Michael Sandel raises two common objections to the notion that everything should be a market good and therefore be for sale. One is about fairness, the other about corruption1. The former "asks about the inequality that market choices may reflect" and the latter "asks about the attitudes and norms that market relations may damage or dissolve"2. In other words, being able to buy a noble prize might corrupt the value of the noble prize as a whole and being able to buy a kidney might force the poor to sell their kidney whilst they wouldn’t be able to afford one should they need one.
This essay will focus on the objection from corruption. I believe this objection to be the stronger of the two but I also believe it to be wrong. Sandel omits what I perceive to be the crucial property that can lead to the corruption of a good; the scarcity of that good. A nobel prize that is awarded every month is automatically less valuable than one that is awarded every year. Furthermore, I’ll argue that it is not the market that is the corrupting force. If a market is created for a good and that market seems to diminish the value of this market good, I do not perceive the market per se to be the corrupting agent but the action of making transparent the value of a certain good.
Sandel’s argument for the corruption of certain goods, should they be for sale, is based on a view that questions the "[s]tandard economic reasoning [...] that commodifying a good [...] does not alter its character"3. His thinking is of course that the alteration in character that takes place if a good is commodified is that it is corrupted. I do not believe this to be the case. It is not the good that is altered in character, it is our perception of that good that gets altered.
The Opacity Of Nobel Prizes
I agree with Sandel, a nobel prize that can be bought does not carry the same value as before. At least my first intuition tells me so. But before we get ahead of ourselves, let’s look at this example closely.
First of all, we should try and be realistic so that we do not create a straw man example. Nobel prizes will never be completely commoditized. There will never be a situation in which you wire a certain amount to Sweden and the next week you’ll be able to call yourself a nobel prize winner. This is the first and a very important aspect Sandel overlooked: Scarcity. The perceived honor a certain thing carries is more closely tied to its quantity than it is to whether it carries a price tag or not. An "I love you" spoken from a close person will carry more value if said person only tells it to you and not to everyone. No matter whether those "I love you"’s are sold or not. The same goes for nobel prizes, it makes one world of a difference whether there are five prizes a year or whether there are a thousand.
So suppose that all Nobel Prizes are now up for sale. That means that anyone can suggest people for consideration. The suggesting agent however, will have to pay for the prize should their suggested participant win the prize. You still will need to show excellence in your field, a chemistry nobel prize will still only be handed out to a leading chemist. So, highly distinguished individuals in their field will now have to look for financial backing should they themselves be wanting to "acquire" such a prize. I see two possible scenarios coming from this: Either, universities start to assess their professors and their research and decide carefully each year if they want to hand in an application and if so to whom it should apply. The same would be the case for publishers and the literary nobel prize. In such a scenario, the nobel prize would carry the same weight it carries now, the process would just be more transparent and more costly for the winner. Such a scenario would also raise stronger objections from the objection from unfairness than from that of corruption.
In the second scenario universities would drop out and the prize would have a diminished value in academic circles. Corporate agents (pharma companies for example) would step in and suggest their excellent researchers for consideration. The alignment of the prize would change, its value would change over from honoring excellent academic research to honoring excellent corporate backed research. Is this corruption? No. The prize is still awarded to standouts, only the alignment has changed. The academic world would certainly be fast in coming up with new prizes to honor its standouts.
Markets Are Not Created Out Of Thin Air
There are two points that I want to stress. The first was already mentioned earlier, the scarcity of a good correlates with the perceived value of a good. The second is that the critics of selling everything, such as Sandel, sometimes seem to think that people would be spearheaded when creating new markets. Of course, the writings of some economists do suggest just that. But as I explained with the nobel prize example above, if nobel prizes will ever be up for sale it will not be in a moronic way, so that every John will be able to purchase one. Markets are always created in relation to the goods that are sold, markets are not created out of thin air.
All of Sandel’s examples and mine of the nobel prize above have one thing in common: the provided good would be monopolized. Only I can sell my kidney. Only the Nobel Prize Committee can sell the nobel prize. Only I can sell my love. And all those goods that would not be monopolized when commoditized by being market goods (arguably also kidneys) would not be touched by the objection from corruption. Think of all the goods that we think of as honorable, as carrying mostly immaterial value, all those goods would be monopolies. Yes, everyone could sell their love but if they want Peter’s love, they have to get it from Peter. A fake nobel prize is not a nobel prize. Only the nobel prize is the nobel prize.
What does that mean? Monopolized markets are special markets. They do not adhere to the standards of supply and demand because supply is completely controlled by one entity. Their value is then, if you so will, controlled by the holder of the monopoly. Even if nobel prizes are for sale, as long as they are scarce and not commoditized, they will not be corrupted.
This brings me back to my first point, the scarcity of a good. The available quantity of a good is the real mediator of its corruption. A nobel prize that is awarded every month instead of every year is automatically less valuable, no matter whether you bought it or not.
Another example of how scarcity works is the software world. There are so called open source licenses, such licenses grant every user of the provided software the rights to distribute, modify, change and commercialize the provided software. This seems to be the exact opposite of the argument of commodification. The commodities are provided for free, software that is licensed in such a way, is completely eradicated from the market. The biggest commodification of all is making it free, giving it to everyone, putting it out of markets. But, and this is a huge but: Those goods are not commodities. They are closer to being public goods, provided for free to all and worked on by many.
The goods that are market goods in the modern software world, are not the software itself but the services built on top of it. The scarce goods, the excellent use cases, are those that are up for sale. Not the software. Everyone can use the software.
It is not yet clear to me, what exactly the objection from corruption says. Does it say that all commoditized goods are at least to a certain extend corrupted? Or does it say that goods that carried some characteristic of honor or immaterial value before they were commoditized are corrupted? Or, does it mean that the commodification of a good equals the corruption of that good?
All three are wrong, tough. The first and third one are negated by the Open Source example and the second is negated by the simple fact that other objects, such as paintings, that hold mostly immaterial value are not understood as corrupted. Picasso’s works are not corrupted just because they were sold.
Putting A Prize On It
I suppose that there might still be some critics that are unconvinced of my arguments. They would argue that a nobel prize is corrupted as soon as it is up for sale. This would then bring me to mention the point I made at the beginning, putting a good up for sale does not yet corrupt it. Attaching a price to it does. If we’re being honest, everything does have some sort of transaction cost; you invest time and effort in your friendships, scientists need funding to be able to do research. In other words, winning a nobel prize has huge amounts of transactions costs that were used for the scientist’s education, training and research (and that is to simplify the matter considering that there are usually teams of researchers at work). The cynic would now say that putting a prize on a nobel prize has just raised the transaction cost the tiniest amount. My idea, however, is much simpler: as soon as we put a prize on something, we take away some of the magic. A prize is nothing else than a completely transparent expression of value.
Think about it, a nobel prize is not corrupted because it is for sale. It is perceived as corrupted because it has a prize. If we are being honest with ourselves, we must admit that everything carries value and the cost behind the value we perceive a good to have is mostly hidden.
If the value and by that the real prize of something is hidden, it carries still some magic juice that lets our brains be irrational about it. Putting prizes on a good takes that away. This act is the one we intuitively understand as corruption. But is it?
Let’s think back of Sandel’s view that selling nobel prizes will alter their character. If we look at the language I used, one thing stands out: I said that you "acquire" the prize, you do not "win" it anymore. But does that really mean that the good itself has changed? My view is that it is not the object that has changed, it is the relation we have to the object that has changed. And that, in my view, says more about us humans and our preexisting cognitions, biases and world-views than it says about the good and its corruption.
I do feel with Michael Sandel. I share very much his intuition that there should be limits to markets. That there should be things that aren’t for sale. However, I find it painstakingly hard to find arguments that support such a claim. As I showed in this essay, the objection from corruption does not hold as long as we are realistic in our examples. A scarce good will not become a commodity just because it can be bought. And even if it would become a commodity, being a commodity is not equal to being a corrupted good.
This is really the point I tried to make in my argument. The scarcity of a good is of much greater importance to its perceived value than is the fact of whether the aforementioned good is obtainable through financial means. I share the intuition that markets are something that should be handled carefully. It is just very hard to hold that intuition up when considering some reasonable arguments brought forward by market proponents. Maybe it is just so that we, as flawed human beings, can not create such a thing as perfect markets and that, morally speaking, if we could, we should. But as long as we remain flawed, we maybe shouldn’t.
Let’s hope that my initial assessment was wrong and that the objection from fairness is actually the stronger objection. Let’s hope that it holds up better than the objection from corruption did. Otherwise we might have to start to sell our kidneys, our friendship, our love.
Sandel, Michael J. 2012. What Money Can’t Buy: The Moral Limits of Markets. Penguin Books.
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