Sunday, 13 October 2013

The Moral Limits of Markets



In August 2012 five people went on trial in China for facilitating illegal organ trading after a student was found to have sold his kidney in order to buy an iPad. In the subsequent reporting of the incident, the case was held up as an example of the foibles of a world obsessed with consumption; a world in which everything has a price. Even though I agree that such transactions should be prohibited, the focus on whether or not people are materialistic somewhat misses the point. The salient question is not to do with the morality or immorality of consumerism, but rather a question about the boundaries of legitimate state intervention in the affairs of private individuals.

I’m going to outline a couple of reasons there may be for wanting the state to stop these sorts of transactions. One reason is that if a market in a particular good or service corrupts the social meaning of a good, then it is legitimate to restrict the sale of that good.  The main problem with this argument is that it is quite illiberal. It can permit the restriction of the rights of citizens on the basis of reasons with which they may radically disagree, even if those rights have no harmful implications for anyone else. So, for example, the argument could be deployed in a country where a majority of Christian citizens object to the sale of kidneys on religious grounds. The Christian citizens may attempt to restrict the commodification of kidneys because they believe that human organs are a sacred gift from God which should not be ‘corrupted’ by monetary valuation. Now consider if there was a minority of atheists in this country. The atheist minority can reasonably disagree with the religious justification for the laws restricting their choice to sell their kidney. The atheist minority could protest that they are not being treated as equals; a comprehensive doctrine that they do not accept is being used to restrict their liberty. They are not being permitted to act as they choose, despite these actions having no harmful implications for any other members of society. 

A second (and better) reason for restricting markets is that people may only sell particular types of goods or services when they were in situations of such dire economic necessity that it constitutes a kind of coercion. Michael Sandel sums up this position well, he writes ‘a peasant may agree to sell his kidney or cornea in order to feed his starving family, but his agreement is not truly voluntary. He is coerced, in effect, by the necessities of his situation.’ I suspect this is why most people, me included, may want the state to step and stop these kinds of transactions. But people who are sympathetic to this view might want to consider a couple of problems with the argument.  The first thing to note about this argument is that it is not an objection to markets per se, rather it is an objection to markets which operate under highly asymmetrical background conditions. Therefore, it could not provide a reason to prevent a wealthy person selling their kidney. Another potential problem is that the transaction is paternalistic – it says that people who are in poverty are incapable of making a choice which they perceive as increasing their well-being simply because they have few resources.

8 comments:

  1. Thanks for the post George - always an interesting issue.

    I disagree with the restrictions that you discuss for the reasons you yourself suggest, the first is highly illiberal, the second is an objection to the conditions and highly paternalistic - If I was in these dire situations and I could sell a kidney to help my family, I do not believe my life would be made better off by being banned from doing this.

    I am suprised you haven't mentioned externalities in your discussion? The classic economic argument for limiting supply or taxing a transaction is that it is imposing a burden on others which is not paid for by the individuals involved. This to me is the strongest argument for banning these forms of transaction.

    For example - take the case of prostitution, it could well be argued that by allowing individuals to engage in this act, they are harming their entire gender. I think this is slightly different from your first line of argument - the qualitiative difference between harm and offence (I'm fine if you offend another person, not if you harm their reasonable pursuit of the good life).

    I think the first move should be to regulation or taxation of transactions we find undesirable (we may find that we can do more good with the tax revenue for example than we can by driving these activities underground with a ban), but ultimately if these approaches fail (which they might for many reasons), this remains the best justification for banning transactions.

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  2. Great topic! Let me throw in one more thought, which Basu has brought forward in a number of papers: there can be PD structures in markets, such that societies can end up in situations that are collectively irrational (although given that this is the situation, it is rational for each individual to pursue this strategy), which can sometimes be overcome by regulation. Basu's example, if I remember correctly, is a situation in which you might have one of two market equilibriums: either a wage that is so low that parents cannot support their children, so these have to work as well, which increases the supply of labour, thus lowering the price - or a situation in which child labour is banned, the supply of labour is lower, wages are therefore higher, and parents can support their kids. There are of course many independent reasons for rejecting child labour. But this structure of having several equilibriums, some of which are more normatively desirable than others, can, I think, also occur in other contexts, and can justify legal limitations on markets.

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  3. George, I wonder why you think that '[t]he salient question is not to do with the morality or immorality of consumerism, but rather a question about the boundaries of legitimate state intervention in the affairs of private individuals.' Can't there be two salient questions? After all, if no one wanted to facilitate such trade, the trade would not exist - there would be no sellers and no intermediaries, in spite of presumably continuing demand - which means that (moral) limits on consumerism could address the issue.

    The point is that some practices may be morally problematic even if state intervention to prevent them is illegitimate or unfeasible. In such cases, discussing their morality seems the most sensible thing to do.

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  4. Thanks for the post, George. As Lisa says: a great topic. I think that I would probably want to question you further on the line that Will raises. To wit, whether the reasons on which you focus really lead to the conclusion of market regulation. Specifically, if what draws our concern in these examples is those in poverty who may not be acting voluntarily, it is not clear that a ban on the activity is a good solution. First, as Will highlights, it could exacerbate their circumstances. Second, since the crux of our concern is with the voluntary choice of individuals, it would seem that our ‘solution’ should seek to rectify the problems in this area, by relieving the circumstances that lead to the lack of voluntariness. This point connects with the thought that the argument does not apply well to the wealthy. As you note, it is not an objection to the market per se. If that is correct, altering the market does not seem the right response. It seems more apt that we focus on where our objection crucially lies.

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    1. Is voluntariness all that matters here? Or could there be other principles involved? George talked about the "social meaning of goods", and rejected it on the basis of it being illiberal in pluralist society - but then aren't there *some* social meanings of goods that everyone needs to respect, even if for different reasons? I guess the line one could try to pursue would emphasise that there are certain things (e.g. human dignity) that we all share, and if their social meaning is threatened, markets can be banned. The question then is, of course, whether this applies to human organs - you might end up in disagreement again. But I don't this that this line of argument should be completely closed down, and everything reduced to voluntariness.

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    2. Agree with you on the above, Lisa. My point was only that *if* voluntariness is the concern that is doing the work, market restrictions do not seem the right response. I did not mean this comment to imply that the if-clause was valid.

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  5. Thanks for the post George. What exactly do you mean by "if a market in a particular good or service corrupts the social meaning of a good"? It seems that 'social meaning' could have quite a few different meanings that might change how we feel about interfering.

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  6. Thanks, George. I'd like to know what you and others make of a possible further reason for restricting certain types of transaction. In particular, I have in mind cases that involve either inalienable rights or self-regarding duties. These cases are interesting since, if there are either inalienable rights or self-regarding duties, then it means citizens can act voluntarily but in a way that is also problematic from their own point of view. If these cases exist, then surely we ought to regard the transaction as invalid. Though this need not necessarily result in limiting markets that involve these types of transactions, there seems no principled reason for market-restriction to be off the table.

    A good example, here, might be the case of voluntary enslavement. This is because it is often held that we have an inalienable right against enslavement, and that we have a self-regarding duty not to render ourselves subservient to others. What do yo make of this case?

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