Market morality

from David Ruccio

Both Michael Sandel and Deirdre McCloskey treat market morality as a very trivial thing, and easily understood.

For Sandel, market morality is based on the idea that “some of the good things in life are degraded if turned into commodities.” Therefore, “the market” should be circumscribed and delimited according to community norms and values. McCloskey’s view, per contra, is that “the market” is responsible for tremendous economic growth, and especially for the decline in world poverty. Her version of market morality is to encourage the flourishing of markets, anywhere and everywhere.

The problem is, both market moralists—Sandel and McCloskey—treat markets in an abstract fashion, as “the market.” Neither wants to discuss different kinds of markets: slave markets, capitalist markets, communist markets, and so on. And therefore neither wants to recognize the fact that the different consequences of markets depend, at least in part, on how market commodities are produced.  

Once we move beyond the idea of the abstract market—and thus the idea that market morality is a very trivial thing, and easily understood—we can begin to talk about the conditions and consequences of capitalist commodity production. The Sandels of the world would then have to confront the moral consequences of a large part of humanity being forced to have the freedom to sell their ability to work to the tiny minority who appropriate the surplus they produce. And the McCloskeys of the world would have to move beyond their moral defense of the origins of bourgeois virtues to consider the contemporary implications of the buying and selling of “fictitious commodities” such as labor, land, and money.

McCloskey is correct in chiding Sandel for wanting to undo the fundamental “‘unfairness’ of charging for Shakespeare tickets in Central Park.” There certainly is something more important at stake. But McCloskey, for her part, fails to recognize the continued existence of poverty in the midst of plenty—or the fact that those on top, in the name of bourgeois virtue, brought the world economy to the brink of disaster and continue to impose the costs of capitalist recovery on the rest of the population.

No, in contrast to the views of both Sandel and McCloskey, market morality is not a trivial thing, easily understood. To quote that nineteenth-century Moor, “Its analysis shows that it is, in reality, a very queer thing, abounding in metaphysical subtleties and theological niceties.”

  1. November 26, 2012 at 8:54 pm

    How should we read Hayek?

  2. November 26, 2012 at 8:55 pm

    Kenjikatsuragi's Blog でリブログ& コメント:
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  3. robert r locke
    November 26, 2012 at 10:33 pm

    Markets are not the problem. Society benefits when firms have to satisfy customer demand. The problem begins when the rewards firm’s earn from markets are distributed to stakeholders in firms. If they are unfairly distributed because the CEO and the directors decide who gets what, then injustice raises its ugly head

  4. Bruce E. Woych
    November 27, 2012 at 2:20 am

    Contemporary “market” or markets are both tangible and intangible reciprocal and/or exploitative networks. Markets are human intrinsically and extrinsically relations, not merely resource extractions, technology, production, distribution and redistribution in economic terms.The idea of splicing “market morality” seems an inversion of sorts. Morality within markets are standards of right and wrong and we all know that market pressures twist and shape acceptable or tolerance levels that distort standards of behavior. Legal morality takes on another shape within market transactions that produce desirable outcomes from undesirable sources / resources. Ethical behavioral rules are transitive formalities that often go the way of the outcome based forces of survival, and might making right is a tired cliche’ that is, none the less, a perennial favorite. Corruption, of course, is at the heart of a morality in markets but it seems that corruption is defined by the incidents not the prevalence of justice. In this regard there seems no real absolute morality to markets; but relativity is a social order of tolerance. Markets therefore are amoral in and of themselves; while the prevailing morality of a social order determines the dispositions and predispositions of interests in trade relations. Desperation, aside, it is not “market” morality but the nature of total contract ownership over dignity that is trampled when human beings are placed in a rank and file of market graded values that deny them an authenticity of being existentially whole.

    This article generates profound implications for further thought and definitive questions:

    • robert r locke
      November 27, 2012 at 8:44 am

      “Markets therefore are amoral in and of themselves; while the prevailing morality of a social order determines the dispositions and predispositions of interests in trade relations.”
      This is a key point. It means that the condition of civil society determines the efficacy of markets, and not the reverse, unfettered markets do not lead to a better civil society. The options we are presented in this English language blog by US and British educated economists is invarably the same. Either we get the intervention of the government (a sort of Keynesianism) to correct market failures or we are told to wait for the markets to correct themselves (with quotes from von Hayek). It is all so tiresome. Years ago I learned that economists discussed this issue for a long time in postwar Central Europe when they set up the social market economy. I mean Ordoliberalism from the Freiburg school of market economists, e.g., Wilhelm Roepke, archetects of the German economic miracle. When they used the word social with market economy that meant a moral as well as an economic order. All comments to bring their work to the attention of UK and US trained economists are done in vain. Instead we get this endlessly repeated.

      • Bruce E. Woych
        November 27, 2012 at 4:35 pm

        Thank you Robert; I believe the question of addressing the inherent pain and suffering is not a market problem, …but accusing “markets” becomes a buffer and a “distancing” mechanism from assuming true responsibility and standing ground against the real culprits of inequity in society and an all too tolerant “capitalist” monetary gaming system that grows desperately path dependent upon “zero sum” solutions;… Consider:

        Humanitarian Coverup: Why is Obama Silent Over the New Congo War?
        By Shamus Cooke
        Global Research, November 26, 2012

        Url of this article:

        Studies were once done concerning the distance factor in warfare when canon fire is sent from one human being to another and that “distance” becomes a disconnect from conscience and/or moral restraints (if not responsibility). Certainly war pilots have noted the disconnect between bombings and the ground impact in real time consequences to real time people. Today we have financial markets that speak to wealth while those same “markets” may work to starve global areas for the basic monetary gains of high value market distribution. The food supply is more impacted on this earth by a broker like Goldman Sachs than by necessity and human misery itself (and it is growing moreso under scarcity manipulations).

        The bottom line is monetary systems that convert misery from the focus of attention and make “wealth” the value of ultimate moral gradients. The question of ‘distance” and “consequence” is a handle on bridging that gap…but silence and accountability do not go hand in hand.

  5. Pavlos
    November 27, 2012 at 4:23 am

    Economists routinely fail to model markets properly. They just model the order 0 effect, that is the direct trade. Sometimes, for very circumscribed markets, this is enough.

    But in most real cases you have to model the order 1 effect of substitutes that the participants face. For example:

    – Powerful firm: Invest, milk position, or be nice
    – Competitive firm: Minimize costs, differentiate/advertise, or bankrupt
    – Executive: Self interest, shareholder returns, or coast/be lazy/be an ass
    – Middle class: This job, another job, self employed, or gap/savings
    – Female employee: Tolerate sexism, or even lower pay, or marry/go home
    – Unskilled worker: This job, another bad job, or no income/homeless
    – Migrant worker: This job, or no visa/deportation/the mob
    – Prostitute: Sell sex, or marry, or homeless/outcast

    It’s meaningless to discuss price equilibrium or welfare without considering these effects. Participants in the market will fare very differently depending on what alternatives they face. Generally the parties with the better alternatives (less compelled to trade) will increase their advantage over the parties that are more compelled.

    Then how about the order 2 effects (first externalities):

    – Banker: Heads I win, tails taxpayers lose
    – Factory: Install safety measures, or hope it doesn’t happen?
    – 3rd world laborer: No food because land is now used for coffee export
    – Western kid: All playstation because mum and dad never home
    – Fishing village: No income because fish exhausted

    And then you can go on to the 2nd externalities when these people fail in various ways in life and cause further problems. The point is mainstream economists treat markets as if the participants are non-compelled, non-externalizing, relatively equal agents. They’re not. The difference matters.

    • November 27, 2012 at 9:55 am

      Now you are talking! Pavlos, I’d appreciate an explanation of where you got your four levels of order from. Mine come from scientific computing language, but tie in.

      Bruce and Robert, fine comments. So morality (or lack of it) is like number: a familiar label, rarely defined, which is either derived from the Christian ethos or (in Anglo-American usage) understood via the shifting Humean sands of what it is agreed one can get away with?

  6. Bruce E. Woych
    November 27, 2012 at 5:02 pm

    History of ideas & ideas in history: cultural background for “moral” foundation :
    (some cross disciplinary research sources);
    Homo economicus
    For the journal, see Homo Oeconomicus.

    In economics, homo economicus, or economic human, is the concept in many economic theories of humans as rational and narrowly self-interested actors who have the ability to make judgments toward their subjectively defined ends. Using these rational assessments, homo economicus attempts to maximize utility as a consumer and economic profit as a producer.[1] This theory stands in contrast to the concept of homo reciprocans, which states that human beings are primarily motivated by the desire to be cooperative and to improve their environment.

    Side Bar:

    Homo Oeconomicus (HOEC) is an interdisciplinary peer reviewed academic journal publishing studies in classical and neoclassical economics, public choice and social choice theory, law and economics, and philosophy of economics.

    It has published articles from fields beyond economics,[1][2] and was once listed as a “Heterodox journal”.[3]


    Rationalization and the ‘Production Miracle’ in Germany during …

    The survey that follows here is a preliminary assessment of how and why rationalization was introduced into the German war economy and of the extent to which …


    Efficiency Movement – Wikipedia, the free encyclopedia –

    Similar to Efficiency Movement – Wikipedia, the free encyclopedia

    In the late 19th century there was much talk about improving the efficiency of the … In Germany the efficiency movement was called “rationalization” and it was a …

    historical counterpoint:

    Romanticism – By Movement / School – The Basics of Philosophy

    Like the German Idealism and Kantianism with which it is usually linked in a … was largely centred in Germany during the late 18th and early 19th Century. … Romanticism in general was a reaction against the scientific rationalization of Nature …

  7. Bruce E. Woych
    November 28, 2012 at 3:27 am

    Morality and “austerity” …as marketing society

  8. Bruce E. Woych
    November 28, 2012 at 3:35 am

    Observing History? Market generated transitions and social transformation:
    “…a thorough disenchantment with what liberalism has brought — austerity economics, a widening gap between rich and poor, hollow democratic institutions, a disregard for environmental issues. Many people in the region have come up against these shortcomings of liberalism and veered right, into nationalism. Another group has struck off in the opposite direction to create a new kind of progressive politics.”

  9. Bruce E. Woych
    November 28, 2012 at 4:06 am

    Last but not least we have “morality” in market media:

    what might be called “radicalizing factionalism” through marketing consensus
    becomes the foundation for a “Fiduciary State” under an “institutionalization” of history

    useful file reference materials:
    Media manipulation

  10. sergio
    November 28, 2012 at 6:22 am

    Those idiots from chicago school should have moved “beyond the idea of the abstract market”, when they promoted idea of free market in post-sociaist countries. Those countries still after 20 years experience complete disaster. Free markets brought nor prosperity, nor moral. Now, who will take responsibility for someone’s illusions which destroyed lives of millions of people in post-socialist countries? Where are those innocent idealist, as Friedman and his boys? Bring them to justice!
    If “the market” is responsible for tremendous economic growth, and especially for the decline in world poverty, now who will take responsibility for failure of free market policy round the world?
    “Encouraging the flourishing of markets, anywhere and everywhere” is immoral and criminal!

  11. November 28, 2012 at 2:09 pm

    Bruce @ #4: ” This [David Ruccio] article [on Market Morality] generates profound implications for further thought and definitive questions. Bravo!”

    Bruce @ #9 has generated a substantial and relevant research programme. Bravo to that too! Here are a few “profound” reactions to the readings he offered: not so much to “implications” as to exclusions and omissions.

    First, that none of them addresses the lead I offered at #8 about how David Hume radically transformed the concept of morality from the one based on the Aristotelian “virtue” ethic in its Christian form of error forgiveness and correction, to one based on a Hobbesian concept of voluntary acceptance of behavioural control by law.

    Second, that the definition offered by Mill of Economic Man altogether excludes morality, though in his defence I suggest that his Humean “moral sentiments” tended in practice to be as kind as Adam Smith’s were critical.

    Third, that the concept of rationalization is not incompatible with the unmentioned Christian morality just so far as it isn’t applied to mankind.

    Fourth, that late Victorian ideas on efficiency have still not been corrected in the field of politics and economics in light of Shannon’s 1948 demonstration of the tradeoff between reliability and efficiency, made possible by using redundant capacity for error correction very much along the lines of the Christian form of virtue ethic. A good system is not one that doesn’t make mistakes but one that can recognise, accept and correct mistakes before they do too much damage. In the middle of the second Slump, what does that say about our economists and political educators?

    Fifth, on Romantic philosophy – the history of which I found fascinating – it is curious how the Christian view of mankind made in the image of man – i.e. as a system made up of parts having different functions (1 Cor 12) – remains unattributed in these post-Humean narratives so often derived from it, and so has not led to an increased attention to understanding how sub-systems within systems work as we learn more about the architecture of and communications within the human body.

    Sixth, I totally agree with James Corbett on the evil of selling some unspecified ‘market economy’ by means of euphemisms which convey the idea that what is bad (like theft) is good (like austerity). I’ve previously pointed out how different forms of the same information – like the positives and negative of a photo – can look radically different, and how a compass doesn’t point North but aligns itself between North and South, so that without an independent reference like the North Star one can easily mistake precisely the wrong way for the right one.

    Seventh, another version of “Observing History” is “Reading the Signs of the Times”. For me it is not so much what is happening in Bulgaria that is the focus as how the same issues (like uncontrolled development) are coming up in one’s own patch, and even more significantly, how issues like this and abuse of “queers” are being used to “divide and rule”, i.e. fragment opposition to international control by fraudulent banksters.

    “Last but not least” we have “morality” in market media: getting away with what they can, and as now in Britain in reaction to the Levison inquiry, blackmailing governments vulnerable to their exposing the truth. With heartfelt sympathy for Sergio’s predicament I agree with his response at #13 to David Ruccio’s characterisation of McCloskey’s version of market morality: “to encourage the flourishing of markets, anywhere and everywhere”. The media markets created for misrepresentation, diversion, pornography and control via corporate advertising are “immoral and criminal”; the directors of such subversions of democracy should certainly be “brought to justice”.

    • November 28, 2012 at 3:22 pm

      Looking back over this, at “Sixth” it seems I should have drawn attention to the positive conclusion of the James Corbett video, which explained how the little Icelanders went about peacefully getting rid of their corrupt government and its fraudulent indebtedness. I see at #10 the video has now disappeared. Why? Because it is important? Bruce, would you please supply us with the relevant link?

      At “Seventh”, with the British media indicting ad nauseum the dead Jimmy Saville and Cyril Smith, it seems “abuse of and by queers” is being used to divert attention from live political economic issues.

  12. Bruce E. Woych
    November 29, 2012 at 12:19 am

    @davetaylor1 : “The Meaning of Austerity” from Youtube is still posted as I write, and if I add the link it will simply display the window again.

    British intellectuals mechanized reality and utility drove their sense of rationalization, but I think that if Hume were alive today he might actually address “Market Morality” (as well as political markets…) through the links found here:

    • November 29, 2012 at 8:25 am

      Bruce, I don’t believe Hume would have addressed “Market Morality” (in the sense of written about: he might well have studied it) that way, because he was in the market selling atheism in competition with naive and corrupted forms of Christianity. It seems his actual tutor may have been the cynic Voltaire.

      You are absolutely right that “Psychological manipulation” is what marketing is all about, though, and that is why keep trying to make the point that economics is an INFORMATION system, not a physical nor even merely a Geoff Davies life system. It doesn’t just involve complexity, it involves COMPLEX TRUTH, which must not only compute true but contain no errors or systematic lies.

      As others have said, the economy depends on us being sufficiently trustworthy. That said, why should we be trusting bankers rather than Everyman? The double bluff, surely, is bankers selling themselves to naive innocents as more trustworthy than they are.

      • November 29, 2012 at 8:31 am

        “More trustworthy than THEY are”, i.e. the naive innocents. Apologies for the ambiguity.

      • Bruce E. Woych
        November 29, 2012 at 9:56 pm

        @davetaylor1: It is a pleasure to exchange ideas with you! I probably will side with the idea that a “contemporary” Hume would see morality from a psychological point, but the “empiricism” of Hume (while split between middle class liberalism and class loyalty) may well have seen “manipulations” as a form of utility that comes under “market” application, but his sensitivity to a constant standard of moral character was old fashion “Trait” theory (which may well have translated in the 20th Century of class & personality theory.

        It is interesting to compare:

        Moral sense theory
        An Enquiry Concerning the Principles of Morals

        I would venture to guess that Hume would follow in course (the 20th Century) with something akin to:

        ….perhaps academic chit-chat; but interesting stuff none-the-less!

        Thanks Dave:

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