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American Economic Association

Market Reasoning as Moral Reasoning: Why Economists Should Re-engage with Political Philosophy Author(s): Michael J. Sandel Source: The Journal of Economic Perspectives, Vol. 27, No. 4 (Fall 2013), pp. 121-140 Published by: American Economic Association Stable URL: http://www.jstor.org/stable/23560025 Accessed: 29-10-2015 09:34 UTC

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Economic Perspectives.

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Journal of Economie Perspectives—Volume 27, Number 4Fall 2013Pages

121-140

Market

Reasoning

as Moral

Reasoning:

Why Economists

Political Philosophy1

Should Re-engage

with

Michael

J. Sandel

are some things money can't buy—friendship,

for example.

If I want

A hired

more friends than I have, it clearly wouldn't

friend is not the same as the real thing. Somehow, the money that would

work to buy some.

There

buy the friendship dissolves the good I seek to acquire. But most goods are not of this kind. Buying them does not ruin them. Consider

kidneys.

Some

people

favor

a market

in

human

organs;

others

are

opposed.

But

those who oppose the buying and selling of kidneys cannot argue that a market in

kidneys would destroy the good being sought. A bought kidney will work, assuming

a

other reason. Money can buy kidneys (as the black market attests) ; the question is

whether it should be allowed to do so.

book What Money Can't Buy: The Moral Limits of Markets, I try to show that

good match. So if a market in human organs is objectionable,

In my

it must be for some

market

values

and

market

governed

by nonmarket

reasoning

increasingly

norms (Sandel

2012).

reach

into

spheres

In procreation

of life previously

and childrearing,

health

and

education,

sports

and

recreation,

criminaljustice,

environmental

protec

tion, military service, political campaigns, public spaces, and civic life, money and

markets play a growing role. I argue that this tendency is troubling; putting a price

on

every

human

activity

erodes

certain

moral

We

therefore

need

a public

where they don't belong.

In

this arricie, I would

debate

about

where

like to develop

and

civic

markets

a related

goods

serve

worth

caring

the

public

good

about.

and

theme: When

it comes

to

deciding whether this or that good should be allocated by the market or by

Michael J. Sandel is theAnne T. and Robert M. Bass Professorof Government, Harvard

University,Cambridge, Massachusetts. His email is msandel@gov.harvard.edu.

* To access

http://dx.doi.org/10.1257/jep.27-4.121

the disclosure

statement,

visit

doi=10.1257/jep.27.4.121

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122 Journal of Economie Perspectives

nonmarket principles, economics is a poor guide. On the face of it, this may seem

puzzling. Explaining how markets work is a central subject of economics. So why has

economics failed to provide a convincing basis for deciding what should, and what

should not, be up for sale?

The

reason

lies

in

the

concepdon

of

economics

as

a value-neutral

science

of

human behavior and social choice. As I will try to show, deciding which social practices

should

be

governed

by market

mechanisms

that

is bound

up

with

moral

reasoning.

But

requires

mainstream

a form

of economic

economic

thinking

reasoning

asserts

its

independence from the contested terrain of moral and political philosophy. Econom

ics textbooks emphasize the distinction between "positive" questions and normative

ones, between explaining and prescribing. The popular book Freakonomics states the distinction plainly: "Morality represents the way we would like the world to work and

trafficin

economics represents how it actually does work." Economics "simply doesn't

morality" (Levitt and Dubner 2006, pp. 11, 46,190; see also Robbins 1932).

Moral

Entanglements

Economists

have not always understood

their subject in this way. The classical

economists,

going

moral and political

today

presents

itself

back

to

Adam

Smith,

conceived

of

economics

philosophy.

But the version of economics

as

an

autonomous

discipline,

one

that

does

as

a

branch

of

commonly

taught

not

pass

judgment

on how income should be distributed or how this or that good should be valued.

The notion that economics is a value-free science has always been questionable. But

the

more

entangled

markets

extend

they

become

their

reach

into

with

moral

questions.

noneconomic

aspects

of

life,

the

more

To

be

clear,

I

am

not

on markets. A considerable

writing

here

about

body of economic

"market

produce

failures,"

an

efficient

or

situations

result,

such

in

which

unaided

as imperfectly

the

standard

textbook

are

limitations

to identifying

to

analysis is devoted

market

forces

unlikely

competitive

markets,

negative

and

positive externalities,

public goods, imperfect information,

and the like. Another

body

of

economic

literature

addresses

questions

of inequality.

But

this

literature

tends to analyze the causes and consequences of inequality while claiming to be

agnostic on normative questions

of fairness and distributive justice.

Outsourcing

judgments

about equity and fairness to philosophers

seems to uphold

the distinc

tion between positive and normative inquiry.

But this intellectual

division of labor is misleading,

observed,

Efficiency

better

off?

the

public

to

"economics

only

The

good.

for two reasons.

First, as

despite

society

concep

has

Atkinson (2009) has recently

protestations

better

off.

But

to

the

what

contrary.

counts

tion

of

the

general

largely

writes,

nals

disappeared"

"economists

of economics

welfare

from

have

"are

not

replete

as

or

is a moral science,"

insofar

as

it makes

depends

"welfare

on

some

economics

recent

decades,

Articles

"clear

matters

answer

Although

in

mainstream

ceased

with

economics

make

Atkinson

in jour

normative

welfare

statements"

statements."

and

reach

welfare

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conclusions,"

Michael J. Sandel

123

he states, even though the principles underlying those conclusions

go

largely

unexamined.

Mostly,

the

conclusions

rest

on

utilitarian

assumptions.

But

as

John Rawls and other philosophers

have pointed

out, utilitarianism seeks to maxi

mize welfare without regard for its distribution. Atkinson calls for a revival of welfare

economics that acknowledges the defects of utilitarianism and considers

range of distributive principles.

a broader

A second

reason

to doubt

that

economics

can

be

a value-free

science

of social

choice points beyond debates about distributive justice to debates about commodifi

cation:

Should

sex

be

up

for sale?

What

about

surrogate

motherhood,

or pregnancy

for pay? Is there anything wrong with mercenary armies, and if so, how should mili tary service be allocated? Should universities sell some seats in the freshman class in

order to raise money for worthy purposes, such as a new library, or scholarships for well-qualified students from poor families? Should the United States sell the right

to immigrate? What about allowing existing US citizens to sell their citizenship to

foreigners and swap places with them? Should we allow a free market in babies up

for adoption?

of markets would improve efficiency by

people of these controversial

Should

be allowed

uses

to sell their votes?

Some

enabling

mutually

ties might outweigh

advantageous

exchanges.

In

some

cases,

negative

externali

the benefits to buyers and sellers. Even absent externalities,

however,

some

market

transactions

are

objectionable

on

moral

grounds.

acter

One

of

such

ground

an

exchange.

is

If

that

severe

a

desperately

inequality

poor

can

peasant

undermine

the

sells

a kidney,

voluntary

or

a

child,

char

the

choice to sell might be coerced, in effect, by the necessities of his or her situation. So

one

familiar

argument

in favor

of markets—that

the

parties

freely

agree

to

the

terms

of the dealis called into question by unequal

know whether a market choice is a free choice, we have to ask what inequalities

background conditions of society undermine meaningful consent. This is a normative

question that different theories of distributive justice answer in different ways.

bargaining

conditions.

In order

to

in the

A second

moral

objection

is

not

about

fairness

and

tainted

consent,

but

about

the

tendency

of market

practices

to corrupt

 

we

might

them

up

for

sale

them

with

the

cheapest,

might

also

oppose

such

example,

hesitate

or

crowd

out

nonmarket

children

grounds

values

worth

on

the

caring

grounds

the

about.

that

or

For

putting

leave

we

But

to create

would

price

least

a market

a market

less-affluent

desirable

on

the

in children

parents

(the

that

out

of

fairness

putting

a

market

argument).

price tag on children would objectify them, fail to respect their dignity, and erode

the norm of unconditional parental love (the corruption argument).

Even where markets improve efficiency, they may be undesirable

or

crowd

whether

out

nonmarket

to

create

a market

norms

in

of

moral

children,

importance.

for

example,

we

So

before

have

to

if they corrupt

we

figure

can

out

decide

what

values and norms should govern the social practices of child-rearing and parenting.

In

this

For

sense,

those

market

who

to reasoned

open

reasoning

presupposes

assume

that

all

values

argument,

it may

seem

moral

reasoning.

are

odd

merely

to suggest

subjective

that

some

goods

are

more

appropriate,

or fitting,

or morally

defensible

than

preferences

not

ways

others.

of valuing

But

such

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124

Journal

of Economie

Perspectives

judgments

are

unavoidable,

and

explicitlywhenever

we decide

we

make

them—sometimes

implicitly,

sometimes

whether this or that good should be up for sale.

Economists

are

not

unaware

of

the

moral

objection

to monetizing

all

relation

ships. For example, Waldfogel (1993; 2009), like many economists, questions the

rationality of gift giving. Analyzing what he calls the "deadweight loss of Christmas," he calculates the utility loss that results from people giving gifts rather than the

cash equivalent. He attributes the practice

giving." But he does

does not

consider the possibility that the stigma against monetary gifts, at least among lovers,

it is an irrational obstacle

of in-kind giftgiving to "the stigma of cash

not ask whether this stigma might be justified. He simply assumes

to utility that should ideally be overcome.

He

spouses,

such

and

other

intimates,

and

when

may

reflect

norms

he

worth

as attentiveness

thoughtfulness.

also recognizes

writes

Alvin Roth (2007)

social

practices,

moral objections

of "repugnance

certain

honoring

and

encouraging,

to the commodification

as a constraint

on

markets."

of

To contend with such repugnance, he designs in-kind kidney exchanges and other

mechanisms that avoid outright buying and selling. Unlike Waldfogel, he does not

treat repugnance as an irrational, utility-destroying taboo; he simply accepts it as a

social

fact

and

devises

work-arounds.

 

Roth

does

transactions

he

discusses.

He

does

not

ask

which

not

morally

instances

assess

the

of

o f r e p u g n a n c e

repugnance

repugnant

reflect

unthinking prejudice

considerations

that should be challenged

and which reflect morally weighty

to pass judgment

on repug

that should be honored.

This reluctance

nance

may

reflect

the

economist's

hesitation

to venture

onto

normative

terrain.

But the project of devising in-kind exchanges

presupposes

some moral judg

ment

about

which

instances

of

repugnance

are

justified

and

which

ones

are

not.

Consider

the

supply

of kidneys

ring

object

it

to

on

human organs. Everyone recognizes

that lives could be saved by increasing

of organs

on

the

for

grounds

transplantation.

that

removing

another

the

grounds

violates

that

the

buying

sanctity

and

But

some

object

to

the

buying

and

an

organ

from

one

person

and

integrity

of

the

human

selling

kidneys

objectifies

the

and

body.

human

selling

transfer

Others

person

by encouraging

used

for

profit.

us

Still

to view

others

our

bodies

as property,

as collections

favor

a market

in

kidneys

on

the

of spare

grounds

parts

that

we

to

be

own

ourselves

and

should

be

free

to profit

from

our

bodies

in whatever

Whether an outright market in kidneys or an in-kind exchange

sible

depends,

at least

in part,

on

which

of these

stances

toward

the

way

we

choose.

is morally defen

body

and

human

personhood is correct. If the firstview is right, then all forms of organ transplantation,

paid or gifted, are objectionable, notwithstanding the lives that could be saved. If the second view is right, then gifted but not paid kidney transfers are morally defensible.

Insofar

as kidney

exchanges

preserve

the

gift ethic

and

avoid

promoting

a mercenary,

objectifying attitude toward the human body, they address the moral concern under

lying the second view. If the third view is right, we should not limit kidney transfers to

in-kind exchanges, but should allow people to buy and sell kidneys for cash.

Some

neither

Instead,

of

failures

they

the

most

corrosive

effects

of markets

of

involve

efficiency

the

in

the

degradation

economist's

that

can

on

sense,

occur

moral

nor

when

and

civic

practices

are

matters

we

of

turn

inequality.

all

human

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Why Economists Should Re-engage withPolitical Philosophy

125

relationships

commodities.

makes implicit judgments

into transactions

The

economic

and

treat all good

that

things

in

stigma

life as

and

if they were

repugnance

be unable

literature

about

acknowledges

these questions;

otherwise,

it would

to

propose

either

market

solutions

or

quasi-market

alternatives.

But

it

does

not

articulate and defend the basis of these judgments. Doing so would carry economic

reasoning beyond the textbook distinction between positive and normative inquiry

and

call

into

social choice.

against

the

use

question

the

conception

I will try to show

how

of market

mechanisms

of

economics

as

a value-neutral

science

of

this is so by considering

arguments

in some

contested

contexts.1

for and

The Line-Standing Business

When

Congressional

committees

hold

hearings,

they

reserve

some

seats

for the

press

basis.

hours

and

make

Corporate

in

line

to

others

lobbyists

assure

available

are

to

keen

themselves

the

general

public

on

to attend

a

seat.

these

Their

hearings,

solution:

a first-come,

Pay

but

are

loath

thousands

first-served

to spend

of dollars

to

professional

line-standing

companies

that

hire

homeless

people

and

others

to

queue

up for them (Montopoli

2004; Copeland

2005; Lerer 2007; Palmeri 2009).

A company called LineStanding.com

describes itself as "a leader in the Congres

sional line standing business." It charges $50

of which a portion is paid to the people who

dollars an

stand and wait. The business has recently

hour for line-standing services,

expanded

ments

in

from

Congress

big

constitutional

to

the

cases,

US

Supreme

the

demand

Court.

When

the

Court

for seats

far exceeds

hears

oral

the

supply.

argu

But

if

you are willing to pay, LineStanding.com

court in the land. Business was brisk for the Obama healthcare case in July 2012, when

will get you a ringside seat in the highest

the

line

began

forming

three

2013, some people

queued

days

in advance.

For

the

same-sex

marriage

cases

injune

up five days in advance, making the price of a seat in the

courtroom

about

$6,000

(for

reports

of

this

practice

in

the

popular

press,

see

Cain

2011; Smith 2013; Associated Press 2013; Liptak 2013).

The

On

efficiency

homeless

people

grounds,

who

it

is

spend

hard

hours

to

find

fault

queuing

up

with

the

receive

line-standing

a payment

business.

that

makes

the

waiting

worth

their

while.

Those

who

employ

their

services

gain

access

to

a

Congressional

and

 

hearing

willing

to

pay

for.

the

parties

are

of

of the sections

in following

Scalpers

or

a Supreme

the

off, and

Court

one

argument

arranges

that

the

they

deal

are

to attend

eager

And

better

company

no

that

makes

money

makes m o n e y
from p p . 21-133.

from pp. 21-133.

references

to the

too.

For

2012

pp. 33-35;

pp. 70-72;

"The

Case

"Refugee

"Paying

against

Effect,"

"Econo

All

is worse

Sandel

off.

(2012),

1 A number

"Ticket

of this paper

up specific

Standers,"

draw upon

discussions,

pp. 21-23;

pp. 65-70;

especially

page

those interested

book:

Quotas,"

to Shoot

Gifts," pp. 98-103;

pp.

mizing Love,"

here are the relevant

"Markets

and Line

"Fines

and Corruption,"

pp. 63-65;

a Walrus,"

"Blood

vs. Fees,"

"Tradeable

Procreation

Permits,"

Entanglements,"

pp. 88-91;

pp. 113-120;

"The

of Market

Faith,"

pp.

pp. 82-84;

"Crowding

for Sale,"

"Incentives

122-125;

and Moral

Norms,"

"Two Tenets

out Non-market

pp.

Commercialization

and

120-22;

125-127;

pp. 127-133.

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126

Journal

of Economic

Perspectives

has

that

And

yet

some

people

object.

Senator

Claire

McCaskill,

a Missouri

tried to ban paid Congressional

line standing, without success.

special

interest

groups

can

buy

seats

at congressional

hearings

like

Democrat,

"The notion

they

would

buy tickets to a concert or football game is offensive to me," she said (as quoted

O'Connor 2009; see also Hananel 2007).

in

But

what

exactly

is objectionable

about

it?

One

objection

is about

fairness:

It

is unfair

that

wealthy

lobbyists

can

corner

the

market

on

Congressional

hearings,

depriving

the

only

ordinary

troubling

hired

line-standing

services affordable

citizens

of

the

opportunity

to attend.

But

unequal

access

is

not

aspect

of

companies,

this

practice.

the

and

Suppose

proceeds

lobbyists

were

used

were

taxed

to make

when

they

line-standing

for ordinary citizens. The subsidies

might take the form, say,

of vouchers

scheme

might

redeemable

ease

the

for

discounted

unfairness

of

the

rates

at

present

line-standing

system.

But

companies.

a further

Such

a

objection

would

remain:

degrades

We

it.

can

turning

see

this

access

more

to

clearly

C