Book Review: What Money Can't Buy

This is going to be an unusual book review. I don't think I've ever read a book before where I simultaneously disagreed with almost everything the author wrote and still thought that the book was a good read. But that was the case for What Money Can't Buy, by Michael Sandel. The subtitle is "The moral limits of markets", and Sandel essentially spends 203 pages trying to convince the reader that market reasoning has gone too far. Take this quote from the introduction:

The most fateful change that unfolded during the past three decades was not an increase in greed. It was the expansion of markets, and of market values, into spheres of life where they don't belong.

Sandel sees two main objections to the expansion of markets: (1) fairness; and (2) corruption. He provides a useful example of the market for prostitution services that illustrates both objections:

Some people oppose prostitution on the grounds that it is rarely, if ever, truly voluntary. They argue that those who sell their bodies for sex are typically coerced, whether by poverty, drug addiction, or the threat of violence. This is a version of the fairness objection. But others object to prostitution on the grounds that it is degrading to women, whether or not they are forced into it. According to this argument, prostitution is a form of corruption that demeans women and promotes bad attitudes toward sex. The degradation objection doesn't depend on tainted consent; it would condemn prostitution even in a society without poverty, even in cases of upscale prostitutes who liked the work and freely chose it.

The book collects many examples of where market reasoning has gone wrong, such as the case (reported in Uri Gneezy's The Why Axis, which I reviewed back in 2015) of the Israeli childcare centre that began fining parents for late pickups of their children, only to see the number of pickups increase. When we increase the cost of something, we usually expect less of it to happen, but in this case placing a price on late pickups undermined the moral incentives for parents to pick up their children on time, essentially enabling them to avoid the moral consequences with a small payment. I was also interested that Sandel included several examples that I have blogged about before, including a market for refugee obligations, and farming or licensed hunting of endangered species to save them.

Sandel does make a strong case for why economists need to understand some moral psychology, and importantly how the impact that creation of new markets or prices where they previously did not exist will interact with previous norms and expectations (as in the childcare example) to lead to unintended consequences. However, despite the impression that Sandel gives, economists do not routinely ignore unintended consequences. In fact, as one example, unintended consequences are a recurring theme on this blog.

I was also surprised that Sandel didn't mention at all the important work of Karl Polanyi, in particular The Great Transformation, where Polanyi makes the point that the domain of markets is socially determined. Perhaps Sandel prefers that the social determination of markets has already happened, some time in the past rather than recently, and that the domain of markets cannot be further refined over time?

Similarly, in spite of the number of objections to market reasoning that Sandel provides, he fails to engage with some of the most compelling reasons for markets, one of which is transparency. To draw on one of the examples that Sandel himself uses, an open market for bribery would at least provide citizens with information on bribe-recipients and bribe-givers, where those transactions behind closed doors are much more insidious. Of course, neither Sandel nor I are suggesting that a market for bribery would be a good thing, but price transparency is one virtue of markets that Sandel overlooks.

In the last two sections of the book, Sandel rails against the rampant commercialisation of modern times, including secondary markets for life insurance, naming rights on stadiums, markets for sports memorabilia, and so on. Those two sections are much less convincing and, while the whole book is quite moralistic, I found these sections to be far too 'small-c' conservative for my tastes. While the first sections of the book were quite thought-provoking, and prompted me to re-examine some of my assumptions about the primacy of markets, these later sections struck me as the philosophical equivalent of an old man shouting at the neighbourhood youngsters to "Get off my lawn!". Just because some market innovations have been negative, that doesn't mean that all market innovations are to be resisted.

This is certainly a book that will make you think. I really enjoyed the mix of examples that Sandel uses to illustrate his points, even though I didn't agree with him in most cases. Whether you are a market evangelist or a market sceptic, I suspect there is something of value in this book for all. Highly recommended!