The Higher Bealism: The Moral Limits of Markets

The Higher Bealism: The Moral Limits of Markets

The Higher Bealism: The Moral Limits of Markets

Why are moral and political thinkers failing to engage with the true, dispiriting scale of market sovereignty?


“I don’t have to tell you things are bad,” Howard Beale (played by Peter Finch) announces in the warm-up to his famed populist outburst in Network (1976), inciting his millions of viewers to rush to their living room windows and yell, “I’m as mad as hell, and I’m not going to take this anymore!” Beale ticks off a standard litany of 1970s-era social woes—inflation, unemployment, bank failures, violent crime—to stoke the audience of his nightly news broadcast. In the end, his undoing proves to be not hubris but civics. He tries to goad Americans into thinking critically about the ultimate source of their malaise: the economic arrangement of their daily affairs. Beale first denounces, and then embraces, the global market system, all to the detriment of his new calling as the “mad prophet of the airwaves.” Americans, it turns out, don’t want to be bothered with detailed jeremiads about the relative social costs of market sovereignty, and how effective social remedies may require a re-examination of the Republic’s guiding folklore of the free market. As Beale’s ratings tank, his bosses script a violent end for him—an on-air assassination carried out by an outfit called the Ecumenical Liberation Army. With Beale out of the picture, the network can pad its prime-time schedule with lesser, more lurid tabloid knockoffs of his doomsaying style.

It’s hard not to ponder Beale’s glum fate, fictional though it is, as an instructive counterweight to a pair of new books—each bearing the same subtitle—seeking to impose moral limits on the market’s sovereignty. While Beale is remembered for the “I’m as mad as hell” mantra, his more fitting epitaph is “I don’t have to tell you things are bad.” God knows we don’t need moral theorists to let us know that things are bad, with the long-term fallout of the 2008 financial crisis having left millions of Americans foreclosed on, debt-ridden, jobless and worse. In addition, as does Beale in the early phase of his prophetic career, both Debra Satz, who teaches ethics and philosophy at Stanford, and Michael Sandel, a political philosopher at Harvard best known for his communitarian critique of liberal social-contract theory, focus on the subjective discomfort and dismay of their presumed readers over the imperial expansion of the market into spheres heretofore designated as civic, personal or spiritual. And much as Beale proves to be, their books are at a loss to deliver an account of nonmarket moral principles that offer a serious challenge to the untrammeled reign of “rational choice” and “competitive advantage.”

In Why Some Things Should Not Be for Sale, Satz acknowledges the universal sweep of market prerogative across the social realm and advances the crucial point that some of the market’s triumphs can disfigure or stunt the ability of its subjects to do much civic or moral thinking for themselves. Lest this latter notion strike readers as unduly radical, Satz emphasizes that it was forcefully argued by the intellectual hero of classical market economics: Adam Smith. Writing in The Wealth of Nations about the baleful impact of the industrial-age division of labor on a democratic citizenry, Smith observed that

The man whose whole life is spent in performing a few simple operations, of which the effects, too, are perhaps always the same…has no occasion to exert his understanding, or to exercise his invention, in finding out expedients for removing difficulties which never occur. He naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become…. [He is incapable] of forming any just judgment concerning many even of the ordinary duties of private life. Of the great and extensive interests of his country he is altogether incapable of judging.

As Satz notes, this trenchant appraisal of a worker’s diminished social and intellectual life demonstrates Smith’s belief that “the parties to certain kinds of exchanges are themselves partially constituted in the market.” For political economists of Smith’s persuasion, the preferences and capacities of agents in the labor market are not permanent, objective features of economic life; rather, in the voguish terminology of today, they are socially constructed, arrangements we create and that in turn shape us. What’s more, Satz writes, “these preferences and capacities are relevant to our assessment of markets: labor markets can have troubling social, cultural, and political effects precisely by shaping preferences and capacities…. In the labor market workers make not only pins and widgets, but they also make aspects of themselves.”

Satz argues that as economics became ever more divorced from public and moral questions, the discipline downplayed and eventually ignored altogether the civic worries of its Enlightenment founder. So-called marginalist economic thinkers—who stressed the gains of select productive inputs as decisive factors in economic growth—seemed to gloss over Smith’s anxieties about the qualitative damage wrought in workers’ lives by the industrial division of labor (as well as the allied critiques of the exploitation of labor advanced by nineteenth-century figures such as David Ricardo and Karl Marx). By the time the next pseudoscientific shift in economic thinking occurred—with the rising prestige of the now regnant “neoclassical” school, which views not simply business transactions but all of social life as a function of the rational pursuit of competitive advantage—its adherents came to regard the economic sphere as a sort of post-social utopia. “The economy is now viewed as an autonomous sphere of activity, independent of law, convention or power,” Satz writes. Under the neoclassical dispensation, “human wants and resources are taken as given; people are simply assumed to have certain ‘preferences’ or ‘endowments’ whose justice or nature is not relevant to the economic assessment of markets.” Put another way, the activity of workers as self-creating agents no longer provides the standard for judging the social value of a market; rather, the allegedly inherent efficiencies and values of the market now dictate not merely labor relations but social policy, global trade—even, increasingly, the charitable activities of nonprofit foundations. The cart precedes the horse.

In an effort to restore a rounder and more measured account of market relations and their moral fallout, Satz turns to contemporary egalitarian political theory and likewise finds it thin on compelling social specifics. Sizing up the argument of Ronald Dworkin, the New York University philosopher, for a sort of social welfare auction system designed to allocate more resources to citizens facing physical impairments, Satz notes that even Dworkin’s scheme rests heavily on market logic to develop remedies to inequalities that markets otherwise exacerbate. Markets “cannot tell us…what resources people are entitled to or what distributive outcomes are fair.” To develop a fuller sense of how to evaluate markets from the elusive Archimedean point outside the market system, Satz devotes the balance of her book to isolating the features of what she terms “noxious markets”—those that traffic in certain goods that can damage the moral agency or exploit the vulnerabilities of their trading partners, or that may create overly destructive personal or social costs. These markets, in Satz’s judgment, should be subject to a measure of public oversight and, in some cases, outright bans.

The controversial markets Satz highlights are familiar to students of ethical theory and, for that matter, news audiences: surrogacy arrangements (or markets in women’s reproductive labor); prostitution (or markets in—chiefly—women’s sexual labor); child labor; voluntary slavery (debt bondage, peonage, wage slavery); and the trade in human kidneys and other vital organs. Satz judges each market according to her understanding of its role in perpetuating certain social inequalities, and of broader perceptions about how women and children especially are segregated from fuller participation in public life. Her findings generally follow critically minded, small-d democratic policy choices: contract pregnancy is broadly untroubling, save for its reinforcement of the gender division of labor confining women to the role of child-rearing; voluntary slavery is both a contravention of human identity, as Rousseau famously argued—bartering away a right to self-determination and liberty that is constitutive of human nature—and an equally damaging (if more subtly destructive) social enormity. “Democratic societies depend on the ability of their citizens to operate as equals,” Satz writes. “This means not only that in such societies people have equal rights, but also that they see themselves as having equal basic rights, understand and act on the requirements of justice, and accept that they and others are self-authenticating sources of claims who do not need to ask permission to have and make demands” (italics in original).

Satz contends that voluntary slavery should be barred in democratic societies because it creates lousy citizens: “A servile person not only refuses to press his rights in certain cases, but does not see himself as having rights in the first place. Even when he is able to walk away from bondage his mind is unfree, shaped by a world in which others have always made decisions for him.” The qualitative issue of fathoming the rights inherent in contracted social arrangements vastly complicates the standard accounts of “state of nature”–style political theory, especially the asocial varieties favored by libertarian thinkers. Libertarians are unable to adduce any strong objection to voluntary slavery arrangements, Satz notes, as long as such dealings “were established by contract rather than by birth or conquest. Ironically, far from being the natural ideology for a capitalist society, libertarianism has difficulty representing capitalism as a moral advance over feudalism.”

Not all of Satz’s assessments are persuasive. In arguing for upholding some form of a ban on prostitution, she suggests that more open markets for sexual labor will continue to reinforce the sexual objectification of women, and that prostitution advances third-party harm to women as a class, perhaps even making sexual favors a more routine and explicit expectation for women in other labor markets. However, such objections seem just as likely to perpetuate sexualized stereotypes as to shield women from their noxious influence. A legalized corps of sex workers could, after all, unionize and create a working climate far more conducive to gender equality than the status quo—by eliminating pimps, for starters. Satz’s argument about the seepage of prostitution-based work into the female labor market at large seems to diminish the agency not merely of sex workers themselves but also of women employees—and even their male counterparts. Whatever else prostitution is, it’s not a viral condition that transfers semi-spontaneously in any setting where the genders meet. This argument also entirely overlooks federal protections against gender discrimination and sexual harassment on the job, which make the prospect of hooker-happy male employers seeking to attach sexual riders to existing work contracts seem quite remote indeed.

For all of her book’s shortcomings, Satz has sketched a vital new approach to assessing some well-worn case studies in ethical and political theory. It’s something of a jolt to realize how alien any sort of social criticism grounded in classical political economy now sounds to our market-addled ears. Yet Satz’s argument becomes curiously clipped whenever it turns to the moral impact of macroeconomic policy. In part this is a function of the comparatively narrow scope of what is at bottom a theoretical monograph: Satz isn’t trying so much to question the legitimacy of the many market compacts that now govern our lives as to revise the guiding terms and concepts of the contracts themselves.

In the conclusion of her book, Satz seems reluctant to apply her meditations on individually contracted market arrangements to a social world disfigured in many obvious ways by the ideology of the market. If individual noxious markets create bad or damaged political subjects, what are we to make of the far more powerful “innocuous” markets that profoundly circumscribe and distort our range of political choices and economic freedom? Satz does allow that, under her criteria, the market in mortgage derivatives that came close to toppling the economy in 2008 probably qualifies as a noxious market: it weakened the agency of mortgage holders by consigning them to third-party speculators, while creating “extreme harms” for borrowers outfitted with ballooning mortgage obligations they were no longer able to meet. But beyond pausing to note that “there are important regulatory lessons here,” Satz remains agnostic on practical measures to restrain or intensively regulate such markets. The best she can do is to issue a disclaimer about her reluctance “to endorse blanket prohibitions on markets that have troubling characteristics,” because “multiple factors” and “many values” figure into the appraisal of a market’s worth, and “the fact that a market is noxious does not tell us whether we should ban it or attempt to regulate it.”

Yet it’s hard to justify such guarded formulations under the terms of Satz’s own argument. It is, after all, an extremely daunting civic hardship to be plunged into long-term, ruinous debt of an investment bank’s devising—especially when the original underlying mortgage loan has been so choked with third-party claims and transaction costs that it can be impossible to determine the actual holder of the loan in question. Add in the doctrinaire budget antics of the austerity-minded right—which have already greatly hampered the prospects for a robust, equitable recovery under the difference-trimming centrist economic policies of the Obama White House—and it becomes plain that the market’s advocates are taking collective action to stunt the public’s access to collective goods, from affordable housing to education to job security. While it’s crucial to acknowledge, as Satz does, that economic contracts can produce significant harms to the contracting parties, and by extension to the moral tenor of our common life, the damage wrought in the 2008 meltdown has greatly diminished the life chances of many people while also drastically reconfiguring civic life at every level. The outcome of the 2008 crisis has been bizarre: because government revenues have been steeply reduced in a political climate that makes significant tax increases all but unthinkable, the contours of our morality and politics now conform to the market’s priorities even more closely than before. Amid such dismal conditions, what are the sorts of institutions and resources that an aggrieved public can pressure to craft remedies, particularly when political access in our formal democracy is routinely auctioned off to the highest bidder?

It’s not incumbent on Satz to offer a ready-made solution to this stubborn impasse of political imagination. But at the same time, the broader failure of moral and political thinkers to engage fully with the true, dispiriting scale of market sovereignty in our age is striking. Consider, by contrast, the intellectual labors of American thinkers in the wake of the last economic calamity, the 1929 crash. Edmund Wilson dedicated himself to chronicling the devastation of market failure in the United States (The American Jitters) as well as capitalism’s rival ideologies (To the Finland Station). Economic thinkers from John Maynard Keynes to Stuart Chase to Thurman Arnold envisioned a newly robust role for state programs to counteract the market’s worst, and least democratic, excesses. Cabinet members in the Roosevelt White House established a new regulatory playing field for the financial industry that helped stave off another enormous collapse—until 1999, when Congress foolishly repealed the foundation of that system as laid out in the Glass-Steagall Act. (That service was performed, naturally, at the behest of free-market ideologues in the Clinton White House such as Alan Greenspan, Robert Rubin and Lawrence Summers.) Especially as financial firms, with the compliance of a largely prostrate business press, attempt to undermine even the comparatively modest banking controls enacted under the so-called Volcker Rule in the Dodd-Frank Wall Street Reform and Consumer Protection Act, for Satz to sidestep such matters in a study of the market’s corrosive effect on social ethics feels very much like an effort to “change the subject” (to quote Satz herself on the marginalist economists’ attempts to gloss over the social problems raised by Smith and his fellow classical economists).

* * *

Much the same foreshortened social outlook constrains Sandel’s What Money Can’t Buy, the bulk of which is devoted to examining the same basic conundrums discussed by Satz, such as surrogacy contracts and kidney sales. But unlike Satz, Sandel stops short of making robust claims about the market’s role in shaping the worldviews and life chances of the individual selves bound up in a given contract. As a result, his account of market sovereignty in our time is much less analytically satisfying; while Satz at least sketches the spheres in which market values work to distort the social good, Sandel gestures toward arenas where market prerogatives “crowd out” moral concerns and calls for more sustained moral deliberation about the desirability of a given market outcome.

The problem with his analytic scheme is that it’s exceedingly vague. Who, exactly, are the deliberating subjects envisioned in Sandel’s account, and how will their reasoning be best positioned, institutionally and politically, to countermand the force of a market logic that has increasingly captured our public institutions as well as our moral sense? Sandel doesn’t really say. As Satz notes, it’s crucial to assess the full social-background conditions that shape the bargaining position of any contracting party in a proposed agreement; in prospective child-labor contracts, for instance, “if the background circumstances and options poor children and their parents face are unjust, the option chosen does not by some mysterious process suddenly become just.” If Satz is right in following Smith’s intuitions about the damage that the industrial division of labor does to the capacity of citizens to fathom, let alone deliberate over, the stuff of public morality, the basic terms of Sandel’s prescriptive account grow fuzzier still.

Sandel does offer some important insights about the actual limits of markets in generating new modes of moral reasoning and behavior. He notes, for example, that introducing cash incentives into traditionally nonmarket settings can pervert the intended social aims in play. In one well-known study—which Satz also cites—several Israeli daycare centers, hoping to encourage greater punctuality among their clients, instituted a schedule of fines for parents who showed up late to retrieve their children. Instead, Sandel notes, “late pickups actually increased” because the fines created a perverse sense of entitlement in a community that relied on social norms—shame being one—to regulate its own behavior. “Before, parents who came late felt guilty; they were imposing an inconvenience on the teachers. Now parents considered a late pickup as a service for which they were willing to pay. They treated the fine as if it were a fee.”

At the other end of the spectrum, people can react harshly to offers of cash designed to alter their behaviors or political preferences, viewing them as an insult to their civic honor. In 1993 the residents of the Swiss town of Wolfenschiessen were narrowly in favor of a scheduled referendum to build a nuclear waste facility nearby. A group of economists decided that they could generate still greater support for the plan by extending a monetary offer to each adult citizen endorsing the referendum proposal. Instead, Sandel notes, local support for the plan “went down, not up. Adding the financial inducement cut the rate of acceptance in half, from 51 percent to 25 percent…. What’s more, upping the ante didn’t help. When the economists increased the monetary offer, the result was unchanged. The residents stood firm even when offered yearly cash payments as high as $8,700 per person, well in excess of the median monthly income.”

Sandel also surveys a host of more informal social relations that appear to lose their inherent meaning the more they are conscripted into the market’s cash nexus: fee-based services for wedding toasts and for line-standing surrogates at Congressional hearings and public events; markets in athletes’ autographs; cash incentives to induce adults to stop smoking, or children to read more books. There’s something discomfiting about many of these examples (though speaking as a member of a family with a generally lousy track record in gift-giving, I don’t share Sandel’s seeming aversion to gift cards and holiday checks), but they don’t approach the more dire level of “crowding out” moral concerns. I might find someone else’s purchased wedding toast crass, or the money-for-reading scheme self-defeating when it comes to cultivating truly engaged and motivated readers, but that’s not likely to stop me from composing my own wedding toast or promoting the act of reading as a self-rewarding virtue.

* * *

Sandel devotes the final chapter of What Money Can’t Buy to the excesses of corporate sponsorship in sports, whereby professional teams not only lease out the naming rights to their stadiums but also pimp out broadcasting calls of individual plays to advertisers, as in the “AT&T call to the bullpen” and “Safe at home. Safe and secure. New York Life.” This is all plenty irksome, as is the proliferation of advertising spots in schools and on airplanes, two other trends that Sandel laments at considerable length. More irksome still is the staggering degree of communitarian significance Sandel grants to national sporting contests: “From Yankee Stadium in New York to Candlestick Park in San Francisco, sports stadiums are the cathedrals of our civic religion, public spaces that gather people from different walks of life in rituals of loss and hope, profanity and prayer.” Something truly irreplaceable is lost, Sandel argues, when this sacred space gets profaned by commerce: “As stadiums become less like landmarks and more like billboards, their public character fades. So, perhaps, do the social bonds and civic sentiments they inspire.”

Not to put too fine a point on things, but this argument is deeply misguided, and not only because sports fandom is far from reverent and civic-minded when in the throes of hard-fought regional rivalries and post-season battles. Major League Baseball—the sport that Sandel plainly reveres most—has been beset throughout its history with corrupt practices and scandals, be it the 1919 “Black Sox” World Series, Pete Rose’s history of gambling on the game while still in uniform in the 1980s, or the steroid scandals of our own age. The most fabled hitter of the sport’s early golden age, Ty Cobb, once beat a fan senseless at the Polo Grounds and, by some accounts, may even have killed a man. No less corrupt is baseball’s ownership structure; it enjoys an antitrust exemption pretty much without precedent in the annals of the American regulatory state, largely on the basis of the same sepia-toned appeal to its exceptional nature as our national pastime that Sandel evokes. The sport’s commissioner, Bud Selig, is the former owner of the Milwaukee Brewers, whose MVP outfielder, Ryan Braun, narrowly escaped a long-term suspension for doping by pillorying the character of the low-level MLB testing official who handled his urine sample—while never contesting the actual findings of his drug test. To assert, at this late date, that the moral fiber of the national pastime is being corrupted by the money culture demonstrates precious little understanding of the pastime or culture in question.

Sandel is so besotted with what he imagines as the higher nobilities of baseball that he uses Sabermetrics, the statistical analysis of player performance popularized in Michael Lewis’s 2003 book Moneyball (and by the recent Brad Pitt film version), as the crowning metaphor for the infiltration of commercial values into every last crevice of our common life. This strained comparison misses the fundamental point of moneyball: it was a strategy born of economic necessity, to improve the standing of a small-market team unable to retain marquee talent amid the competitive rigors of free agency. Moneyball, in other words, was a savvy end run around the very economic distortions of the sporting market bemoaned by Sandel in the balance of his chapter. What’s more striking, however, is that Sandel seizes on the moneyball experiment to levy a mild critique of the social philosophy of Larry Summers, the former Council of Economic Advisers chair, treasury secretary and Harvard president (“my friend and colleague,” Sandel sunnily discloses). Summers, Sandel reasons, embraced moneyball as an all-purpose symbol for the wonders being worked by fast-calculating numbers wizards throughout the economy, be they environmental regulators, political campaign strategists or derivatives traders. “Here, just four years before the financial crisis, was the market triumphalist faith—the moneyball faith—on bold display,” Sandel writes. “As events would show, it didn’t turn out well—not for the economy and not for the Oakland Athletics,” the first team to capitalize on the moneyball stratagem.

But the far more telling example of our market-addled social order is not the symbolic use that Larry Summers makes of recent trends in baseball scouting; it is, in fact, the career of Larry Summers himself, a veritable Where’s Waldo figure of latter-day financial calamity whose dismal track record is dwarfed only by his inexplicable capacity for failing ever upward. As treasury secretary under Bill Clinton, Summers lobbied hard for the repeal of Glass-Steagall; as president of Harvard, he sent the institution’s portfolio into free fall on a series of disastrous hedge-fund and derivatives trades. Summers even has a cameo in Satz’s book, where he is found pitching a scheme to market toxic-waste sites to cash-strapped countries in the developing world—on moral grounds, naturally. Whereas Satz has awkwardly sidestepped the real moral and economic legacies of the 2008 meltdown, Sandel subsumes them into a gauzy communitarian sermon on the endangered “social bonds and civic sentiments” of the sporting world—and indicts one of the worst actors in the financial crisis chiefly on the grounds of his sporting sympathies. Using much the same wrong-end-of-the-telescope methodology, Sandel elsewhere assails a sponsorship deal that the lifeguards of Orange County, California, struck with Chevy in order to procure a fleet of forty-two beach-worthy pickup trucks, but without bothering to note the reason Orange County was hard up for cash: in the mid-1990s, it became the first major US municipality to be bankrupted by derivatives.

The incursions of commerce into the traditionally private, affective and civic spheres of our world are indeed risible, but disturbing all the same. Yet in an era of stupendous, unpunished financial crime, it’s hard to believe that our most serious moral ills stem from an epidemic of gift cards and corporate-sponsored stadiums. Civic engagement, like a dead fish, rots from the head down. To start reckoning with the real moral limits of markets, we need to make some sharper moral choices about the kind of behavior our economy routinely rewards. And this means, in turn, that our moral philosophers will have to do a lot more by way of thinking through the messy background of their test cases—and in the process, be willing to offend some of their gracious friends and colleagues. We have a long way to go before that happens. But then again, I don’t have to tell you things are bad. n

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