Keeping Markets in Their Place

I am grateful to the discussants for their thoughtful responses.

The two libertarians, Matt Welch and John Tomasi, worry that keeping markets in their place violates liberty. If liberty as they conceive it should always take priority over other goods, then we should not ask where markets serve the public good and where they don’t belong; markets should be everywhere, and consenting adults should be free to buy and sell whatever they please.

I offer two replies. First, my main concern—in the essay and in my book What Money Can’t Buy—is to determine which goods should be allocated by markets and which should be allocated according to other principles. Even if we conclude that buying and selling kidneys, say, or sex, is morally objectionable, whether doing so should be against the law is a further question. For example, you might conclude that outsourcing pregnancy to paid surrogate mothers is morally objectionable but decide that the best way to discourage the practice is not to ban it, but rather to instruct courts not to enforce surrogacy contracts. I’m not sure what a libertarian would say about this way of discouraging surrogacy.

Second, I suspect that all but the most ruthlessly consistent libertarians actually believe that other values sometimes outweigh liberty, understood as freedom of choice. Welch argues for a market in kidneys for transplantation on the grounds that we currently have a shortage of kidney donors, and many people who need a kidney transplant die while waiting. This is a strong reason to consider ways of increasing the supply, possibly by resorting to market incentives. But notice that this argument is not in the name of liberty. It is in the name of reducing the number of deaths that result from renal failure. Suppose a wealthy, eccentric collector wanted to buy a human kidney, not for the sake of saving a life, but for the sake of displaying it as a conversation piece on his mantle. Should he be allowed to do so? Suppose he wanted a matched pair of kidneys, from the same person. Does respect for liberty mean that we must let the collector buy a pair of kidneys from an impoverished peasant who is willing to sacrifice his life to feed his family or educate his children?

Tomasi defends free markets in the name of fairness. Sometimes, he observes, allowing the wealthy to pay to jump the queue (at airport security checkpoints, for example) can help the disadvantaged. The airline might use the revenue from the fast-track lane to lower fares, thus helping those at the back of the queue and those who cannot otherwise afford to buy a ticket. Maybe so, though whether the airline uses the new revenue to reduce airfares or to increase profits is highly contingent. My point is this: the moral cost of letting people pay to cut in line depends on what the line is for. Are they queuing to board a flight, to attend a concert, to cast a vote, to see a doctor? Whatever benefits might trickle down to the disadvantaged, we can’t decide whether queuing or paying is the right way of allocating a good without asking about the moral meaning of the good in question.

Herbert Gintis claims to have identified two mistakes in my criticism of standard economic reasoning, though I don’t understand what he takes those mistakes to be. First, he suggests that although economists “do not have a complete theory of when the exchange of valuable entities is best left to the market and when it should be regulated by other mechanisms,” they do have views on the subject. As examples of these views, he reports that “most economists” favor decriminalizing and regulating the sale of recreational drugs, and that some economists have found that government corruption impedes economic growth. I don’t see how either of these observations bears on my claim that market relations sometimes crowd out non-market norms worth caring about and that we need to take the corrosive effect of commodification into account. My second mistake, he thinks, is to neglect that societies with market economies are more tolerant than non-market societies. But I do not argue against market economies, only against the tendency of market economies to devolve into market societies—places where everything is up for sale, and where market values and market relations invade every aspect of life. By keeping markets in their place, we can preserve the benefits of markets while avoiding their corrosive effects on family life, personal relations, health, education, criminal justice, civic life, and other domains.

By keeping markets in their place, we can avoid their corrosive effects on family life, personal relations, health, education, criminal justice, and civic life.

Samuel Bowles is right to suggest that whether markets corrode virtues worth caring about (such as altruism, generosity, solidary, and civic spirit) is partly an empirical question. One of the problems with standard economic theory is that it is not empirical enough; it rests on formal or stylized assumptions about how people think and act that often go untested. Behavioral economics remedies this defect to some extent by subjecting these assumptions to empirical investigation. But behavioral economics shares with mainstream economics a reluctance to engage in ethical inquiry. If empirical inquiry confirms that markets crowd out non-market norms in some cases, it remains to be decided whether those non-market norms are worth protecting, even if doing so would sacrifice some economic efficiency or social utility. This is a philosophical question that behavioral economics cannot answer on its own.

Anita Allen, Lew Daly, Richard Sennett, and Elizabeth Anderson offer broadly sympathetic responses that nonetheless raise instructive and important points. Allen cites the example of schools paying cash to African American and other students in low-performing urban schools and offers some trenchant objections to this practice. In What Money Can’t Buy, I discuss the growing use of cash incentives to motivate students, and I share Allen’s worries. Drawing on theology, Daly enriches the discussion of markets and morals by bringing to bear the concept of idolatry. Sennett rightly emphasizes that market relations crowd out sociability and mutual obligation. Anderson, whose writings on ethics and economics I am greatly indebted to, shares my view that “corruption objections” to market arrangements go “beyond the standard issues of distributive justice.” And she makes the important point that “not all [motivations] lie on a spectrum between self-interest and altruism,” offering professionalism as one example. I welcome and accept her “friendly amendments” and agree that education, health care, and criminal justice are among the domains where the corrupting effects of markets are most grievous.

Debra Satz, who has also thought long and hard about the moral limits of markets, takes a different view. She agrees that markets should not govern the whole of life, but is skeptical of the corruption argument. She favors a version of what I call the fairness argument—the idea that markets are objectionable insofar as they reflect unequal bargaining power. The reason Satz gives for preferring the fairness or equality argument is that “concerns about corruption offer little guidance about where and when to use markets, and where and when other social institutions are preferable.” We should not rely on the notion that markets crowd out virtues and non-market goods, because this notion does not tell us which goods should be governed by markets and which by other principles.

This makes it seem that Satz believes corruption arguments against commodification are unpersuasive because they are less determinate than fairness and equality considerations. But that would be a weak argument. While the corruption objection admittedly depends on controversial conceptions about how to value goods, the fairness and equality objection is also open to disagreement. In a pluralist society, people disagree about what fairness and equality require, and those disagreements make it difficult to establish what role markets should play in the allocation of health care, say, and other social goods. The meaning of fairness and social equality is contestable in the same way that the meaning of procreation, family life, health, education, and other goods is contestable.

I think Satz’s reluctance to base moral limits to markets on the corruption argument actually reflects a deeper issue of principle, one that goes to the heart of liberal political theory. The notion that market values may corrupt or degrade certain goods and social practice presupposes that some ways of valuing goods are higher, or worthier, or more appropriate than others. The corruption argument requires that we deliberate not only about the right way to distribute goods, but also about the right way to value them.

Deliberation of this kind is judgmental; it brings substantive conceptions of the good life into the public arena. It is therefore at odds with an influential conception of liberal public reason. As Satz writes, “One of the great virtues of a market is that it allows people who disagree about the value or meaning of goods to engage in mutually beneficial exchanges.” The liberal case for markets is that they are nonjudgmental: provided the background conditions are fair, people should be free to place whatever value or meaning they want on the goods they exchange.

One of the aims of What Money Can’t Buy is to call into question this tenet of liberal political theory. Our reluctance to bring competing conceptions of the good life into political debate has not only impoverished our public discourse; it has also left us ill equipped to contend with the growing role and reach of markets in our lives.