What Money Can’t Buy


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Book Review: Michael Sandel, What Money Can’t Buy, the Moral Limits of Markets (Allen Lane 2012)

Michael Sandel’s book powerfully articulates what the majority of people across the globe know is happening: markets and finance are taking over everything; positive moral values that people have held dearly are under threat in the process. The trading in everything from life insurance policies on AIDs victims to advertising space on people’s foreheads is corroding and debasing public morality and humanity itself.

Sandel is no high-minded crank, attractive to only a small minority. His lectures in Harvard are the most popular ever recorded and are now watched by millions of TV users in the USA and on the internet. His preceding book entitled Justice was a New York Times bestseller and his work is now translated in to 15 languages. Clearly, Michael Sandel is highlighting something of huge public importance.

While the book is entitled What Money Can’t Buy, the first chapter shockingly illustrates the power and reach of money. It can buy  a prison cell upgrade in Santa Ana, California for $82 per night; 9 months in the life of an Indian surrogate mother for $6,250 or the right to shoot and kill an endangered black rhino for $150,000.

Like many others, Sandel is curious why government and society still have boundless faith in markets even after the global financial collapse that has brought the sharpest recession in world history. The message is that the reach of markets has become institutionalised and embedded in ‘non-market’ forms. Traditionally, the police force was predominantly a non-market area, but now in the US and UK the number of private security guards is over twice the number of police officers. Similarly, in Iraq and Afghanistan, the number of private security contractors actually outnumber army soldiers.

The rise of markets has made ‘everything for sale’. Central to Sandel’s thesis are two objections to this development: firstly, in terms of fairness, life will be far more difficult or even dire for those who can’t afford essentials such as healthcare, food, a decent home or an education. Secondly, markets corrupt, by making everything subject to trade it ‘crowds out’ values which are good. These include altruism or bonds of decency which have become norms over thousands of years.

Sandel gives thoroughly researched examples of this process:  insurance companies lobbied the US government in the 1990s to relax insurance laws. As a result, large companies were allowed to purchase life insurance on their employees, even though the companies did not have an ‘insurable interest’ in the worker. This became the COLI (Corporate Owned Life Insurance) industry. Most workers did not even know that their employers had insured them and they did not give consent. In many cases, companies such as Nestle, Procter & Gamble, AT & T, Walmart and others, received hundreds of thousands on the death of each employee. After, the 9/11 attacks in the US, it was the big companies who were first to be paid. By 2008, US banks held €122 billion on the lives of their employees.

Sandel believes that practices such as these corrode human and moral values and are bad for society. In an even more striking example of how this occurs, he examines the ‘Viatical industry’ in the US. This was an insurance industry where those with terminal illnesses such as AIDs or Cancer could sell on their insurance policy at a large discount to investors. The investors had a vested interest in the death of the terminally ill person: an early death increased their financial return; if the person held on, the investor lost money! One AIDs victim who lived longer than expected due to new drugs became inundated by continuous phone calls and written correspondence to check had he died yet!

We know that the global financial collapse occurred due to the trade in futures of mortgage bonds with parcelled up sub-prime mortgages which eventually collapsed. Sandel outlines a new futures market in ‘spin life’ polices, where a senior person buys a life policy and sells it on as a profit to an investor who can cash it in on his death. In 2006 the ‘spin-life’ market was worth €16 billion a year. The TV presenter Larry King had spun a life policy on his death, getting $1.4 million for the policy. In a subsequent litigation, King was perturbed when he found out that due to the further trades on this policy, he would not be aware whether ‘a wall street hedge fund or mafia don’ would be the one to cash in on his death.

Sandel demolishes the standard account within the economics discipline, popularised by Nobel Prize Winner Ken Arrow, that commercializing any activity doesn’t change or debase it: Titmuss’s study found that the supply and quality of blood donated voluntarily in the UK was higher than in the USA which relies upon for-profit agencies to collect blood donations. Interestingly contaminated blood from the US caused the scandal of state infected hepatitis C in Ireland previously (see page 47 of the Lindsay Report).

Titmuss’s work verifies Sandel’s two fold theory: firstly, taking blood from the poorest on Skid Row was deeply exploitative (his fairness argument); secondly, if blood was paid-for, people viewed it as a commodity which stripped them of their ‘moral responsibility’ to donate it (his corruption argument). Consequently, trading in blood corrupted the altruistic motivation to donate blood. This demonstrates the corrupting influence of markets by ‘crowding out’ selfless and socially beneficial behaviour.

Further illustrations evidence a group of lawyers in the US who refused to do work for the American Association of Retired Persons when offered payment, but accepted once the work was done free on a voluntary basis. Also, in an Israeli crèche, most parents collected their children on time due to their moral responsibility. However, the latecomers increased once a price was introduced as a fine on late parents.

Sandel also refutes another central tenet of Arrow’s thinking: that good deeds are so scarce that we need to rely on the self interest of the market mostly.  Sandel shows however that: “altruism, generosity and solidarity are not like commodities that are depleted with use. They are more like muscles that develop and grow stronger with exercise”.

He believes that policy makers will discourage altruistic social values by leaving everything to be determined by market forces. In this case, the moral imperative is lost. For example, a country or company may feel entitled to pollute the atmosphere with one ton of carbon, once it purchases a pollution permit for $18.

All of these examples display the ‘moral limits of markets’. By using the market to control the supply and demand for everything, social responsibility, public morality, fairness and doing the right thing will suffer. People possess strong norms of what is right and wrong. For example, most people believe that a market for human kidneys is wrong, as is the purchasing of a wedding speech online by the best man. We cannot allow markets to ‘crowd out’ these cherished beliefs and norms. We cannot, as suggested by the Chicago School’s Gary Becker, use ‘The Economic Approach’ for everything. This book patently demonstrates that this is a dangerous myth. It is one founded by an ideological school in economics which has served/is serving the world badly.

A shorter version of this review was published in the Irish Examiner in May.


3 Responses

  1. Brian

    August 30, 2012 7:58 am

    What an excellent piece, even if you are a fervent believer in the economic markets and there roll in society, the examples given are well document and proven. Yet wealth has blinded society to the capitalist ideals that “more is better” and moral values can be bought and sold as profitable commodities as in the example of companies purchasing life insurance on their work force. Whats worse is that this will continue until we wake up from this idea that we can all be rich …. Capitalism promotes wealth to only the few and a few with little or no moral values.

  2. Kieran C

    August 30, 2012 8:22 am

    The rich pay orthodox economists to push the notion that markets are the best way to achieve the goals of society. But the rich really wish to achieve an expansion of markets so that there are more opportunities to make profits.
    These orthodox economists push the idea that wages should be lowered to inrease profits. This has been achieved by allowing the global free movement of capital leading labour in Europe to compete with labour in the developing countries, the free movement of labour within the EU which puts pressure on wages in the western EU and the marginalisation of Trade Unions in the EU.
    The result of these policies is to make the top 1% richer and the lower deciles of the population poorer.
    This is now the the real ‘Road to Serfdom’ for the vast majority of people nowadays. Hayek wrote a book with the title ‘The Road to Serfdom’extolling the virtues of the market and it’s expansion into all areas of life. He is a guru for the ideological right-wing economists

  3. Colin Quirke

    September 3, 2012 7:56 pm

    I believe Hayek has since disowned most of his earlier thesis. Which is not to say he is a fully reformed character, but those who use his arguments should be made aware that he now considers that work to be a folly of youth.

    It is perhaps of interest too that the original road to serfdom, as experienced from the fall of the Roman Empire to the rise of the European monarchs, when viewed in purely economic terms, was driven by the vast and unequal privatization of wealth by a small elite body whose interests increasingly diverged from the state’s, or any common good. Of course there is no single reason for the emergence of serfdom, and the Roman Empire was not a utopia.