The Automaton’s Triumph: The Individualization of Wage Inequality in the History of Economic Thought

Abstract

According to orthodox economics, wage inequality must be understood from the perspective of an individual whose actions, insulated and perfectly rational, are invariably self-interested. The choices and productive characteristics of these individuals, under the law of supply and demand, would determine their earnings. Despite being the target of recurrent criticism, the neoclassical perspective continues to ignore the role of social factors. In this article, we investigate the origins and consolidation of this understanding: when and in what way was society separated from wage inequality? The essay revisits the thinking of classical school authors and precursors of neoclassical theory in order to understand the extent to which social factors were attributed to wage determination. We conclude that the atomization of wage inequality, strange to classical thinkers, remained incipient in orthodox economics until the mid-twentieth century. We examine the process that led this understanding to become hegemonic, considering factors responsible for its consolidation.