Have Markets Gone Too Far?

I recently finished Michael Sandel’s What Money Can’t Buy: The Moral Limits of Markets, and experienced a mini-episode of catharsis. (You may have heard of Sandel before for the popular class called “Justice” he teaches at Harvard and the eponymous book.) Finally, a book that articulates well why so many of us experience a vague but palpable sense of unease when we read about, say, programs to pay students to read books or when the New York City Metropolitan Transportation Authority sells naming rights for a subway station. Even if these things “work” in some sense (and they don’t always), they seem wrong in some way. And I believe the argument is particularly relevant with issues of civic engagement.

Other examples abound: Sandel points to websites where you can pay for someone to draft a wedding toast or schemes in which wealthy hunters pay obscene amounts of cash to shoot rhinos, thus giving them an “incentive” to protect them. Together, he argues, they amount to an insidious intrusion of economic thinking into pretty much everything. It’s a trend best exemplified by the book “Freakonomics,” which purports to be able to explain any number of conventionally non-market interactions (e.g., doing one’s civic duty, childrearing, giving gifts to loved ones) by utilizing the analytical power (and assumptions) of markets.

(To illustrate the point, here’s a quick game you can play: How many market buzzwords can you catch yourself using in everyday speech? Examples: social entrepreneur, leveraging your time, giving yourself incentives, being more productive.)

While Sandel seems generally admiring of the power of markets to do things like enrich nations and promote economic growth, he raises two primary objections to markets’ ever-expanding reach:

“The fairness objection points to the injustice that can arise when people buy and sell things under conditions of inequality or dire economic necessity. According to this objection, market exchanges are not always as voluntary as market enthusiasts suggest. A peasant may agree to sell his kidney or cornea to feed his starving family, but his agreement may not really be voluntary. He may be unfairly coerced, in effect, by the necessities of his situation.”
“The corruption objection is different. It points to the degrading effect of market valuation and exchange on certain goods and practices. According to this objection, certain moral and civic goods are diminished or corrupted if bought and sold. The argument from corruption cannot be met by establishing fair bargaining conditions. It applies under conditions of equality and inequality alike.” (Pg. 111.)

The first objection is an argument to make markets work better. The second argues that no matter the conditions, there are some spheres in which markets are inappropriate and will actually change the meaning of the good in question. However, Sandel also notes that we as a society maybe sometimes decide that the benefits of markets are so great as to justify the risk of corruption of a particular good. Sandel’s point is not that we should do away with markets per se – it’s that we too often shy away from having a debate over their appropriateness in the first place.

Does this argument resonate with you? Or do you disagree with Sandel’s objections? Does, say, paying schoolchildren to read prevent them from fostering an intrinsic love of reading? Does that even matter if they wind up reading more? Please post your comments.

-Daniel Millenson, Managing Director