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Review: What Money Can't Buy by Michael Sandel

Treating everything as a commodity ruins the moral fabric of society.

What Money Can't Buy: the Moral Limits of Markets
Michael Sandel
Allen Lane, 256pp, £20

At the Kyoto conference on global warming in 1997, the US demanded that any mandatory worldwide emissions standards include a trading scheme allowing countries to buy and sell the right to pollute. Arguing against the scheme in the New York Times, the political philosopher Michael Sandel suggested that letting countries buy the right to pollute was like letting people pay to litter. If rich countries could buy their way out of the duty to reduce their emissions, the sense of common sacrifice necessary to build global co-operation in future would be undermined. We should aim to strengthen the stigma attached to despoiling the planet, he argued. Treating pollution as a commodity was bound to diminish the role of morality in dealing with environmental problems.

The response to the article was scathing. The newspaper was swamped with letters from economists, some of them Sandel’s colleagues at Harvard, fuming that he had failed to understand the efficiencies of trade and elementary principles of economic rationality. He did receive a sympathetic email from one economist – his old college professor. “He understood the point I was trying to make, he wrote. But he also asked a small favour: would I mind not publicly revealing the identity of the person who had taught me economics?”

The reaction to Sandel’s article illustrates the dangers of relying on the current generation of economists for guidance in policymaking. Not much more than half a century ago, economics was understood as a humane discipline whose roots lay in moral philosophy and the study of history. There can be no doubt where John Maynard Keynes, faced with the uncomprehending philistinism of Sandel’s critics, would aim his sympathies. Keynes was much too subtle a thinker ever to imagine that civilised life could be ruled chiefly by economic reasoning.

The dominance of a narrow type of econo­mic thinking is a recent development. “To a remarkable degree,” Sandel notes, “the last few decades have witnessed the remaking of social relations in the image of market relations.” In the past, no one doubted that many areas of life should stand outside the market. Even for Margaret Thatcher, it was unthinkable that the police and prison services should be reorganised on market lines and she never took seriously the right-wing think tanks’ proposals for introducing markets throughout health care and education. Today, these madcap ideas are the common sense of much of the political class.

As Sandel writes:

These uses of markets to allocate health, education, public safety, national security, criminal justice, environmental protection, recreation, procreation and other social goods were for the most part unheard of 30 years ago. Today, we take them largely for granted.

There are many reasons why social relations have been so comprehensively and so quickly remade on a market model. The sheer force of events impelled change. The Soviet collapse discredited central planning and left some kind of market economy as the only viable alternative. But shifts in ideas were also important – and not only on the right. One whose importance has been widely underestimated was identified by Sandel in his path-breaking critique of John Rawls, Liberalism and the Limits of Justice (1982).

In A Theory of Justice (1971), Rawls – a Harvard colleague – had argued that basic human goods should be distributed according to egalitarian principles of fairness, which he attempted to formulate. Rawls rejected the doctrinaire neoliberalism promoted by Friedrich Hayek and Milton Friedman because of its denial of social justice. But his theory was silent on how basic goods were to be provided, which he seems to have seen mainly as an issue of efficiency. It did not matter greatly whether individuals received basic goods via the market, or through some non-market institution. However, as Sandel pointed out, the free-floating chooser in liberal theory is a myth. Individual choices are shaped by the meanings society attaches to goods. Passing over this fact, Rawls’s theory – which had huge influence – disarmed moral criticism of the market as much as right-wing lib­ertarianism did.

In What Money Can’t Buy, Sandel shows how goods can change their nature when they are supplied through the market. Blood that is donated by volunteers to the NHS may not be physically different from blood sold to commercial blood banks in the US. But treating blood as a commodity has moral consequences. Not only does the blood that is bought and sold come largely from the poor; the social cohesion that is promoted when blood is collected by means of a gift relationship is lost. The idea that markets can rule as long as the distribution of income and wealth is corrected was accepted by many left-leaning economists. But although it may be an improvement on the worst kind of market fundamentalism, redistributive market liberalism is a flawed philosophy.

In a culture mesmerised by the market, Sandel’s is the indispensable voice of reason. He is a public speaker of enormous power, who teaches using a version of Socratic dialogue. His Harvard lecture course on justice has attracted hundreds of students year after year, those attending often numbering over a thousand. In Britain, he has given the Reith Lectures (2009) and last month he presented a Radio 4 series, The Public Philosopher, in which he engaged with audiences at the London School of Economics. 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.

Probing these cases, he shows that the limits of markets cannot be decided by economic reasoning. We need to be less impressed by ideas of efficiency and more ready to make judgements about the good life. The trouble is that, in 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.”

A practitioner of deliberative democracy in his lecturing and teaching, he seems confident that these differences can be resolved in public debate. I’m not so sure. Politics isn’t going to become an exercise in Socratic dialogue. Contesting fundamental values in the public realm may produce nothing more edifying than the endlessly divisive culture wars that rage in the US. But if we do bring basic values into political life in the way that Sandel suggests, at least we won’t be stuck with the dreary market orthodoxies that he has so elegantly demolished.

John Gray is the New Statesman’s lead book reviewer. His “The Immortalization Commission: the Strange Quest to Cheat Death” is published in paperback by Penguin (£9.99)

John Gray is the New Statesman’s lead book reviewer. His latest book is The Soul of the Marionette: A Short Enquiry into Human Freedom.

This article first appeared in the 14 May 2012 issue of the New Statesman, Halal: Britain’s most feared food

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David Cameron’s starter homes: poor policy, but good politics

David Cameron's electoral coalition of buy-to-let retirees and dual-earner couples remains intact: for now.

The only working age demographic to do better under the Coalition was dual-earner couples – without children. They were the main beneficiaries of the threshold raise – which may “take the poorest out of tax” in theory but in practice hands a sizeable tax cut to peope earning above average. They will reap the fruits of the government’s Help to Buy ISAs. And, not having children, they were insulated from cuts to child tax credits, reductions in public services, and the rising cost of childcare. (Childcare costs now mean a couple on average income, working full-time, find that the extra earnings from both remaining in work are wiped out by the costs of care)

And they were a vital part of the Conservatives’ electoral coalition. Voters who lived in new housing estates on the edges of seats like Amber Valley and throughout the Midlands overwhelmingly backed the Conservatives.

That’s the political backdrop to David Cameron’s announcement later today to change planning to unlock new housing units – what the government dubs “Starter Homes”. The government will redefine “affordable housing”  to up to £250,000 outside of London and £450,000 and under within it, while reducing the ability of councils to insist on certain types of buildings. He’ll describe it as part of the drive to make the next ten years “the turnaround decade”: years in which people will feel more in control of their lives, more affluent, and more successful.

The end result: a proliferation of one and two bedroom flats and homes, available to the highly-paid: and to that vital component of Cameron’s coalition: the dual-earner, childless couple, particularly in the Midlands, where the housing market is not yet in a state of crisis. (And it's not bad for that other pillar of the Conservative majority: well-heeled pensioners using buy-to-let as a pension plan.)

The policy may well be junk-rated but the politics has a triple A rating: along with affluent retirees, if the Conservatives can keep those dual-earner couples in the Tory column, they will remain in office for the forseeable future.

Just one problem, really: what happens if they decide they want room for kids? Cameron’s “turnaround decade” might end up in entirely the wrong sort of turnaround for Conservative prospects.

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.