Markets can be morally corrosive, yet research suggests they may also foster important civic skills. How can we balance markets and morals? (More)

Markets and Morals, Part III: Corruption, Inequality, Idolatry, and Informality (Non-Cynical Saturday)

This week Morning Feature considers the recent Boston Review Forum on markets and morality. Thursday we began with Michael Sandel’s essay on the moral limits of markets. Yesterday we examined rebuttals by Matt Welch, Herbert Gintis, and John Tomasi. Today we conclude with essays on social value and inequality.

Elizabeth Anderson is a professor of philosophy and women’s studies at the University of Michigan, and the author of The Imperative of Integration. Debra Satz is the director of the Center for Ethics in Society at Stanford University and the author of Why Some Things Should Not Be for Sale: The Moral Limits of Markets. Anita Allen is a professor of law and philosophy at the University of Pennsylvania and the author of Unpopular Privacy: What Must We Hide?. Lew Daly is the director of the Sustainable Progress Initiative at Demos and the author of God’s Economy: Faith-Based Initiatives and the Caring State. Samuel Bowles is a researcher at the Santa Fe Institute and the author of The New Economics of Inequality and Redistribution. Richard Sennett is a professor of sociology at New York University and the London School of Economics, and is the author of Together: The Rituals, Pleasures, and Politics of Cooperation.

Corruption and Inequality

In her essay, Elizabeth Anderson amplifies Dr. Sandel’s thesis that markets can corrupt some goods and services. She distinguishes two forms: constitutive corruption, where the value of the good or service is at least partly a reflection of the reasons and motives for offering it (such as a wedding toast or a gift); and instrumental corruption, where the market creates an incentive to compromise quality or unnecessarily inflate the price of the good or service. She also proposes other motivations beyond the scale of self-interest-versus-altruism, such as trust, reciprocity, solidarity, and professionalism. “From a domestic policy perspective,” she writes, “concerns about corruption arise most seriously in education, health care, and criminal justice.”

Dr. Anderson proposes that market-driven, high-stakes testing creates instrumental corruption in education, by encouraging teachers to “teach to the test” and ignore educational objectives that cannot be measured and incentivized. The constitutive corruption here is not the crowding out of altruism, but of professionalism. She makes a similar argument about Taylorized medical practice standards. But her most compelling case is criminal justice:

The rise of for-profit prisons has even more ominous implications. The private prison industry was secretly involved in drafting Arizona’s harsh anti-immigrant law to boost demand for its immigrant detention centers. The Corrections Corporation of America has offered to help relieve the fiscal crises of 48 states by buying their prisons—provided the states sign a contract to keep them 90 percent full for the next twenty years, regardless of the crime rate.

Debra Satz’s essay acknowledges the issue of corruption but argues that the public policy focus should be on inequality. We may agree that a paid-for wedding toast is tasteless and boorish, she writes, “but that hardly seems a reason for not allowing people to perform them. In a liberal society, we give people the right to be crude.” She continues:

Indeed, the central debates in our society today about the place of the market – debates about health care, education, and political influence – do not so much raise questions about the meaning of these specific goods as about inequality.

I agree that inequality is an important moral issue for progressives. But we should remember that Jonathan Haidt’s research implies the moral corruption of motivations, irrespective of inequality, may well be an equally important moral issue for others.

Incentives and Idolatry

Anita Allen’s essay asks if offering cash incentives for “good” behaviors may reinforce negative stereotypes about African Americans:

It would be hard to object to monetary incentives if they significantly increased the donor pool for life-saving tissues. But there is an argument to be made that inducing African Americans with cash promotes the stereotype that our community is not only needy but also especially materialistic. The more we are offered money for ethically and socially desirable behaviors, the more we could come to expect it, erecting a what’s-in-it-for-me cultural norm on the ashes of the unselfish morality that spirited the civil rights movement.

She also notes that the empirical evidence for cash incentives is weaker than we imagine, citing a year-long pilot project in New York City that offered students up to $500 per year for regular attendance and good grades, and their parents up $200 a month for holding a full-time job, having health insurance, attending school conferences, and getting their children to school. That sounds like it should work, yet the data showed students who were offered the incentives did no better or worse than the other students in their classes.

Lew Daly’s essay expresses his concerns that many Americans have conflated markets with religion:

Sandel sees a world in which markets increasingly “corrupt, dissolve, or displace nonmarket norms,” that is, the expectations, customs, and interdictions that shape a common moral life and provide a moral structure for the common good. But his spatial metaphor of “crowding out” obscures the true depths of market corruption. When Goldman Sachs’s Lloyd Blankfein can even try to defend what he does as “God’s work,” the problem is not a crowding out of morals but their transvaluation: making money, formerly an exclusive realm of cosmic evil (or at least a cause of crippling moral diseases among the affluent), is now “doing God’s work.”

Daly argues that conservatives’ strengthened commitment to markets-only solutions – despite the 2008 Wall Street collapse – shows that “free markets” are no longer an economic theory but have instead become a matter of faith.

Social Value and Informality

Yet as Samuel Bowles writes, there is also evidence that market economies can foster important civic virtues:

More than two centuries ago, the royalist Edmund Burke warned of an “age … of sophisters, economists, and calculators” and after him Karl Marx of a “time of general corruption, of universal venality” when everything “passed into commerce.” Had they been right, liberal, market-based society would have been doomed, for even market enthusiasts know that social institutions – including markets – cannot function if people are the amoral and self-interested calculators of blackboard economics.

But that is not what happened. Markets have held their longest sway in Europe west of the Elbe and north of the Tiber and the Pyrenees, areas distinguished by their vibrant civic culture when compared to those with more short-lived exposure to markets, including the former Communist Party-ruled nations. The United States, readers will be surprised to know, is not far behind northwestern Europe in both survey and experimental measures of generosity, civic engagement, and interpersonal trust.

Dr. Bowles cites a study using economic behavior games that showed more positive civic behavior among subjects in long-time market economies as compared to other cultures.

So how do we balance the virtues of markets with our other moral values?

Richard Sennett proposes that one key may be the informality – person-to-person contact of the sort we call Fred Whispering – that arises from greater focus on bottom-up rather than top-down problem solving. After explaining how Scandinavian countries allow local communities to allocate their shares of central state funds, Dr. Sennett writes:

Does this Scandinavian social model have any value to us? I think it does. It means, partly, a re-balancing of attention on the left: greater engagement with local issues, less obsession with national politics and politicians. Revival of the social element in socialism means embracing what the community organizer Saul Alinsky called the “mess” of local action—the fractures, adaptations, and ambiguities that inevitably result from personal encounters. Those dour Scandinavians have made a cultural virtue of this. They stress listening carefully and showing respect for the opinions of others, no matter how confused, rather than engaging in the “fetish” of assertion, as the philosopher Bernard Williams described it.

Informality in social relations is great social glue; water-cooler conversations, street-corner gossip, and illuminating chance encounters can bind us to other people as formal rules might not. Yet social science has largely neglected the study of informality, with consequences of a political sort. The think tank, spewing out clear policy, belongs to the top-down realm. In its precision of argument, it speaks the language of command. Restoring the social element to the left means honoring the mess of informality, countering the fetish of making killer assertions. If this happens, then a space opens up for the sort of participation that consists in finding out what to do together, rather than being “guided” by someone else’s version of truth.

Dr. Sennett concludes that “an open, local, informal sociability” – talking together about solutions to specific, concrete problems rather than exchanging talking points about idealized, abstract systems – “should be the left’s goal in countering this deadly as well as dismal science.”

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Happy Saturday!