignoring how intrinsic features of persons can produce unjust distributional inequalities, such as in Dworkin’s talent problem.⁷ Income-generating components of a person that have a strong combined genetic or environmental component, such as intelligence, personality traits, and talents and skills, cannot be used to unequally allocate income as they are forms of brute luck and are therefore slotted on the luck side of the luck-choice dichotomy. Thus, even in a world absent rents, luck would still generate distributional inequalities through the unique qualities of personal attributes.

One could say here that a focus on rents captures some but not all normatively problematic sources of inequality for luck egalitarians, and so the rent model simply needs to be coupled with other models of inequality. However, the second problem in grounding economic rent in luck egalitarianism is that addressing the brute luck that the market mechanism allows often actually demands the creation of rents. In a world of differentiated talents and personal traits, Dworkin’s model requires the use of welfare state redistributions or other nonmarket schemes to correct for the distributions perfectly competitive markets create. In this way, it is not simply that the elimination of rents themselves is insufficient to address all forms of inequality, but that the creation of rents is necessary to pursue distributive justice for luck egalitarians. Thus, while resource egalitarians and rent theorists both define a perfectly competitive market as a just metric for initial distributions, in dynamic markets where brute luck can enter, luck egalitarianism demands the use of nonmarket mechanisms to create rents in a way that cuts against the rent model.

Overall, while Dworkin’s and Sørensen’s respective framings of unjust inequalities are quite closely aligned, the normative problem with economic rents from a luck egalitarian perspective is that it uses a weak metric for luck—rents—and an inegalitarian mechanism—market competition—to pursue the core luck egalitarian aim of linking distributions exclusively to individual choice. If rent theorists are to ground their arguments in luck egalitarianism, they will still need to call upon nonmarket institutions, most prominently the welfare state, to create rents as a means to neutralize bad brute luck and this cuts against the core of the rent model. Therefore, the Sørensenian conceptualization of economic rents cannot be supported by the luck egalitarian framework as its normative foundation.

If luck egalitarianism cannot justify the rent metric, perhaps relational egalitarianism can. Unlike luck egalitarianism, relational egalitarianism has a broader notion of inequality than just the distribution of resources. It takes as its starting point that what is of fundamental value for an egalitarian is that all members of a society exist in equal standing with one another, where equality of standing is understood as a set of social relations that gives each person’s interests equal consideration (Anderson 2008, 1999; Scheffler 2005, 2003). Therefore, a just society is articulated by Scheffler (2003) as a “fair system of cooperation among equals,” entailing a set of nonhierarchical social relations based on equal respect, power, and standing (24). Individuals do not have to beg or grovel to have their interests and claims heard, or to be seen as an equal within the complex social relations in which they exist. Rather, individuals are able to make claims on others in those relations and to have those claims treated with prima facie respect (Rawls 1980).

How well, then, does the rent metric align with relational egalitarianism? There are two concerns that need to be addressed in answering this question. One is the relationship between equal standing and the distributional outcomes of perfectly competitive markets, and the second is the relationship between equal standing and the market mechanism itself. I will take the distributional outcome question first.

To the extent that relational egalitarians are concerned with distributions, and thus economic rents, it is only insofar as they create or reflect hierarchical relations that undermine equal standing (see Schemmel 2011). Initially it may seem that relational egalitarians have a prima facie case for preferring the distributions that competitive markets produce precisely because such markets prevent economic rents. For example, monopolistic markets reflect unequal standing as they give sellers of some asset power over buyers of that asset, allowing sellers to extract rents from them.

But ensuring equal standing also requires preventing distributional outcomes through which some can translate the resources they possess into an unjust social hierarchy or that otherwise would undermine the notion of a society of equals, and this can require limiting competitive markets and their effects (Anderson 2008; Scheffler 2005). Relational egalitarians have, in separate places, articulated three distinctive distributional goals to plausibly ensure relations of equal standing, which we can assess relative to the kinds of distributions perfectly competitive markets produce.⁸

First, Anderson (1999) initially articulated a sufficientarian distributive goal for relational egalitarianism, in which society is to ensure that each individual has as much as they need to maintain equal standing in social relations. In principle this could allow for substantial distributional inequalities flowing from the market mechanism. However, the sufficientarian goal requires either a floor on wages (i.e., a minimum wage) or a robust mechanism of state redistribution and social insurance to maintain the sufficiency requirement. These are explicit counterbalances to market distributions that would otherwise allow a person’s resources to fall below what is sufficient for equality of standing and actually require creating economic rents. In doing so, relational egalitarians pursuing the sufficiency criterion violate the perfectly competitive market metric, creating a disjuncture between the rent construct and the sufficientarian version of relational egalitarianism.

A second distributional criterion proposed by relational egalitarians suggests not just minimum wages but range constraints on distributions to prevent unjustly high or low incomes as well as to avoid crowding out the middle of the distribution (Anderson 2008; Scheffler 2003). Here again markets would be allowed to distribute resources, but only within constraints not only at the bottom (i.e., minimum wages) but also at the top and middle of the distribution in order to ensure relations of equal standing. The intuition behind this is that ensuring equal standing means not only that no one can fall below a certain threshold (as in the sufficientarian case above) but also that no one should have so much more of society’s resources than others that they are able to use these resources to further their interests either against or without reference to the interests of others. This could involve the use of material resources to influence the exercise of political power in their own interest, but it could also entail those at the top simply isolating themselves physically and socially from the rest of society and their concerns by living in gated communities or outsourcing low-wage workers to other organizations. Such insulation undermines the social solidarity that is required to ensure relations of equal standing.

Social solidarity is also undermined by a hollowing out of the middle of the distribution that produces extreme inequalities between the top and bottom of society (Anderson 2008). Constraints that produce a stable middle class provide political and social stability, which are necessary to maintaining the social solidarity that ensures relations of equal standing.

The rent metric cannot accommodate the distributional requirement of range constraints any more than it can accommodate sufficiency. The outcomes of even perfectly competitive markets would have to be adjusted, again either through wage floors and ceilings or through state redistribution and social insurance. These both create economic rents to ensure that a real average income is maintained and that individuals do not capture incomes too far above or below the average income.

Finally, some relational egalitarians since Anderson and Scheffler have argued that ensuring equal standing requires more than just sufficiency or range constraints and actually entails an approximately equal distribution of resources. Schemmel (2011) argues that relational egalitarians should default to a presumption of an equal distribution of resources unless compelling claims can be made to the contrary in a particular distributional circumstance. If individuals are to be treated as equal in status this requires that the fruits of social production be distributed equally. To the extent that we live in a fair system of mutual cooperation, then we all contribute to and should therefore equally benefit from that cooperation. To do otherwise is to place some individuals’ interests in material well-being ahead of others’. As well, distributional inequalities very likely generate relations of domination that then undermine equality of standing. Allowing inequalities of income or wealth may enable those individuals to be perceived as more worthy and therefore to use that perception to claim greater income in future claims on resources. The presumption of distributional equality rule, of course, means that monopoly rents are off the table, but so too are inequalities deriving from personal traits and efforts that are differentially rewarded in perfectly competitive markets. And in fact, economic rents must be created to establish an even roughly equal distribution of resources.

Thus, none of the distributive principles laid out by relational egalitarians can justify distributions that arise from the perfectly competitive markets of rent theory. As with luck egalitarianism, while rents certainly violate relational egalitarianism, so do other forms of distributional inequality. And to create a distributional pattern that ensures equal standing, economic rents have to be produced either through directly managing market prices or through welfare state redistributions.

Despite these possible distributional rules, for relational egalitarians equality does not inherently flow from distributions. And so now I will turn to the core mechanism producing economic rents, the competitive market, to establish how well it can express relations of equality that are the centerpiece of relational egalitarianism.

At first blush, it seems plausible that perfectly competitive markets express relations of equality. Under the most charitable version of markets, they are defined by voluntary contractual exchanges wherein every actor is given leeway to pursue their own interests, as in the auction Dworkin describes. Transactions in such a context can be conceptualized as nonhierarchical, thereby meeting the core test of relational egalitarianism.

But there are two problems with this view. First, it misses the fundamental inequalities of standing that are central to contemporary market societies because these emerge not in markets per se but in the workplace conditions that have developed in the context of markets. And as markets have evolved, political and economic actors have created an entirely new set of market institutions and social relations to support competitive market transactions (Anderson 2017). In particular, employers created a new class of actors—managers—tasking them with wresting control over production from workers in order to ensure that the labor owners purchased was maximally realized in production (Laurie 1989; Montgomery 1979). Through this process of renegotiating power within the labor process, the ideal-typic modern workplace came to undermine the autonomy and interests, and thus equal standing, of workers within market societies, inscribing hierarchy into the everyday social relations within workplaces.

Such managerial hierarchies are not ancillary to markets but are fundamental to them. Labor markets require that labor time is purchased for a wage price, but the quality of that labor time cannot be known until the labor is realized in production. Thus, the employment contract grants by default complete authority to the purchaser of labor time (i.e., the employer) to ensure that it is used in the buyer’s interest, generating power for the employer over the employee which they delegate to managers within workplaces (Anderson 2015; Wright 2000, 1997; Bowles and Gintis 1990). And such power generates inequalities of standing within market relations.

As uncertainty and risk in virtually all markets, not just labor markets, make fully specifying and enforcing market contracts difficult, social relations of exchange in markets should be prima facie understood as power relations (Beckert 2009, 1996; Bowles and Gintis 1990). Even if we have the conditions of perfectly competitive markets, with buyers and sellers able to enter the market without interference, we still have exchanges infused with power and thereby inequalities of standing. Because the rent metric misconstrues the nature of markets, most especially the labor market, it misses the fundamental link between power in markets and workplaces in generating inequalities of standing.

There is a second, related yet distinct, way in which the institution of perfectly competitive markets violates the relational egalitarian condition of equality of standing, such that, even if the above empirical claims that markets are infused with power relations are unconvincing, it should suffice to demonstrate the incompatibility of the perfectly competitive market with relational egalitarianism. The autonomy necessary to realize one’s interests, which is central to relational egalitarianism, demands that actors have a voice in exchange relations such that they have a say in the terms of exchange. However, an actor’s power to realize their interests in competitive markets happens exclusively through their capacity to exit one exchange relationship for another on terms that better suit their interests. Having the capacity to exit relations in which one’s interests are undermined does not justify the existence of an unjust set of relations. Relational egalitarianism requires correcting for and preventing the unjust exercise of power rather than merely allowing for individuals to exit relations of domination (Anderson 2017, 2015). Thus, for relational egalitarians, exit in markets is a thin notion of autonomy. Realizing equal standing requires the elimination of unjust hierarchies, not merely the capacity for individuals to exit those relations. In this way, competitive markets provide opportunities for exit, but no voice to ensure relational equality.⁹

Thus, the normative problem with the concept of economic rents from a relational egalitarian perspective is that the market mechanism cannot properly capture relations of equal standing. It both fails to embody distributional outcomes required of equality of standing and misses the inequalities of power and standing inherent to even perfectly competitive markets. The disjuncture between relational egalitarianism and the rent concept is that the perfectly competitive market idealized in rent theory cannot embody relations of equal standing.

If sociologists are to retain the concept of economic rent, this analysis makes clear that we have to engage its normative underpinnings. One option is to abandon any normative commitment to egalitarianism and to continue using the concept of economic rent as conceptualized while grounding it on nonegalitarian normative foundations. Libertarian approaches are one possibility as they ground justice in the contractual arrangements of competitive markets (e.g., Tomasi 2012; Nozick 1974). However, they often have no specific mechanism for addressing monopolies that are not enabled by the state, such as natural monopolies, which rent theorists are reacting against.¹⁰ A better alternative may be desert-based theories of distributive justice (e.g., Mulligan 2018; Lamont 1997, 1994). Here an individual’s inputs are valued for their contribution to the total social output, and individuals according to this principle should be rewarded commensurate to their contribution to that output. This establishes a moral principle on which to ground both the elimination of structural advantages that Sørensen was concerned with and the rewarding of individual effort, ability, and sacrifice. While either desert or libertarian approaches moves away from egalitarianism, either would normatively ground empirical analyses of distributional inequality that use the perfectly competitive market heuristic for economic rents.¹¹

For sociologists committed to egalitarianism there are two options. One is to simply abandon the concept of economic rent altogether given it is so wedded to the baseline condition of perfectly competitive markets. If there is no egalitarian basis for the rent construct, understood as deviations from a perfectly competitive market, then the concept is no longer useful for an egalitarian.

But a second option may be preferable, where egalitarian sociologists retain the concept but reformulate it on more plausible egalitarian philosophical grounds. The concept of rent itself is valuable in that it specifies a baseline condition for identifying different sources of resource flows under different conditions. And as I have shown in this paper, these are rooted in the normative justifiability of these conditions. With this concept of economic rent in mind, the notion of competitive markets could be replaced with a baseline guided by either relational or luck egalitarianism. Below I will begin to develop, via a brief sketch, one possible avenue for this using relational egalitarianism. I use relational egalitarianism primarily because it is more consistent with recent sociological theories that explain inequality dynamics through the status and power embedded in social relations (e.g., Tomaskovic-Devey and Avent-Holt 2019). This is not to preclude other alternative reconceptualizations based on luck egalitarianism or further developments using relational egalitarianism, but rather to provide an initial model of how egalitarians could go about reconstructing the concept of economic rent.

At the core of relational egalitarianism is the argument that moral claims can be accepted only if they are interpersonally justifiable (Anderson 2010).¹² On Anderson’s account, interpersonal justification requires that any claim I make on another person be based on a principle that free persons with equal standing, power, and respect in that community would all agree to, perhaps behind something like a hypothetical Rawlsian veil of ignorance. This develops an alternative baseline for economic rent to Sørensen’s model. Grounding the concept of rent on an interpersonal justification principle means that instead of asking if a distribution approximates what would obtain under the condition of perfect competition, we have to ask if a distribution would be agreed to by free and equal persons on principles all would accept. Any particular resource one actor receives should be justifiable to other actors who could have a prima facie legitimate claim on that resource. Economic rent then can be conceptualized as receiving a resource greater than what other actors who could have claimed that resource would reasonably accept.

There are two conditions that would meet this “rents as interpersonally unjustifiable” test. First, the process by which the resource distribution was established could fail this test if it failed to embody and reflect relations of equal standing. This would require that in the process of negotiating resource distributions, some actors are systematically locked out, or that if they are included, they have less power and status than others in making claims. Recent research on German workplaces, for example, shows that roughly half of employees do not even have the capacity to negotiate wages, and lower status actors are less likely to be able to negotiate as a routine part of their employment (Sauer et al. 2021). In this way, these actors’ abilities to make claims on income streams are silenced, and thus the process through which wage distributions emerge in those workplaces cannot be interpersonally justified. Were they able to openly negotiate on an equal footing, the capacity for other, presumably more powerful, actors to claim higher wages would be undermined and they would not receive rents.

In other cases actors can make claims, but their standing is diminished to such an extent that their claims are not treated with prima facie respect by more powerful actors. Labor unions in the United States are a case in point, where unions in some workplaces still have legal standing and make claims, but these claims are no longer treated seriously by firms and hence the union premium has diminished substantially (Avent-Holt 2017; Rosenfeld 2006). One can also easily see the claims of women, racial/ethnic minorities, immigrants, and other lower status actors similarly being discredited at the outset. In each of these cases, the process through which the distribution emerged fails to reflect relations of equal standing, and thus more powerful actors receive rents at the expense of less powerful actors.

A second way that distributions could be interpersonally unjustifiable is in the outcome itself, if a particular distribution undermines the ability for some actors to maintain equal standing to make claims on resources. This is the importance of range constraints on income, which prevent some actors from gaining so much of society’s resources that they can wield political power over others or can simply create hierarchical relations that leave those with lower incomes unable to feel empowered to make claims on others. In this way, the process of producing the distribution itself may be interpersonally justifiable, but over time the outcome diminishes the standing of some actors in making claims. Increasing income streams accumulating at the top, as we have seen in more Liberal countries in the last forty years, can undermine the status of middle and lower wage workers and thereby undermine their standing to make claims on future resources. In this way, the outcome of a distribution fails to create and maintain equality of standing, enabling those with already higher incomes to make successful claims to additional income streams—or economic rents—that those with lower incomes could have obtained if relations of equal standing obtained.

Thinking of economic rents as interpersonally unjustifiable resource streams has three features that are worth noting. One is that it resolves one of the thorniest problems in the debates about rents. Many sociologists have noted that treating rents as deviations from a perfectly competitive market leads to the counterintuitive proposition that institutional arrangements favoring the disadvantaged, such as unions and minimum wage laws, create rents by distorting perfectly competitive markets (Wright 2000; Rueschmeyer and Mahoney 2000). And the destruction of such rents through moving toward more market competition ends up actually making the disadvantaged worse off, producing more of what egalitarians would see as inequality. The move from competitive markets to interpersonal justification as a baseline for rents eliminates this contradiction. It removes the need to see unions, for example, as generating rents through supply restrictions. Instead, unions provide a voice to channel workers’ interests, giving them power and standing within the organization, which is more in line with their historical role within capitalism (e.g., Lambert 2005). Wage gains that unionized workers get are not rents, but instead destroy the rents that owners capture by not taking worker interests into account. This is more justifiable than the more recent move to simply treat Sørensenian rents at the bottom as egalitarian (e.g., Jackson and Grusky 2018).

Second, treating rents as extracting more than other actors would reasonably agree to is actually more empirically verifiable than the hypothetical perfectly competitive market. As perfectly competitive markets do not exist in natural settings, there is no real-world counterfactual baseline condition to compare existing distributional outcomes against. But variation in the degree to which organizations incorporate the interests of actors, both in contemporary settings and historically, allows us to empirically compare across conditions in which different actors’ interests are differentially accounted for. Union versus nonunion workplaces are one example, but so too are comparisons of manufacturing plants in Germany that use codetermination versus those that do not or worker cooperatives versus hierarchically managed firms. Financialized firms that amplify shareholder interests versus nonfinancialized firms provide another comparison. These, of course, would need to be justified by demonstrating that actors’ interests are differentially accounted for in these settings, but such comparisons have an added advantage in that they are the comparisons sociologists actually make in examining inequality, even when using the current conceptualization of rent (e.g., Lin and Tomaskovic-Devey 2013; Morgan and Tang 2007; Morgan and Cha 2007). Ultimately, we can determine the interests and preferences of reasonable people historically, experimentally, through surveys, and in organizational ethnographies much more easily than approximating the conditions of perfectly competitive markets.

Third, at a theoretical level, this conceptualization of rents is much more consistent with recent theoretical approaches to distributional inequality in the stratification literature that center the process of inequality on claims-making. Relational Inequality Theory is explicit in this (Tomaskovic-Devey and Avent-Holt 2019), but the power to make claims and have one’s interests heard and accounted for is also at the center of Power Resources Theory (e.g., Brady 2009; Korpi 1983). In both cases, organized actors articulate and mobilize reasons for why they are deserving of a greater amount of resources, and when institutional and organizational channels exist to allow those claims to be heard and their interests taken into account, those actors tend to be more successful in having their claims legitimated. Thus, these theories of inequality can account for distributional inequality without reference to perfectly competitive markets, and simultaneously more closely align with relational egalitarian intuitions.

In analyzing the normative foundations of economic rents, this paper provides three substantive contributions to the study of social inequalities. First, it highlights that a key construct sociologists use to study social inequalities, economic rents, is imbued with normative content, as is the concept of inequality itself. Implicit in economic rents is the normative assumption that the baseline condition of perfectly competitive markets is free of structural advantages for some actors. Sociologists are not attempting to smuggle normative content into what is supposed to be a purely empirical theoretical construct. It is just that it is impossible to construct a conceptualization of economic rents without appeal to some normative criteria.

This is because inequality itself is a normative concept. Equality is an ideal, and how we construct that ideal shapes what we are willing to define as inequality. We should be clear about what we mean when using inequality, and associated concepts like economic rent, so that our empirical work around them can be judged adequately for both its empirical and its normative claims and assumptions. The implication is that we should interrogate the normative foundations of any particular conceptualization we develop to understand inequalities so that we have anchored our concepts in normative criteria we are willing to accept. This does not mean our theories of inequalities do not require empirical adequacy. It is just that they also require justification in the normative underpinnings and implications of how concepts are defined.

Second, this paper demonstrates that the current Sørensenian construction of rents fails to align with contemporary egalitarian philosophies. This notion of rents is normatively anchored by the assumption that perfectly competitive markets produce just distributions. This is not an explicit assumption but is implied in the use of the perfectly competitive market counterfactual as the baseline for the absence of structural inequalities. However, this baseline condition cannot be said to be egalitarian within the dominant strands of egalitarianism in political philosophy. For luck egalitarians, the competitive market fails to adequately track the luck-choice distinction, allowing for more luck in the distribution of resources than luck egalitarians, even of the less strict resource egalitarian variant, are willing to accept. For relational egalitarians, the competitive market fails to embody relations of equal standing, and the distributions it produces often cut against equality of standing. Importantly, in both forms of egalitarianism the creation of rents is required to ensure equality. In this way, by anchoring the concept of economic rent around the perfectly competitive market, sociologists have used an anti-egalitarian distributional metric to pursue the egalitarian aim of eliminating structural advantages.

Third, this paper provides a novel way to reformulate the concept of economic rents in order to ground it more solidly on contemporary egalitarian thought—specifically, relational egalitarianism. Relational egalitarianism is particularly appealing for sociologists as it takes social relations as its starting point, and asks how justice inheres not in individual actions but in social relations. The core question is whether or not social relations can be said to be organized through equal status, power, and standing, which gets at the most plausible reason sociologists might be concerned with inequality. It is not distributions per se that we care about, but what those distributions mean in the context of our social relations. Distributions can emerge from or reproduce unequal social relations, and as such, these distributions entail economic rents that cannot be justified interpersonally. Interpersonal justification provides a novel contrast to the perfectly competitive market baseline and is more consistent with existing research on resource inequalities (even some research within the rent tradition).

Ultimately, this analysis brings into focus the important role for moral and political philosophy in sociological analysis. Social inequality cannot be uttered without imposing some normative criteria in its definition. The challenge for sociologists studying inequality is to be precise in how we construct and deploy inequality and related concepts like economic rent. This is true for studying not only distributional inequalities but also other forms of inequalities in neighborhoods, organizations, families, and schools. Normative criteria are inevitable in the study of social inequalities, and sociologists have to grapple with the normative assumptions and implications of how we conceptualize what constitutes inequality.

The author has no competing interests to declare.