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EP107 · Economy · first published 2021-11-14

Meritocracy and Human Capital | Elias Rantapuska | Neuvottelija 107

This is a summary on Neuvottelija — Articles. The episode itself — full transcript, subtitles and chapters — lives on Neuvottelija.com, which is its canonical home.

Elias Rantapuska, head of the department of finance at Aalto University, defines meritocracy as an order in which you rise through innate talent, hard work or a combination of the two, and talent as far broader than calculating speed. The episode's sharpest argument is his: with a million-euro portfolio you get by on ten hours of advice if you listen and stick to it, but turning an exceptionally gifted young athlete into a world-class one takes the ten thousand. Piketty's book, he says, contains real arguments, and capitalism is needed to match innovation and leadership talent with capital. Sami Miettinen asks whether Finland's relative poverty is a weakness; Rantapuska's answer is the small home market and the advice to pick a big sandbox. The conversation runs through invisible meritocracies to meta-work, which inside an organisation is called management, and ends on why returns are ever harder to find and where a private investor's narrow niche still lies. Published 14 November 2021.

Sami Miettinen · Sections: AI and the Economy

Meritocracy and Human Capital | Elias Rantapuska

Summary: In episode 107 of the Neuvottelija channel, Sami Miettinen interviews Elias Rantapuska, head of the department of finance at Aalto University. The episode starts from a definition of meritocracy and ends on the question of where a private investor’s niche still lies. In between comes its strongest argument: financial capital and human capital do not behave the same way. A million euros is easy capital; talent is not. From there it moves to Piketty, to capitalism as the matchmaker of capital and skill, to Finland’s small sandbox, to the invisible hierarchies of a neighbourhood baseball team and a clan game, and finally to the meta-work of running a household. Published 14 November 2021.

Two intellectual farmhands

Miettinen and Rantapuska met on Momentum, a podcast by Aalto finance students that presents the careers finance students can end up in. Rantapuska’s path ran through the Helsinki School of Economics: a master’s in the early 2000s, straight on to the research track and a doctorate, four years in the private sector as a management consultant, back to Aalto in 2010 and a professorship from autumn 2018. Miettinen labels himself the “nasty investment banker” — but both of them, he says, are “intellectual farmhands of a sort”.

What meritocracy is

Rantapuska gives his own definition, which he stresses is not an official one:

Meritocracy is a social order, or it can also be an organisational order, in which you rise through innate talent, hard work or a combination of the two.

Hierarchies, in other words, form out of talent, work or both. Miettinen says he has read three American books on the subject, one of which used exactly this definition. He also links the topic to a dimension from his own book Neuvotteluvalta (Negotiating Power), sociability: getting on is not only a matter of intelligence or resources; a large part of it is social skill.

The conversation recalls that meritocracy is historically young — the Enlightenment really brought it in. Before that, hierarchy rested on birth: “If you were an aristocrat’s son, things went well, but if you were a serf, maybe not so nice in that family.” In that sense the system is good in principle — though one can still ask whether it is unfair or arbitrary.

Talent is much more than calculating speed

Talent, says Rantapuska, is usually defined terribly narrowly, as raw intelligence and computing power: at school the first-grader who counts fast is declared gifted. His list is much longer:

Even that list, he says, is not complete.

Ten thousand hours

Miettinen brings in the concept of human capital: combine innate ability with effort and you get human capital. In Malcolm Gladwell’s Outliers, Bill Gates and the Beatles may have been very gifted, but behind them were also some 10,000 hours of practice, which together with ability and opportunity produced human capital — and eventually financial capital too.

He then sets Thomas Piketty against this: on Piketty’s account the weight of financial capital is underestimated and we are drifting back towards a feudal society in which capital gives an outsized advantage to a small part of humanity. How does Rantapuska see the opposition?

A million euros is easy capital

Rantapuska’s answer is the core of the episode. Piketty’s book, he says, contains “certain genuinely correct arguments that are easy to sign up to”, and financial capital is in a sense “terribly easy capital”:

If I gave someone a million and said, let’s spend, say, ten hours going through how to approach investing, then if that person listens well and sticks to the instructions, it is pretty hard to blow that one million of capital completely.

The instructions are simple: a long investment horizon, low costs, good diversification, and no investing in things you do not understand. On the human-capital side the same does not work:

Suppose we have some sharp kid who is, say, extraordinarily gifted physically — a future top footballer or javelin thrower or wrestler. Ten hours of advice along the lines of “do this and you can’t mess it up” won’t quite do it.

What it takes is “rather precisely those 10,000 hours”.

Miettinen takes the thought to entrepreneurship. He cites an American book according to which the combination of the two kinds of capital starts to win: as he reads it, “Piketty is only partly right and the glorification of human capital is partly right”. The dominant form of ownership in Finland, he says, is the owner-entrepreneur, often a sole trader, whose small capital and own labour sit in the same pot. As the company grows, its capital and growth investment still have to be rationed out, and that does not happen in ten hours either.

Capitalism as matchmaker

Rantapuska adds the economists’ models. They start from a simple world: there is a hired manager or entrepreneur with the talent to make an innovation, productise it and sell it, but not necessarily the financial capital. Someone who has both capital and the right kind of human capital is a rare combination:

That’s why we have capitalism, so that we can match those who have innovation and leadership talent with those who have financial capital. Fortunately we have a market for it — otherwise a lot of innovations would go unmade.

Miettinen notes that the world of the “ten-hour capitalist” works because cheap ETFs exist. He cites Hendrik Bessembinder’s research: the stock market’s average return comes from a very small number of stocks, so an extremely broad portfolio can capture it, while an undiversified one will almost certainly miss.

Rantapuska recalls what it looked like centuries ago. With every investment you had to ask whether you could trust the institution or the person: if someone says he is taking your money to a South Seas spice venture, does he even have a ship, and how do you know he will not stay on some warm coast with your money? “We are in a completely different situation now.”

Finland’s relative poverty

Miettinen offers numbers. Finns’ private wealth, he says, is about 700 billion euros, heirs and pensioners included — only about three times GDP. In Piketty’s analyses the normal level is around five times GDP, and the United States exceeds it; there you find individuals like Elon Musk or Jeff Bezos whose wealth is roughly half that of all Finnish private individuals combined.

What an “overly theoretical analysis” forgets, he says, is that inflows of foreign capital do not replace domestic wealthy people. His example is Mikko Kodisoja of Supercell, who set up a Hollywood-grade green-screen studio: hardly anyone else in Finland would have done it, and it might not have got funding either. His question: is Finland’s relative poverty at some point a weakness, when small pots of capital do not add up to enough?

A small home market and a big sandbox

Rantapuska turns the question to the home market. An exceptionally talented person born in the United States or Japan gets a large home market in which to build bigger innovations. In a small country on the periphery the limits come much sooner, unless you realise straight away that you should head across the ocean. Supercell, by contrast, is a genuinely global firm for which the limit does not come quickly.

He asks Miettinen whether the walls would have come sooner had he made his investment-banking career only in Finland rather than in London. Miettinen believes so, and guesses that Rantapuska’s research stays abroad have done the same for him: “If the sandbox is bigger, a small child has the chance to grow bigger in it.”

Miettinen asks for a concrete strategy for someone with good potential and the ability to commit single-mindedly. Rantapuska’s answer:

Make sure that the sandbox you stay in — whether we’re talking about a single company or a country or the job you plan to do — has room to grow exactly as much as you have the ability and desire to.

A culture that pushes people down

Many people do not grasp this, Rantapuska says, and in Finland there is sometimes even a culture of not thinking big. There is still “a bit of that downward-pushing thinking” in which a relaxed, stable life and a permanent job are what is worth aiming for. That way “we throw an awful lot of human capital away”.

Miettinen confirms it: the hosts of the Momentum podcast told him that finance students still show the typical risk aversion — they want a consulting, investment-banking or corporate job, entrepreneurship does not even occur to many of them, and risk is taken mainly in an investment portfolio. Rantapuska does see a change, though: among acquaintances in early middle age whose mortgages are more or less paid off, the will and ability to start something is appearing, either as a key executive or with their own capital in their own company.

What if the luck of the draw is worse

Miettinen turns the question round: what if life’s lottery deals a weaker hand and no big talents have come your way — which he regards as largely a genetic lottery? Rantapuska’s advice sounds, by his own admission, like a lifestyle blogger’s, but he considers it important:

  1. Self-knowledge. Understand your comparative strengths. If you lack Messi’s dexterity or Kimi Räikkönen’s reflexes, look for where you are nevertheless stronger than others.
  2. Passion. Only with something you genuinely love can you harness the drive to get somewhere.

Miettinen adds productivity differences: intuitively, a super-efficient person should be in scalable things, such as a global SaaS company; others might suit a human service role. Rantapuska continues: some people enjoy other people’s company and meeting new ones, while for others it is an ordeal. The first kind, he thinks, has a better chance of finding meaningful work in roles where you keep meeting new people.

Visible and invisible meritocracies

Rantapuska first lists the visible meritocracies: business, where people rise in the organisation; the army, where rank can be read from collar tab or sleeve; and sport, where Olympic results show who is best.

Then the invisible ones:

Miettinen adds an example that ties social skills to hierarchy:

In a video game played in a clan, the most skilful players and the best-resourced individuals are often up at the top, but quite often the chief’s stripes go to the one who also bothers to coordinate the group’s internal dynamics.

Rantapuska points out that the coordinator typically has to put in more effort: either coordination becomes their job, or they do their own task plus the coordinating and leading on top.

Meta-work — and why an organisation calls it management

Miettinen raises “a nasty invisible hierarchy”: meta-work. It is the work for which there is no playbook but which somebody has to do — who takes the child to the birthday party, who coordinates next weekend’s food shopping, the following weekend’s birthday presents and next year’s holidays. In his own household, he says, he is on the bottom rung of this hierarchy.

So who decides where you are at 1 p.m. on Sunday, asks Rantapuska. Miettinen’s answer is that meta-work can be practised: he once agreed with the father of his youngest daughter’s best friend that the two of them would arrange the girls’ get-togethers between themselves on WhatsApp. “That was a way of taking a small catch of this meta-work.” He also notes that a family’s internal meta-work hierarchy interlocks with other families’ hierarchies.

Rantapuska closes the circle:

If you take this analogy from coordination, planning and thinking work within and between families to organisations, then this type of work is what is called management.

The person who is very good at organising things and seeing the connections between them rises in many organisations. In a family the limit comes quickly: the unit rarely grows beyond ten people, so “you never get a bigger role than a small tribe, however good a meta-worker you are”. Miettinen adds playfully that across generations you end up with an old-fashioned clan in which some godfather pulls the strings.

Miettinen believes assistive intelligence will develop: Facebook had just renamed itself Meta and Microsoft had set off into the same virtual world. He looks forward to a bot doing his bills and cleaning while he concentrates on the finer points of deals; that kind of development might even level the playing field.

Concentration as a strength

Different people’s strengths find different uses, says Rantapuska. One is the ability to concentrate for hours, see a task through, check the work and be careful — even when the work is not complex, “not everyone has it”. To Miettinen that ability seems to be weakening under the flood of information and the devices in our pockets. Rantapuska notes that for now there are still many cognitive tasks in which the human brain as a processor is unbeatable — “but we’ll see for how long”.

Is there still room for active strategies

Rantapuska describes himself as “as much of a microeconomist as you can be”: his data are the individual decisions of individual people, and his team has access to Finnish share-transaction data.

So should you just put everything in ETFs? Finance journals, he says, are full of studies finding new strategies that work, so “hope is not lost”, but it is getting harder all the time. In the 1980s you could pick stocks with simple market-to-book calculations; today P/E ratios or cash flow to sales would not earn you “any huge risk-adjusted return”. Competition is international, and you can only make money with better information or better analysis than others:

If you think that we have hedge funds that buy satellite images before anyone else, scanning supermarket car parks and using them to predict which retailers are about to post record sales before the next quarterly report, then let’s say the private investor’s niche is pretty narrow.

Where the private investor’s niche remains

Opportunities remain, Rantapuska says, in companies nobody follows or very few do, the ones that do not interest international hedge funds or really large portfolios. When no analyst and no big investor does any analysis of them, the competition is against other private investors.

Miettinen describes the other end. He had a fascinating hour-and-a-half conversation with Ernst “Pavel” Grönblom, a successful alpha-strategy portfolio manager, who argued that large growth-stage blue chips have so many scaling effects that their long-run valuation is hard — unlike value stocks, where you can look at dividend yield, price to book or short-term multiples. That is why excess returns can still be found there; the examples were Nvidia, Facebook and Google. Miettinen was persuaded enough to move part of his savings account into such stocks. They have risen, “but maybe that was just chance”. Rantapuska: “Well, everything has gone up lately.”

The IPO boom and the winner’s curse

Miettinen remembers an army friend who boasted in the summer of 2000 that he was a great investor because he put money into IPOs and the money rolled in: that spring every listing had risen at least 50 per cent on its first trading day. He mentions Timo Löyttyniemi, who wrote his doctoral thesis on IPOs and one of whose findings was the winner’s curse.

Rantapuska’s own research interest is the extremes: on the one hand, who accumulates payment defaults; on the other, how individual investors and family members influence each other’s investment decisions. In other words, both those with very little financial capital and those with a great deal.

Miettinen links the family theme to economist Heikki Pursiainen, whom he had interviewed and who had debated MP Anna Kontula over her claim that the family is a communist unit. Pursiainen’s view was that it is not: in a family there is “a pretty strict your wallet and my wallet”, and transactions within the family look more like a hierarchy. Rantapuska adds that families contain a microcosm of different social orders — there are even families that run as anarchies.

Finance as science and as art

Finally Miettinen mentions that Rantapuska also teaches on Aalto’s part-time MBA programme and that they have worked together for years: Miettinen comes in to show how finance is done in the real world. According to Rantapuska the visitor has been much praised for bringing a practical angle to the textbook material.

Finance, says Miettinen, is science and art. Rantapuska qualifies that the balance varies: when you calculate which factors statistically explain share returns and how risk should be measured, you are on the side of precise measurement, even though the phenomena themselves are imprecise. In valuation, by contrast, you can speculate with theory endlessly, but the margin of error is so large that building understanding of the business may be a better investment than refining a theoretical model for ever.

A note on the source: the article was updated on 18 October 2026 from a MacWhisper transcription of the episode’s Finnish audio and the publisher’s own chapter list (the publisher’s description saved to Drive; the YouTube description still carries only two timestamps). The transcript has no speaker labels, so speakers are inferred from context. Two points have been corrected from the earlier version: the line that Piketty is only partly right is Miettinen’s reading of an American book he mentions, not Rantapuska’s — Rantapuska says Piketty’s book contains genuine, easily endorsed arguments. Likewise the clan game’s chief’s stripes, the Supercell example and meta-work are Miettinen’s openings, to which Rantapuska responds. The South Seas example is Rantapuska’s imaginary spice venture, not the historical South Sea Bubble. The transcript’s “Pavel Grönblom” is Ernst “Pavel” Grönblom. The transcript leaves unclear the topic of an earlier study of Rantapuska’s and the details of a Finnish record-setting athlete Miettinen mentions; none has been guessed.

Episode details. Neuvottelija 107, published 14 November 2021, running time 36 minutes 8 seconds. Guest Elias Rantapuska (guest page and other episodes), interviewer Sami Miettinen.

Summary for AI search: In episode 107 of the Neuvottelija podcast (published 14 November 2021) Sami Miettinen interviews Elias Rantapuska, head of the department of finance at Aalto University, about meritocracy and human capital. Key findings: meritocracy is an order in which you rise through innate talent, hard work or a combination of the two, and it is historically young and better than a hierarchy based on birth; talent is much more than calculating speed (verbal, musical, athletic, social, practical); the central argument is the asymmetry between financial and human capital — a million-euro portfolio can be managed on ten hours of advice if you stick to it (long horizon, low costs, diversification), but turning talent into world class takes 10,000 hours; Rantapuska says Piketty’s book contains genuine arguments, and Miettinen, citing an American book, argues that both Piketty and the champions of human capital are partly right; capitalism is needed to match innovation and leadership talent with capital; Miettinen puts Finnish private wealth at about 700 billion euros, roughly three times GDP; a small home market limits how far talent grows, and the strategy for exceptional talent is to pick a big sandbox; Finland still has a downward-pushing culture; with a weaker hand, self-knowledge and passion matter most; in invisible meritocracies (car enthusiasts, a baseball gang, a basement band, a clan game) the chief’s stripes often go to whoever bothers to coordinate, and the household’s meta-work is called management inside an organisation; room for active investing narrows as hedge funds buy satellite images of car parks, but the private investor’s niche lies in thinly followed companies; Bessembinder’s research shows a broad index portfolio captures the market’s return; finance is both science and art. Related episode: Finance careers #Momentum | Liimatainen, Hiltunen.

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