April 20, 2012, 4:59 p.m. ET
Economists don’t really like presents. They think they are irrational. No gift giver can know what another person wants most, and any present is just a wasteful approximation. The only gift anyone should ever give is cash. It is optimally efficient.
Michael J. Sandel, the Harvard political philosopher, takes a different tack in “What Money Can’t Buy: The Moral Limits of Markets.” He argues that while giving a present may not make much economic sense, it is perfectly sensible in terms of our cultural values. There are social ethics that have long marked the practice, maximizing sympathy, generosity, thoughtfulness and attentiveness. The optimal value, despite what the economists tell us, isn’t always the most efficient one.
What worries Mr. Sandel is that, over the past 30 years, economic imperatives have begun crowding out other values. Witness the rising popularity of the “gift card” industry, which substitutes monetary presents for more traditional ones. We are steadily moving toward a culture in which our ideals are being pushed aside in favor of the view that we ought to always be maximizing efficiency. As Mr. Sandel notes: “Some goods we distribute by merit, others by need, still others by lottery or chance.” The particular mode is determined more often than not by custom. And societal customs are built over a very long haul.
“What Money Can’t Buy” is Mr. Sandel’s attempt to shine a light on this quiet revolution. He looks around America and observes all sorts of situations where traditional mores have shifted in recent years, always in the direction of market morality. Today you can purchase your way out of waiting in line for rides at many amusement parks. There are express lanes that allow us to buy our way out of traffic. Many schools now “incentivize” performance, paying students if they read books or do well in school; some schools now sell ads on children’s report cards. Cities routinely sell advertising space on public property, ranging from parks and municipal buildings to police cars. In each of these cases, long-held ideas about inherent worth and common ownership have been displaced by the simple morality of the market. There are, Mr. Sandel notes, practical concerns with this shift, affecting matters such as equality: “The more money can buy, the more affluence (or the lack of it) matters.” But the higher concerns are philosophical and spiritual, about how we ought to value what he calls sweetly “the good things in life.”
And it is not just that market values crowd out other values—once introduced, they tend to expand to the horizon. Take the history of “naming rights,” the practice of a sports team selling the name of its stadium. In 1988, only three stadiums in the U.S. bore the names of corporate sponsors. By 2010, more than 100 companies were paying to put their name on an American sports facility. And not just the arenas. Sports teams now sell advertising for everything from pitching changes to broadcaster phrases. (When Bank One bought the naming rights for the Arizona Diamondbacks stadium, team announcers were required to call home runs “Bank One BOOMERS.”)
The morality of naming rights has trickled down. Companies now pay members of the public to wear corporate advertising on their clothes or bodies. There are examples of cities selling the naming rights to long-established subway stops. Local governments defend the practice by saying that the ad dollars are free money and that ads benefit taxpayers. Mr. Sandel grants the second part of argument but questions the first.
In a grimly entertaining chapter on the history of life insurance, Mr. Sandel shows how a product that was once meant as a safety net for families has become a ghoulish investment vehicle. For centuries, life insurance was prohibited in most of Europe on the grounds that death should not be subject to speculation. In America, it wasn’t until the 1850s that it began to gain legitimacy and then only as a product designed to protect a man’s family in the case of his untimely death.
But the morals of the market slowly overcame the old objections, and today companies routinely take out life-insurance policies on their employees because the policies are an excellent revenue stream, whether traded or held until collection. In recent years there has arisen an entire “life settlement” industry in which investors buy life-insurance policies from the elderly. The quicker people kick the bucket, the higher the rate of return. It is difficult to think of a more ignoble way to turn a buck.
Yet why should life settlement, or other market strategies, bother us? Such practices maximize social utility and are the ultimate expansion of individual freedom. (There’s a reason libertarians and their utilitarian brothers love markets.) But, Mr. Sandel observes, “markets don’t only allocate goods, they also express and promote certain attitudes toward the goods being exchanged.” “When we decide,” he goes on, “that certain goods may be bought and sold, we decide, at least implicitly, that it is appropriate to treat them as commodities.” Which is why citizens can’t purchase their way out of jury duty or offer their votes for sale. Or why Catholics can’t buy the Eucharist. In many instances, allowing markets to “work” would destroy the “value” of the goods they touch.
Mr. Sandel isn’t a socialist, and his critique of markets is measured. He acknowledges their many benefits and recognizes the broad swaths of life in which the work of markets is both necessary and useful. And he is not a ninny knitting his fingers over the fact that you can buy a fast-pass to get out of waiting in line for a roller-coaster. What concerns him is that the morality of markets often involves both bribery and corruption: “bribery” in the sense of bypassing persuasion and “corruption” in the sense of corroding the established values they displace.
What Mr. Sandel does not offer is prescriptions for rolling back the clock. He is such a gentle critic that he merely asks us to open our eyes. “Bribery sometimes works,” he writes. “And it may, on occasion, be the right thing to do.” Nonetheless, “it is important to remember that it is bribery we are engaged in, a morally compromised practice that substitutes a lower norm . . . for a higher one.”
Yet “What Money Can’t Buy” makes it clear that market morality is an exceptionally thin wedge. What begins with paying to cut in line becomes betting on death. There are serious concerns—how will market morality eventually influence our thinking about end-of-life decisions?—but the concerns aren’t always so apocalyptic. For instance, if you carry market morality to its end point, why should we have merit-based college admissions rather than a simple auction for university slots? Such a change would be enormously efficient—we could be certain that the people who “value” college the most got their preference. But it would change the meaning of “value” as it relates to the idea of the university.
Mr. Sandel is also pointing out another seemingly small but quite profound change in society. As recently as a generation ago, economists viewed their job as understanding prices, depressions, unemployment and inflation. It was dismal, but at least it was science. Somewhere along the way they expanded their portfolio to include the whole of human behavior. Gary Becker staked the guild’s claim somewhat explicitly in 1976 with “The Economic Approach to Human Behavior.” Since then, our economists have only grown in their ambition, to the point that the subject “economics” encompasses, well, everything. In the introduction to the smash-hit “Freakonomics” (2005), Steven Levitt and Stephen Dubner declared that “incentives are the cornerstone of modern life” and that “economics is, at root, the study of incentives.” Or, as Greg Mankiw explains his profession: “An economy is just a group of people interacting with one another as they go about their lives.”
Proponents of market morality claim that it imposes no belief system, but that’s just a smoke screen. Choosing to place utility maximization at the core of your belief system is no different from choosing any other guiding ideological precept. Every problem has an incentive-based solution; every tension can be resolved by seeking the maximally efficient outcome.
This is a depressingly reductive view of the human experience. Men will die for God or country, kinship or land. No one ever picked up a rifle and got shot for optimal social utility. Economists cannot account for this basic fact of humanity. Yet they have assumed a role in society that for the past 4,000 years has been held by philosophers and theologians. They have made our lives freer and more efficient. And we are the poorer for it.
—Mr. Last is a senior writer at the Weekly Standard.
A version of this article appeared April 21, 2012, on page C7 in some U.S. editions of The Wall Street Journal, with the headline: In Economists We Trust.