Book Review: What Money Can't Buy: The Moral Limits of Markets

Michael Sandel

Michael Sandel’s 2012 book, What Money Can't Buy: The Moral Limits of Markets, argues that moral considerations should keep some things from becoming bought and sold on markets. Sandel, a political philosopher and Professor of Government at Harvard, argues that market values often affect or even significantly control our lives. Market values can change or corrupt our perceptions of the things that can be bought and sold. Market values are basically an agreed-on trade, the profit motive and/or utilitarian value to people and society. Some prominent economists have argued that businesses that allow social conscience or values other than market values to impair profit are immoral.

Economists and pro-market advocates argue that market values are neutral and do not affect people or society. Sandel disagrees:

“We live in a time when almost anything can be bought and sold. Markets have come to govern our lives as never before. But are there some things that money should not be able to buy? Most people would say yes. .... Part of the appeal of markets is that they don’t pass judgment on the preferences they satisfy. They don’t ask if some ways of valuing goods are higher, or worthier, than others. .... Markets don’t wag fingers. They don’t discriminate between admirable preferences and base ones. .... The more markets extend their reach into noneconomic spheres of life, the more they become entangled with moral questions. .... As markets reach into spheres of life traditionally governed by nonmarket norms, the notion that markets don’t touch or taint the goods they exchange becomes increasingly implausible. .... Many economists now recognize that markets change the character of the goods and social practices they govern.”

Market assumptions aren’t always true

Many economists argue that (1) markets are the best way to efficiently allocate goods without adverse personal or social effects, and (2) monetary incentives are additive with other sources of motivation such as personal morality or a sense of civic duty. In addition, they believe that market-based policies that rely on self-interest instead of relying on non-market altruism or other moral concerns preserves an allegedly scarce supply of personal and social virtue.

The prominent economist Lawrence Summers argued the scarce virtue argument like this: “We all have only so much altruism in us. Economists like me think of altruism as a valuable and rare good that needs conserving. Far better to conserve it by designing a system in which people’s wants will be satisfied by individuals being selfish, and saving that altruism for our families, our friends and the many social problems in this world that markets cannot solve.”

One can say that market advocates like Summers at least concede that markets cannot solve all problems. Some economists argue that markets can solve all problems, under the theory that all human activity is focused on maximizing the actor’s economic welfare. Sandel points out that although the scarce virtue theory is dominant among economists, empirical evidence mostly contradicts it. Instead of being scarce and limited, virtue is more like a muscle that needs exercise to grow and maintain. There is not a fixed amount of virtue that just runs out. Instead, empirical evidence suggests that virtue and civic spirit languish with disuse under markets. One experiment found that paying people to do a public service gets a smaller response than when the same people are asked to do it for no payment other than the satisfaction in service to the public interest.

One prominent research economist called the phenomenon of market intrusion into non-market activities the commercialization effect. Research shows that introducing market incentives and mechanisms to social and political activities tends to crowd non-market values right out of the picture. Wth market morality in place, people see and value the marketized activities differently. Some previously unpaid virtuous activities are reduced when monetary incentives are added to the mix. Commitment to the common good can be devalued to the detriment of society.

Corruption and fairness

A common pro-market argument holds that willing adults consent to enter into market transactions on an equal footing and they deserve unfettered freedom to do that in the name of freedom. In the real world, there is usually both resource and information inequality in consumer and other transactions. Poor people often have little choice but to pay higher prices than others for various reasons including lack of transportation to reach less expensive sellers. Sellers often have far more information about the market than average consumers, making them able to leverage that knowledge into higher profit that more knowledgeable buyers would accept. The market’s answer to that is caveat emptor, i.e., tough, get over it. Fairness is not a market value. The argued market value is equality and neutrality, which can both be mirages.

A different criticism of market values is that they can lead to corruption, instead of allegedly being neutral as most market advocates assert. In the case of prostitution, women can willingly enter the business, but that tends to foster bad or corrupt attitudes toward women and laws where it is illegal. In the case of access to public institutions such as congress, access could be sold to the public and that would generate as much as the market would bear. People without enough money would be excluded. Most Americans would probably consider that corrupt because it looks and is corrupt.

Sandel does not touch on some issues that have become of much higher public importance since he wrote in 2012. One is the what the values of our market-based pay-to-play system of politics has done to both political and social morality. Another is the question of how the demand for profit from broadcast and cable news has tainted or corrupted what the American people now see.

In general, Sandel makes a strong case that markets and their morals have reached into areas of life that they do not belong, at least not without a decent public debate.