The title of Michael Sandel’s book What Money Can’t Buy is a misnomer: it should have been “What Money Shouldn’t Buy.” There are, of course, things that money can’t buy—love and friendship, for example (though a little money does help to get useful introductions). If you try to purchase love or friendship, what you will get will be corrupted by the very process of buying it, so what you get is not the real thing. But these are not what Sandel, a Harvard University philosopher and professor of government, has in mind. What he really argues is that attempting to buy and sell certain goods may be possible, but is immoral and (I suspect) should be illegal. In arguing this, he raises interesting questions but falls far short of his agenda.

Filthy lucre | It is clear from the book that Sandel does not like money. But, paradoxically, he gives money too much importance. He seems to assume that all voluntary exchanges must be for money. In reality, money is just a means of exchange, and some things that cannot be purchased with money can be exchanged through long-term barter sorts of relationships. You can't buy love with ad hoc money transfers, but you can buy it—or at least buy its maintenance—with a long-term package deal. You give me love, and I return love in exchange, for an indefinite period of time. The same goes for friendship. No lover or friend would continue to give if he did not get back in exchange something at least as good. Exchange is the master key of social interaction.

The issue on which Sandel focuses is that some things can be exchanged for money but they shouldn't be. One reason is "fairness," to which Sandel duly pays his respects (like to other politically correct causes), but he is too smart to rely on this fleeting concept for his main argument. He does suggest that introducing money in some transactions—say, exchanging a kidney for transplant—exerts "coercion" on the poorest party, but he also admits that queues are not necessarily fair either. He may not fully realize how the fairness argument can be turned on its head to support market transactions. For example, he argues against buying and selling the right to raise children, yet this would redistribute income from rich adopters to the poor who don't want to raise their offspring—and to the adopted children themselves.

Tainting and corruption | Sandel's main argument is about moral degradation: the very act of exchanging certain goods or services for money, he claims, changes the way they are perceived, taints and corrupts them, negates their "socially useful purpose," degrades their "social utility," and demeans people who trade them. He contends that the last few decades have produced "the commodification of everything" and that these market values crowd out moral values. An example is the viatical market, where investors purchase life insurance policies from individuals and thus benefit from their deaths. An institution that was designed to provide for the deceased's family has branched into a bet on his death. Similarly, the virtue of organ donation is destroyed by trade in organs. Sandel gives several other examples.

One problem with Sandel's thesis is that the purpose of something is generally in the eye of the beholder. For Sandel, "the purpose of public schools is to cultivate citizens"; for others it is to teach children to read and count, and prepare them to be free and self-reliant individuals. For some people, the virtue of life insurance is, or becomes, to sell their policies if they need the money before their deaths. The presumed moral virtue of organ donation is not worth much for somebody who can't have the organ he needs donated to him. And are not voluntary transactions on the market the very embodiment of morality? By definition, commercialization responds to a market demand. As a baseball fan, Sandel is distressed by the commercialization of his sport. When he was a kid, he could easily hunt his idols and get free autographs from them. Today's idols very democratically sell them to anybody.

There exist private ways to avoid tainting and corruption. Some institutions have evolved for this task. Marriage helps in the raising of children and douses the temptation of trying to buy with money what money can't buy. Religion, especially monastic religion, provides a means of avoiding the temptations of the greedy and sensual life. Nonprofit organizations and cooperatives skirt commercialization. Private academic standards prevent the buying and selling of credible diplomas. And if commercialization really depreciates baseball in a way that most fans dislike, an entrepreneur would make a bundle of money by creating a "Non-Tainted Non-Corruptive Major Baseball League." Advertising can often be avoided altogether if you are willing to pay for the products yourself, instead of letting advertisers pay for what you consume; for example, you can purchase software and apps with no advertising.

Even if one does not agree with these critiques, the question remains of who makes the valuation baselines from which things should not be degraded. What is "the proper way of valuing" things, Sandel asks? His theory "requires that we make a moral assessment": "we have to decide what values should govern the various domains of social and civic life." Sandel is apparently unaware that the political "we" has no ascertainable meaning or, if it does, implies either inconsistency (voting cycles) or authoritarianism. This implication of the Arrow Theorem and social choice theory still has not sunk into popular or philosophical culture, as Sandel's book illustrates.

Confused economics and politics | Sandel's understanding of economics, although better than other philosophers', shows many big holes. For example, he does not see that the expressive, sentimental aspect of gift-giving can by itself generate what economists call "utility" both for the recipient and the giver. He believes that baseball tickets are expensive because players draw high salaries, while the causality works the other way: the demand for baseball players is a derived demand—what club owners are willing to pay for inputs is derived from the price that tickets and advertisements can fetch on the market. He believes that economics is about maximizing "social welfare" "as the sum of people's preferences." This slippery notion of social welfare has been debunked by welfare economists, while others like Friedrich Hayek and Robert Sugden have convincingly argued that social coordination, not welfare, is the goal.

Sandel's understanding of politics is worse. It is not "we as a society," but the state—that is, politicians and bureaucrats—who will make the valuations he calls for. Like many philosophers, Sandel just assumes an ideal state. He ignores that the morals of the state, as it is and not as it should be, are generally worse than the morals of the market. Consider the current case of the Benedictine monks who have been prevented by the Louisiana Board of Embalmers and Funeral Directors from selling the caskets they make because they do not submit to the requirements of licensed funeral directors. Where is the compassion for the monks and for the poor consumers who want to buy less expensive caskets? Who profits obscenely from death? To paraphrase the author of What Money Can't Buy, there are virtues that coercive power cannot buy.

Sandel's thesis is undermined by an empirical problem: fewer and fewer things have become free to trade without special conditions, permits, and licenses.

On Capitol Hill, line-standing companies employ "standers" to spend hours moving along the queues to enter congressional hearings until, when they get close to the relevant hearing rooms, they cede their places to the well-heeled lobbyists who have purchased the service from the line-standing companies. The problem with this practice is not, as Sandel argues, the bypassing of queues, but rather the nearly unlimited power of Congress to give or take back favors and privileges, and the need for lobbyists to play Congress's political games.

The trouble with trading | If Sandel proves anything, he proves too much. He criticizes the unequal access to health care, but does not mention the parallel case of food. The comparison is even more striking if we borrow a thought experiment from Auberon Herbert and imagine that the state has accustomed us to free food. Philosophers would argue that the very fact of buying food for money would taint it, as it is transmogrified from a life-sustaining gift and a perpetuator of "society" to a greedy tool for farmers to make a buck. In Sandel's terms, the commercialization of food would also crowd out the civic virtue of farmers and grocers who previously worked for free, and teach the wrong moral lesson to food consumers.

Sandel's thesis is also undermined by an empirical problem. Is it really true, as he argues, that the last three decades have witnessed "market triumphalism" and "a world in which everything is for sale"? In fact, fewer and fewer things have become free to trade without special conditions, permits, and licenses. Data from the Mercatus Center and the Weidenbaum Center show that between 1960 and 2007—that is, even before the proliferation of post-recession regulations—the budget of the main federal regulatory agencies had multiplied 11 times in constant dollars, excluding Homeland Security—and 14 times if we do include state security.

Paradoxically, the less markets were allowed to function unimpeded, the more people tried to reinstate them in the interstices of the regulated society. The more laws and bans were imposed, the more the subjects of those restrictions came to see them as simply a cost of doing business or of living. The more rarified genuine market incentives became, the more the authorities tried to "incentivize" people, a word that Sandel understandably does not like. He cleverly notes that President Obama used the word 29 times during his first three years in office. An extreme case of incentivizing from the top was attempted in communist countries during a large part of the 20th century.

Sandel has a point when he criticizes the sale of commercial advertising in public schools or the sale of naming rights for public places, like the renaming of the Pattison Station on Philadelphia's subway system as the AT&T Station. But look carefully at what is really happening there. Virtually bankrupt governments, which have tried to impose the good life with high taxes and borrowed money, are now selling their subjects' public wares in order to maintain the aristocracy of reigning politicians and bureaucrats. And these are the organizations to which Sandel would grant more power to fight tainting and corruption!

Sandel is right to claim that economics cannot ultimately be disentangled from value judgments, a point that welfare economists have made ad nauseam. However, this entanglement does not imply that any act of exchange must be judged on its own merits and approved or banned by someone in authority. With tradable permits—whether on pollution, hunting, or conceivably on immigration or (why not?) free speech—Sandel sees the problem in the "tradable," while it actually lies in the "permit." And Sandel dismisses too easily the idea that we must economize on ethics by imposing as few constraints as possible on individual preferences and choices. Otherwise, the only solution to diversity and disagreement is to fight it out.

I, and most libertarians, believe that some things should not be traded. Examples include murder contracts and favors between government and rent-seeking lobbyists. The set of Aristotelian good-life taboos is not empty, but it should be defined more by Hayekian rules and spontaneous conventions à la Sugden than imposed from the top. Unfortunately, Sandel ignores this modern strand of analysis. Only a very limited set of banned exchanges can prevent politics from becoming the largest and most systemically corrupt market.

And am I imagining things, or does the author of What Money Can't Buy question commercialization only when it doesn't fit his own values or interests? Nowhere does he criticize the conception of marriage as a contract, probably because he rightfully agrees with this evolution. Nowhere does he argue against copyrights and commercial publishing, in favor of dispensing philosophical wisdom freely to the masses, at safe distance from the tainting of his own commercial publisher. And why would talking and writing about bad events like terrorist attacks be acceptable while, as Sandel argues, prediction markets for such events (proposed a decade ago by Robin Hanson and the Defense Advanced Research Projects Agency) would have corruptive effects?

The charitable interpretation of What Money Can't Buy is to see it as the interesting work of a philosopher recommending the best values to freely choose in our lives. But when the chips are down, after discarding the empty "we" and the angel-manned state, Sandel's effort resembles the proverbial Philosopher King intent on imposing his moral values on others. "[T]he kind of society in which we want to live" is the one the Harvard political philosopher likes. The good life, or else!

Readings

  • "Law, Legislation, and Liberty, Vols. I–III, by Friedrich A. Hayek. University of Chicago Press, 1973–1979.
  • "Social Welfare, State Intervention, and Value Judgments," by Pierre Lemieux. The Independent Review, Vol. 11, No. 1 (Summer 2006).
  • "State Education: A Help or Hindrance?" by Auberon Herbert. Fortnightly Review, July 1880. Reproduced in The Right and Wrong of Compulsion by the State, and Other Essays, by Auberon Herbert; Liberty Fund, 1978.
  • The Economics of Rights, Cooperation, and Welfare, 2nd ed., by Robert Sugden. Palgrave Macmillan, 2004.
  • "The Public Choice Revolution," by Pierre Lemieux. Regulation, Vol. 27, No. 3 (Fall 2004).