Is market life sucking the meaning out of real life?

Are too many things available to buy? That seems to be a theme of much recent literature that, at its worst, regrets how the economy has sucked the meaning out of life ever since the invention of trade and agriculture. The idea is that economic life weakens the close bonds with kin and community we used to build while we helped each other ward off starvation.

Markets are not the only focus of that concern: the expansion of cities and the encroachment of technology are others. For technology, think of the internet and social media, but don't forget the earlier effects of the automobile and the phonograph. As for  what you can buy these days with money, and the growth of markets, don't forget bottle feeding and washing machines, and women in the labor force.

But even if we have no nostalgia for the bad old days, it doesn't hurt to be aware of how the increasing scope of markets, like the growth of cities and technology, changes how we relate to one another.

In a recent NY Times Op Ed, the sociologist Arlie Russell Hochschild, who teaches at Berkeley, writes of her concerns about the increased reach of markets, The Outsourced Life. The article is accompanied by pictures of ads for all sorts of services that can now be bought and sold, from birthday party planners to cooking coaches, to upgraded accommodations in a private prison, to someone offering a service called "rent a dad."

The article announces her new book on the subject, The Outsourced Self: Intimate Life in Market Times

I recently received a review copy (one of the few signs that the world notices a blog).

It is a thoughtful book, on a topic in which I have a professional interest, but I wasn't encouraged when it began by regretting the loss of small town community that the author experienced as a child visiting her grandmother's farm. She visited from the city, a life her parents had chosen, and which she later chose herself. But the book is saved from nostalgia for the lost world by the acknowledgement of how much easier it would have been to take care of her elderly grandmother, years later when she was frail, if only she had lived near a city and the services that money could buy, and which a granddaughter could not easily deliver from far away.

So, and here is the interesting part of this kind of discussion, the loss of community isn't just something that happens because people choose to move to cities for the better opportunities and bigger markets they offer (even though they may regret, at least in memory, leaving the town behind). Loss of community is also something that happens to those left behind, as the towns are thinned out by those who moved on, so less community remains. Professor Hochschild and her parents chose to move away from the farm, and didn't ever really want to go back, but there's no going back even if they did want to: that old community isn't there anymore.

Of course, some of it was never really there. The book compares her grandfather's courtship of two sisters, one of whom became her grandmother and the other who apparently made a poor marriage (to "a n'er-do-well farmer"), with today's internet dating. Internet dating also doesn't always work out, it seems. Her grandmother did better with the old fashioned process, but it wasn't so great for her great-aunt.
**********


Closely related is Michael Sandel's book What Money Can't Buy: The Moral Limits of Markets (about which and whom I have blogged before). While Hoschschild's lost world is that of her grandparents' youth, Sandel regrets the changes he sees since he was young himself: here's a recent review (whose title is a summary of it's contents):.
What Money Can't Buy: The Moral Limits of Markets, By Michael Sandel: Should you pay to jump the queue – or for a new kidney? It's hard to define where cash has no place.

Sandel turns out to be a childhood friend of NY Times columnist Thomas Friedman, who writes about Sandel's book in a May 12 column called This Column Is Not Sponsored by Anyone
" Seen in isolation, these commercial encroachments seem innocuous enough. But Sandel sees them as signs of a bad trend: “Over the last three decades,” he states, “we have drifted from having a market economy to becoming a market society. A market economy is a tool — a valuable and effective tool — for organizing productive activity. But a ‘market society’ is a place where everything is up for sale. It is a way of life where market values govern every sphere of life.”

"Why worry about this trend? Because, Sandel argues, market values are crowding out civic practices. When public schools are plastered with commercial advertising, they teach students to be consumers rather than citizens. When we outsource war to private military contractors, and when we have separate, shorter lines for airport security for those who can afford them, the result is that the affluent and those of modest means live increasingly separate lives, and the class-mixing institutions and public spaces that forge a sense of common experience and shared citizenship get eroded."
***********

Tim Harford shared his thoughts on Sandel on markets on Google+:  He asks, "Why oh why is Michael Sandel so famous?"
***********

The role of markets in life, how these have changed over time, and peoples' perceptions of these things, are well worth the attention of economists. I initially organized my thoughts on the subject in my 2007 article Repugnance as a constraint on markets, and it's a subject I return to often in blog posts on repugnance and repugnant transactions.
**********

The Harvard Crimson on Michael Sandel on economists

One of the clearest reviews of Michael Sandel's thoughts on economics and economists appears in the Harvard Crimson (the student newspaper), written by Jonathan Zhou, and undergraduate, and titled Luddite of the Mind. (As is often the case, the url is more entertaining than the headline: http://www.thecrimson.com/column/homo-economicus/article/2013/2/13/Sandel-vs-Mankiw/ )

Zhou writes, in part:

"Professor Sandel criticizes economists for applying efficiency arguments to buying and selling kidneys without thinking about its moral consequence. If Sandel cares to talk to any economist at the Harvard Faculty Club, he will find that his colleagues not only think about such moral complexities, but have also devised solutions. Instead of cash incentives, the “kidney exchange” will use an algorithm to swap donated kidneys, so that people who cannot receive donated kidneys from a loved one can still get a donated kidney from a stranger. This can improve efficiency of kidney donation based on the economic principle of coincidence of wants, but not in a morally contentious way. The study of markets without financial incentives became such an important subfield of economics that its intellectual godfather, Harvard economist Alvin E. Roth, received the Nobel Prize in Economics last year for this contribution. It is intriguing that in Sandel’s book about economists’ fixation with monetary markets, he forgets to include such alternative markets offered by mainstream economists.

More broadly speaking, economists are no strangers to difficult discussions about civic life. The great economists Kenneth J. Arrow and Amartya Sen founded the field of social choice theory, a mathematical formalism for making collective decisions with consideration of fairness, rights, liberties, and human folly. Of course, such ideas would not be included in Professor Sandel’s hypothetical textbook, because he dismisses the “rigor of natural sciences” in economics as deviant from the discipline’s origin as moral philosophy."

Michael Sandel on markets and economists

The Boston Review hosts a Forum on Michael Sandel's arguments against markets:

Forum:
How Markets Crowd Out Morals

Shout

Michael J. Sandel

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.

---

Responses

Richard Sennett

When the market is everywhere, we lead a socially impoverished existence.

Matt Welch

Because Sandel disagrees with people’s choices, he wants to take those choices away.

Anita L. Allen

Financial incentives are improperly used to induce African Americans to embrace “good” behaviors.

Debra Satz

Debating the place of the market is less about the value of goods than about inequality.

Herbert Gintis

Tolerance, equality, and democracy have only flourished in market societies.

Lew Daly

Making money, formerly an exclusive realm of cosmic evil, is now “doing God’s work.”

Samuel Bowles

Even market enthusiasts know that society can’t function if people are the amoral, self-interested calculators of blackboard economics.

Elizabeth Anderson

The profit motive is corrupting the justice system.

John Tomasi

Free markets are a kind of fairness.

Michael J. Sandel replies

By keeping markets in their place, we can avoid their corrosive effects.

---

Sandel lays out his views more fully than in the quote at the top of the page (if not always more clearly) in the lead essay of the forum: How Markets Crowd Out Morals, and in his reply to the commentators, some sympathetic and some less so. Bowles and Welch and Gintis all suggest that the level of the discussion could be raised by considering evidence, of various kinds.

See my earlier posts on Michael Sandel's views on markets.

Update: Nicholas Kristof weighs in in his May 30 NY Times column, citing some of the more lurid examples of things bought and sold.

Tim Besley reviews "What Money Can't Buy" by Michael Sandel

Besley likes Sandel's book (while recognizing its flaws): Here's the opening sentence of his review in the Journal of Economic Literature(2013, 51(2), 478–495):

"Michael Sandel’s What Money Can’t Buy (WMCB hereafter) is a great book and I recommend every economist to read it even though we are not really his target audience."

I've written a bunch of blog posts about Sandel's views on markets, and others on repugnant transactions and markets, so I won't go into the details again here.

Let me instead give Besley the last word. Here are two paragraphs from his Final Remarks:

"The timing of WMCB may seem ironic in a year in which the Nobel Prize was awarded to Alvin Roth and Lloyd Shapley for their important work on market design that underpins a large expansion of exchange and matching into domains such as school choice, labor markets, and kidney exchange.
As Roth (2008) explains, the approach that he has taken is sensitive to issues of social constraints on market allocations. For example, he acknowledges that having a role for prices in kidney exchanges offends societal values. So the market design that has been proposed in this setting looks for exchanges that are feasible without prices. Thus, the concerns in WMCB are already taken on board by those who are actively promoting more socially sensitive forms of exchange.
...
"At the outset, WMCB identifies two obstacles to rethinking the role and reach of markets. One is the power and prestige of market thinking. The other is the rancor and emptiness of public discourse. Most economists will regard the first as well earned and many would gladly take a bow. But it seems hard to dispute that the need to participate in and engage with debates about markets (and governments) is a central obligation of the economics profession. WMCB is to be applauded for supplying both provocation and insight on a wide range of important topics. And it suggests
a range of challenges to which the discipline of economics can respond."


HT: Parag Pathak

Michael Sandel on Markets and Morals

My Harvard colleague, the political scientist Michael Sandel, lectures on the BBC on Markets and Morals The Reith Lectures. Here is the transcript: MARKETS & MORALS LECTURE TRANSCRIPT (I don't know how long the BBC will keep these links live...).

Sandel begins by noting that he thinks that Economics is "a spurious science."

"It’s a spurious science in so far as it is used to tell us what we ought to do because questions of what we ought to do in politics or as a society are unavoidably moral and political, not merely economic questions, and so they require democratic debate about fundamental values. Economists can inform us about possible implications of policy choices, but they can’t tell us - and they don’t really claim to tell us - what’s right and wrong, what’s just and unjust. "

The gist of his argument is here:

"Looking back over three decades of market triumphalism, the most fateful change was not an increase in the incidence of greed. It was the expansion of markets and of market values into spheres of life traditionally governed by non-market norms. We’ve seen, for example, the proliferation of for profit schools, hospitals and prisons; the outsourcing of war to private military contractors. We’ve seen the eclipse of public police forces by private security firms, especially in the US and the UK where the number of private guards is more than twice the number of public police officers. Or consider the aggressive marketing of prescription drugs to consumers in the United States. If you’ve ever seen the television commercials in America on the evening news, you could be forgiven for thinking that the greatest health crisis in the world is not malaria or river blindness or sleeping sickness, but a rampant epidemic of erectile dysfunction. (LAUGHTER) Or consider some recent proposals to use market incentives to solve social problems. Some New York City schools are trying to improve academic performance by paying children 50 dollars if they get good scores on standardised tests. In Dallas, they’re trying to encourage reading by paying children 2 dollars for each book they read.
Or consider the vexed issue of immigration policy. Gary Becker, the Nobel Prize winning free market economist at the University of Chicago, has a solution: to resolve the contentious debate over whom to admit, the US, he says, should simply set a price and sell American citizenship for 50,000 dollars, or perhaps 100,000. Immigrants willing to pay a large entrance fee, Becker reasons, would automatically have desirable characteristics. (LAUGHTER) They are likely to be young, skilled, ambitious, hardworking; and, better still, unlikely to make use of welfare or unemployment benefits. (LAUGHTER) Becker also suggests that charging admission would make it easier to decide which refugees to accept - namely those sufficiently motivated to pay the price. Now you might say that asking a refugee fleeing persecution to hand over 50,000 dollars is callous. So consider another market proposal to solve the refugee problem, one that doesn’t make the refugees themselves pay out of their own pockets. An American law professor proposed the following: that an international body assign each country a yearly refugee quota based on national wealth. Then let nations buy and sell these obligations among themselves. So, for example, if Japan is allocated 20,000 refugees per year but doesn’t want to take them, it could pay Poland or Uganda to take them in. According to standard market logic, everyone benefits: Poland or Uganda gains a new source of national income; Japan meets its refugee obligations by outsourcing them; and more refugees are rescued than would otherwise find asylum. What could be better?
There is something distasteful about a market in refugees, even if it’s for their own good, but what exactly is objectionable about it? It has something to do with the fact that a market in refugees changes our view of who refugees are and how they should be treated. It encourages the participants - the buyers, the sellers and also those whose asylum is being haggled over - to think of refugees as burdens to be unloaded or as revenue sources rather than as human beings in peril. What this worry shows is that markets are not mere mechanisms. They embody certain norms. They presuppose, and also promote, certain ways of valuing the goods being exchanged. Economists often assume that markets are inert, that they do not touch or taint the goods they regulate. But this is a mistake. Markets leave their mark. Often market incentives erode or crowd out non-market incentives. "

He then speaks briefly about Gneezy and Rustichini on childcare late fines (Gneezy, U., and A. Rustichini “A Fine is a Price,” Journal of Legal Studies, vol. XXIX, 1, part 1, 2000, 1-18.), about Titmuss on paid versus unpaid blood banks, and on his own reservations about tradeable pollution permits. He sums this up as follows:

"My general point is this. Some of the good things in life are corrupted or degraded if turned into commodities, so to decide when to use markets, it’s not enough to think about efficiency; we have also to decide how to value the goods in question. Health, education, national defence, criminal justice, environmental protection and so on - these are moral and political questions, not merely economic ones. To decide them democratically, we have to debate case by case the moral meaning of these goods in the proper way of valuing. This is the debate we didn’t have during the age of market triumphalism. As a result, without quite realising it, without ever deciding to do so, we drifted from having a market economy to being a market society. The hope for moral and civic renewal depends on having that debate now. It is not a debate that is likely to produce quick or easy agreement. To argue about the right way of valuing goods is to bring moral and even spiritual questions into public discourse. Is it possible to bring moral and religious disagreements into public life without descending into intolerance and coercion? That is the question I’ll turn to in the next lecture. Thank you very much."

Update: In his second lecture, Morality in Politics, Sandel discusses why he thinks paying surrogate mothers is a bad idea (apparently in Britain it is illegal, and so there's a thriving market in which British couples hire surrogate mothers in India). He also discusses arguments for and against same sex marriage. Here is the Programme transcript of the second lecture from the BBC.

HT: Tim Harford

Markets, Virtues and Ethics

 Do markets complement virtues, or sideline them?  Here's another entry into that discussion.

Reese, A., Pies, I. Solidarity Among Strangers During Natural Disasters: How Economic Insights May Improve Our Understanding of Virtues. J Ethics (2023). https://doi.org/10.1007/s10892-023-09460-7

"Abstract: The renaissance of Aristotelian virtue ethics has produced an extensive philosophical literature that criticizes markets for a lack of virtues. Drawing on Michael Sandel’s virtue-ethical critique of price gouging during natural disasters, we (1) identify and clarify serious misunderstandings in recurring price-gouging debates between virtue-ethical critics and economists. Subsequently, (2) we respond to Sandel’s call for interdisciplinary dialogue. However, instead of solely calling on economics to embrace insights from virtue ethics, we prefer a two-sided version of interdisciplinary dialogue and argue that virtue ethics should embrace economic insights. In particular, we argue that if virtue ethics is to preserve its social relevance under modern conditions, it should re-conceptualize its notion of virtue and re-evaluate the self-interested but effective—and in this sense solidary—help among strangers via markets as virtuous rather than devaluate it as greed, that is, as vicious price gouging.

...

"Most forms of virtue ethics share a central concern for the moral character of a person, the development of excellence, and an emphasis on avoiding vices and pursuing virtues. This means that in essence, the virtue ethics perspective focuses on good intentions and intended consequences. In contrast, modern economics fosters a systems approach to situational incentives and thus shifts the perspective to focus on the unintended consequences of intentional actions.

...

" Roth (2007) acknowledges repugnance and other kinds of assumed moral inappropriateness as real constraints on market design. He takes moral feelings seriously and proposes market arrangements that do not evoke such feelings. For example, many people experience a feeling of unease with the idea of being able to buy and sell kidneys, which is currently possible for Iranians in the Islamic Republic of Iran. By designing in-kind kidney exchanges, Roth has shown ways to facilitate market transactions that operate entirely without money and, as such, do not evoke repugnant reactions (Leider and Roth 2010; Roth 2016). Surely, there are still too many people desperately waiting for a kidney. However, the implementation of in-kind exchanges has saved lives. It has helped a significant number of people obtain a kidney that would have obtained none without such a system. In line with Roth, we take the virtue argument seriously. However, we choose a longer time horizon where the assumed moral inappropriateness is no longer a given constraint on market design but becomes, at least in principle, a variable.

...

"Sandel insists on deciding case by case whether we should give the virtue of (probably less effective) selfless help precedence over the assumed repugnance of (probably more effective) self-interested help via markets, or vice versa.

...

"Reassessments of social practices are not uncommon throughout history. Most people today perceive the practices of charging interest rates, dueling, and paying opera singers for their performance differently than their ancestors. 

Repugnant Behavior, a conference in Montpellier in February 2021

Here's the announcement and call for papers:

WINIR Workshop on

Repugnant Behaviours

24-25 February 2021

University of Montpellier, Montpellier, France

Organiser: Alain Marciano

"Formally introduced in economics by Nobel laureate Alvin Roth, the concept of "repugnance" arises in the debate among philosophers (e.g., Elizabeth Anderson, Michael Sandel, Debra Satz) and other social scientists (e.g., Kristie Blevins, Amitai Etzioni, Kimberly Krawiec, Amartya Sen, Philip Tetlock) about how and why moral concerns, taboos and sacred values place, or ought to place, limits on market transactions. (A set of representative references is provided in the call for papers.)

Important dates

15 June 2020 – Abstract submission deadline

15 July 2020 – Notification of acceptance

15 December 2020 – Full paper submission deadline

Keynote speaker

Kimberly D. Krawiec

Kathrine Robinson Everett Professor of Law

Duke Law School, USA

REFERENCES

Anderson, E. (1990) “The Ethical Limitations of the Market” Economics and Philosophy 6(2): 179-205.

Anderson, E. (1993) Value in Ethics and Economics (Cambridge, MA: Harvard University Press).

Blevins, B., Ramirez, R. & Wight, J. B. (2010) “Ethics in the Mayan Marketplace” in M. D. White (ed.) Accepting the Invisible Hand: Market-Based Approaches to Solving Social-Economic Problems (New York: Palgrave Macmillan).

Cook, P J. & Krawiec, K. D. (2018) “If We Allow Football Players and Boxers to Be Paid for Entertaining the Public, Why Don’t We Allow Kidney Donors to Be Paid for Saving Lives?” Law and Contemporary Problems 81(3): 9-35.

Elias, J. J., Lacetera, N. & Macis, M. (2015) “Sacred Values? The Effect of Information on Attitudes toward Payments for Human Organs” American Economic Review 105(5): 361-365.

Elias, J. J., Lacetera, N. & Macis, M. (2016) “Efficiency-Morality Trade-Offs In Repugnant Transactions: A Choice Experiment” NBER, Working Paper No 22632.

Etzioni, A. (1986) “The Case for a Multiple-Preference Conception” Economics and Philosophy 2: 159-183.

Etzioni, A. (1988) The Moral Dimension: Toward a New Economics (New York: Free Press).

Healy, K. & Krawiec, K. D. (2017) “Repugnance Management and Transactions in the Body” American Economic Review 107(5): 86-90.

Held, P. J., McCormick, F., Ojo, A & Roberts, J. P. (2016) “A Cost‐Benefit Analysis of Government Compensation of Kidney Donors” American Journal of Transplantation 16(3): 877–885.

Kass L. R. (1997) “The Wisdom of Repugnance: Why We Should Ban the Cloning of Humans” New Republic 216(22):17-26.

Kekes J. (1998) A Case for Conservatism (Ithaca, NY: Cornell University Press).

Khalil, E. L. & Marciano, A. (2018) “A Theory of Tasteful and Distasteful Transactions” Kyklos 71(1): 110-131.

Krawiec, K. D. (2015) “Markets, Morals and Limits in the Exchange of Human Eggs” Georgetown Journal of Law & Public Policy 13(1): 349-365.

Krawiec, K. D. (2016) “Lessons from Law About Incomplete Commodification in the Egg Market” Journal of Applied Philosophy 33(2): 160-177.

Krawiec, K. D., Liu, W. & Melcher, M. (2017) “Contract Development in a Matching Market: The Case of Kidney Exchange” Law and Contemporary Problems 80(1): 11-35.

Kray, L. J., George, L. G., Liljenquist, K. A., Galinsky, A. D., Tetlock, P. E. & Roese, N. J. (2010) “From What Might Have Been to What Must Have Been: Counterfactual Thinking Creates Meaning” Journal of Personality and Social Psychology 98(1): 106-118.

Leider, S. & Roth, A. E. (2010) “Kidneys for Sale: Who Disapproves, and Why?” American Journal of Transplantation 10(5): 1221-1227.

McGraw, P. & Tetlock, P. E. (2005) “Taboo Trade-Offs, Relational Framing And The Acceptability Of Exchanges” Journal of Consumer Psychology 15(1): 35-38.

McGraw, P., Schwartz, J. & Tetlock, P. E. (2012) “From the Commercial to the Communal: Reframing Taboo Trade-Offs in Religious and Pharmaceutical Marketing” Journal of Consumer Research 39(1): 157-173.

Roth, A. E. (2007) “Repugnance as a Constraint on Markets” Journal of Economic Perspectives 21(3): 37-58.

Sandel, M. J. (2012) What Money Can't Buy: The Moral Limits of Markets (New York: Farrar, Straus & Giroux).

Sandel, M. J. (2013) “Market Reasoning as Moral Reasoning: Why Economists Should Re-Engage With Political Philosophy” Journal of Economic Perspectives 27(4): 121-140.

Satz, D. (1995) “Markets in Women's Sexual Labor” Ethics 106(1): 63-85.

Satz, D. (2008) “The Moral Limits of Markets: The Case of Human Kidneys” Proceedings of the Aristotelian Society 108(1/pt3): 269-288.

Satz, D. (2012) Why Some Things Should Not Be For Sale: The Moral Limits of Markets (New York: Oxford University Press).

Schoemaker, P. & Tetlock, P.E. (2011) “Taboo Scenarios: How To Think about The Unthinkable” California Management Review 54(2): 5-24.

Sen, A. (1987) On Ethics and Economics (Oxford: Blackwell).

Sheehan, M. (2016) “The Role of Emotion in Ethics and Bioethics: Dealing with Repugnance and Disgust” Journal of Medical Ethics 42(1): 1-2

Michael Sandel thinks more transactions should be repugnant

The Atlantic publishes an essay adapted from his book What Money Can’t Buy: The Moral Limits of Markets: What Isn’t for Sale?

He is glad that kidneys can't be bought and sold, and regrets many of the things that can be, because he worries that allowing too broad a scope to markets may undermine the moral fabric of society.

He doesn't mention (but I am reminded of)  sumptuary laws that used to enforce the moral fabric by preventing people from wearing clothes above their social station.
********

Update: here's a review published in the April 20 WSJ:
In Economists We Trust: We are a society built on market-based solutions—but should everything have a price?

"Mr. Sandel is also pointing out another seemingly small but quite profound change in society. As recently as a generation ago, economists viewed their job as understanding prices, depressions, unemployment and inflation. It was dismal, but at least it was science. Somewhere along the way they expanded their portfolio to include the whole of human behavior.
...
"Proponents of market morality claim that it imposes no belief system, but that's just a smoke screen. Choosing to place utility maximization at the core of your belief system is no different from choosing any other guiding ideological precept. Every problem has an incentive-based solution; every tension can be resolved by seeking the maximally efficient outcome.

"This is a depressingly reductive view of the human experience. Men will die for God or country, kinship or land. No one ever picked up a rifle and got shot for optimal social utility. Economists cannot account for this basic fact of humanity. Yet they have assumed a role in society that for the past 4,000 years has been held by philosophers and theologians. They have made our lives freer and more efficient. And we are the poorer for it.

Anti-economics (If Michael Sandel Ruled the World)

If I ruled the world: Michael Sandel

The first sentence of the first paragraph: "If I ruled the world, I would rewrite the economics textbooks."

The first sentence of the second paragraph: "Consider the case for a free market in human organs—kidneys, for example."

Economics is important...sounds like someone should study it...

Michael Sandel on "The Perils of Thinking Like an Economist"

It seems to me his title  "The Perils of Thinking Like an Economist" may be missing a comma.

I enjoy trying to follow his train of thought, though as time goes on he seems to be digging himself in deeper and deeper. See my previous posts on Michael Sandel here.

HT: László Sándor

Democracy & “Noxious” Markets, by Debra Satz

 The Winter 2023 issue of Daedalus is about Creating a New Moral Political Economy, edited by Margaret Levi & Henry Farrell.

The article by Debra Satz will strike a chord with market designers: she takes very seriously that markets are tools that need thoughtful design.

Democracy & “Noxious” Markets, by Debra Satz

"my argument is not a lawyer’s brief against markets. No large democratic society can or should entirely dispense with markets. Not only are markets among the most powerful tools we have for generating growth in living standards and incentivizing innovation, but also Smith was right to see their democratic potential as ways of enabling cooperation among independent, free, and equal individuals. As tools, however, we should think carefully about where to use them and how to design them when we do. While a neoliberal worldview sees efficient markets enhancing freedom and well-being everywhere, the reality is more complex. Some markets foreclose options that would better support democratic institutions and culture. Sometimes, closing off market options makes everyone better off. Consider that if individuals are free not to purchase health insurance on the market, the cost of publicly provided insurance will increase: healthy individuals are more likely to opt out of health insurance, leaving sicker individuals in the pool to be insured and raising the costs of their insurance, leading more people to forgo holding such insurance, driving the prices up even higher."

Among the markets she is concerned about are school choice, and military service:

"some of the ways parents prioritize their own children can lead to worse outcomes for other children and to the furthering of educational inequities, as well as to other social ills like instability and conflict. Evidence indicates, for example, that choice schools in the United States are more homogenous than public schools with respect to social class and race. Researchers have also shown that when public school choice is available, educated parents are especially likely to factor child demographics in their school selections.11 This may be because school quality is very hard to judge and parents default to markers such as the reading and math levels of other students. These levels, in turn, are heavily influenced by social class. It is likely that some parents take race and class directly as proxies for school quality."

...

"Extending the reach of markets even more, war has been further outsourced to private military contractors: in 2009, there were more private military contractors in Afghanistan than U.S. military troops.17 Hiring private mercenaries and outsourcing national security to a subsection of our population might spare our citizens, but as political philosopher Michael Sandel has noted, it changes the meaning of citizenship.18 In what sense are we “all in this together” if most citizens never need to think hard about decisions to go to war? Whatever the efficiency pros and cons of the decision to outsource fighting and allocate military service through market means, doing so changes our relationships with one another and our sense of a common life."

"My argument so far suffers from treating the state and market as two stark alternatives for the allocation of goods and services in society. So I now want to consider ways in which the benefits of markets can be harnessed—through design—to better serve important democratic goals. "

...

"One important mechanism is providing greater roles for worker voice. This can be done through such reforms as changing labor laws to support forms of worker association, like trade unions, allowing worker representatives on company boards, and strengthening democracy at work through diverse forms of ownership including worker-managed and -owned firms. Empowering the associational organization of labor would also help redress the background social conditions that render workers vulnerable to the oligarchic power of their employers.

"There are other examples in which careful design and policy can limit the “noxiousness” of a particular market for democracy. Policies such as a negative income tax can strengthen the power of workers, and campaign finance laws can diminish the power of money in elections. Others have argued for reforms to our current system of commodified legal representation within an adversarial system, and for single-payer health care systems."

Here's her concluding paragraph:

"Beyond education, we need to pay special attention to particular markets that affect democratic functioning and stability. Such markets include but are not limited to markets in legal representation, media and news markets, markets relating to national defense, and markets governing political rights. Politicians and other commentators usually write unreflectively, as if all markets were the same. They are not. Markets affect not only the distribution of income and wealth, but also our capacities, and our views of each other. Their strengths but also their limits depend on the fact that they are radically individualizing. But in some contexts, that individualizing threatens the practice of democracy. Markets have moral and even “spiritual” consequences relevant to our shared public life, and our evaluations of them must also attend to those consequences. A new political economy needs to take this larger evaluative frame into account."

******

The next article in the issue is a thoughtful essay on markets for personal care of the young and the elderly, organized in various ways, including care within families, written as a commentary on the Satz article: 

Is There a Proper Scope for Markets?  by Marc Fleurbaey

Normative Ethics and Welfare Economics at HBS, and Behavioral Ethics, also at HBS (at the same time:)

There are two (competing) conferences on ethics at Harvard this weekend, one on Friday and Saturday and the other on Friday, both at HBS.

I'll be speaking at this one:

2016 Normative Ethics and Welfare Economics Conference

October 21-22, Harvard Business School

Organizers: Itai Sher and Matt Weinzierl

All sessions will take place in the Chao Center, room 340

Transportation to the HBS campus from the Hyatt Regency Cambridge Hotel will be provided.

Oct 21

A Harvard University shuttle bus will depart the Hyatt at 8:00 am

8:15-8:45	Breakfast
8:45-9:00	Opening Remarks
9:00-10:30	Population Ethics Partha Dasgupta and Johann Frick Discussant: Glen Weyl Papers: Birth and Death Socially Embedded Preferences, Environmental Externalities, and Reproductive Rights
10:30-11:00	Break
11:00-12:30	Reasons and Preferences Justin Snedegar and Itai Sher Discussant: Caspar Hare Papers: Overlapping Reasons Comparative Value and the Weight of Reasons
12:30-2:00	Lunch
2:00-3:30	Public Reason Matt Weinzierl and Sean Ingham Discussant: Lucas Stanczyk Papers: A Dilemma for Theories of Public Reason A Welfarist Role for Nonwelfarist Rules: An Example with Envy
3:30-4:00	Break
4:00-5:30	Forbidden Transactions Michael Sandel and Al Roth Discussant: Stefanie Stantcheva
5:30-6:00	Break
6:00-8:30	Dinner for Speakers & Discussants Location TBA Transportation will be provided.

Oct 22

A Harvard University shuttle bus will depart the Hyatt at 8:00 am

8:30-9:00	Breakfast
9:00-10:30	Business Ethics Rebecca Henderson, Karthik Ramanna, and Wayne Norman Discussant: Nien-hê Hsieh Papers: Business Ethics, Democratic Theory, and the Regulatory State: Merriment & Diversion when Regulators and the Regulated Meet? Business Ethics Do managers have a role to play in sustaining the institutions of capitalism?
10:30-11:00	Break
11:00-12:30	Behavioral Economics and Welfare Economics John Doris, Julia Haas, and Dan Benjamin Discussant: Ben Lockwood Papers: Moral Psychonomics Reconsidering Risk Aversion
12:30-1:30	Lunch​​
1:30 - 3:00	Prioritarianism Matthew Adler and Hilary Greaves Discussant: Jerry Green Papers: Justice, Claims and Prioritarianism: Room for Desert? Antiprioritarianism
3:00-3:30	Break
3:30-5:00	Closing Panel Marc Fleurbaey, Dan Hausman, Greg Mankiw, Tim Scanlon Moderator: Nathan Hendren
	Adjourn

************************
It turns out that there is a lot of interest in ethics at Harvard, and so there is another ethics conference at the same time, also meeting at HBS:

Symposium - "Behavioral Ethics: Philosophical and Psychological Perspectives" Featuring Peter Singer

Date: 

Friday, October 21, 2016 (All day)

See also: Ethics

Location: 

Spangler Auditorium, Harvard Business School

Organizers: Max Bazerman and Joshua Greene

Sponsors: Edmond J. Safra Center for Ethics, Harvard Business School, Center for Public Leadership at Harvard Kennedy School

This symposium will integrate psychology and philosophy to explore a goal state for ethical behavior, why we fail to achieve that goal state, and what society can do create more ethical behavior.

Event Participant Bios

9:30 a.m. - 10:00 a.m.
Welcome
Danielle Allen and Max Bazerman

10:00 a.m. - 12:00 p.m.         
What does the greatest good look like in contemporary society?
Peter Singer, "What is the Most Good We Can Do?"

Joshua Greene, TBD

Steven Pinker, “Measuring and Defining Progress”

12:00 p.m. - 1:00 p.m.           
Lunch Break

1:15 p.m. - 2:45 p.m.             
Why don’t we get there?
Mahzarin Banaji, "The Difficulty with Discretion"

Fiery Cushman, “Is Non-Consequentialism a Feature or a Bug?”

Michael Norton, "Spreading the Wealth (and Health): Evidence for a Universal Desire for Greater Equality"

3:00 p.m. - 4:30 p.m.
What can be done to change behavior (nudging and beyond)?
Francesca Gino, “To Do or Not To Do: Motivating Ethical Behavior”

Iris Bohnet, "Gender Equality by Design"

Max Bazerman, "Prescriptions for Creating Greater Good"

4:30 p.m. - 4:45 p.m.             
Closing Statement
Max Bazerman

Jean Tirole on the morality of markets: « La Moralité et le marché »

Jean Tirole, on the morality of markets:
La Moralité et le marché -- Pour une éthique du libéralisme (update: the pdf file has been removed, but here's the video... https://www.dailymotion.com/video/x3nnmov_fondation-ethique-economie-conference-de-jean-tirole_news

As near as I can make out with my deteriorating high school French and the increasingly helpful Google Translate, Tirole argues that critics of markets (and of economists) like Michael Sandel are ignorant of decades of economic research...and that it is easier to condemn markets for kidneys if one ignores the deaths of patients with kidney disease...


see also this blog post by Prof  Alexandre Delaigue referring to Tirole's talk, and concentrating on compensation for kidney donors L'interdiction de vente de rein est-elle morale?

A black market kidney sales dystopia in China

This is the kind of black market that keeps my surgeon colleague Frank Delmonico travelling around the world in an effort to firm up laws (and enforcement of laws) against kidney sales: Five Charged After Chinese Teen Sells Kidney to Buy iPhone

"Five people in southern China have been charged with intentional injury in the case of a Chinese teenager who sold a kidney so he could buy an iPhone and an iPad, the government-run Xinhua News Agency said on Friday.According to the Xinhua account, one of the defendants received about 220,000 yuan (about $35,000) to arrange the transplant. He paid Wang 22,000 yuan and split the rest with the surgeon, the three other defendants and other medical staff.
"The report did not say who received and paid for the kidney.

"China banned the trading of human organs in 2007, Xinhua said. Several other suspects involved in the case are still being investigated."
*********

See related recent posts:
Michael Sandel thinks more transactions should be repugnant
Organ transplants and prisoners in China, revisited

Cash for Kidneys: The Case for a Market for Organs. Becker and Elias in the WSJ

Gary Becker and Julio Elias have a reprise of their 2007 Journal of Economic Perspectives paper in this weekend's Wall Street Journal, in a cogent column called Cash for Kidneys: The Case for a Market for Organs.

Their 2007 JEP paper was called  Introducing Incentives in the Market for Live and Cadaveric Organ Donations (slightly more direct link here).

Between then and now the number of people on the waiting list for kidneys has gone up. Their 2007 article has these sentences: "Almost 17,000 persons were waiting for a kidney transplant in 1990. But this number grew rapidly, so that about 65,000 persons were on this waiting list by the beginning of 2006."

This weekend's WSJ column starts with the sentence "In 2012, 95,000 American men, women and children were on the waiting list for new kidneys, the most commonly transplanted organ."

So, the arguments that they repeat have gotten stronger over time: the shortage of organs is costly in every sense, and could likely be relieved by allowing kidneys to be bought and sold by live donors, and allowing the purchase of organs from deceased potential donors, i.e. by repealing the part of the 1984 National Organ Transplant Act that makes such sales a felony in the United States. (Similar laws exist in most of the developed world: the only country that seems to have an explicitly legal market for kidneys is Iran, although many black and grey markets exist.)

So, why hasn't this argument made any headway, either in the U.S. or overseas? Is patient repetition of the argument the best way to make the case? I don't know the answers, but I think that the repugnance of organ sales is a subject worth studying, not just for science but also for those who might like to influence policy.

In the same issue of the JEP as Becker and Elias (2007) was my article Repugnance as a Constraint on Markets (more direct link here), which sought to understand not just the repugnance to kidney sales, but to many economic transactions, in different places and times, e.g. to charging interest on loans, or having markets for slaves or indentured servants. I noted that kidney exchange doesn't arouse the repugnance that sales do. I've since blogged about a lot of different repugnant transactions including compensation for donors (as of this writing my most recent post on transactions that some regard with repugnance is headlined Womb transplants in Sweden (where surrogacy is illegal)...)

Note that the prohibition on organ sales is not some law that remains on the books merely through inattention. This is illustrated by the recent events surrounding the tug of war over whether it might be legal to compensate (even) bone marrow donors. Briefly, the ninth circuit court of appeals issued a ruling that said that in some circumstances bone marrow donors could be compensated, but then the Department of Health and Human Services proposed regulations that would keep the ban in place.   So the opposition to organ sales--even to compensating bone marrow donors--is alive and well.

But things don't go all in one direction. Bob Slonim reminds me that while we rely on unpaid donation of whole blood in the United States, most of our supply of blood plasma comes from paid donors.

I've participated in some efforts to understand better the repugnance to compensating organ donors, e.g. here's a survey with Steve Leider about who disapproves of kidney sales, and some correlates of such disapproval:
Leider, Stephen and Alvin E. Roth, ''Kidneys for sale: Who disapproves, and why? American Journal of Transplantation  10 (May), 2010, 1221-1227.

More recently, Muriel Niederle and I conducted a different sort of survey, which assessed the relative willingness of Americans to contemplate monetary rewards for the heroism associated with kidney donation:
"Niederle, Muriel and Alvin E. Roth, “Philanthropically Funded Heroism Awards for Kidney Donors?” forthcoming in Law & Contemporary Problems, 77:3, 2014.

Judd Kessler and I have a paper forthcoming in the American Economic Review papers and proceedings (May 2014) called "Getting More Organs for Transplantation," in which we summarize the issue this way:

"Kidney sales are often the leading example of a repugnant transaction cited by those who would put stricter limits on markets in general (e.g. Sandel 2012, 2013), because of their sense that such sales arouse widespread opposition. A representative sample survey of Americans conducted by Leider and Roth (2010) suggests that disapproval of kidney sales correlates with other socially conservative attitudes, but that it does not rise to the level of disapproval of other repugnant transactions such as prostitution. In addition, there is evidence that the manner of the payment to an organ donor may mitigate some of the repugnance concerns. Niederle and Roth (forthcoming 2014) find that payments to non-directed kidney donors are deemed more acceptable when they arise as a reward for heroism and public service than when they are viewed as a payment for kidneys."

That paper closes with this thought on the presently available options: 
"While these potential donors could save thousands of additional lives, at current rates of medical need, these donors alone would not be able to supply all the demand. Consequently, we must continue working on numerous fronts to solve this growing problem. "

In summary, the issue of whether and how organ donors might be compensated is an important policy issue that also touches on an important and still poorly understood social science phenomenon. Repetition of the basic arguments may move the discussion forward as the background facts become more severe, and it's great to see the issue addressed in such a public forum as the WSJ. But it may also be that repetition of arguments is not enough. To make progress in the face of opposition, it seems likely to be useful to understand better the nature of the opposition.