owning

WHAT

MONEY

CAN"T BUY

The Moral Limits

of Markets

MICHAEL J. SANDEL

FARRAR, STRAUS AND GIROUX/ NEW YORK

Introduction: Markets and Morals

T here are some things money can't buy, but these days, not many.

Today, almost everything is up for sale . Here are a few examples:

• A prison cell upgrade: $82 per night. In Santa Ana, California,

and some other cities, nonviolent offenders can pay for better

accommodations-a clean, quiet jail cell, away from the cells

for nonpaying prisoners.1

• Access to the car pool lane while driving solo: $8 during rush

hour. Minneapolis and other cities are trying to ease traffic con­

gestion by letting solo drivers pay to drive in car pool lanes, at

rates that vary according to traffic.2

• The services of an Indian surrogate mother to carry a pregnancy:

$6,250. Western couples seeking surrogates increasingly out­

source the job to India, where the practice is legal and the price

is less than one-third the going rate in the United States. 3

• The right to immigrate to the United States: $500,000. Foreign­

ers who invest $500,000 and create at least ten jobs in an area

of high unemployment are eligible for a green card that entitles

them to permanent residency.4

1 / WHAT MONEY CAN'T BUY

• The right to shoot an endangered black rhino: $150,000. South

Africa has begun letting ranchers sell hunters the right to kill a

limited number of rhinos, to give the ranchers an incentive to

raise and protect the endangered species. 5

• The cell phone number of your doctor: $1,500and up per year. A

growing number of"concierge" doctors offer cell phone access

and same-day appointments for patients willing to pay annual

fees ranging from $1,500 to $25,000.6

• The right to emit a metric ton of carbon into the atmosphere: €13

{about $18). The European Union runs a carbon emissions

market that enables companies to buy and sell the right to

pollute.7

• Admission of your child to a prestigious university: ? Although

the price is not posted, officials from some top universities told

The Wall Street Journal that they accept some less than stellar

students whose parents are wealthy and likely to make substan­

tial financial contributions. 8

Not everyone can afford to buy these things. But today there are

lots of new ways to make money. If you need to earn some extra cash,

here are some novel possibilities:

• Rent out space on your forehead (or elsewhere on your body) to

display commercial advertising: $777. Air New Zealand hired

thirty people to shave their heads and wear temporary tattoos

with the slogan "Need a change? Head down to New Zealand."9

• Serve as a human guinea pig in a drug safety trial for a phar­

maceutical company: $7,500. The pay can be higher or lower,

depending on the invasiveness of the procedure used to test the

drug's effect, and the discomfort involved.10

Jntrod 1'clion: !,fo.,·k.els a,id Momls / 5

• Fight in Somalia or Afghanistan for a private military com­

pany: $250per month to $1,000 per day. The pay varies accord­

ing to qualifications, experience, and nationality. ll

• Stand in line overnight on Capitol Hill to hold a place for a

lobbyist who wants to attend a congressional hearing: $1 5-$20

per hour. The lobbyists pay line-standing companies, who hire

homeless people and others to queue up.12

• If you are a second grader in an underachieving Dallas school,

read a book: $2. To encourage reading, the schools pay kids for

each book they read.13

• I f

you are obese, lose fourteen pounds in four months: $378.

Companies and health insurers offer financial incentives for

weight loss and other kinds of healthy behavior.14

• Buy the life insurance policy of an ailing or elderly person, pay

the annual premiums whil e the person is alive, and then collect

the death benefit when he or she dies: potentially, millions (de­

pending on the policy). This form of betting on the lives of

strangers has become a $30 billion industry. The sooner the

stranger dies, the more the investor makes.15

We live at a time when almost everything can be bought and sold.

Over the past three decades, markets-and market values-have

come to govern our lives as never before. We did not arrive at this

condition through any deliberate choice. lt is almost as if it came

upon us.

As the cold war ended, markets and market thinking ertioyed

unrivaled prestige, understandably so. No other mechanism for or­

ganizing the production and distribution of goods had proved as

successful at generating affluence and prosperity. And yet, even as

growing numbers of countries around the world embraced market

6 / WHAT MONEY CAN'T BUY

mechanisms in the operation of their economies, something else was happening. Market values were coming to play a greater and greater

role in social life. Economics was becoming an imperial domain.

Today, the logic of buying and selling no longer applies to material

goods alone but increasingly governs the whole of life. It is time to

ask whether we want to live this way.

THE ERA OF MARKET TRIUMPHALISM

The years leading up to the fiuancial crisis of 2008 were a heady

time of market faith and deregulation-an era of market triumphal­ ism. The era began in the early 1980s; when Ronald Reagan and

Margaret Thatcher proclaimed their conviction that markets, not

government, held the key to prosperity and freedom. And it contin­ ued in the 1990s, with the market-friendly liberalism of Bill Clinton and Tony Blair, who moderated but consolidated the faith that mar­ kets are the primary means for achieving the public good.

Today, that faith is in doubt. The era of market triumphalism has come to an end. The financial crisis did more than cast doubt on the

ability of markets to allocate risk efficiently. It also prompted a wide­ spread sense that markets have become detached from morals and

that we need somehow to reconnect them. But it's not obvious what this would mean, or how we should go about it.

Some say the moral failing at the heart of market triumphalism

was greed, which led to irresponsible risk taking. The solution, according to this view, is to rein in greed, insist on greater integrity

and responsibility among bankers and Wall Street executives, and enact sensible regulations to prevent a similar crisis from happening again.

folroduction: Mark,l, and Mora.I, / 7

This is, at best, a partial diagnosis. While it is certainly true that

greed played a role in the financial crisis, something bigger is at stake. The most fateful change that unfolded during the past three

decades was not an increase in greed. It was the expansion of mar­ kets, and of market values, into spheres of life where they don't

belong.

To contend with this condition, we need to do more than inveigh against greed; we need to rethink the role that markets should play in our society. We need a public debate about what it means to keep markets in their place. To have this debate, we need to think through the moral limits of markets. We need to ask whether there are some

things money should not buy. The reach of markets, and market-oriented thinking, into aspects

of life traditionally governed by nonmarket norms is one of the most

significant developments of our time. Consider the proliferation of for-profit schools, hospitals, and

prisons, and the outsourcing of war to private military contractors.

(In Iraq and Afghanistan, private contractors actually outnumbered U.S. military troops. 16)

Consider the eclipse of public police forces by private security

firms-especially in the United States and Britain, where the num­ ber of private guards is more than twice the number of public police officers. 17

Or consider the pharmaceutical companies' aggressive marketing of prescription drugs to consumers in rich countries. (lf you've ever seen the television commercials on the evening news in the United States, you could be forgiven for thinking that the greatest health crisis in the world is not malaria or river blindness or sleeping sick­ ness, but a rampant epidemic of erectile dysfunction.)

Consider too the reach of commercial advertising into public

8 / WHAT MONEY CAN'T BUY

schools; the sale of "naming rights" to parks and civic spaces; the marketing of"designer" eggs and sperm for assisted reproduction; the outsourcing of pregnancy to surrogate mothers in the developing world; the buying and selling, by companies and countries, of the

right to pollute; a system of campaign finance that comes close to permitting the buying and selling of elections.

These uses of markets to allocate health, education, public safety, national security, criminal justice, environmental protection, recre­ ation, procreation, and other social goods were for the most part unheard of thirty years ago. Today, we take them largely for granted.

EVERYTHING FOR SALE

Why worry that we are moving toward a society in which everything is up for sale?

For two reasons: one is about inequality; the other is about cor­ ruption. Consider inequality. In a society where everything is for sale, life is harder for those of modest means. The more money can buy, the more affluence (or the Jack of it) matters.

If the only advantage of affluence were the ability to buy yachts, sports cars, and fancy vacations, inequalities of income and wealth would not matter very much. But as money comes to buy more and more-political influence; good medical care, a home in a safe neigh­ borhood rather than a crime-ridden one, access to elite schools rather than failing ones-the distribution of income and wealth looms larger and larger. Where all good things are bought and sold, having money makes all the difference in the world.

This explains why the last few decades have been especially hard on poor and middle-class families. Not only has the gap between

! 'I

,'

Introduction: Markets and Morals / 9

rich and poor widened, the commodification of everything has sharpened the sting of inequality by making money matter more.

The second reason we should hesitate to put everything up for sale is more difficult to describe. It is not about inequality and fair­ ness but about the corrosive tendency of markets. Putting a price on the good things in life can corrupt them. That's because markets don't only allocate goods; they also express and promote certain at­ titudes toward the goods being exchanged. Paying kids to read books might get them to read more, but also teach them to regard reading as a chore rather than a source of intrinsic satisfaction. Auc­ tioning seats in the freshman class to the highest bidders might raise revenue but also erode the integrity of the college and the value of its diploma. Hiring foreign mercenaries to fight our wars might spare the lives of our citizens but corrupt the meaning of citizenship.

Economists often assume that markets are inert, that they do not affect the goods they exchange. But this is untrue. Markets leave

their mark. Sometimes, market values crowd out nonmarket values worth caring about.

Of course, people disagree about what values are worth caring about, and why. So to decide what money should-and should not­ be able to buy, we have to decide what values should govern the various domains of social and civic life. How to think this through is the subject of this book.

Here is a preview of the answer I hope to offer: when we decide that certain goods may be bought and sold, we decide, at least im­ plicitly, that it is appropriate to treat them as· commodities, as instru­ ments of profit and use. But not all goods are properly valued in this way.18 The most obvious example is human beings. Slavery was ap­ palling because it treated human beings as commodities, to be bought and sold at auction. Such treatment fails to value human beings in

10 / WHAT MONEY CAN'T BUY

the appropriate way-as persons worthy of dignity and respect,

rather than as instruments of gain and objects of use.

Something similar can be said of other cherished goods and

practices. We don't allow children to be bought and sold on the mar­

ket. Even if buyers did not mistreat the children they purchased, a

market in children would express and promote the wrong way of

valuing them. Children are not properly regarded as consumer

goods but aS·beings worthy of love and care. Or consider the rights

and obligations of citizenship. If you are called to jury duty, you may

not hire a substitute to take your place. Nor do we allow citizens to

sell their votes, even though others might be eager to buy them. Why

not? Because we believe that civic duties should not be regarded as

private property but should be viewed instead as public responsi­

bilities. To outsource them is to demean them, to value them in the

wrong way.

These examples illustrate a broader point: some of the good

things in life are corrupted or degraded if turned into commodities.

So to decide where the market belongs, and where it should be kept

at a distance, we have to decide how to value the goods in question­

health, education, family life, nature, art, civic duties, and so on.

These are moral and political questions, not merely economic ones.

To resolve them, we have to debate, case by case, the moral meaning

of these goods and the proper way of valuing them.

This is a debate we didn't have during the era of market trium­

phalism. As a result, without quite realizing it, without ever deciding

to do so, we drifted from having a market economy to being a market

society.

The difference is this: A market economy is a tool-a valuable

and effective tool-for organizing productive activity. A rnarket soci­

ety is a way of life in which market values seep into every aspect of

fotrod,ulion: Markets and Morals / 11

human endeavor. It's a place where social relations are made over in

the image of the market.

The great missing debate in contemporary politics is about the

role and reach of markets. Do we want a market economy, or a mar­

ket society? What role should markets play in public life and per­

sonal relations? How can we decide which goods should be bought

and sold, and which should be governed by nonmarket values?

Where should money's writ not run?

These are the questions this book seeks to address. Since they

touch on contested visions of the good society and the good life,

1 can't promise definitive answers. But I hope at least to prompt pub­

lic discussion of these questions, and to provide a philosophical

framework for thinking them through.

RETHINKlNC THE ROLE OF MARKETS

Even if you agree that we need to grapple with big questions about

the morality of markets, you might doubt that our public discourse

is up to the task. It's a legitimate worry. Any attempt to rethink the

role and reach of markets should begin by acknowledging two daunt­

ing obstacles.

One is the persisting power and prestige of market thinking, even

in the aftermath of the worst market failure in eighty years. The other

is the rancor and emptiness of our public discourse. These two con­

ditions are not entirely unrelated.

The first obstacle is puzzling. At the time, the financial crisis of

2008 was widely seen as a moral verdict on the uncritical embrace of

markets that had prevailed, across the political spectrum, for three

decades. The near collapse of once-mighty Wall Street financial firms,

12 / WHAT MONEY CAN'T BUY

and the need for a massive bailout at taxpayers' expense, seemed

sure to prompt a reconsideration of markets. Even Alan Greenspan,

who as chairman of the U.S. Federal Reserve had served as high

priest of the market triumphalist faith, admitted to "a state of shocked

disbelieP' that his confidence in the self-correcting power of free

markets turned out to be mistaken.19 The cover of The Economist,

the buoyantly pro-market British magazine, showed an economics text­

book melting into a puddle, under the headline WHAT WENT WRONG

WITH ECONOMICS.2U

The era of market triumphalism had come to a devastating end.

Now, surely, would be a time of moral reckoning, a season of sober

second thoughts about the market faith. But things haven't turned

out that way.

The spectacular failure of financial markets did little to dampen

the faith in markets generally. In fact, the financial crisis discredited

government more than the banks. In 2011, surveys found that the

American public blamed the federal government more than Wall

Street financial institutions for the economic problems facing the

country-by a margin of more than two to one. 21

The financial crisis had pitched the United States and much of

the global economy into the worst economic downturn since the

Great Depression and left millions of people out of work. Yet it did

not prompt a fundamental rethinking of markets. Instead, its most

notable political consequence in the United States was the rise of the

Tea Party movement, whose hostility to government and embrace of

free markets would have made Ronald Reagan blush. In the fall of

2011, the Occupy Wall Street movement brought protests to cities

throughout the United States and around the world. These protests

targeted big banks and corporate power, and the rising inequality of

income and wealth. Despite their different ideological orientations,

,•

Introduction: Markets and Morals / 13

both the Tea Party and Occupy Wall Street activists gave voice to

populist outrage against the bailout. 22

Notwithstanding these voices of protest, serious debate about the

role and reach of markets remains largely absent from our political

life. Democrats and Republicans argue, as they long have done,

about taxes, spending, and budget deficits, only now with greater

partisanship and little ability to inspire or persuade. Disillusion with

politics has deepened as citizens grow frustrated with a political

system u na hie to act for the public good, or to address the questions

that matter most.

This parlous state of public discourse is the second obstacle to a

debate about the moral limits of markets. At a time when political

argument consists mainly of shouting matches on cable television,

partisan vitriol on talk radio, and ideological food fights on the floor

of Congress, it's hard to imagine a reasoned public debate about

such controversial moral questions as the right way to value procre­

ation, children, education, health, the environment, citizenship, and

other goods. But I believe such a debate is possible, and that it would

invigorate our public life.

Some see in our rancorous politics a surfeit of moral conviction:

too many people believe too deeply, too stridently, in their own con­

victions and want to impose them on everyone else. I think this

misreads our predicament. The problem with our politics is not too

much moral argument but too little. Our politics is overheated be­

cause it is mostly vacant, empty of moral and spiritual content. It

fails to engage with big questions that people care about.

The moral vacancy of contemporary politics has a number of

sources. One is the attempt to banish notions of the good life from

public discourse. In hopes of avoiding sectarian strife, we often in­

sist that citizens leave their moral and spiritual convictions behind

14 / WHAT MONEY CAN'T BUY

when they enter the public square. But despite its good intention, the reluctance to admit arguments about the good life into politics prepared the way for market triumphalism and for the continuing hold of market reasoning.

In its own way, market reasoning also empties public life of moral argument. Part of the appeal of markets is that they don't pass judg­ ment on the preferences they satisfy. They don't ask whether some ways of valuing goods are higher, or worthier, than others. If some­ one is willing to pay for sex or a kidney, and a consenting adult is willing to sell, the only question the economist asks is, "How much?" Markets don't wag fingers. They don't discriminate between admi­ rable preferences and base ones. Each party to a deal decides for himself or herself what value to place on the things being exchanged.

This nonjudgmental stance toward values lies at the heart of mar­ ket reasoning and explains much of its appeal. But our reluctance to engage in moral and spiritual argument, together with our embrace of markets, has exacted a heavy price: it has drained public dis­ course of moral and civic energy, and contributed to the techno­ cratic, managerial politics that afflicts many societies today.

A debate about the moral limits of markets would enable us to decide, as a society, where markets serve the public good and where they don't belong. It would also invigorate our politics, by welcom­ ing competing notions of the good life into the public square. For how else could such arguments proceed? If you agree that buying and selling certain goods corrupts or degrades them, then you must believe that some ways of valuing these goods are more appropriate than others. It hardly makes sense to speak of corrupting an activity­ parenthood, say, or citizenship-unless you think that some ways of being a parent, or a citizen, are better than others.

Moral judgments such as these lie behind the few limitations

lntrodu,ction: Marlttts and Morals / 15

on markets we still observe. We don't allow parents to sell their children or citizens to sell their votes. And one of the reasons we don't is, frankly,judgmental: we believe that selling these things val­ ues them in the wrong way and cultivates bad attitudes.

Thinking through the moral limits of markets makes these ques­ tions unavoidable. It requires that we reason together, in public, about how to value the social goods we prize. It would be folly to expect that a morally more robust public discourse, even at its best, would lead to agreement on every contested question. But it would make for a healthier public life. And it would make,us more aware of the price we pay for living in a society where everything is up for sale.

W hen we think of the morality of markets, we think first of Wall Street banks and their reckless misdeeds, of hedge funds and bail­ outs and regulatory reform. But the moral and political challenge we face today is more pervasive and more mundane-to rethink the role and reach of markets in our social practices, human relationships, and everyday lives.