Magazine article Teaching Business & Economics

Professionals: Do They Benefit the Public or Themselves?

Magazine article Teaching Business & Economics

Professionals: Do They Benefit the Public or Themselves?

Article excerpt

The number of people in professional occupations in the UK has been growing. Professional bodies claim their practices protect the public from the potential market exploitation, but academics (economists and sociologists in particular) question whether this is the case. The article considers how the use of economic concepts such as principal agent theory, human capital theory and cartels can help focus the debate.

"All professions are conspiracies against the laity," according to George Bernard Shaw. Although writing a century ago, the Irish playwright was obviously aware of the debate about the role, nature and impact of this group of occupations. It's a debate that has persisted into the current era and taken on additional significance with more than 12 per cent of the labour force now classified as "professional". The core of the debate is whether the control that professionals have over their knowledge and expertise benefits the public or whether professionals exploit their market power for financial and other gains.

The statistics (Table 1) seem to show that just under 13 per cent of the labour force is employed (both employees and self-employed) in professional occupations and that this has grown by one percentage point during the current decade. However, as with many classifications, the devil is in the detail - that is, the detail of what constitutes a professional occupation. The International Labour Organization's (ILO) International Standard Classification of Occupations states:

"Professionals increase the existing stock of knowledge, apply scientific or artistic concepts and theories, teach about the foregoing in a systematic manner, or engage in any combination of these three activities." (ILO, 2004)

This encompasses the likes of doctors, lawyers, teachers, librarians, chemists and even economists. The ILO definition also covers "personnel and careers", however the UK's ONS does not include these occupations as professionals, classifying personnel officers and careers advisers as "associate professional and technical". (This is based on a comparison of Office for National Statistics (2000) and International Labour Organization (2004).) Note also, that some managers and senior officials may be professionals by training and qualification but are classified by their current occupation. Thus, the figures in Table 1 probably underestimate the number of professionals in the UK.

The ILO's specification (and the related ONS specification) of what constitutes a professional occupation is based on the minimum of relevant characteristics (or, to use the sociological terminology, "traits"): the possession of knowledge, In the academic literature, there is no consensus as to the minimum characteristics required. Perrin (2000) lists 17 main characteristics (see panel on page 25) used in 10 previous studies but no one characteristic is used in all ten.

While there is no agreed definition of what constitutes a profession (and its derivatives, professional, professionalism, etc.), the emphasis of academic enquiry has been on how professionals use their position "to provide service and to use their knowledge for economic gain" (Krause, cited in Evetts, 1999: 120). The service is to the public by offering specialist knowledge and skills. It is a type of principal-agent relationship (see Sloman, 2006: 207-08), where the professional is trusted to do what is best for the client irrespective of financial gain. A patient goes to a doctor and trusts the doctor, as a professional, to provide the most appropriate treatment rather than a less appropriate treatment which would earn the doctor a higher fee or save the NHS money.

However, this knowledge and expertise gives professionals a potentially powerful position in product and labour markets, especially if they are able to restrict entry to the profession - a process known as "closure" in the sociological literature, or monopoly in economics. …

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