The Moral Costs of Markets

Free markets are, on balance, wonderful things, I think. When they’re truly open and free and not monopolized by a few big players, or overly regulated by excessively intrusive governments, markets are amazingly efficient ways of providing people with the things they want and need. They’re the chief engines of economic progress, and are singularly conducive to human happiness. But my enthusiasm for free markets is not unlimited.

This week begins both a new year and a new season of Philosophy Talk.   Hard to believe, but we’re into our  8th season.  It’s been a great ride so far and we hope to keep building the program.  

To launch a new season and a new year, we take up the topic of  free markets, in particular the moral costs of free markets.  Free markets are, on balance,  wonderful things, I think.  When they’re truly open and free and not monopolized by a few big players, or overly regulated by excessively intrusive governments, markets are amazingly efficient ways of providing people with the things they want and need.  They’re the chief engines of economic progress, and are singularly conducive to human happiness. 

But my enthusiasm for free markets is not unlimited. It’s not that I don’t like free markets or that I am some kind of socialist – though I do think that democratic socialism of the Western European variety has something going for it.  In their place, markets are very good things. But I just don’t believe that every product or service is best distributed by the market.

To make a pretty basic point, take something as simple as the air we breathe. I doubt that even someone with boundless enthusiasm for free and open markets, would suggest that there should be a price on air. 

Now you could say that that is cheating, since nobody controls the air.  So nobody can stop you from breathing just because you won’t pay up.   There couldn’t be a market in air.   But of course there markets in air  — sort of.  At least there are markets in clean air — where companies get to buy and sell pollution credits.   That points to a different problem with markets.  You buy your gas-guzzling dream car.  The oil company gets rich.  The car company gets rich.  And me? I get to breathe dirty air.

Here  I’m talking what economists call externalities — costs generated by economic transactions between two parties that are borne by somebody else, somebody not a party to the original transaction.  Markets can generate lots of different externalities and many of them are morally problematic. 

But that wasn’t my original point about markets in air.   My point was that even if there could be a market for air, nobody would accept it.  People have a basic and equal right to air.  And things to which we have basic and equal rights shouldn’t be subject to the whims of the market – you know… some folks having more, some having less, and some having none at all.

I know that there are, of course, lots of things that the rich have more of and the poor have less of.  The poor live in less luxurious houses than the rich; drive less expensive cars; go to less fancy schools, have less access to the political process.  Plus they eat less well and probably don’t wear as finely-tailored clothing.   And I admit that if we were  going to restrict markets wherever they generate inequality, we’d truly have our work cut out for us.

But I didn’t say that wherever markets generate inequality they’re bad and ought to be regulated.   Still, markets are not divine.   They don’t have godlike wisdom into the right and just distribution of every possible good.  That’s because they pay attention only to the bottom line, not to considerations of justice and morality.  That’s why markets sometimes need to be regulated or even prohibited.  

Of course, that raises the question of what principles distinguish morally intolerable markets from morally tolerable ones.   Here’s a first quick thought about that.  Votes definitely shouldn’t be traded on the free market.  And public schools definitely shouldn’t be driven by markets.  Public schools should offer an education that’s good enough for rich and poor alike – independent of ability to pay. 

But of course, those aren’t really principles, are they?   Those are just examples.  I gave examples because, frankly, I don’t know what the right principles are.  I’m not even sure that all the moral limits of markets have to do with inequalities.  Markets in woman’s sexual labor seem wrong to me, for example,  but not because of issues about inequality — not exactly, anyway. 

It seems clear that we need to call on somebody who has thought a little harder and deeper about this question than I have. That would be our guest, Stanford philosopher Debra Satz.  She’s the author of the very fine book, Why Some Things Should Not Be For Sale: The Moral Limits of Markets.