Sandel is the well-known Professor of Harvard University and the author of Justice, the iconic book. He is also known for making his course with the same name available freely both online and on television. His latest book continues with his stream of arguments which looks at how marketised and financialized we are and whether we should stop at some point arguing that the markets know best. In the process of his arguments he takes on his colleague Mankiw as well as the Dubner and Levit the iconic authors of Freakonomics looking at the moral fabric of society and trying to poke holes in the rationality of the economic world. While he does not discuss the work of Banerjee and Duflo of the Poor Economics fame – where they argue for testing out human behavior based on market based incentives using randomized control trials - he does give us enough thought to look at their work from a moral lens.
The basic argument of Sandel is that there should be some things at least that money should not buy. Or at least money alone should not buy. When we introduce the concept of markets everywhere, we lose out on the moral suasion and guilt. In order to have a just society it is important to have some feeling of guilt. Let me start with a more nuanced example that Sandel gives from an experiment carried out in an Israeli day-care centre [Something similar to this is also discussed by Dubner and Levit in Freakonomics]. When the day care centre introduced a fine to the parents for picking up the children later than the close time, the number of parents who picked up kids late and paid actually went up, rather than reduced. Since they were paying for the extra time, there was no longer a sense of guilt and responsibility towards the time of others who would be waiting. Dubner and Levit look at it from the economic lens of incentives, but Sandel seems to question whether this is indeed a right and moral approach.
While most of the examples that Sandel gives are located in a grey area, and have powerful arguments on either side – the market based rational behavior argument is equally persuasive – it is when Sandel brings up the chapters on Markets in Life and Death and Naming Rights, that it becomes stark. How good is it to have a futures market in Terrorism, how appropriate is it to bet on death or how wrong is it to tattoo a brand on the forehead of a person for life?
If we were to extend Sandel’s arguments in our context we could look at some examples – how appropriate is it to sell ‘darshan’ of lord through a paid, VIP and a break-darshan queue as they have in Tirupati? Is god and his blessings also for sale? What about healthcare or primary education that could be an entitlement? What is the concept of a capitation fees? And what exactly do we mean by cross-subsidy? Where are we crossing the line when we ask the rich to pay for a superior benefit, so that the poor can get it at an affordable price?
Clearly there are several examples in his book, where there is no grey area, but the markets seem to have taken over. Trading in carbon in order to buy a right to pollute is one and organized and controlled poaching in order to save endangered species is another. In each of these cases the market argument talks about the demand and supply, the overall positive effects of reducing information asymmetry and brings the core issue to the fore and brings out measurability. But at the same time, there is some element of injustice in the entire structuring.
Of course there are many more things that should not be in the market, they are and we seem to have accepted them as a part of life. Buying and selling of drinking water which was seen with shock and awe several years ago has become a part of life. Jacking up prices for the movie tickets over the week-ends and on the release date has removed the thrill of a first-day first-show joy of standing in the queue and getting an entitlement. Tollways without an alternative access, legalizing FSIs, and police stations being painted and spruced up by corporate groups are clear examples where we seem to have crossed the line. The paid news and news-like advertisements have all moved something that was possibly always there, and was thought to be a corrupt practice towards a legitimacy and entitlement.
Sandel is a delight to read and this book should be made a mandatory reading for all graduates of business school intending to specialize in the financial markets with complex derivative products. There should be at least some products and some derivatives they should not be dealing with, however innovative and lucrative they are. Drug abuse is bad for society and that is a moral position. We cannot buy that position with money. That is Sandel’s message and it should not be lost in the financialised world.
What Money Can’t Buy
The Moral Limits of Markets
pp.244. Price £14.99.