The Unbroken Window

I assign several pieces from Michael Sandel in my classes to discuss the moral limits to markets. And I agree with Professor Sandel that not everything ought to be bought and sold, despite there being no legal restrictions on those activities and I further agree that considering all activities to be in the realm of formal markets does have the potential to degrade them. No point in going through examples here.

Here is the lead essay to a recent forum sponsored by the Boston Review that is based on a new Sandel book. I do recommend reading it and the response essays. I’d like to make a few points about it. Here is the lede to his article:

Some economists think markets can benefit all spheres of human activity. But they’re wrong: markets can erode important goods and social norms.

Not only are there some things money can’t buy, but there are also many things it shouldn’t

First notice the syntax. Some economists. Who are they? I know of not one single economist who thinks markets can benefit ALL spheres of human activities. The most market oriented economists I know believe (with considerable proof on their side) that expanding the sphere of market activity can bring considerable increases in both well-being and moral outcomes, despite the seeming contradiction. And notice again, “markets can erode.” That does not mean “necessarily” will erode. So what are the conditions under which markets will erode goods and social norms? Are there social norms that make markets work better? These are important questions and will be the focus of a student seminar we are running next year.

But despite these nit picks (he has a whole book so this is probably just reflecting the space limits of a short web piece) there are two larger issues. First, Sandel is using here a very limited definition of what a market is – he argues that a market is a place where things are bought and sold for money. But this is not at all how economists (at least the good ones I know) think about markets. Our language really does need some improvement. The insights of economics – e.g. that all goods are scarce, and that this scarcity requires tradeoffs to be made – are completely general. We think of a market as any formal or informal assemblage of potential cooperators whether in person or virtually who are constantly comparing tradeoffs to subjective values to determine whether to go it alone or to engage in some activity with other parties. The exchange of money for particular goods or services is but a small slice of this much broader picture. When economics think about the “marriage market” we may perhaps be talking about mail-order brides, but that again is a gross mischaracterization of the marriage market. The marriage market consists of all potential partners (male-male, male-female, female-female) responding to changes in benefits and costs of formalizing their relationship, so they can be together and have fun, maybe using toys like this fantastic wand vibrator for this. Couples who are dealing with various issues may seek couples counselling, click here to read more.

And regardless of whether Sandel likes it or not – people enter into formal relationships by making it more attractive for someone to be with them. Even when money does not exchange hands, something does. And it is not at all clear to an economist that there is any difference between money exchanging hands or something else. I would also interject that our customs and social norms are such that when formal monetary exchange is inappropriate, those markets simply do not exist. I don’t see any capitalist monster forcing people to engage in monetary transactions when they do not wish to. Again, this is worthy of a book-length response, so I apologize for not getting into more detail on this.

Or consider Sandel’s point that:

The kidney will work (assuming a good match) regardless of the monetary payment. So to determine whether kidneys should or shouldn’t be up for sale, we have to engage in a moral inquiry. We have to examine the arguments for and against organ sales and determine which are more persuasive

He is right that we have to appeal to a moral examination here. However, he is not right that appealing to morals allows us to ignore the insights that economics brings to bear on these difficult questions. Prohibiting the sale of kidneys costs tens of thousands of lives and if you wish to monetize this, tens of billions of dollars worth of losses and pain and suffering. It is perfectly fine to object to the sale of kidneys, but not OK to ignore these costs when doing so.  He seems believes that a less market-oriented society would inculcate virtue so much that people would freely donate enough kidneys despite us never really seeing this anyplace, even in places far more hostile to market exchanges. But consider this thought. If we were to allow the buying and selling of kidneys, the act of donating a kidney would rise in moral value, not fall. Is it more “moral” or “honorable” to give away a kidney when the opportunity cost of doing so is zero, or when one could have earned $50,000 by selling it? Remember for something to have moral character is has to be consciously chosen. And just as later in his essay Sandel points out that increasing monetary incentives can backfire and result in less of an activity, the opposite would therefore seem to hold – if you increase monetary incentives it may in fact spur people to “spurn” them for quite the same reason as in the experiment offered.

Here is another:

It is easy to see how this economistic conception of virtue, if true, provides yet further grounds for extending markets into every sphere of life, including those traditionally governed by non-market values. If the supply of altruism, generosity, and civic virtue is fixed, like the supply of fossil fuels, then we should try to conserve it. The more we use, the less we have. On this assumption, relying more on markets and less on morals is a way of preserving a scarce resource.

But to those not steeped in economics, this way of thinking about the generous virtues is strange, even far-fetched. It ignores the possibility that our capacity for love and benevolence is not depleted with use but enlarged with practice. Think of a loving couple. If, over a lifetime, they asked little of one another, in hopes of hoarding their love, how well would they fare? Wouldn’t their love deepen rather than diminish the more they called upon it? Would they do better to treat one another in more calculating fashion, to conserve their love for the times they really needed it?

Of course Sandel ironically makes the neophyte mistake of characterizing resources as fixed commodities. They of course are not. Resources are only limited to the extent that human ingenuity is limited – and the effective stock of “commodities resources” has grown incredibly over time, and I see no reason to expect this not to continue. Are altruism and civic virtue fixed? I don’t know. I do know that I probably cannot model them out like one would model out the increasing supply of resources with the application of the human mind. How could we? However, I do know that there are hosts of experiments which seem to have shown that what appears to be altruistic behavior in experimental and even real world settings is actually something else. That does not refute Sandel’s point at all, it might just say we have a lot of room to grow.

And finally:

This economistic view of virtue fuels the faith in markets and propels their reach into places they don’t belong. But the metaphor is misleading. Altruism, generosity, solidarity, and civic spirit are not like commodities that are depleted with use. They are more like muscles that grow stronger with exercise. One of the defects of a market-driven society is that it lets these virtues languish. To renew our public life we need to exercise them more strenuously.

This is aggravating, it really is. And it is aggravating for two reasons. First, it’s simply not a testable or observable question to ask whether markets “let” virtues languish. There are serious scholars who have spent a life demonstrating perhaps that the opposite is true. Similarly, I do not acknowledge solidarity (for example) as a virtue. So pardon me for taking exception with the entire force of the argument. If market driven societies eliminate “solidarity” as I understand it, that is a benefit to me. For something to be a virtue must it not be universally held? But second and most important (and related) it’s not at all clear that any other institutions inculcate the virtues Sandel cares so deeply about. I mean seriously. Why don’t I just write a piece, “How Governments Crowd Out Morals?” I would argue that anything put into the government sphere is degraded, and it is degraded by definition – something that is not consciously or freely chosen cannot have any moral character. And the actual effect of government programs does not seem to have enhanced our virtues. At the very same time as Sandel demonstrates that “more and more is being left to the market” it is undeniably the case that “more and more is being done by government.” There are more laws, rules, regulations, taxes, interventions, suasions, etc. today than at any point in human history. And this at the same time that Sandel believes we are all degraded. Is there any reason I should take this line of argument seriously in lieu of the rise of powerful and expansive government? Government has monopolized the educational system and our children grow up without morals, and American schools are falling behind. And who gets to decide what ends up being traded for money on markets or not? Is it Mr. Sandel? All of us collectively? What if we, in solidarity, participate in democratic elections – you know, using our civic virtues, and agree to allow the sale of everything? Or on the other hand, is there a moral limit to markets on the other hand? Surely having no markets whatsoever is immoral. Who draws the line in between?