What Money Can’t Buy: The Moral Limits of Markets

A Japanese company hires out articulate individuals to deliver apologies. An online company ghostwrites wedding speeches for individuals. These things become less meaningful if they are outsourced and paid for.

Gifts are inefficient from an economic perspective, as the gift receiver usually has a more accurate idea of what they want than the gift giver. The fact that there is a social taboo against giving cash reveals the fact that gifts are meant as a luxury, rather than utilitarian, item.

Gift cards are a halfway point between money, which allows the receiver choice, and a gift, which shows knowledge of the person, as the element of choosing an appropriate store allows the buyer to convey their knowledge of the gift receiver.

Honorary degrees are sometimes conferred on people who have not studied at an institution. In some cases, they are awarded to individuals for making donations to the establishment.

Although most university places are merit-based, there are some cases where admission might be mediated by a donation as well as by academic merit, sporting ability, parents’ alumni status, and a range of other factors; it is usually difficult to ascertain to what extent donations played a part.

The first objection to market-based choices is that they perpetuate wealth inequality. The second issue is that the corrupt nature of making financially-savvy choices may corrode the integrity of an institution’s norms.

The market suggests that fairness is achieved by allowing people what they want to buy and sell, but some choices aren’t freely made.

Markets can touch or taint the goods they touch, changing the inherent value of that thing. Furthermore, as is illustrated in earlier chapters, sometimes paying for a thing, such as a behavior, decreases rather than increases that behavior, such as paying children to read resulting in less intrinsic motivation and, therefore, less reading in the long term.

Swiss residents, who reluctantly accepted having a nuclear waste dump near their town out of a sense of civic duty, become more reluctant when offered an annual cash incentive from the government in return for the proximity of the nuclear waste dump. They felt uncomfortable with being bribed; the addition of the financial incentive crowded out the sense of civic duty.

Civic sacrifice repaid through public works or projects is accepted more readily, contradicting pragmatic economists who suggest that cash would always be better than a gift.

Three groups of Israeli students were sent door to door to collect money for charitable causes. The group offered no remuneration for their collections earned the most for the charities, whereas the groups offered financial incentives collected less, although the group offered 10% or their revenue did better than those offered 1%. Paying the students changed the nature of the activity for them; it was an activity motivated by personal gain, rather than by civic duty.

Fred Hirsch, a British economist, suggested “the commercialization effect,” whereby the product is affected by its commercialization, rather than if it were distributed via feelings of service, love, altruism, or in an informal exchange.

Lawyers asked to give retired people legal services for a reduced fee ($30 an hour) refused, but accepted when they were asked to do it for free as a charitable service.

People’s intrinsic motivation is “crowded-out” by extrinsic motivation when services or goods are monetized, which changes their relationship to the good or service. This is an important anomaly in economics, as usually increasing financial incentives increases supply.

British sociologist Richard Titmuss, in 1970, comparatively examined the British and American blood bank systems: Britain relied on charitable donations, whereas America offered money for blood donations. Britain attained greater supplies of blood, proving that charitable donations made greater sense from a pragmatic, economic perspective. Furthermore, Titmuss also pointed out the moral implications, as blood donations were supplied primarily from the poor in America. Charitable donors thus were “crowded-out” in the American system.

A core tenet of market principles is that commercializing an activity doesn’t change it: People could choose to participate in a market for a product or service, or not if it contradicts their values around that subject. However, the blood donation and selling example illustrates that commercializing blood changes the meaning of donating it.

The second tenet is that altruism is a finite resource that should be used sparingly; therefore, one should rely on markets wherever possible.

Sir Dennis H. Robertson, an economist, suggested that love is a scarce resource that should be used sparingly. However, on the other hand, love could be viewed as expansive—it enlarges with practice.

Economist Lawrence Summers aligned himself with Robertson, suggesting that boycotting sweatshops is unproductive, as markets should be run on commercial principles and altruism should be spared for individuals’ personal lives.

Sandel counters both economists, suggesting that altruism in public life is sorely missing, and that “altruism, generosity, solidarity, and civic spirit are not like commodities that are depleted with use” (158).