Friday, August 17, 2012

Social obligations and markets

The vice presidential pick for the Republican ticket is an extreme voice on the question of whether individuals have obligations to others in society that justify taxing them to maintain their basic human needs. Paul Ryan is a fan of Ayn Rand's philosophy, which is an extreme version of individualism against social obligations. According to the Randians, the state should be limited to the very most minimal tasks, and the idea that individuals have obligations to other people in society is anathema.

This Randian philosophy has at least two major components: individuals exclusively deserve what they earn through the market; and virtually everything should be allocated through private markets rather than through collective decisions about taxes and benefits. If you are poor, according to a Randian, you have only yourself to blame, and you have no moral claim on the rest of society. And if you are an investment banker with a $30 million bonus staring you in the face -- good for you! It's yours, enjoy!

This philosophy of the relationship between the individual and the rest of society may make sense to Paul Ryan and the Tea Party. But it doesn't make sense to much of the rest of the world. A society is a system of cooperation and mutual interdependence, and one person's wellbeing inevitably depends on the activities of countless other individuals in society. (This was the point of President Obama's line that "You didn't build this business alone.") Moreover, most of the cultures of the seven billion of us on planet earth recognize duties of compassion and mutual support. The fundamental humanity of the fellow citizen is reason enough to be concerned about his or her liberty, nutritional status, health, and personal safety.

It is logical to most of the world's population that a key role of the state, as the political embodiment of the whole of the society, is to establish a decent safety net for all its citizens and to take steps direct and indirect to ensure that its population has access to the basic necessities of life. It is precisely this moral idea that is under determined attack by the Tea Party movement and the ascendancy of politicians like Paul Ryan.

Michael Sandel's current book, What Money Can't Buy: The Moral Limits of Markets, is an eloquent statement of some very basic moral convictions that many people share about the subject. His basic idea is that it is morally obnoxious to think of all goods as being best distributed through a market mechanism -- through a price, a seller, and a buyer. In an interview on NPR this week he made the point very eloquently: we are moving from a market economy to a market society; moving from looking at the market mechanism as an important social tool, to looking at it as the supreme social value. He argues that this movement in values and thought has the result of crowding out more substantive moral values. In the book he illustrates this point with a striking example:
Or consider baby selling. Some years ago Judge Richard Posner, a leading figure in the "law and economics" movement, proposed the use of markets to allocate babies put up for adoption. He acknowledged that more desirable babies would command higher prices than less desirable ones. But he argued that the free market would do a better job of allocating babies than the current system of adoption, which allows adoption agencies to charge certain fees but not to auction babies or charge a market price. (kindle loc 1375)
He comes back to this example with his own analysis of what's wrong with the idea.
Or consider children. It would be possible to create a market in babies up for adoption. But should we? Those who object offer two reasons: One is that putting children up for sale would price less affluent parents out of the market, or leave them with the cheapest, least desirable children (the fairness argument). The other is that putting a price tag on children would corrupt the norm of unconditional parental love; the inevitable price differences would reinforce the notion that the value of a child depends on his or her race, sex, intellectual promise, physical abilities or disabilities, and other traits (the corruption argument). (kl 1620)
Sandel's sociological insight is this: markets subvert many values by commercializing social relationships.
Many economists now recognize that markets change the character of the goods and social practices they govern. In recent years, one of the first to emphasize the corrosive effect of markets on nonmarket norms was Fred Hirsch, a British economist who served as senior adviser to the International Monetary Fund. In a book published in 1976 -- the same year that Gary Becker's influential An Economic approach to Human Behavior appeared and three years before Margaret Thatcher was elected prime minister -- Hirsch challenged the assumption that the value of a good is the same whether provided through the market or in some other way. (kl 1760)
So Sandel calls upon us, as Karl Polanyi did almost seventy years ago in The Great Transformation: The Political and Economic Origins of Our Time, to re-tune our moral antenna, and to recognize that there are moral and social values that are far deeper and far more important than price and market.  As a society we possess a host of moral affinities and obligations that the market philosophy of Ayn Rand doesn't touch.


greg said...

A Randian, market society probably cannot sustain the level of material wealth, never mind social wealth, of a modern, mixed economy. It totally discounts the synergistic effects of cooperative action. As society becomes more 'market' oriented, this inability to sustain material wealth is what we may be witnessing.

Mike said...

Paul Ryan may be a fan of Atlas Shrugged, but he is way too committed (at least for public consumption) to his Catholic views to accept Rand's objectivist views.

Luke said...

Any social system that is purely one way or another is unlikely to function in a way that we would either recognize or appreciate without serious cognitive recaibration. Having said that, I believe that people who (as Mike mentions of Paul Ryan) mix such diametrically-opposed rule systems don't have a solid handle on the position they espouse.