Thursday, May 31, 2012

Markets and morality

Boston Review has an excellent debate about Michael Sandel's new book. As with all issues involving morality, there can be little agreement on the issues under debate. Prof Sandel's argument is that market motives have the potential to corrupt all participants in a transaction and thereby limit (or crowd-out) the role of morality in them. He therefore advocates that certain things like friendship, wedding toasts, gifts, school admissions, and organs for transplant that should not be commercialized.

Debra Satz makes the important point by arguing that, instead of corruption, the fundamental concern with market is that it is agnostic to fairness in any transaction. She therefore traces the limits to market in its inherent nature to exclude a large proportion of the population from accessing certain goods and services. In terms of economics, this is called inequality. She illustrates this with the example of kidney markets,
Recently the New York Times reported that 60 people were linked in the longest chain of kidney transplants ever constructed. What is the difference between an ordinary market and this trading system in which people barter organs on behalf of loved ones? The morally salient difference is that, in the kidney exchange system, people could not use money to get access to an organ: the standing of rich and poor were thereby equalized. That people respond very differently to kidney chains and kidney markets suggests that there is an egalitarian intuition behind the prohibition on organ trading, not a view about the meaning of body parts.
My own belief is that the debate on which things/services can be transacted in the market and which should be regulated by social norms will never have a conclusion which does not leave a significant minority dissatisfied. If its implications were confined purely to the personal realm, it would have been appropriate to leave the debate to rage on. But in a world where market norms have invaded most of our lives, there is a compelling case to the argument that the application of such norms to certain transactions can have socially destabilizing effects.

Let's take two examples of mainstream debates on inequality and healthcare where the morality goalposts have undergone important changes due to the suffusion of market values. As inequality widens, there is mounting evidence that it has significant distortionary and destabilizing effects on the market's allocative efficiency. But conservatives invoke the principles of free-markets (income distribution is a reflection of inherent merit and hardwork) and oppose any attempt to remedy the situation. The result is an environment where taxation and welfare support are seen as undesirable, despite the co-existence of extreme concentration of wealth with severe deprivation and poverty.

As technological advances and increasing life expectancies drive healthcare costs upwards and fiscally constrained governments are forced to pare down healthcare expenditures, there is an intense debate raging about rationing healthcare. Questions involving what should constitute the basic package of healthcare services, nature of terminal care, subsidizing health coverage for the indigent, and so on, which involve important issues of collective morality, are increasingly being debated and decided based on market principles.     

In both these cases, a market-based system of making decisions, which overlooks the principles of morality and human values, may have contributed to making many of us indifferent to severe deprivation or letting people suffer and even die for lack of access to the best available health care. But do we blame markets for this slip down the morality scales or is it an inevitable accompaniment of development and progress itself?

2 comments:

KP said...

Dear Gulzar,

You end with a question, which is the crux of the debate.

While earlier it was society / religion / societal values that served as a arbiter of social values - markets, and our almost religious faith in the efficacy of its (markets) decision making - now serve the function of being the arbiter of all social choice.

In socializing everybody to this creed - the existence of any alternative form of societal arbitration / mediation is being displaced with a pace that is dubiously efficient and untested.

Examples abound, taking a miniscule sample - starting from the principle of common property ownership - to a bias towards individual ownership and greater individual rights or the casting away of local practices in areas like childbirth and medicine - to accomodate market driven practices that are based more on efficiency than any evolutionary or evolved / localized consideration.

The conflation of democracy with markets / choice and freedom - has as Zizek so eloquently states - "lost its self evidence and automatic legitimacy" and "the marriage between capitalism and democracy is over".

More interesting is in the guise of expanding individual freedoms we now propound, again in Zizeks words an "ideology of spiritualized hedonism".

Markets are not moral and we know it - just as we know that majoritarianism cannot automatically define morality or what is right.

The Devlin - Hart debate drew a line between morality - private and public and created the space for private rights vs publicly acceptable behaviour that safeguard society.

This debate also shaped the distinction between what is morally right and what is legally so.

Markets adhere to legal standards of behaviour - they are in a skewed sense a reflection of the expansion of individual rights. However, to use the markets as the basis of deciding the moral sweep of government or social action - is in a sense moving backwards rather than forwards as a society.

Cultural anthropologists and sociologists need to step into this debate - rather than viewing society purely through an economic lens and a price for everything.

regards, KP.

gulzar said...

Thanks KP for those excellent points. I completely agree with them.

But with all such debates, I try to take a Bayesian position (basically because, this approach helps us more effectively counter the supporters of the market, in so far as it speaks their own language). That is, conditional on the inevitability of a creeping market and its values, how do we

1. carve out adequate space for traditional non-market values

2. stem the influx of market values in atleast certain areas.

for example, markets are increasingly being shown as equivalent to choice and therefore democracy. i think the argument should start not by rejecting this assumption, but strongly qualifying it with market failures and the resultant need to address fairness and distributional issues. this in turn will bring in issues of taxation, social safety nets, and public goods. in other words, democracy has to be projected as a mixture of markets working in tandem with all the aforementioned things. remove one, and the concept has to collapse.