Wednesday, July 30, 2014
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What Money Can Buy

CHICAGO – In an interesting recent book, What Money Can’t Buy: The Moral Limits of the Market, the Harvard philosopher Michael Sandel points to the range of things that money can buy in modern societies and gently tries to stoke our outrage at the market’s growing dominance. Is he right that we should be alarmed?

While Sandel worries about the corrupting nature of some monetized transactions (do kids really develop a love of reading if they are bribed to read books?), he is also concerned about unequal access to money, which makes trades using money inherently unequal. More generally, he fears that the expansion of anonymous monetary exchange erodes social cohesion, and argues for reducing money’s role in society.

Sandel’s concerns are not entirely new, but his examples are worth reflecting upon. In the United States, some companies pay the unemployed to stand in line for free public tickets to congressional hearings. They then sell the tickets to lobbyists and corporate lawyers who have a business interest in the hearing but are too busy to stand in line.

Clearly, public hearings are an important element of participatory democracy. All citizens should have equal access. So selling access seems to be a perversion of democratic principles.

The fundamental problem, though, is scarcity. We cannot accommodate everyone in the room who might have an interest in a particularly important hearing. So we have to “sell” entry. We can either allow people to use their time (standing in line) to bid for seats, or we can auction seats for money. The former seems fairer, because all citizens seemingly start with equal endowments of time. But is a single mother with a high-pressure job and three young children as equally endowed with spare time as a student on summer vacation? And is society better off if she, the chief legal counsel for a large corporation, spends much of her time standing in line?

Whether it is better to sell entry tickets for time or for money thus depends on what we hope to achieve. If we want to increase society’s productive efficiency, people’s willingness to pay with money is a reasonable indicator of how much they will gain if they have access to the hearing. Auctioning seats for money makes sense – the lawyer contributes more to society by preparing briefs than by standing in line.

On the other hand, if it is important that young, impressionable citizens see how their democracy works, and that we build social solidarity by making corporate executives stand in line with jobless teenagers, it makes sense to force people to bid with their time and to make entry tickets non-transferable. But if we think that both objectives – efficiency and solidarity – should play some role, perhaps we should turn a blind eye to hiring the unemployed to stand in line in lieu of busy lawyers, so long as they do not corner all of the seats.

What about the sale of human organs, another example Sandel worries about? Something seems wrong when a lung or a kidney is sold for money. Yet we celebrate the kindness of a stranger who donates a kidney to a young child. So, clearly, it is not the transfer of the organ that outrages us – we do not think that the donor is misinformed about the value of a kidney or is being fooled into parting with it. Nor, I think, do we have concerns about the scruples of the person selling the organ – after all, they are parting irreversibly with something that is dear to them for a price that few of us would accept.

I think part of our discomfort has to do with the circumstances in which the transaction takes place. What kind of society do we live in if people have to sell their organs to survive?

But, while a ban on organ sales may make us feel better, does it really make society better off? Possibly, if it makes society work harder to ensure that people are never driven to the circumstances that would make them contemplate selling a vital organ. But possibly not, if it allows society to ignore the underlying problem, either moving the trade underground, or forcing people in such circumstances to resort to worse remedies.

Then again, part of our unease probably has to do with what we perceive as an unequal exchange. The seller is giving up part of her body in an irreversible transaction. The buyer is giving up only money – perhaps earned on a lucky stock trade or at an overpaid job. If that money had been earned by selling a portion of a lung, or represented savings painfully accumulated during years of backbreaking work, we might consider the exchange more equal.

Of course, the central virtue of money is precisely its anonymity. I need know nothing about the dollar bill I receive to be able to use it. But, because money’s anonymity obscures its provenance, it may be socially less acceptable as a medium of payment for some objects.

In both examples – congressional tickets and organ sales – Sandel suggests reducing money’s role. But money has many virtues in facilitating transactions – hence its ubiquitous use. So, perhaps the more important message is that society’s tolerance for monetization is proportional to the legitimacy accorded to the distribution of money.

The more people believe that it is the hardworking and the deserving who have money, the more they are willing to tolerate transactions for money (though some transactions remain beyond the pale). But if people believe that the moneyed are primarily those who are well connected or crooked, their tolerance for monetary transactions falls.

Rather than focusing on prohibiting monetary transactions, perhaps a more important lesson imparted by Sandel’s examples is that we should work continuously to improve the perceived legitimacy of money’s distribution.

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  1. CommentedMukesh Adenwala

    There is one more aspect that would need to be considered - that of values. Can a society live with efficiency as its only value? If not, what other values we need? As yet there is no consensus on that and that could be reason for this debate.
    I am of the opinion that the society maybe able to but should not be allowed to flourish without a set of values because such efficiencies cannot be sustained. Efficiency is also embodied in eugenics and prostitution. It can be argued that gambling can increase the size of the market because more people would be willing to lose a small sum of money to get a chance to `win' a product than the people who can afford to buy that product. I wonder, what kind of society would we live in if each of these are allowed.
    Whereas it is true that mere values cannot allow the society to flourish, arguing solely on the basis of efficiency also remains flawed.

  2. CommentedKarthik M

    How about lucky? How would you percieve the legitimacy of money’s distribution then?
    I worry that, by the tone of this article, Sandel's worries aren't your worries.

  3. CommentedSarchis Dolmanian

    How about understanding, at last, that money is a tool and not a goal?
    And, as such, the way we use it and the consequences of this are our individual and collective responsibility?

  4. CommentedCox Andy

    Money and the cash nexus should be abolished. See http://andycox1953.webs.com

  5. CommentedKarthik M


    I agrue for the corruption side of the argument so I disagree with your article.
    What is at stake is not only what money can or cannot buy but rather also what money should and should not buy. Sandel was too polite in his book.
    A man's kidney need not be bought with money. And in the case you presented, is effective if the money is just a supplement. What essentially transacts is gratitude. (something which money can't buy (and shouldn't try to!))
    Else nice article!
    Read more at http://www.project-syndicate.org/commentary/what-money-can-buy-by-raghuram-rajan#f61AVQM1UZu4tYP6.99

  6. CommentedKarthik M

    I agrue for the corruption side of the argument so I disagree with your article.
    What is at stake is not only what money can or cannot buy but rather also what money should and should not buy. Sandel was too polite in his book.
    A man's kidney need not be bought with money. And in the case you presented, is effective if the money is just a supplement. What essentially transacts is gratitude. (something which money can't buy (and shouldn't try to!))
    Else nice article!

  7. CommentedMeenakshi Srinivasan

    I agree to some extent to this last para as well as Justin Douglas' comment. My only addition to this view would be delinking essentials such as water, land, food crops and such that are basic needs for survival from a "monetary" system that has contributed to large scale inequities with moneyed people playing the markets with these basic commodities and thus playing with people's lives. These should not even be listed on any commodities or trading lists. The entire agri policy of many countries in the name of "trade" has cause huge discrepancies in health of land, water and people (chemical inputs) and petroleum needs to farm causing dependance on oil rather than farming oil-free. And on the other end we see disappearance of native crop varieties and increased malnutrition amongst children. These are sever problems that require quick microeconomic response but requiring macro support.

  8. CommentedMeenakshi Srinivasan

    I begto differ- scarcity is man made to ensure this uneven playing field. Let us revisit this scenario with the hearing being televised live via the internet/ TV and every registered voter can have an opportunity to "speak up". Then nobody needs to stand in line or sell their spots.

    The idea of "money" is an illusion. RO water can be bought for 20 cents/ gal if I take my bottle to the water center. If I want the same water bottled for me then it becomes $1 on a sale or $2 full price. If the same water is not RO but from an exotic glacier or fancy artisan well from a polution free country, it becomes $10- even $100 a gal! If I trusted my municipality tap and filled my water from a tap, it costs less than .2 cents a gal (not considering the people who scour the land for drinking water and sometimes have to make do with contaminated water or dry wells and thus have to walk miles to get a gallon). Thus, this "perceived" value can easily be manipulated with "money", but bottomline, as humans we all need to drink water to survive.

  9. CommentedJustin Douglas

    I think that much of the problem with money lies in perceived discrepancies between use-value and exchange-value. That is, organ sales make us uncomfortable because it requires that we give it a value that (a) is separate from its intrinsic worth (b) is measurable (c) can be compared with other things (d) is influenced by anonymous market forces.

    While I also don't think it would be wise to try to transition to a moneyless economy in our lifetime, it is important to keep this discrepancy in mind, if not work to diminish it somehow.

  10. CommentedDavid Thaler

    I think that you are wrong concerning the nature of the objection to selling organs. Organs are usually in short supply; the patients who obtain them will have a chance to live, while those who don't will die. In rationing them by price, we are saying that the rich should be saved while the poor should be left to die. If we except that, then we are economists, not moral agents, and hence not fully human.

  11. CommentedProcyon Mukherjee

    A brilliant article that is synthesis of what Sandel summarized as the benefits that society would acrue with limiting the role of money.

    I would have liked the analysis to be shifted to the area of information asymmetries that create the inequality and the monetizing of these asymmetries, which has become an overwhelming driver for all investing and trading activity; sometimes one feels that we live in a world where we are simply betting against rise or fall based on information. I see that instead of limiting the role of money, we are moving towards a phase where money essentially could replace emotions, fear, happiness, love, camaraderie and all other objects of humanness, that we were so proud of.

    With so much money following so few goods and opportunities, this is not that distant a possibility.

    Procyon Mukherjee

  12. CommentedPaul Jacobson

    Your point about distribution is key. When the rich can evade taxes because of their scale of wealth and earn that wealth by eliminating jobs or by financial trickery, then we have issues.

  13. CommentedA. T.

    Ideally, what we are shooting for is some sort of "equal sacrifice" – some sense of "do not take more than you give/have given". Either you and I both make similar sacrifices in an exchange (and are, therefore, 'made whole' in terms of amount sacrificed at the end of it), or the person willing to make the bigger sacrifice for a scarce resource gets the resource. Unfortunately, neither time nor money is an adequate measure of effort or sacrifice – both of them can be worth a lot less to some people than to others. Perhaps the cost of something needs to depend on how much one has – like a sales tax whose rate depends on the wealth of the purchaser.

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