In some of my recent blogs I have argued that market
economies cannot obviously be wrong in themselves at least under the most
obvious understanding of the purpose of the economic system. I of course
believe that the most egalitarian market economy is the correct one and that
fairness is a major problem for market economies that requires constant
rectification.
I fully accept that market economies tend towards
inequality and monopoly and that it is necessary to have strong mechanisms in
place to counteract these. Robust regulation is required to guard against
monopoly and other potential market failures Redistributive mechanisms are
necessary to counteract the inequalities that markets generate, and my
CLIPH-rate tax system is my proposal to achieve this.
This still leaves it open to argue that there is
something (or many things) wrong with markets even if there isn’t a better
economic system available. Some political philosophers have made some arguments
along these lines in recent years and it is worth considering these.
Michael Sandel is one of the most widely known political
philosophers and has been a strong critic of markets. He has argued, for
example in his book What Money Can't Buy:
The Moral Limits of Markets, that markets impose their own valuations which
corrupt and crowd out other values. He has a few good examples in which
introducing market solutions can be counter-effective because other values get
crowded out.
He goes to great lengths to show that the issue is not just
the unfairness engendered by allowing markets into more areas of life in
unequal societies, but that rather other important values can be lost as a
result. His proposed solution, unsurprisingly to those who know his other work,
is that markets should be subordinated to the common will, as determined by
democratic discussion.
I was not particularly impressed or convinced by Sandel’s
book, despite its being as clearly written as you would expect. Although I would
be keen to encourage deliberative democracy I felt the book didn’t add up to
much more than a few examples which did not all seem to particularly indicate
the need for his vague solution of discussing together whether markets should
be disallowed in some cases.
A more philosophically satisfying book from the same year
with a similar title was Deborah Satz’s Why
Some Things Should Not Be for Sale: The Moral Limits of Markets. Satz
proposes a method by which to judge when markets are inappropriate among four categories
of harm. This allows her to consider whether markets in various goods (such as
sex or kidneys) might be noxious. Those items with markets deemed noxious
should either be regulated and restricted or even banned.
Satz makes a clear case for regulating or restricting markets
on the basis of arguments that are quite reasonable and which do not depend
upon controversial philosophical or political positions. I therefore found
Satz’s approach much more useful than Sandel’s to judge whether certain types
of goods should not be sold.
So while I am happy to accept that there can be a case
for restricting the application of markets in some cases the case for allowing markets
remains a strong default position in most cases. Does this mean there is
nothing more to be said? Can markets really crowd out other goods as Sandel
suggests in some cases he has found?
I am sceptical of the idea that very many people value
things according to their market price rather than how the items helps them to in
some way live their life better. The most obvious type of counter-example is
where someone clearly wishes to show off that they have something which cost a
lot of money. This is the familiar idea of a status symbol or conspicuous
consumption. The expense of the item might indicate that the person values high
quality or wants to show that they have good taste but it could equally be a
sign that the person has a high disposable income such that they can afford to
waste their resources on something of little or no obvious use value to them.
This perhaps fits in with Sandel’s concern about markets
(or money) corrupting other values. Indeed, this goes back to
socialists/communists, who talked about the reification of
money (i.e. turning money into something that has value in itself).
Now, clearly those who think that the money value of an
item has any bearing on the item itself and how we should judge it are clearly
making some kind of mistake. In some areas of life, of course, people may view
things in entirely money terms, like making abstract investments.* However, if
someone does it in their personal life I would think that they are displaying a
poor character trait.
Where people have this view it is a tragedy, firstly for
them personally as they are probably victims of a misunderstanding about what
matters in life. It is also a tragedy in the way it is likely to affect others.
Status symbols are positional or hierarchical goods. These are a zero-sum game
in that their aim is to create a hierarchy in which others will feel worse
about their position. As Fred Hirsch pointed out, positional goods are
inherently wasteful and inefficient.
Furthermore, using resources in this manner is going to
leave fewer resources in society for people to use on their own lives. A
society in which people are primarily concerned with showing off their position
will be a tragic one in which everyone is actively trying to put others in a relatively
worse position rather than in making the most of their own lives. Of course, if
someone really wants to live their life in this way it is up to them—people are
perfectly entitled to use their resources in ways that make others worse off.
However, I fail to see why anyone would consciously choose a way of life that
makes others—and almost certainly themselves—worse off. I would think it is
more likely to be an unreflective choice.
Dedicating one’s life to ostentatiously wasting as much
as possible is one approach to the good life, but it is a strange one to hold.
It isn’t likely to bring about much happiness either since you have to alienate
others while doing so rather than nurturing relationships with them. I doubt
anyone really has such an approach to life, though sometimes people might fall
foul of attempting to show off as if this was a good thing to do.
How should we respond to this concern that people are
going to value items of property according to their money value rather than
their usefulness? I think the answer is in education and regulation of certain
markets. As part of their education children should learn that there are lots
of approaches to life and that they have to choose one of these. They should
also be given the philosophical tools to consider these.
Markets should only be regulated or restricted if there
is a very good reason. The typical argument for regulation is to avoid harm to citizens
through market failures
and monopolistic behaviours. However, there may be some markets that should be
regulated for paternalistic reasons to ensure that children and adults in vulnerable
positions are not harmed. We may also want to design the education system and
wider society to ensure that people have a good chance of making an active
choice over the life they live rather than a passive one. This may, for
example, require regulation of advertising.
My overall conclusion is that while I think some
philosophers, such as Sandel, go too far in arguing against markets that this
does not mean that regulation is a solely technical issue to be determined by
economists. Satz provides a basis for determining markets that require further regulation
and another basis is the liberal requirement of providing people with the
conditions to make authentic choices.
*This may be deemed important by radicals who believe financial
markets represent alienation and obscures class relations and exploitation. I
will ignore arguments from this perspective because I am unconvinced by the
labour value theory of economics and therefore do not see take alienation to be
a specific economic issue. Perhaps a further advantage of these kinds of view,
however, is that they challenge the type of mistake I characterise in this
paragraph.
