Michael Sandel's What money can't buy: the moral limits of markets. New York: Farrar, Straus and Giroux, 2012, 256 pp.

Abstract

Review of Michael Sandel's What money can't buy: the moral limits of markets. New York: Farrar, Straus and Giroux, 2012, 256 pp.Michael Sandel's latest book is not a scholarly work but is clearly intended as a work of public philosophy-a contribution to public rather than academic discourse. The book makes two moves. The first, which takes up most of it, is to demonstrate by means of a great many examples, mostly culled from newspaper stories, that markets and money corrupt-degrade-the goods they are used to allocate. The second follows from the first as Sandel's proposed solution: we as a society should deliberate together about the proper meaning and purpose of various goods, relationships, and activities (such as baseball and education) and how they should be valued.Public philosophy is a different genre from academic philosophy, but that does not mean that it cannot be held to high standards. In my view, while this book does provide food for thought and food for conversation, it nevertheless has significant failings as a work of public philosophy rather than journalistic social activism on the model of Naomi Klein's No logo (1999).THE CORRUPTION THESISBefore moving to discuss Sandel's corruption thesis, let me sketch the context of the debate. A market is an institutionalised space in which goods and services can be exchanged for reasons of direct self-interest, usually though not necessarily via the medium of money (Herzog 2013). Market exchange may be contrasted with other arrangements for allocating goods, such as those identified by Karl Polanyi (1944, chapter 4): reciprocity between individuals (such as gift exchange systems), redistribution by government, and autarky in which people produce what they need for themselves (such as subsistence farming). Economists like markets because, under certain conditions (such as rivalrous competition between multiple producers) they tend to promote the efficient allocation of resources, as well as innovations that make those resources go further. The story of the world's increasing material prosperity over the last few hundred years is the story (Adam Smith's story) of the rise of markets, which have allowed individuals to meet more of their wants and needs than ever before, and, through taxation, have also permitted an enormous expansion in the provision of public services by governments (education, health, security, law, transport infrastructure, and so on). The practical success of the market economy is sometimes taken to imply that, other things being equal, markets are the best way of organising the production and distribution of everything. But are other things equal? The critique of the market comes from three directions.Economists themselves are the first to point out the limits of markets. They recognise that the conditions for a successful market are actually quite demanding, and that where they are not met, such as in the case of 'natural monopolies' or public goods, alternative institutional arrangements may well perform better. For example, while it is possible to have drinking water supplied by competing fleets of tankers, and this is something one actually finds in cities in poor countries, it is far cheaper to have a single-regulated or publicly owned-water utility company running a pipe network. (This is why drinking water costs less in London than in the slums of Manila, Jakarta, or Nairobi.) Another example is the economic justification for firms themselves (Coase 1937). Although firms obviously buy their inputs and sell their products in markets, their internal organisation is a bureaucratic command economy whose operations are carefully shielded from the market. That is largely because contractual relationships between self-interested strangers often impose high transaction costs that make them uneconomical. Economists thus use the instrumental criterion of efficiency to draw the limits of the market. Markets should only be used where they are more efficient than other arrangements. …