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Here is a book that you might enjoy – What Money Can’t Buy: The Moral Limits of Markets. It’s by the philosopher, Michael Sandel. During the course of this volume, Sandel makes an interesting distinction between a “market economy” and a “market society.” One of his key observations is that economic institutions have influenced — Sandel would say “corrupted” — the larger culture. Normative attributes of the free market economy — individual self-interest, pricing, etc. — have become ways that people deal with one another and with the natural environment.

Sandel cites a number of examples in defense of this claim, but I will only repeat a few, just so you understand the essentials of his argument and so as not to spoil your reading of the book. A booming business in corporate America is so-called “janitors insurance,” more properly termed “corporate-owned life insurance” (COLI). Firms that purchase COLI are taking out life insurance on their rank-and-file employees. If the employee dies, then the company — not the family of the deceased — collects the benefits. Sandel wonders whether it is distasteful for an employer to bet against the well-being of its workforce. As another example, Sandel reports that in South Africa a wealthy big game hunter can pay $150,000 to hunt and kill an endangered black rhinoceros. This profitable hunting trade provides an incentive for ranchers to breed more of the animals. Sandel admits that these rhino killings seem to encourage more breeding, but wonders whether this program changes our attitudes toward animal life.

If you are like most readers, you will be troubled by some of his examples, but find others quite reasonable. Sandel is not writing an anti-market screed; he is trying to make us think. According to Sandel, we need a national conversation about the sort of nation we wish to have. This conversation will include when it is and is not reasonable to rely on market norms. The present danger is that we are becoming a market society, as the transfer of market norms into other domains displaces values that are important for community life.

At first glance, these ideas are intuitive enough to risk dismissal as platitudes. Still, with a little thought you can see that Sandel’s ideas may have a conceptual hole. He is tacitly implying something about the human mind, and as we shall see it is a view that not everyone shares. Specifically, Sandel’s norm displacement model assumes there are multiple approaches by which things can be valued – not (only) that there are multiple values but also that there are multiple ways of “valuing” an event or thing. If it were otherwise, then although one set of values might be preferred over others, they would all share a common basis and would not fundamentally different. This is a tricky idea when you first hear it, so let’s work through the particulars.

We will begin by considering a competing view that I have cobbled together myself, using pieces from free market economics and rational decision-making. From this perspective, rational people try to maximize their individual interests. They do so by considering the value of each consequence, weighted by the probability of its occurrence, and summing these products. (If a certain outcome is considered a bad thing for an individual, then it receives a negative score. Of course, adding these negative values reduces the total.) The rational person then selects the available option with the highest score. This is basically the subjective expected utility model of decision-making, though organizational scientists of a certain age may also be reminded of expectancy-valance theory. Notice that in this view there may be multiple considerations and these may have different utility functions. However, they are all scored along a common metric. As such, they can and should be added together in order to obtain a composite score. Depending on the theory in question, this metric yardstick might be called value, utility, or valance. Regardless, these scores are additive, more is better than less.

Consider Sandel and his endangered rhinoceros, though I will adjust his example slightly. You value the black rhinoceros and you value money. Let’s even say that you are a special person who puts a great deal more value on the rhinoceros. However, if the hunter pays you enough money, then you can use the funds to preserve the habitat, perhaps also making a small profit for yourself. Surely, you would prefer to save every rhinoceros, but saving most is still good. Saving most of the animals, while pocketing a little money for yourself is even better. On a scale of 1-10, losing all the rhino and not making money has a subjective expected value of zero. Losing one rhino, saving the habitat, and making money has a value of, say, eight. Losing one rhino, saving the habitat, and not turning a profit for yourself must be less than eight, so let’s call it a seven. Even though it is not a perfect ten, the “eight” appears to be your best option. If you are rational, then you take it.

Here we make no claim that people agree as to the value they place on different outcomes. Some may value animals a great deal more than money; others will no doubt have alternative preferences. Regardless, their values are additive. By this I mean that they can be combined together along a single scale, with the higher total score indicating the best option. This is why some people say that “everything comes down to money.” However much you love the rhino, so long as money has a value greater than zero, then there is some price at which you will allow the animal to be killed. Hence, money can be treated as a universal indicator of value. There are few options we will not accept, if the price is right.

The rational decision model that I presented has the extra advantage of being able to smoothly resolve differences in opinion. There is one way to value things, and all values can be considered on a common metric. If we represent that metric in dollars, then we can handle value trade-offs in market-based terms. For instance, if I care more about black rhinoceroses than you, you can pay me a fee that is equivalent to my concern. After doing so, you can blast away at your pleasure. Everyone gets what they want or, at least, something equal in value to what they want (except for the dead rhino).

This poses a bit of a problem for Sandel’s claim. To be sure, he might wish for certain items to receive a greater value than they do in modern society. Perhaps his critics agree or perhaps they do not. In a sense, it doesn’t matter because no one is corrupting anyone. There is no moral high ground among the favored sets of items, and nothing fundamental is lost when market norms displace other paradigms. In the end, all of us are using the same scale of value. If we like, we can represent each set of preferences in terms of dollars, which implies that everything is market-based in some meaningful sense or other. Cynically, we might draw the conclusion that Sandel is as willing as anyone to sell the life of an endanger animal, he just wants a better price up front. Morally speaking, there isn’t much difference between Michael Sandel and Milton Friedman.

Well, not really. Actually, I was exaggerating for effect. This is empirical question and the data are with Sandel. Let’s review our situation. Professor Sandel’s displacement occurs when one set of norms shunts another aside. This displacement process can only transpire if there are multiple – Dr. Sandel can get by with two — sets. These normative systems value things in different ways.

The possibility of multiple systems might seem implausible, but if it does then I encourage you to think of the brain as an evolved organ, which was shaped by natural selection. Recall how Darwinian evolution works. Very generally speaking, we begin with diversity. The adaptations that are most successful in facilitating reproduction are the ones most likely to be passed on to the next generation. This process has a corollary – you have to go with what you’ve got. That is, natural selection seldom scraps an entire system and re-builds it from scratch. Rather, it grafts new structures on top of older ones. This is the evolutionary process that produced the well-known “modular brain” — a many-faceted kludge that actually works pretty well.

The modular brain has proven important for helping behavioral ethicists understand how people make moral decisions. In this noteworthy book, Experiments in Ethics, Kwame Appiah observes that our moral sentiments cluster into distinct sets. Scholars are still working out the specifics, and a number of different models exist. However, all of these frameworks have in common the notion that market-based logic, though important to human beings, is only one way that events and goods are evaluated and understood.

One of my favorite approaches was posited by the anthropologist Alan Fiske. Professor Fiske argues that there are four “relational modes.” Market pricing, of the type discussed above, is certainly one. However, there is also communal sharing, authority ranking (listening to the boss), and equality matching.  Fiske is telling us, with Sandel, that people certainly care about markets and think in market terms, as well we should! However, people also care about other things, such as the community, legitimately exercised power, and social equality. Fiske adds that all four of these orientations exist in every human culture, though societies differ as to how they are applied and how much emphasis is placed on each.

If such theories of the modular mind have some accuracy, then we should be able to find instances where market logic breaks down in the face of moral logic. These instances should be economically irrational, but should make sense when alterative relational orientations are taken into account. Sandel presents a number of examples in his book, but to make our task more difficult, I thought I should look for corroborating evidence elsewhere. I had some good fortune on this matter. Shortly after I finished Sandel’s The Limits of Markets, I read Barry Schwartz’s and Kenneth Sharpe’s Practical Wisdom. In their Chapter 9, I found two examples that are relevant to our present discussion. Let’s consider each.

In the childcare industry a common problem is late pick-ups. Parents fail to arrive on time. By not meeting this obligation, they create difficulties for the daycare workers. To allay this problem, a center in Israel decided to impose a fine. Let’s look at the logic of this. Meeting one’s obligations is valuable, but meeting ones obligations plus avoiding a fine must be of greater value, so long as the fine is greater than zero. Hence, imposing the fine should reduce parental lateness from its pre-existing baseline. Value are additive, so we’re just doing the arithmetic. Except that the very opposite occurred. After imposing the fine, tardiness began to increase. From a baseline of 25%, it increased to 33%. Schwartz and Sharpe tell us that by week 16 roughly 40% of all pick-ups were late. According to Schwartz and Sharpe, lateness lost its moral connotations, the sense that one had an obligation to the daycare staff. The fine was interpreted as the fee or price for an extra service. Parents were customers who were willing to purchase a few extra minutes.

To switch back to Sandel’s language, we can say that a prior set of norms was displaced by a subsequent set. Once the fine became a fee for services rendered, lateness was valued in a different way. Formally, it had been understood as an obligation, a type of moral act. Now it was understood as an economic exchange, whereby the only moral requirement was to pay the posted price. In other words, parents did not add their reasons together; they exchanged one set of standards for another. This is consistent with theories of modularity in moral thinking.

Not only can market norms change our relationship to one another, they may also alter our feelings about our country. Schwartz and Sharpe review a study that addresses this issue. During the 1990s, Switzerland needed to find locations in which they could house nuclear waste. This is nasty stuff, with incumbent safety risks and diminished property values. Despite knowing these pitfalls, researchers determined that about 50% of Swiss citizens were willing to accommodate the waste in their communities. The scholars sweetened the pot by also proposing an annual payment to people in the towns that hosted the waste dumps. This offer of payment cut compliance rates to roughly 25%. Two reasons – civic duty plus money – were less effective than one – civic duty. Actually, according to Sandel that last sentence was incorrect. Once the payout was proffered, there were no longer two reasons. The citizens were not thinking of waste dumps as civic obligations; they were weighing the market price before making a sale.

Sandel is telling us that there are different, and to his thinking often better, ways to set value. This is how Michael Sandel is different from Milton Friedman. It is not (only) because they value different things. Rather, they assign value to things – they “valuate” things – in different ways. The Limits of Markets is an important book, but I suspect that its impact will be more limited than it should be. Market thinking has become so ingrained that it often seems to appear as if it were second nature. Still, it should be questioned because the theory, while interesting, is not entirely accurate. As it happens, market logic is only one way to value things. There are others. Michael Sandel believes that it’s time to give these alternatives a second look.

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