The Future Of The Prestige Economy: Who Gets Status?

There is accepted wisdom within the corporate and professional realms that one should be willing to sacrifice in the short-term for long term career success. This can take the form of many things:

  • Unpaid internships to get experience
  • Going into debt for credentials to get access to certain jobs or industries
  • Opening up your network to help people so you’ll be helped in the future
  • Taking a certification course for credibility (see MBTI, coaching, Yoga, Six Sigma)
  • Doing favors for “successful” people to earn social capital for favors to be named later

All of this behavior operates on the assumptions of what many have called a “prestige economy.” Kevin Simler gives us a good working definition of this kind of system (or hierarchy):

If dominance is the kind of status we get from intimidating others, prestige is the kind of status we get from doing impressive things or having impressive traits or skills.

When you start to understand these dynamics, I believe they can explain a lot of behavior. I would also argue that the assumptions behind our prestige economy has also come to dictate the conventional wisdom on the best way to live a life – at least in the western world.

Put simplypursue prestigious things…keep doing it…eventually you’ll be respected and rewarded (financially, but not always)

The Prestige Economy Is Undermining Itself

At the extreme ends, the payoffs to prestige-seeking are still very high. I would be crazy to recommend against anyone attending Harvard.

However, many other examples are less clear cut.

While writing this article, I went over to LinkedIn and searched “MBA MS BS” and in the first result found something that highlights the logical outcome of this system. Someone with four degrees, yet still searching for the payoff to their investment in the prestige economy.

Journalist Sarah Kendzior’s thoughts on the prestige economy are a good example of a growing school of thought about the modern economy:

Success does not matter because, in a prestige economy, success has nothing to do with employability. Achievements are irrelevant in a system that rewards money over merit, brand over skill.

Put more simply….the game is rigged!

When I tell people that I still think I would have learned more by staying at my job and not attending MIT for grad school, they look at me like I am slightly insane.

Skills aren’t the ultimate arbiter of success in a prestige economy. The appearance of skills is good enough.

Kendzior’s argument is that the prestige economy is undermining itself. By taking the appearance of competence as a proxy for competence and using money as a way to gain access to these prestigious institutions, people will eventually lose faith in the whole thing:

Institutions that use unpaid labor are hastening their own demise. They are sinking in quality and destroying their own reputations, which is what they bank on to hire unpaid labor in the first place.

Another word for the prestige economy is the meritocracy, which David Brooks calls out as one of the fundamental lies of our current culture:

The myth of the meritocracy is you can earn dignity by attaching yourself to prestigious brands. The emotion of the meritocracy is conditional love, you can “earn” your way to love. The anthropology of the meritocracy is you’re not a soul to be purified, you’re a set of skills to be maximized. And the evil of the meritocracy is that people who’ve achieved a little more than others are actually worth a little more than others.

People have started to lose faith in the traditional recipe of prestige. But that does not mean it was even the recipe that everyone wants.

Some People Are Opting Out Of Traditional Prestige Economics

If we are not aware of the nuances of prestige economics, it would be easy to assume that prestige is universal and translates to different domains. People will often say things to me like “you can travel the world because you worked at X.”

While my past experience has helped me create new things, I’ve entered these new communities having very low status. Luckily, many of these communities trade prestige for things other than money or things that can be bought:

  • Maker communities: technical competence, sharing your journey & lessons
  • Digital nomad communities: generosity with connections, & technical know-how
  • Online content creators: # of followers, originality of ideas, ability to bring people together
  • Gift communities: Time bank communities, coliving communities operating on what you are uniquely suited to offer

These are examples of still relatively new communities and I think that is important. Eventually some of the status within these communities will be standardized and eventually sold (will Lambda school be the Harvard of maker communities?), but they are all founded on new stories.

Enabled by digital communities, people are coming together from around the world and aligning around new values – things like competence, generosity, care, citizenship – and granting prestige to the people that embody these values.

Money still matters, but it isn’t central.

Who We Admire Determines Who Gets Status

If I think about my family, I think instantly about my grandmother. She is turning 90 this week and has a tremendous amount of status. This status is not a result of dominance, fear and control. Instead because she is respected and admired. Simler makes this same point in his essay:

So  admiration, rather than prestige-seeking, is the lynchpin of the prestige system.

It doesn’t matter is someone seeking prestige has good or bad intentions. All that is required for them to reap the rewards of prestige is that people admire them.

But outside of a closed system like a family, how do you figure out who you admire? Scott Alexander makes the simple but powerful point that there isn’t really much thinking behind this other than accepting the wisdom of our peers:

…since it’s hard to figure out who’s good at things (can a non-musician who wants to start learning music tell the difference between a merely good performer and one of the world’s best?)  most people use the heuristic of respecting the people who other people respect.

This is a sensitive topic for me. Since leaving my consulting job, many people seem to be confused about why I would give up all the prestige that I had earned.

When we get past the BS, they ask me directly: how could you give up the money?

It doesn’t make any sense and is a hard conversation to have until you understand that we have different definitions of prestige.

For me, I want to shift to a groups where generosity is a bigger factor than my title and where helping teach others is more important than how much I earn.

We are obsessed with money as the sole indicator of people’s success. Economic growth has given us many good things, but many people are craving a different story.

Next time someone is talking about how much money someone is earning, perhaps we inject a story of an amazing person that has contributed to the world in a different way.

Aren’t those the kind of communities we want to live in anyway?

About Paul Millerd

Paul is a writer, creator, and curious human that is passionate about how people can reimagine their relationship with work to do things that matter. He published The Pathless Path in 2022.

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