Thursday, May 31, 2012

For those of you who get queasy during economics class

Economists are really good at figuring out the consequences of various policies, like selling pollution permits.  By placing a price on pollution, you also create an incentive to reduce it.  If the policy goal is less pollution, this is one of the best ways to reach it.

This kind of analysis leads naturally to the moral ethic of consequentialism, where a policy is judged "good" if its consequences are good, i.e., the ends justify the means.

So why does this rub so many people the wrong way?  Perhaps the biggest objection to consequentialism is that by using markets to allocate goods and services, we turn personal relationships based on love or affection into arms-length commercial relationships based on the pursuit of profit.  Philosophers call this "commodification."

This can make a difference if, for example, the "means" of trading pollution permits, changes how we feel about the "ends" of reducing pollution.  Specifically, by allowing people to trade pollution permits, we may reduce the stigma of pollution, and make it more acceptable.

So, if some of you get queasy during economic class, you are not alone:
What Money Can’t Buy – which must surely be one of the most important exercises in public philosophy in many years – examines a wide variety of cases in which goods that in the past were believed to be outside the market have been turned into commodities. Surrogate motherhood, paying others to queue for you to attend a Supreme Court hearing, buying the right to immigrate into a country or shoot endangered wildlife, purchasing the insurance policies of ailing and elderly people to collect death benefits and charging fees for a better class of prison cell are just a few of the examples that Sandel deals with.

The problem with this critique, of course, is that we need something to replace economic relationships. And, as the author points out, a highly pluralistic society such as ours, there is not much consensus on the content of the good life. As a result, there is little prospect of agreement on the moral limits of the market. Sandel points out: “We disagree about the norms appropriate to many of the domains that markets have invaded.”

This reminds me of something that Winston Churchill would have said, "markets are the worst way to allocate goods and services, except for every other method that has been tried."

HT:  Daniel C.


  1. This comment has been removed by a blog administrator.

  2. Commodification in its purest sense should make us queasy, in my opinion. However, I can't help but feel a bit queasy when I think of how this would be measured or policed as I'm certain it would be by the over-reaching arm of our federal government.

  3. Prescribing any single morality is obviously difficult. But can't even consequentialists disagree over how to evaluate the same consequences? Different actuaries will estimate different values for a single person's life. Certainly money isn't everything, or more rich people would be happier and some of the happiest people on earth wouldn't be the same people who have taken vows of poverty. Maybe we should all be consequentialists, but just because it's hard to figure out what consequences to measure, doesn't mean we shouldn't try to identify and quantify them.

  4. I believe that consequentialism can be a good thing in society but that problem is we all have a different opinion on what is deemed "good". A policy maybe "good" for one group of people but could be determental to another group. It is in the eye of the beholder. As far as commodification, we have a free market in the US and if there is money to made off an opportunity, someone will do it. I don't think there is anything wrong with commodification if you feel what you are doing is morally right.

  5. As I was reading this post, the first example that popped in my head was that of the Asian Carp that are invading the Mississippi River Watershed. To make a long story short, this invasive species is out-competing native species and causing populations of desirable fish to drop. The Asian Carp is now knocking on the door of the Great Lakes, and it could devastate that ecosystem. A few years ago, an entrepreneur wanted federal grant money to open up a processing plant specifically for these fish. His plan was to solve the carp problem by turning them into dog food and/or freeze drying them and sending them to China, where the meat is considered a delicacy. In the end he was denied the grant money because the government was worried that if an industry was created for the fish then the fisherman would want the fish to thrive and not reduce the population back to manageable levels. In short, the government feared the commodification of the invasive Asian Carp.