FRIDAY’S WORDS OF WISDOM: WHY SOME THINGS SHOULD NOT BE FOR SALE BY DEBRA SATZ

Why Some Things Should Not Be For Sale by Debra Satz is a work of political philosophy that critiques the assumptions that underlie much modern economic theory and the implications of those assumptions in the application of markets to real world problems.

Satz starts from the principle that markets have their value and their place but that both are, in the real world, limited. Markets are often conceived, by both neoliberals and egalitarians, as “an all-purpose remedy” for the defects of government and state control. But, as markets have been applied to new areas, new concerns have arisen about their morality. In arenas such as the sale of human organs, sex, reproductive services, blood diamonds, weapons and (medical and recreational) drugs the application of market solutions elicit very different reactions from markets in other commodities. Satz believes that such markets “strike many people as noxious, toxic to important human values. These markets evoke widespread discomfort and, in the extreme, revulsion.” (3).

Why Some Things Should Not Be For Sale attempts to identify what it is about these market exchanges that repels many people and asks how our public policies should respond to these noxious markets. Satz identifies four parameters that may make us regard markets as an illegitimate way of organising some areas of our society. Two of the parameters are linked to characteristics that people bring to markets: the vulnerability of individuals in the market transaction and extreme asymmetries of information leading to “weak agency”. The other two parameters are linked to the outcomes of markets: extremely harmful outcomes for individuals and extremely harmful outcomes for societies. She goes on to analyse a number of markets she considers noxious including markets in women’s reproductive labour, sexual labour, child labour, “voluntary slavery” and the sale of human organs. To understand markets, she argues, we cannot only look at the production and distribution of goods, we must also look at their effects on social and political relations, “including their effects on rich and poor, women and men, and the more or less powerful. We need to examine the effects of various markets on the social norms that underwrite our relationships with one another.” (11)

Satz believes that the discipline of modern economics is too narrow. Returning to the work of early, classical political economists – Adam Smith, David Ricardo, Karl Marx – she notes that they set markets in a broader context. She contrasts their “understanding of the market as a system of heterogeneous relationships between social classes with competing interests and later approaches founded on an image of the economy as a set of exchange relations between independent individuals.” (39)

Classical political economists possessed insights that have been lost by the modern vision of economic theory. First they:

emphasised the social embeddedness of markets. They saw that markets could not become the sole institutions or sole organizing principle of a liberal society without destroying that society. More specifically they recognized that markets require limits if a liberal society, based on the equality and freedom of its members, is to be maintained. (39) 

And second:

the classical political economists recognized that markets were heterogeneous and that some markets shape society as well as individuals. For example, thinkers as diverse as Smith and Marx believed that the way human labor power is produced and sold has not only profound effects on the workers whose labour it is, but also external effects on society as a whole. (40)

So, while Adam Smith is frequently held to be the father of unrestricted markets, Satz sets out the variety of concerns and insights in Smith’s work that identify the limits of the application of unrestricted markets that are compatible with a good society. Smith particularly recognised the need for intervention in areas such as the labour market and speculation in capital markets.

Smith saw the marketplace as a political and cultural as well as an economic institution, where differing interests wielded power and where some types of exchanges shaped the participants. If markets in such domains are political and cultural institutions, then market failure takes on a different meaning… If labor markets are organized in ways that undermine the collective decision-making skills on which a democratic society depends then we might judge such markets a failure even if they are efficient… Smith saw the market as a complex heterogeneous institution, bringing people into different kinds of relations with each other for different purposes. From this broader perspective, not only efficiency but also the effects of a particular market on the structure of political power and on human development are relevant to its assessment. (51)

The broader insights of these classical political economists were lost in “the marginal revolution”, a moment Satz identifies as taking place in the 1870s when William Stanley Jevons, Carl Menger and Leon Walrus and others reshaped economics to make it a more mathematically rigorous but much narrower discipline. The marginalists constructed the idea of a rational actor pursuing their own interests in a market that produces maximal benefits for all, the foundation of neoclassical economics. This shift, Satz says, “did not so much refute the classical economists as change the subject.” (58) Unlike Smith, Ricardo and Marx, neoclassical economists claimed that their theories applied across all markets, regardless of their content and purpose. Marginalist neoclassicism also removed the issue of the effects of markets on social relations – class, power – from the remit of economic study. The neoclassical version of economics studied only static, fixed points in time lacking the classical vision of a dynamic, changing society with “shifting populations, expanding human wants, differing human motivations, and the changing quality and quantity of resources.” (59) Finally the marginalist preference for the idea of the rational individual actor in a market meant that “values and preferences are now shifted outside the province of the economics to private individual choice and decision. Economics is hereafter silent about individual subjective market choices.” (60)

Smith, John Stuart Mill, the Ricardian socialists, and Marx bequeathed a rich tradition of critical social thought including arguments about the coerciveness of labor contracts as well as awareness about the asymmetric power of agents bargaining over the distribution of the social surplus. Moreover for the classical political economist these issues were tied to their respective visions of a good society. How to achieve that good society, and whether or not it could be maintained once achieved or would fall into a stationary state and decline, were principal questions that preoccupied these thinkers. (61)

By contrast in economics after the marginalist revolution:

The economy is now viewed as an autonomous sphere of activity, independent of law, convention or power… The new economics enabled its practitioners to build tractable and unified models (which have admittedly generated some very important insights into the workings of an economy). Yet almost everything that classical economists considered interesting in economic life – in particular their crucial insights into the social effects of different markets on human capacities and social relationships and the ways that different markets are socially embedded – has been omitted. (61)

This shift has meant that much modern economic theorising is wilfully blind to the problems of markets. Satz is particularly concerned that exchange based in “desperation, humiliation, or begging or whose terms of remediation involve bondage or servitude is not an exchange between equals.” (93) This inequality of “standing” before, during and after market exchanges is, Satz argues, the reason why we find many markets noxious. Such exchanges are not just damaging for the individual, they are damaging for the prospects of a democratic society because they undermine the basic principle of individual equality. As such, in some markets, individual choices have to be limited to protect freedom of people to act as equals.

While there may not seem to be a problem to allow one person to work for whatever wages or hours she chooses, societal rules about minimum wages and maximum working hours provide a “threshold of economic welfare” that enhances the bargaining power of the poorest and protects them from exploitation and abuse. So, blocking one person from making a “free” choice to work for below minimum wage actually keeps open choices for many others. The same is true for, for example, child labour.

Wider concerns of freedom, therefore, mean that society is justified limiting the choices of some individuals.

If our concern is with avoiding outcomes that undermine the conditions for citizens to act as equals, then there is a powerful argument for guaranteeing access to a certain level of goods – education, health care opportunities, rights, liberties and physical security – even if some citizens would prefer to trade and sell these goods, or the opportunity to access these goods, to the highest bidder… access to these goods should not depend only on individual preferences or income. The conditions for equal citizenship cannot be cashed out in terms of generic good like money or utilitarian welfare; in addition to some level of income, they require that some goods be distributed in kind and that, in some cases, the distribution be more or less equal. (102)

And, to preserve democratic freedoms, some markets – most obviously markets in votes and political influence – should be blocked entirely. But it isn’t just such direct threats to democracy that we should be concerned about. Returning to the insight of the classical political economists, who saw that market exchanges shape people and societies, Satz argues:

we do need to worry about whether a particular kind of market produces or supports passivity, alienation, or a ruthless egoism. Labor markets may be structured so as to accustom people to being pushed around and managed by others. Widespread markets in women’s reproductive or sexual capacities… might amplify gender inequalities by entrenching and deepening negative stereotypes about women. Unregulated education markets are compatible with children being treated as and raised as servile dependents. We need to pay special attention to cases like these, for they pose potential threats to the stable reproduction of democratic citizenship over time. Indeed the democratic state has an interest in withholding its support from institutions that cultivate subordination and servitude, even if those institutions are not strictly illegal. (104)

It is worth reiterating that Satz is not making a case against all markets. Unlike many modern economists, she does not regard all markets as essentially the same. Markets are heterogeneous and their impact depends on their object, the standing of individuals taking part and their outcomes. The decisions about which markets we allow to thrive and which we block are practical, guided by a moral stance that favours democratic freedom.

As I have repeatedly stressed, markets are engines of growth and have important roles to play with respect to our equality and freedom. In some cases the requirements of equal citizenship will push us to a floor of provision, not strict equality in the distribution of the good. In other cases that may not be so; we may care about the ceiling as well as the floor because we want to constrain the amount of inequality to maintain a healthy democracy. Often empirical considerations will be paramount, such as the effects of inequality on the prospects of those worst off. Some markets trade in things that no democratic society can countenance’ others need to be regulated, constrained, or supplemented with other mechanisms if the preconditions for a democratic society are to be maintained. (108/9)

Ultimately Satz defends:

a social democratic thesis: that certain goods need to be provided outside the market if citizens are to be equals. Equality in these goods is necessary for democratic citizenship; thus in democratic countries there are no markets in votes or basic political or civil right. Other necessary goods for citizenship can be supplied (unequally) by markets, in part, but also require non market provision… A democratic society has strong interests in the production of adults who are capable of participating in the political structures of society and in ensuring that all children receive an education sufficient to allow them to become adults independent functioning, of standing as equal citizens… Other goods need to be protected from markets because when the exchange of these goods is adopted as a social practice (in markets) they reinforce significant inequalities of bargaining power and sometimes of political power that leads to extreme harm. (208/9)

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