Review: Devaluing the priceless

May 11, 2012

By Martin Langfield
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Is the world better off, or worse, if a poor person sells a kidney to a rich person who needs it?

A form of corrosive hubris has gripped modern societies, Michael Sandel writes in his new book, “What Money Can’t Buy: The Moral Limits of Markets.” It is the belief that there are no taboo areas for markets.

A professor of government at Harvard University, Sandel argues the expanding, overly glib application of price mechanisms and market thinking – in medicine, education, government, law, art and sports, among many examples he cites – demeans both society as a whole and the individuals who participate in inappropriate markets. The market has crowded out other ways of valuing public goods, and has helped make society more polarized.

Sandel delivers his main analysis early in the book, then spends most of its 200 pages briskly illustrating his points. Undue commercialization is objectionable on two main grounds, he says: unfairness and corruption. The exchange of a poorer person’s kidney for a richer person’s cash may be voluntary, but it’s not fair for the powerful to take advantage of the weak. Civic, social and personal values are corrupted when the cash nexus replaces mutual obligation, altruism and sacrifice for the common good.

Sandel allows that markets very often work, of course. Paying children for better grades can sometimes improve their school work. Paying drug-addicted mothers not to have children can lead to fewer births of drug-addicted babies. Buying permits to shoot a few black rhinos may fund the survival of the wider population. And a poor person’s kidney cash could set the family on the road to greater prosperity.

But the price incentive doesn’t always work, and even when it does, it may corrode the goods on offer, Sandel argues. He cites the inhabitants of a Swiss village who, ahead of a referendum on whether to accept a nuclear waste storage facility in their backyard, told economists they were narrowly in favor of it. When asked how they would feel about accepting the facility if the government threw in an annual payment for each resident, their level of support halved, from 51 percent to 25 percent.

“The prospect of a private payoff transformed a civic question into a pecuniary one,” he writes. “The intrusion of market norms crowded out their sense of civic duty.” Similarly, one study found that children paid to collect money for charity raised less than children who volunteered to do so.

Sandel dislikes the social stratification which comes with profit-maximization. Sports teams can charge huge fees for “skyboxes”, or luxury executive hospitality suites, but such “gated communities” – both within and outside the world of sports – shield the wealthy and privileged from the rest of the populace. People of all stripes and income levels no longer mingle. Market thinking is also bad for character development: advertising in schools fosters wanting and consuming instead of reflecting and learning self-control.

If Sandel’s book has a villain it is the widely influential University of Chicago economist Gary Becker, who espoused in the 1970s the view that “the economic approach is a comprehensive one that is applicable to all human behavior.” Sandel prefers Fred Hirsch, a British economist who said it’s wrong to assume goods are unchanged by being subjected to market mechanisms. People are changed by markets, he says. Social goods are too.

What should be done? Sandel recommends more public debate about what kind of society we want to live in, what we hold to be priceless, and where the advance of markets should stop. His book is a vigorous example of just this kind of discourse.

 

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