Stanford philosopher examines why some things should not be for sale
Philosophy Professor Debra Satz explores the moral limits of free markets in a democratic society.
The free market system shapes individual choices and decisions, fosters innovation and facilitates transactions between large groups of people. But along with commodity markets for things like corn and copper there comes a dark side of globalization.
Markets such as those for human organs, child labor, weapons and addictive drugs have expanded their reach as communism collapses around the globe. The diamond trade fuels bloody wars, people are trafficked across continents and wealthier countries ship toxic waste to poorer ones.
A mention of these corrupt industries typically evokes a visceral, negative response – but why? What differentiates a market for human kidneys from one for education when the more socially acceptable industry can have as much detrimental impact on society as the explicitly immoral one?
Stanford philosophy Professor Debra Satz tackles that question in her latest research focused on the ethical limits of markets. And, she raises important issues related to seemingly less reprehensible markets like those for health care and education.
In her search for a more nuanced understanding of markets, Satz found that existing economic and philosophical studies tended to present a one-dimensional picture of markets as economically efficient structures that lacked the social scientific realities of trade.
"It is hard to accept that we are each other's equals, when some are so poor that they cannot afford basic medical care, or where some schools are so inadequate that poor children cannot compete on equal terms with those of the wealthy for college and careers," Satz said.
Her research is outlined in her book, Why Some Things Should Not Be for Sale: The Moral Limits of Markets.
"A market in votes might be 'efficient' in the sense that there are many people who would be willing to sell their votes and many who would want to buy them, so there would be gains from allowing trade," she said.
But, she explained, "That doesn't mean that we should introduce a legal market in votes. Rather, we need to be guided by political and ethical considerations."
Measuring noxious levels
Questions about why some markets are perceived as more problematic than others led Satz to develop a new method for measuring the "noxious" level of a particular market using four indicators.
The first two indicators concern the sources of the market. These are what Satz refers to as "weak agency" and "vulnerability."
The second two concern the effects of a market.
"Some markets have extremely bad outcomes for individuals and some have extremely bad outcomes for society," she said.
Satz's hypothesis is that the "higher a given market 'scores' on these different dimensions, the greater will be our intuitive distrust and, in the extreme, our disgust about that market."
Weak agency involves both poor information and also limited decision-making with respect to the market. As an example of extreme harm to individuals, Satz explained, "consider markets that lead to the depletion of the natural resource base of a country or to the fueling of a genocidal war. Or consider child labor markets, which score high on many parameters."
From the egalitarian perspective that Satz describes, a common characteristic of many noxious markets is the underlying "origins in destitution and desperation."
In considering the child labor market, Satz pointed out that children are weak agents because they generally do not trade their labor – their parents do.
"Parents can be weak agents because they often lack information about the true costs of pulling their children out of school," said Satz. Because the people involved in child labor markets are typically the "poorest of the poor" they are the most vulnerable. In addition to harming the children, this market clearly harms society since uneducated children make unproductive workers and poor citizens.
Satz argues that some goods ought to be kept out of the marketplace because when "exchange for these goods is adopted as a social practice (in markets) they reinforce significant inequalities of bargaining power and sometimes of political power that leads to extreme harms."
When the free market concept fails
Like a market for human kidneys, Satz says markets for seemingly less offensive products such as education and health care can register high on her noxious scale.
By allowing a marketplace where the rich can buy a vastly better private education or where the poor cannot purchase health care, governments are reinforcing inequalities that are at odds with the concept of equal citizenship that is the foundation of a democratic society.
A democratic government requires that people in a society not be so poor as to be excluded from the society's institutions, or that "no one count for nothing" as Satz put it.
Director of the Bowen H. McCoy Family Center for Ethics in Society, Satz argues that democratic citizenship requires equal political status, equal civil status in the market and, finally, equal social status.
"No one's ability to participate in their society should be blocked because they have too little money, or are too uneducated," she said.
The concept of equal citizenship puts some inherent restrictions on the extent to which the market can determine the life chances of individuals. Or, as Satz put it, "There are some goods that bad luck should not be able to take away."
Although Satz's egalitarian suggestion sounds logical, the fact remains that nearly one-sixth of the world's population lives in extreme poverty, a scenario that will continue to support noxious markets that are fueled by economic desperation.
Markets allow people who disagree about what has value, as well as about how to live, to cooperate as each other's equals.
But, as Satz said, "in order for two people to meet as each other's equals there must be limits on the market."
The free market concept fails when some participants lack basic information about the goods they are exchanging, when there are negative external effects on third parties or when some of the participants are "so poor that they will accept any term that is offered to them and when they have no alternatives to rely on," said Satz.
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Brooke Donald, Stanford News Service, (650) 725-0224, email@example.com