Academic

On Immoral Markets

By Kim Krawiec

Harvard Professor Michael Sandel presents the Reith lectures ? the topic, ?A New Citizenship? -- this month on the BBC.  (HT: Al Roth via Tim Harford).  You can listen to a podcast of the lectures (a series of four, of which two have been delivered so far) here.  Sandel, as most readers already know, is a well-known political philosopher, and his theories on the moral limits of markets make up a large part of this four-lecture series.  As Sandel clarifies in response to an audience question in the first lecture in the series (and has emphasized in prior lectures and publications), his concerns with the moral limits of markets extend to the degrading effect of market exchange on certain goods and services ? what are often referred to as ?commodification? concerns.  Establishing fair and equal bargaining conditions or general equality in the underlying distribution of wealth cannot address this objection ? in other words, it is different from ?coercion? concerns.

Perhaps not surprisingly, from a person who attempted to sell her tenure in her very first blog post, I?m generally unpersuaded by attempts to define the sphere of acceptable market transactions through this particular moral objection. Repugnance and disgust deeply affect both legal systems and markets, and thus are real constraints on the ways in which people conduct their lives. As I argue in Show Me The Money: Making Markets in Forbidden Exchange, which introduces a forthcoming symposium volume on the same topic, nearly all cultures reserve certain items, activities, and entitlements as inalienable for profit. But the individual mental accounting, social norms, and laws regarding the proper scope of commercial activity are not universal, preordained, or inflexible. In fact, researchers across disciplines have demonstrated both the malleability and context-dependency of individual mental accounting, and the socially constructed nature of relational boundaries, which vary across time and cultures. Moreover, attempts to limit the incursion of market forces into other arenas do not always operate uniformly. Some restrictions on market exchange may disproportionately harm those already disadvantaged in the marketplace, facilitate anticompetitive behavior, or exacerbate bargaining inequality.

For example, despite the frequent insistence that some values, relationships, or activities are sacred, priceless, or incommensurable, in reality scarce resources force each of us to at least implicitly attach dollar amounts to and trade off such values with some frequency.  These transactions frequently cause cognitive discomfort, and individuals adopt a variety of coping strategies to reconcile their behavior with their value beliefs. 

Moreover, market and non-market transactions and relationships often resemble one another so closely that the participants go to great lengths to distinguish them, including by adherence to social norms that dictate the appropriate exchange rules for each transaction. Although one?s relations with a wife, a date, a girlfriend, a mistress, and a sex worker may have similarities, the participants can and do define and distinguish the boundaries of the relationship, in part, through the type of exchange principles that operate in each. What is the appropriate thank you for an enjoyable evening?  Flowers, jewelry, cash, or doing the dishes? The choice of payment terms signals much about the nature of the relationship itself.

Finally, social norms and legal rules regarding relational boundaries and the proper means of exchange within them are permeable and changing.   The rules vary over time and across societies, and may be ambiguous or contentious at the margins. Sometimes, a trade or market once considered commonplace and legitimate becomes forbidden. By contrast, some markets once forbidden, or at least contested, eventually become commonplace or less contested.  Moreover, technological innovation, social or political change, or other developments may create previously unknown circumstances for which no existing rules of acceptable exchange exist, causing social, legal, and political strain.  From blood and organs to eggs, sperm, and parenthood, money is closely intertwined with numerous items, activities, and relationships that many contend should be impervious to, or even sacredly immune from, market forces. As resource scarcity and scientific, medical, and technological advancement continue to expand, this trend is likely to continue. 

Update:  As Matt notes in the comments, there's also a discussion on the Sandel lectures over at Crooked Timber.

Full post as published by The Faculty Lounge on June 22, 2009 (boomark / email).