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What Money Can’t Buy: The Moral Limits of Markets, by Michael Sandel, Allen Lane RRP£20/Farrar, Straus and Giroux RRP$27, 256 pages
How Much is Enough? The Love of Money, and the Case for the Good Life, by Robert and Edward Skidelsky, Allen Lane RRP£20/Other Press, RRP$24.95, 256 pages
The economic collapse that followed the credit boom has sometimes felt like a marital betrayal. Here was a system, and an economic philosophy to underpin it, that was supposed to make us happy. For a while it did. Now, as financially pumped growth and ever-increasing house prices recede into memory, we realise what fools we were. Like the faithful spouse ignoring the warnings of friends, we wanted to believe in what, with the benefit of hindsight, could not be.
Sadder but wiser, we can now decide between giving the system another chance or leaving it behind in search of a better match. It is a choice that does not map conveniently on to the two main populist forces of the moment: the Tea Party and Occupy movements. Their different political hues, and those of their European equivalents, obscure the same underlying grievance. The Tea Party blames the government; Occupy blames big business. But ask a Tea Party supporter about his Medicare health benefits and he is not as opposed to government as he thinks. Nor can the Occupiers be described as revolutionaries. Their demands – for jobs and for more taxes on the rich and corporations – fall rather short of class warfare. In an op-ed article for this newspaper, Occupy London members quoted Hayek rather than Marx.
Few in either camp offer a radical critique. They agree that people have been cheated of what they deserve, even if they disagree on who deserves what. Their objection to contemporary capitalism is a materialistic one: that it falls short of its promise to create prosperity for all. They want that promise kept, not abandoned.
From that perspective, the main question must be how markets can yield the fairer outcomes we have been led to expect. Some recent studies – Finance and the Good Society by the Yale finance professor Robert Shiller, and Free Market Fairness by John Tomasi, a political philosopher at Brown University, being two notable examples – adopt just this approach. But what if the biggest problem is not capitalism’s failure to deliver on its promise but the promise itself?
In that case, the changes we need go far beyond tweaking economic incentives. Two new books that enter these darker waters and question the axioms of market capitalism are Michael Sandel’s What Money Can’t Buy and Robert and Edward Skidelsky’s How Much Is Enough?. Both want us to see our romance with capitalism as a Faustian bargain. The warning is that giving free rein to markets, even if they do deliver the material goods, comes at the cost of giving up a part of our soul.
For Sandel, a political philosopher at Harvard, we have “drifted from having a market economy to being a market society” – by which he means that we increasingly treat the important things in life merely as commodities available for purchase and sale. For Robert Skidelsky, the economic historian known for his biography of John Maynard Keynes, and his son Edward, an academic philosopher, the problem is material insatiability. The incessant quest for more – higher incomes, faster growth – is robbing us of the good life rather than helping us attain it. Both books argue that the faith in markets has surreptitiously undermined the things we care, or should care, most about.
Nobody would accuse either Sandel or the Skidelskys of being revolutionaries. They do not condemn capitalism and markets as such. But they are radicals in the true sense of the word: they ask us to rethink our view of markets to the roots. Indeed, they are more cogently radical than most avowed anti-capitalists. Their warning, which is reason enough to read both books, is that our ability – individual and collective – to pursue valuable lives has been undermined because a certain form of political philosophy, and in particular the influence of contemporary economic thinking, has numbed our understanding of what the good life is.
Both books set out their stall by drawing attention to different but equally startling sets of facts – facts that are obvious once you think about them. However, the problem is precisely that we do not think about them anywhere near enough.
The Skidelskys begin with “Keynes’s mistake” – such a clever argumentative springboard that I am surprised it has not, to my knowledge, been used before in this way. This is the Keynes not of the General Theory but of “Economic Possibilities for Our Grandchildren”, the 1930 essay that imagined the world liberal capitalism could produce a century hence. Keynes forecast a four- to eight-fold increase in the standard of living, which would put “the economic problem ... within sight of solution”. More concretely, this would mean being able to “satisfy our needs without having to work more than three hours a day. The possibility ... was that we would learn to use our extra leisure to live ‘wisely and agreeably and well’. ”
Keynes was spot-on about per capita economic growth, which averages 400 per cent across rich countries since he made the forecast. For hours worked, he missed the mark completely. People do work less than before, of course, but we are nowhere near swapping the nine-to-five for lives dominated by leisure.
This much is obvious. What is not obvious is why Keynes’ vision of society has not been realised, even though economic conditions now allow for it. As the Skidelskys’ title makes clear, they blame an obsession with growth. But that does not seem quite right. Productivity growth does not itself hinder the good life they advocate, nor policies to make it more attainable. The problem, as the authors admit, is the one lamented by moralists through the ages: seeing acquisitiveness not as a means to the good life but as an end in itself.
Sandel has no quarrel with growth; what worries him is commercialisation. As market norms encroach upon ever more extensive fields of human activity, more and more things are valued as if they were items to be priced. Sandel’s battery of facts is a freak show of commercial transactions that until recently would have been unheard of. For example, audience places to congressional hearings are allocated on a first-come-first-serve basis. But professional line-standing companies will hire someone to queue for you for what can be long hours of waiting overnight and outdoors. For a fee, lobbyists can then arrive shortly before a hearing starts and crowd the public audience seats.
What Money Can’t Buy is replete with examples of what money can, in fact, buy. South Africa allows sales of limited permits to shoot endangered black rhinoceros (which, defenders argue, gives landowners incentives to protect the species). In the viaticals and “life settlement” industries, investors buy the life insurance policies of the sick and elderly in the hope that they will die sooner rather than later. Investment banks are busy bundling such policies into securities known as “death bonds”. Sandel parades before our eyes the corporate-sponsored baseball commentary (“AT&T call to the bullpen”), the ticket tout market for papal masses, and the lady who had a casino’s website tattooed to her forehead for $10,000.
Coming from a lesser thinker or weaker writer, this would sound like an old man’s complaints that things are not the way they used to be. But Sandel has a genius for showing why such changes are deeply important – and why economists are wrong to be irritated by what they see as irrational opposition to market solutions.
Take the good of friendship, he offers. Suppose you are feeling lonely but you have money to spare. Why not pay for company? The answer, of course, is that while you can pay someone to do the things friends often do – come over for dinner, take care of the cat, listen to your love problems – that would not make the person your friend. On the contrary, doing such things in order to be paid is incompatible with being a friend. If it is bought, it is not friendship.
In the case of friendship, we can all see that the commercialisation of a relationship turns it into something else. Sandel’s point is that this may be true of many other things we value. Treating something as a good to be bought and sold for a price can corrupt its non-commercial meaning. A proposal by the law and economics scholar Richard Posner to let adoptive parents bid for the most popular adoptees (which was not implemented) would have demeaned the proper way of valuing children, as persons worthy of love and care. A plan to let people pay to jump the queue for the free tickets to New York’s Shakespeare in the Park (which was) degraded the event’s former meaning as a gift from the city to itself.
One may agree or disagree, depending on the case. What is striking, and what the Skidelskys also show, is how tone-deaf conventional economic thinking often is to reflections about value. No doubt this derives from the authors’ own experience with economists imperialistically wielding their method of social analysis and intellectually bamboozling policymakers.
Two questions remain unanswered, and they are huge. What to do? And what to do now – when people smarting from austerity can be forgiven for not seeing too much materialism as their main problem?
The Skidelskys make proposals whose lack of originality is no flaw. They advocate a universal basic income, consumption taxes and restraints on advertising. These are sensible enough policy ideas. But they seem inadequate as a response to “Keynes’s mistake”. After all, current policies do not hinder many of us from working less, contenting ourselves with “enough” and cultivating the good life. The problem is surely at least as much with our own attitudes as with public policy.
Sandel’s approach is more promising for being more modest. He calls merely for a willingness to discuss how we ought to value things. This is subtly different (though he may disagree) from choosing policies based on an idea of the good life. The dominant political and economic thinking may well now tell us that policy should not push any specific conception of how people ought to live their lives, only respect individuals’ rights and preferences. But that still leaves people free – indeed, it requires them – to exercise value judgments about what sort of life is most worth living. If they choose lives that seem morally impoverished, this is a problem that must be addressed through deliberation and education as much as by policy.
This is the best spirit in which to read these two books. It is also one that is less confrontational with respect to economics. I am not as convinced as these authors seem to be that market thinking is an enemy of value. Good economists seek to respect the values of individuals. They can be made to realise, and correct, some of the unwarranted implicit value judgments economic models often make. No doubt both Sandel and the Skidelskys are right that free-market economics has fallen short in realising what we truly value. But that is not a task from which economics should be excluded, but rather one in which we should enlist its help the better to achieve.
Martin Sandbu is the FT’s economics leader writer and author of ‘Just Business: Arguments in Business Ethics’ (Prentice Hall)