Relational Inequality Theory

This chapter is an introduction to relational inequality theory (RIT). In RIT resources are generated and pool in organizations. Actors with legitimated claims gain access to those resources. Some people and potential trading partners are denied access to organizational resources through processes of social closure. Others appropriate organizational resources based on their ability to exploit weaker actors in production and exchange relationships. Actors are more or less powerful in these claims-making processes to the extent that they have cultural, status, and material advantages in resource-distributing relationships. These power-generating resources tend to be associated with categorical distinctions such as ownership, occupation, gender, education, citizenship, and race. Which categorical distinctions are the basis for claims-making are institutionally and organizationally variable. Markets as well as institutional fields influence, but do not determine, action and opportunities. Rather, actors use cultural and other tools to invent local strategies of action.

Relational Claims-Making

Relational claims-making is a two-step process and the proximate causal mechanism generating inequalities. The process is initiated by a claim on organizational resources and completed when that claim is endorsed or rejected by powerful actors. The ability to make a claim and its legitimacy reflect the social relations of status and power of the actors involved. Actors’ claims can be explicit, implicit, or silenced. Overt claims are explicit, but claims become implicit when they become embedded in taken-for-granted practices. Claims are silenced when actors lack the relational power to act or make claims. Claims-making is illustrated with cases examining the emergent division of labor in mental hospitals and pulp and paper plants, pregnancy discrimination cases, work–family policies, employer bonus systems, productivity metrics, sexual harassment, financial wealth distribution, declining union power, shifts from production to financial discourses, and diversity rhetoric.

Social Closure

Social closure is a process through which some groups, implicitly or explicitly, draw categorical boundaries around themselves and others to monopolize resources. Social closure has two faces: opportunity-hoarding for actors’ categorical in-group and exclusion of the out-group. We explore closure case studies around criminal records, occupational licensing, education, non-compete employment contracts, job segregation, sexual harassment, access to science and technology jobs, and discrimination based on race, gender, sexual orientation, and religion. The case studies also highlight the important role of organizational and institutional variation in the degree and incidence of closure processes. We conclude that closure processes can be challenged by usurpationary movements, institutional regulation, and interactional resistance.

Exploitation

Exploitation is a relationship in which one party uses power to gain at the expense of another. Exploitation happens through a claims-making process. Legal and cultural institutions steer which groups are exploited and block or facilitate exploitation. Exploitation can be naked and open for all to see; more often exploitation is institutionalized, taken for granted, and legitimated even by those being exploited. Examples of exploitation are offered, including increased exploitation of organizational resources by CEOs and other top earners; wage theft by employers from employees; income transfers between workers across categorical boundaries, including race, occupation, education, and parenthood; corporate cultures of self-exploitation; as well as contemporary slavery in the United States and the sexual exploitation of fashion models.

Organizational Inequality Regimes

This chapter describes organizations as inequality regimes. Regimes are comprised of the resources available for distribution; the task-, class-, and status-based social relations within organizations; formal and informal practices used to accomplish goals and tasks; and internal cultural models of people, work, and inequality, often adapted from the society at large to fit local social relationships. Resource levels, national institutions, organizational rules and practices, local organizational cultures, and status intersectionality constitute the basic sources of variation in inequality regimes. Case studies examine historical and contemporary workplace inequality regime variation in Japan, Sweden, Mexico, Germany, and the United States. The role of intersectionality in producing regime variation is explored.

Generating Inequalities

This book introduces relational inequality theory (RIT). RIT builds on a foundation of social relationships, organizations, and the intersectional complexity and fluidity that characterize social life. The argument is organized around three generic inequality-generating mechanisms—exploitation, social closure, and claims-making. The actual levels and contours of the inequalities produced by these three mechanisms are, however, profoundly contingent on the institutional fields in which organizations operate and their internal intersectional dynamics. RIT is contrasted to status attainment theory in sociology, human capital and neoclassical models in economics, as well as heterodox economics and more institutional political economy approaches to inequality. The chapter concludes with an outline of the scientific advantages of relational models of action.

Expanding the Moral Circle

Relational inequality theory (RIT) is summarized, and its implications for social science practice, data collection, and causal attributions are outlined. To advance equality and justice agendas RIT also implies a series of global goals including moving from tribalism to universalism, from hierarchy to citizenship rights, and from markets to human dignity. Robotic recipes, particularly the religious reliance on market solutions, economic growth, and expanding education, will not solve the problems associated with rising inequality and the denial of human dignity. At the center of all three goals is the leveling of categorical distinctions and their associated status and power differentials and simultaneously making human dignity the central cultural framework through which organizational decisions should be made and policy goals identified.

Organizational Surplus and Rising Inequality

Product markets are organized through social relations of power and networks of mutual exchange. Powerful firms exert control over prices and contracts. Increasingly they are also adjusting their organizational boundaries, as well as the basic legal and regulatory environment, to favor their or their network’s market power. Firms desire to avoid competition and develop business strategies, from seeking market niches to patent protection to collusion as a means to protect themselves. Market power is a product of closure processes. When that power is used to extract higher prices from customers or lower prices from suppliers, exploitation is operating. Embedded trust is the alternative to exploitation. When powerful firms lobby governments to adjust regulations in their favor or legalize predatory behavior, they are undertaking a claims-making process. These ideas are illustrated with case studies of pharmaceutical, information technology, and financial service industries and with more global analyses of the trade-off between exploitative and embedded exchange and rising between-firm inequality.

Observing Inequalities

This chapter advocates the development of comparative organizational research designs as the empirical basis for studying both the generic and contingent processes that generate inequality. After explaining where past quantitative and qualitative researchers have gone wrong, it goes on to examine and promote contemporary comparative organizational research designs. Two in-depth case studies highlight the intersection between a relational inequality theoretical approach and comparative organizational research designs. The first examines organizational variation quantitatively, highlighting the roles of categorical intersectionality, organizational practices, and US and Australian national political economic institutions in expanding and contracting workplace class inequalities. The second focuses on three qualitative case studies of claims-making over surgical training regimes, highlighting the role of institutionalized power, gendered struggles, and cultural framing in contestation over status and divisions of labor. Finally, the chapter examines the potential of comparative meta-analyses across existing single-organization case studies for generating generic theories about relational inequalities.