The state is a bigger threat than the market

Contemporary views on the proper relationship between the market economy and the state can be divided into two broad types. Critics typically denounce rampant consumerism for fostering greed, corrupting people’s values, corroding communities and widening inequality.

In contrast, supporters of the market tend to be pragmatic. They rarely make a concerted effort to defend the market system on moral grounds. Instead they generally support it on the basis that it works far better than any other viable alternative.

Admittedly, there is a small minority of free marketeers who occasionally put their case in terms of individual freedom. From this perspective, people should be free to make the particular consumer choices they desire.

Michael Sandel, a professor of philosophy at Harvard and well-known media figure, is keen to subject the question of the moral limits to markets to public debate. Rather than exist in their own separate worlds, the proponents of different views on the market, the one moral and the other pragmatic, should engage in a proper democratic dialogue with each other.

Sandel is careful to avoid drawing the line himself. Instead, his concern is that important choices should be made consciously, through democratic dialogue, rather than happen by default.

His book What Money Can’t Buy: The Moral Limits of Markets emphasises that it is not a critique of the market economy. Sandel is not arguing for a socialist or any other alternative to the market. Instead, his concern is the emergence of a market society. For Sandel, this primarily means a society in which market-based values are corroding traditional notions of altruism and community.

He claims that for the past three decades or so, market values have come to play a central role in American life. He discusses many examples, including the commercial sponsorship of sports teams, initiatives to pay children to get good grades at school, and the emergence of a market in second-hand life insurance policies.

Future developments include the possibility of the emergence of a commercial trade in human organs. Critics argue that under such a system, it would be possible for the rich to use their economic power to coerce the poor to donate body parts.

Sandel agrees that, beyond a certain point, it is necessary to curb markets. He argues that unfettered markets lead to the widening of inequality as they allow the rich, sometimes literally, to jump the queue in the competition for scarce resources. This can mean paying a premium to use a fast lane through airport security or purchasing an organ that a poor person needs more urgently.

The ultimate effect of allowing excessively free markets is social corrosion, or what Sandel sometimes calls ‘skyboxification’. This reference has nothing to do with the British satellite TV company set up by Rupert Murdoch. Instead, it refers to the practice of allowing the wealthy to pay for corporate boxes, or ‘skyboxes’, at American sports grounds.

For Sandel, the skyboxification of sport is a good metaphor for what has happened to American society. The rich increasingly live separate lives from everyone else. They have little social contact with their poorer compatriots.

Although several of Sandel’s key arguments are open to question, he does make some good points. His linking of the prevalence of market ideas with non-judgmentalism – the idea that no one has a right to make moral judgments about anyone else – is interesting. If decisions in market societies are made on purely pragmatic grounds, then there is little room for moral reasoning.

Similarly, his insistence that important social questions should be the subject of public debate is welcome. It is all too common nowadays for decisions to be made away from the public gaze. Not so much in smoke-filled rooms, as sometimes happened in the past, but in smokeless rooms full of faceless functionaries. Sandel should be commended for opposing this technocratic approach.

But whereas What Money Can’t Buy has some welcome strengths, it also has serious weaknesses. For a start Sandel confuses market triumphalism with the idea that there is no alternative to the market.

He is wrong to argue that contemporary supporters of the market are in anyway triumphalist. If such triumphalism existed, it was for a brief moment at about the time of the collapse of the Berlin Wall in 1989. Contemporary politicians, including conservatives, tend to be riddled with doubt about the market. As I have argued many times in recent years, they see it as damaging the environment, causing unhappiness, promoting rampant greed and leading to damaging forms of inequality.

Indeed, Sandel himself can be seen as part of this romantic anti-capitalist tradition. He sees no alternative to the market economy, but at the same time laments all the problems he sees it causing. His solution is simply to curb the market’s excesses.

As it happens, Sandel exaggerates the structural changes that capitalism has undergone over the past 30 years. Certainly in relation to the economy in aggregate, admittedly not the focus of Sandel’s book, the extent of state intervention has changed relatively little.

But even in relation to the market encroaching on what were previously largely public services, he could have investigated further. For example, the question of whether it is right to pay children to get good grades raises interesting philosophical questions but it is relatively uncommon. In contrast, there is a big drive to privatise education by introducing private providers such as charter schools. There is also a big debate to be had about the impact of state initiatives in education such as the No Child Left Behind Act of 2001.

Indeed, the biggest weakness of Sandel’s analysis is his apparent blindness to the harm the state can cause. Just as the market can distort human relationships, so can the state. Its role in regulating the lives of individuals has become so large and pernicious that it has, in many cases, become the more proximate threat.

Take sports grounds as an example, since Sandel makes so much of corporate sponsorship and skyboxification. In many ways, sports grounds have also become a microcosm for state intervention in individual affairs.

In British football grounds, for instance, both crowds and players are nowadays subject to severe sanctions should they make remarks others deem offensive. There are also tight regulations on, among other things, who can enter the ground, what they can drink and what they can carry.

Such intrusions on personal freedom have in many ways sanitised the game. Spectators know stewards, CCTV and the police are constantly monitoring them. Such measures go far beyond the matters of consumer choice that preoccupy free marketeers.

Yet Sandel’s call for the imposition of tighter moral limits on markets is essentially a demand for more state regulation – as if there is not enough monitoring, surveillance and control already. His simple model of a highly corrosive market that should be curbed by an apparently benign state studiously avoids this problem.

His failure to recognise such intervention as at least a potentially serious problem is a particularly peculiar omission for a political philosopher. The role of the state is central to many of his concerns, such as the dangers of social corrosion. Yet it remains signally absent from the book.

Daniel Ben-Ami is a journalist and author based in London. Visit his website here. An expanded version of latest book, Ferraris For All: In Defence of Economic Progress, is published by Policy Press. (Buy this book from Amazon (UK).)