In What Money Can’t Buy, philosopher Michael J. Sandel argues that market values have become society’s dominant moral framework, the lens through which we determine what is important or unimportant as well as right and wrong. Sandel warns that the logic and incentives of markets—where there’s no limit on what’s for sale as long as someone’s willing to buy it, and individual self-interest trumps the common good—have supplanted older value systems which held that some things were too important to be subject to the impersonal and calculating forces of supply and demand. He writes that this triumph of market values has had severe negative moral and social consequences.
(Shortform note: Defenders of free markets would argue that Sandel’s concerns about market values ignore the great benefits that capitalism has delivered to humanity. Some commentators write that the spread of capitalism has been the single most important factor in alleviating global poverty and raising worldwide standards of living. In the 200 years since the dawn of the Industrial Revolution—when global capitalism arguably entered its modern phase—the share of the world population living in extreme poverty has fallen from 94% to less than 10%.)
In this guide, we balance out Sandel’s perspective on market values by incorporating commentary from more pro-capitalist writers who make the moral case for markets.
We start by defining market values and examining the reasons why their proponents believe that the ethics and mechanisms of the marketplace are an appropriate, efficient, and equitable way to allocate society’s resources. Next, we explore how these market values came to play a preeminent role in shaping our moral values.
We then look at some of the main problems brought on by our market-dominated society, including the inequitable distribution of goods, services, and experiences and the elimination of true freedom of choice for those lacking insufficient economic resources. Finally, we explore Sandel’s analysis of the corruption of moral, civic, and social virtues at the hands of an unfettered free market—and his call for our society to truly debate and decide the proper moral limits of the market.
Praise and Criticism for What Money Can’t Buy
Although What Money Can’t Buy received less fanfare than Sandel’s previous work Justice, it was still generally well-received by critics. Reviewers applauded the book’s measured and politically philosophical approach. One critic also lauded Sandel for bringing the discussion of our market society out of academia and into the public discourse.
However, some critics pointed out the book’s lack of specific and practical solutions to the problems that Sandel identifies. In particular, skeptics pointed to the apparent hollowness of Sandel’s proposed solution to the problem of the overbearing influence of markets: to simply “debate” these markets’ role in our lives. They noted Sandel’s lack of clarity on what the parameters of such a debate would be, who would mediate it or decide its outcome, and how we might implement its results.
Other reviewers noted that the book fails to establish a clear framework for answering its central question: What should be the moral limits of the market? By failing to create some test or standard for when a particular transaction has violated moral norms, these reviewers argue that Sandel’s book leaves the reader with no clear guidance for which market behaviors are moral and which are immoral.
Sandel defines market values as the logic, attitudes, and assumptions that govern markets—where there’s no limit on what’s for sale as long as someone’s willing to buy it, and individual self-interest trumps the common good. Below, we’ll explore the primary arguments defenders of market values use to support their position.
Sandel writes that supporters of market values claim free markets are the optimal (most “efficient”) way for society to distribute scarce resources. The primary way the market allocates resources is through the price system. In a free price system, there is no need for an external actor (like a government or regulatory authority) to limit or set quotas on what goods or services are to be produced—prices do that on their own, determining what goods are to be produced, in what quantities, and who will get them.
The invisible hand of supply and demand, according to the free-market argument, provides the key self-correcting mechanism that makes the price system work. For example, when the price of Good A increases, consumers start to demand less of it or find alternatives for it. This drop in demand signals suppliers to reduce its price and produce less of it. On the other hand, when the price of Good B decreases, consumers will begin to demand more of it. This rise in demand acts as a signal to suppliers to increase the price and produce more of it.
(Shortform note: As Thomas Sowell explains in Basic Economics, suppliers have a financial incentive to match their supply to consumer demand. This is what makes the market self-correcting and “efficient.” If vendors supply more goods than consumers demand at a given price, they sit on unsold goods and suffer a loss of profits. Similarly, if they supply fewer goods than the market demands at a given price, they run out of stock and lose out on potential profits.)
These price mechanisms are cyclical: After the price of Good A begins to decrease, demand for it will increase once again, which will lead the price to increase, which will reduce demand, and so on. Similarly, after the price of Good B starts to increase, demand for it will decrease, which will lead its price to decrease, which will, in turn, increase demand for it and lead its price to increase once again in a continuous cycle.
(Shortform note: Critics of free markets, on the other hand, argue that the price system often fails to work in such a neat and orderly way. These critics argue that the price system is subject to limitations and potential failures. In a monopoly, for instance, one firm gains complete control of the market, locks out competition, and is able to effectively dictate prices at will—far above what the price would be under normal competitive conditions. In doing so, monopolies interfere with the competitive price system that is meant to rationally allocate resources, because consumers have no alternatives and must accept the price offered by the monopolist.)
Multiple Meanings of “Market Efficiency”
Note that “market efficiency” has multiple definitions in economics.
In a 100% free market, the price of a good is determined by supply and demand. In other words, the free-market system assumes that a good has no inherent value—it’s worth whatever people will pay for it.
But “market efficiency” can also refer to markets in which prices are rational and transparent—they reflect “true value” by incorporating all available and relevant information about the item being sold.
Market Inefficiencies and Arbitrage Opportunities
In this second sense of the term, when markets are “inefficient,” prices don’t accurately reflect all available information, and, as a result, different markets will often have slightly different prices for the same good. This creates arbitrage opportunities for speculators—enabling them to simultaneously purchase an asset in market A and sell it in Market B, exploiting the small differences in price between the two markets and creating a temporary opportunity to make a risk-free profit.
For example, a stock may be simultaneously trading at $100 per share on the Hong Kong Stock Exchange but at $100.02 on the Bombay Stock Exchange, enabling high-frequency traders to make instantaneous purchases and sales on the two exchanges for an automatic profit of $0.02 per transaction.
However, arbitrage is always a short-lived opportunity—in fact, in today’s financial markets, arbitrage opportunities often only last for a few seconds. In our example, the buying activity of the speculators will inevitably raise the price of the stock on the Hong Kong Stock Exchange, while their selling activity will lower its price on the Bombay Stock Exchange, bringing the two prices back to the same level and eliminating the arbitrage opportunity. Thus, these market inefficiencies are self-correcting: They are eliminated by the very activity of the speculators that exploit them.
According to Sandel, the ethical theory of utilitarianism is one of the key intellectual supports for market values. Developed in large part by the English philosopher Jeremy Bentham (1748-1832), utilitarianism is primarily concerned with outcomes and prioritizes ends over means. Its central tenet is that we should seek to maximize overall happiness (or “utility,” as Bentham called it) for the collective. Any action that maximizes net utility is morally justifiable, even if it decreases utility for some individuals. Thus, it would be morally correct to kill one person to save the lives (and, therefore, increase the utility) of 10 others.
Sandel writes that defenders of market values apply the principles of utilitarianism to free exchange. Utilitarians don't question which goods and services should be up for sale, only how much happiness that sale would bring: According to them, we could sell anything as long as the sale created happiness.
Further, Sandel notes, utilitarians believe that as long as parties freely contract to exchange goods and services, selling anything does usually increase the utility of both parties. The seller of a good receives the money she wants (which she must value more than the good itself, or she would not have put it up for sale at that price) and the buyer receives the item she desires (which, in turn, she must value more than the money she used to buy it, or she would not have made the purchase).
To illustrate the utilitarian argument, Sandel uses the example of companies that pay individuals to promote their brands—often, these individuals agree to wear clothing bearing the company’s logo for a designated period of time. Some companies have taken this to an extreme and paid people to tattoo their logos directly on their bodies, in effect turning these individuals into sentient billboards. Many would find such a transaction to be immoral because it is degrading to the person receiving the tattoo and reduces them to a mere instrument of someone else’s profit. But according to Sandel’s interpretation of the utilitarian defense of market values, this action is morally justifiable because the free exchange promotes the utility of both parties—the company receives the promotion they want and the person receiving the tattoo gets the money they want.
Kantian Ethics vs. Utilitarianism
Utilitarianism stands in contrast to another great moral philosophy of the Enlightenment: Kantian ethics. Developed by the German philosopher Immanuel Kant (1724-1804), this system of ethics teaches that it is wrong to use human beings as mere instruments to promote the utility of others. According to Kant, human beings have innate value by virtue of their status as human beings. This ethic transcends Benthamite ideas of utility—even if an action maximizes your own utility, it is immoral and an affront to your self-worth as a human being if it transforms you into just a means to an end.
Sandel’s example of an individual turning their body into a commercial billboard for cash violates Kantian ethics, even if that person is doing so willingly and earns a fair market price for it. In so doing, this person (and the company paying them to do it) is consenting to turn herself into an instrument for someone else’s gain—a choice that, according to Kantian ethics, can never be a moral one.
Finally, according to Sandel, market defenders argue that the ability to buy and sell on the open market is a fundamental human freedom. This argument, drawing on libertarian and classical liberal principles, says that as long as the parties to a transaction aren’t hurting anyone else, there’s nothing wrong or immoral about any voluntary exchange.
Economic Freedom and Total Freedom
Conservative economist Milton Friedman explores this principle in detail in Capitalism and Freedom. Friedman writes that economic freedom is an essential component of total freedom—the ability of an individual to pursue her own happiness and fulfillment without any external impediments. For Friedman, a society cannot have political freedom without individual buyers and sellers in a marketplace being able to engage in voluntary transactions that satisfy their needs. He further writes that there has never been a successful example of a society that had both state control of the economy (in the form of socialism or communism) and political liberty.
Friedman argues that political power is inherently dangerous because it can be easily concentrated and centralized in the hands of the few. Economic power, however, works differently. In a well-functioning capitalist society, millions of individual buyers and sellers make decisions about which goods and services they require to satisfy their needs. As long as there are no monopolies, buyers are free to choose their sellers, sellers to choose their buyers, workers to choose their employers, and so on. Thus, according to Friedman’s argument, markets are, by their nature, decentralized—maximizing individual freedom and choice.
We’ve discussed what market values are and what their defenders say are their benefits, but how did these values come to dominate society in the first place? Sandel suggests that the expansion of free-market values began with a political shift to the right in the 1980s, largely due to the rise of British Prime Minister Margaret Thatcher and US President Ronald Reagan. It was their political success that created the conditions for capitalist values to permeate into spheres of life that had previously existed apart from the market.
As Sandel writes, Thatcher and Reagan were the leading ideological proponents of neoliberalism—believing that a reduction in taxes on the wealthy, privatization of previously state-owned enterprises, and an overall reduction of the state’s role in the economy would unleash a new wave of investment and prosperity. These two leaders substantially remade the economic order in each of their countries—bringing down inflation, sharply reducing top marginal tax rates, and deregulating a wide range of industries from aviation to trucking to banking.
Was the Conservative Revolution a Failure?
In the United States, Republicans see Ronald Reagan as the patron saint of economic conservatism, a figure whose presidency shifted the American political and economic consensus significantly—and permanently—to the right. In their telling, the so-called Reagan Revolution smashed the old liberal New Deal consensus, with its emphasis on an activist role for the federal government in the management of the economy, and replaced it with a pro-business, laissez-faire vision that continues to this day.
But some critics contend that Reagan never truly succeeded in achieving his economic policy goals, despite his political success. These detractors point to federal spending increasing during the Reagan presidency, his administration passing the largest tax increase in modern history, and his bipartisan deal to save Social Security by enacting large increases to the payroll tax.
In Britain, meanwhile, Margaret Thatcher’s government succeeded in making many long-lasting changes to the British economy—including reducing the influence of the once-powerful trade unions, boosting industrial productivity, and presiding over rising rates of homeownership. However, detractors argue that Thatcherism left behind a dubious legacy that included a sharp rise in the poverty rate—and a particularly alarming spike in the child-poverty rate.
The Fall of Communism and the Rise of Economic “Shock Therapy”
The collapse of the Soviet Union in 1991 and the subsequent decline of communism was another watershed moment in economic history that further entrenched the primacy of the market society. With the demise of communist-style planned economies, there was no longer any alternative model to free-market capitalism. Throughout the 1990s and 2000s, former Communist bloc countries like Russia, Ukraine, and Poland became capitalist economies.
This transition from planned economies to market economies often occurred with lightning speed and traumatic social and economic outcomes. In The White Man’s Burden, William Easterly writes that, following the 1991 collapse of the Soviet Union, Western economists implemented what they called “shock treatment” programs in Russia and other former Soviet republics. This entailed the sudden removal of protectionist measures like price controls and state subsidies and the immediate privatization of state assets. The theory was that these reforms would unleash a new age of entrepreneurship that would help these Communist bloc countries transition from authoritarian, planned economies to liberal, free-market economies.
The results, according to Easterly, were disastrous. Following sudden economic liberalization in the 1990s, many former Soviet republics experienced inflation, high unemployment, poverty, economic stagnation, and the rise of a plutocratic class (often drawn from the ranks of former top Soviet officials) who used their connections to buy former state-run enterprises at bargain prices.
Sandel notes that we are living today with the legacy of these momentous political and economic events. The emergence of free-market capitalism as the sole, uncontested economic model, he writes, has profoundly shaped how we view the role of markets.
According to Sandel, our society places an increasingly greater degree of faith in markets as the optimal way to distribute goods and services. This has caused markets to play a more dominant (and in Sandel’s view, distressing) role in our lives.
Our Growing Trust in Markets
According to some data, Sandel’s assertion that we have a high degree of trust in markets seems correct. One 2021 survey found that 54% of Americans trust business—a higher figure than for nongovernmental organizations, the government, or the press.
However, other surveys report widespread dissatisfaction with the prevailing free-market global economic order. According to one survey, 56% of respondents said that 21st-century capitalism has done more harm than good—while only 20% said the system was working for them personally. The surveyors argued that fears of future job losses, rising levels of income and wealth inequality, and well-publicized incidents of public corruption have significantly eroded confidence in both capitalism and democracy.
Sandel has several critiques of this marketization of society. We’ll start by examining his arguments that 1) free markets create inherent inequalities and injustices and 2) free markets often eliminate free choice for people and force them to make dangerous or unethical decisions.
Earlier, we explored the pro-market argument that prices represent the fairest and most equitable way to allocate society’s scarce resources. According to this argument, if the price of a good (in a properly functioning market) reflects its true value and someone’s willingness to pay that price reflects how much they value that good, then prices will always get the goods to those who value them most.
However, Sandel writes that the distribution of resources—often essential resources—on the basis of the price system is incompatible with widely accepted moral principles.
He writes that someone’s willingness to pay the asking price for something does not necessarily mean that they need or want it more than someone else, and that, therefore, free markets create inherent inequalities and injustices.
Those with substantial means can afford things they don’t need, while those with insufficient means are unable to acquire basic resources like food, shelter, clothing, or healthcare. While Sandel acknowledges that this may be “efficient” from a purely economic perspective, it is not morally correct for some people to be deprived of things they need while others have more than they can ever consume.
Conspicuous Consumption and Luxury Taxes
Sandel’s idea of rich people being able to afford goods they don’t need—and thereby driving up prices for everyone else—is closely related to what’s known in economics as conspicuous consumption. This is the practice by which consumers demand either a larger quantity or higher quality of goods than they actually need or more than is economically efficient. Conspicuous consumption is often for show—people buy visible, materialistic things to demonstrate their wealth, prestige, or social status to others.
Some economists view the existence of conspicuous consumption as a symptom of troubling wealth inequality and a waste of capital that could otherwise be directed toward more economically and socially useful purposes. To correct this problem, many jurisdictions have imposed luxury taxes on expensive goods like yachts, jewelry, private jets, and furs.
Shortform Example: Inequality and the US Healthcare System
For an example of Sandel’s argument that free markets generate unjust inequalities, we can look to the American healthcare system.
In the US, employers contract with for-profit insurance companies to provide health coverage for their employees. These employees then seek treatment from for-profit doctors and nurses at for-profit hospitals and clinics. Unfortunately, people who are either unemployed or who can’t afford to purchase health insurance on the open market have no choice but to forgo treatment—indeed, as of 2018, nearly 28 million Americans had no health insurance at all. And even those Americans who do have insurance often find themselves saddled with surprise six-figure medical bills, sending them into bankruptcy and financial ruin.
This goes against what many consider to be a core tenet of medical ethics—that access to healthcare is a fundamental human right that should not be rationed according to someone’s ability to pay for it.
Sandel further argues that “free” markets are often instruments of coercion—pushing people to make dangerous and unethical choices that they would never make without the pressure of having to compete and succeed in the market.
He writes that living in a market society puts individuals and families under constant strain—they need to earn enough money to afford the basic necessities of life like food, shelter, education, and healthcare. Most earn the money they need by selling their labor to an employer. Sandel notes that this type of employment is not necessarily coercive or exploitative—after all, employees are free to leave their jobs whenever they like for any reason they wish.
However, Sandel notes that the pressure of surviving in a capitalist society often puts people in positions where they must, out of sheer necessity, exploit themselves for profit. Since such people are often facing severe material deprivation, they are ripe for such exploitation. He argues that if people are forced into dangerous economic activities—like participating in medical testing for potentially dangerous medications—out of sheer desperation, then they cannot be said to be truly “free.”
Positive and Negative Liberty
Other writers have explored Sandel’s idea that people facing severe economic hardship aren’t “free” in any meaningful sense. Most famously, philosopher and political theorist Isaiah Berlin (1909-1997) argued that there are two types of liberty—positive and negative liberty.
Negative liberty is simply freedom from external constraints. As long as you’re not physically or legally prevented from taking a particular action, you enjoy negative liberty. Thus, a supporter of free markets might argue that as long as someone is able to enter into contracts on whatever terms they agree to with another party without interference from an external entity (usually the government), they are free.
Positive liberty, however, is defined by a mastery of the self and one’s own destiny. This means having control over your mind, your future, and your material circumstances. Rather than freedom from constraints, it is the freedom to achieve your highest potential. Thus, for example, if you suffer from a disadvantaged social position—whether due to poverty, racial discrimination, or lack of education—you will be unable to realize your destiny and are not truly free, even if there are no formal restrictions standing in your way.
Although he doesn’t explicitly mention it, when Sandel writes that people forced into exploitive economic relationships out of desperation aren’t truly free, he is in effect arguing that they lack positive liberty.
Selling Your Own Data
For an example of this kind of exploitation, we can look to the growing business of people selling their data to tech companies. Specific examples include Facebook paying teenagers $20 per month for unlimited access to their phone activity and Amazon paying people $25 (in Amazon gift cards) for their body scans.
While advocates of this practice have hailed it as empowering for consumers—giving them the freedom to treat their consumer, personal, financial, and demographic data as a marketable commodity that they’re free to sell—detractors see it another way. They argue that such schemes are an affront to personal dignity, privacy, and human rights because they transform human beings into data-generating profit points.
Further, these schemes create an inherent disparity in privacy between economic classes. If people become desperate enough that they must sell their own data to be harvested, extracted, and resold for profit, then privacy itself becomes a luxury good—available to those who are wealthy enough not to have to commodify their data but denied to everyone else who must, out of necessity, “consent” to sell away their dignity.
So far, we’ve explored Sandel’s argument that our free-market society often deprives people of essential needs, limits our freedoms and experiences, and forces us into exploitative and unfair economic arrangements.
In this chapter, we’ll explore Sandel’s other principal critique of the free market society—namely, that the very act of putting certain goods, services, and experiences up for sale corrupts, cheapens, and degrades them.
Sandel writes that market values have migrated out of their traditional economic sphere and intruded into other aspects of life—such as healthcare, education, family, law, justice, and democracy—where they are inappropriate. According to Sandel, the logic of the market—where supply and demand reign supreme above all other moral and ethical concerns—has overtaken older systems of values that held that some parts of the human experience were too precious to be bought and sold as commodities.
Is Capitalism the New Religion?
Although Sandel doesn’t explicitly mention it, the idea that some elements of life and the human experience ought to be free from the invisible hand of the market often came from religious traditions like Christianity. These traditions—although frequently flawed in practice—taught that all human beings, endowed with an immortal soul, had an inherent worth and dignity that made them more than mere pawns in a global capitalist system.
Today, some writers argue that, as religious faith and attendance at religious services has declined in the West, capitalism itself has become the dominant religion of the modern age. They claim that instead of finding deeper meaning in the rituals and sacraments of religion and spirituality, people today find that same sense of wonder in the workings of the market—the often-inexplicable rise and fall of stock prices; the creation of new products for consumption; and the mysterious forces behind inflation, recessions, and booms.
These writers claim that the religion of the modern capitalist economy even has its own high priests and holy men in the form of economists, central bankers, and CEOs, who claim unique powers to interpret and direct the inscrutable forces of the market.
Turning Patients Into Consumers
Sandel argues that the logic, incentives, behaviors, and psychology of the market have corrupted and intruded into previously non-market spaces. For an example of this dynamic in the real world, we can turn once again to the American healthcare system.
As we discussed earlier, the US healthcare system is primarily private and for-profit. This is a significant outlier, as most other wealthy, advanced economies (like Canada, Australia, Japan, the United Kingdom, and France) have some form of universal, publicly-subsidized healthcare that provides access to doctors and hospitals free of charge.
Critics of the American system argue that it forces market values and market-based decision making into medicine, a sphere where it is inappropriate, and leads to a moral degradation of the connection between doctors and patients. Such critics write that the relationship between doctors and patients ought to be a special bond—since patients are trusting doctors with their lives and the lives of their loved ones. But the intrusion of market dynamics into this relationship severs this bond—it turns doctors into providers and patients into consumers. Under this system, patients become nothing more than sources of profit for doctors and hospitals—who often extract that profit from them by ordering excessive and unnecessary care.
Meanwhile, patients are encouraged to treat access to the healthcare system as just another consumer choice, no different from buying a car or a smartphone—they’re supposed to find out what care they need, shop around for providers, and make informed, cost-conscious decisions. Not only does this approach largely fail in practice (because patients lack the specialized knowledge needed to make informed decisions and are often doing so under deeply stressful circumstances), but it also reduces what’s supposed to be a special, almost sacred relationship between doctor and patient into a cold, calculating commercial transaction.
It’s important to distinguish this objection—that applying market values inappropriately to areas of life such as family and education corrupts those areas—from Sandel’s earlier critique of markets as being unfair or exploitative. Here, Sandel argues that “fair” market conditions are irrelevant. Even if markets for certain goods, services, and experiences could be designed without inequality or exploitation, simply subjecting them to market conditions alters our attitudes toward them and degrades our collective moral and social wellbeing—forcing us to view them as mere commodities whose value is reflected in their price instead of having intrinsic, non-monetary value.
According to Sandel, this idea that distributing something through the market diminishes its value was first noted by economist Fred Hirsch, who dubbed it the “commercialization effect.” The commercialization effect is the theory that our feelings about a good or service vary depending on its means of distribution: whether it’s provided for money, or whether it’s free and supplied through goodwill, duty, a mutual exchange, or another reason.
Hirsch observed that the utility someone derived from a given good (in other words, the amount of satisfaction or happiness it gave them) diminished if it was acquired through ordinary market transactions. Gifts are a prime example of the commercialization effect. Someone who receives a gift (whatever the gift is) is likely to place a value on it greater than its pure market value because it symbolizes a deep emotional bond between them and the giver. But if the gift recipient simply purchased the item herself, its only value is what she paid for it—its acquisition through the market deprives it of a value it would otherwise have.
The Psychology of Generosity
Indeed, from the perspective of classical economics, behaviors like gift-giving are fundamentally irrational—the giver spends money on something and receives nothing of value, while the recipient may not even value the gift at all and derive no utility from it (if the item is something they don’t want).
However, as we see above, Sandel and Hirsch argue that gifts intrinsically have more value than items we've purchased, and that purchased items are devalued thanks to their acquisition through the market.
Supporting this idea, other writers argue that “irrational” economic transactions like gift-giving and other forms of generosity have significant social value on an evolutionary basis that they wouldn’t under “ordinary” market circumstances. In Influence, Robert Cialdini argues that acts like sharing and gift-giving gave a strong evolutionary advantage to early human communities by fostering tight bonds of social cohesion.
Cialdini argues that reciprocity was the key. If another individual brought you some of their firewood, for example, it would behoove you to bring them some of your firewood—because doing so would help the two of you survive and make the overall clan or tribe stronger.
This, in turn, created networks of obligation among early humans that made it easier for the group as a whole to multiply and survive. These networks of obligation enabled communities to divide labor, trade for scarce goods with their neighbors, create systems of mutual defense, and develop social hierarchies. In a harsh and unforgiving environment, like those many prehistoric peoples faced, this was the only way to ensure group survival and prosperity.
Crucially, Cialdini argues, reciprocal gift-giving also lowered the cost of giving things up to your neighbors: You weren’t really losing something if you knew it would eventually come back to you.
Sandel further argues that market-based thinking has corrupted our values by replacing our intrinsic motivations with economic incentive-based motivations. When we act on intrinsic motivations, we do something because it is rewarding and satisfying for its own sake, not because of the promise of some external reward. Sandel writes that replacing intrinsic with extrinsic motivations weakens our connections to one another and makes our society more selfish, individualistic, and, ultimately, fragile.
In particular, Sandel strongly critiques the over-reliance on economic or financial incentives as the most powerful driver of human behavior. He writes that economists place too much stock in the power and significance of incentives, believing there is no problem great or small that cannot be solved with the proper incentive-based scheme. According to this standard economic model of human behavior, people are rational agents motivated almost entirely by self-interest. Therefore, if they are economically rewarded for engaging in socially “correct” behavior (or penalized for engaging in socially “wrong” behavior) they will align their behavior with their rational incentives.
But Sandel argues that such incentive-based thinking has expanded beyond the strict limits of the market to dominate all aspects of life—with incentives today governing our attitudes toward healthcare, education, and civic participation. It’s why, for example, some conservative economists are major proponents of turning certain government-provided social services like public education and healthcare into voucher programs: giving people a specified credit that they can use to purchase education or healthcare services from “vendors” of their choice, which will give those “vendors” an incentive to provide better services at a lower cost.
Vouchers and Public Education
Conservative economist Milton Friedman was a major proponent of vouchers, and he made his case for them using the same sort of incentive-based reasoning criticized by Sandel. In Capitalism and Freedom, he writes that vouchers—redeemable for educational services up to a certain amount for each child—would give parents the freedom to choose whichever educational option they deemed best for their children. He presents this voucher system as a superior alternative to what he sees as the government’s near-monopoly on education, which he believes traps children in poor communities in failing schools and provides counterproductive incentives for public school teachers and administrators.
Specifically, Friedman writes that public schools receive guaranteed “revenue” that their “customers” are legally required to pay them in the form of taxes, regardless of performance. Teachers, like the school system itself, have few incentives to perform well because they are not paid more for producing better results.
According to Friedman, vouchers would inject some much-needed competition into this “market” by depriving underperforming schools and teachers of their guaranteed revenue stream. With parents having greater freedom to choose where to send their children to school, market forces would introduce more efficiency into the system. Government-run schools that produced poor results would soon find themselves deprived of revenue (like any other seller that produced inferior goods), and ineffective teachers would find themselves out of a job. Over time, he writes, resources would flow to those schools that produced better results and away from those that didn't.
Sandel argues that the spread of market-based values into the traditionally non-market sphere has corrupted human virtue. He writes that defenders of free markets treat virtues like altruism, civic pride, charity, and other moral sentiments as valuable—but limited—commodities. Because of their scarcity, they argue, we should limit our collective reliance upon these virtues and instead look to the rational workings of the market to allocate the vast majority of society’s resources. Thus, virtue is something to be rationed and expended only sparingly.
According to Sandel, however, virtues exist independently of the market. To treat them as marketable commodities is to weaken and diminish them. Sandel writes that virtue cannot be bought, sold, traded, hoarded, rationed, or manufactured out of nothing. Rather, it is cultivated within society through repetition on a mass scale. When we rely less upon moral, social, and civic virtues, we don’t “preserve” our stocks of them—rather, their very disuse depletes them.
Altruism and Individualism
Sandel writes that virtues like altruism need to be nurtured and cultivated on a mass scale, or we risk losing them altogether. This would imply that a more individualistic society (as most modern capitalist societies tend to be) would be less altruistic and more selfish.
However, recent social science research suggests that the opposite may be the case—that highly individualistic cultures are more generous and altruistic than collectivist societies. One 2017 study of people across nearly 80 countries spanning half a century’s worth of data showed a sharp trend toward individualistic values, with researchers concluding that individualism has risen by 12% since the mid-20th century. They attributed this change in attitudes to rising wealth and the growth of free markets over the past 50-60 years, which has given people greater financial freedom to make their own choices without having to rely on traditional and local hierarchies and kinship groups.
Despite this rise in disposable income and individualistic attitudes, however, altruism has increased with individualism, with the world’s five most individualistic countries all ranking among the top 10 globally for generosity (defined as giving help to strangers). One possible explanation suggested by these social science researchers is that while people in more traditional and collectivist societies do indeed value generosity and altruism, it is heavily weighted toward one’s own family or broader kin group. This would perhaps explain why China, which is both ruled by a communist government and strongly rooted in Confucian virtues of generosity, ranks low on the World Giving Index (at 140th place).
Shortform Example: Paying for Civic Participation
To explore how the market can corrupt our virtues, let’s construct a hypothetical. Imagine a society where people only participate in the basic functions of democracy and civic life—like registering to vote, casting a ballot, or attending a school board meeting—if they are paid to do so on a contractual basis. Perhaps there’s even a price system that assigns a value to each of these functions: $500 to register, $300 to vote, $800 to show up at a school board meeting.
Defenders of the market system would find little objectionable in such a setup. They would argue that the involvement of market incentives would do nothing to change this society’s civic character: Democracy will continue to function whether people participate in it for free or for a price.
But, according to Sandel, something irretrievable would be lost: the virtues of civic pride and democratic participation that are essential to the functioning of a free society. The exercise and practice of these virtues would become hollow: Citizens would have a fundamentally different attitude toward their civic obligations, seeing them as a source of profit rather than something that ought to be done for its own sake.
By replacing such vital democratic functions with transactional market incentives and payoff schemes, the citizens of such a society would come to place little intrinsic value or sense of ownership in their own institutions of self-government—beyond those that were monetarily compensated for. Sandel writes that while these virtues don’t have a price or a market value, they are all but gone when they are allowed to languish through neglect.
We’ve seen Sandel argue that the intrusion of markets into non-market spheres of life exploits the vulnerable, deprives us of choices we would otherwise have, and degrades our virtues as a society. Here, we’ll explore the social impact of living in a market society—how it affects our relationships to one another, dilutes our understanding of ourselves as a shared community, and makes us less happy as individuals.
Sandel notes that the intrusion of market forces into non-market spaces can often be seen literally, in the form of prominent commercial advertisements in the kinds of public spaces where they were once off-limits. He argues that the clutter of advertising and its intrusion into non-traditional spaces changes not only the aesthetics of the physical space, but also the ways we experience them.
Sandel observes that advertisements have permeated into nearly all aspects of social, civic, and public life—you can find them in city squares, public transportation systems, sports stadiums, government buildings, educational institutions, and even houses of worship all over the world. Firstly, notes Sandel, this can be an eyesore that detracts from the physical beauty and historic character of such places—for example, it certainly seems garish and unsightly to see giant billboards for brands like Guess and Coca-Cola draping Venice’s Piazza San Marco.
(Shortform note: Responding to the intrusion of distracting video billboards into the urban core of historic French cities like Lille and Grenoble, some activists and municipalities in France are attempting to ban public advertising altogether. This antipathy to advertising builds upon a long tradition of anti-commercialism among certain French intellectuals, who argue that advertising is incompatible with democracy and an assault on public spaces. These spaces are funded by the public and are meant to be used and enjoyed by the public, not for corporate profit extraction.)
But on a deeper level, writes Sandel, these forms of advertising undermine the collective spirit of our public spaces, where people come to enjoy shared cultural activities, participate in civic life, and appreciate aesthetic beauty. Sandel argues that filling these spaces with eye-catching and garishly commercial advertising irrevocably alters their character and severs our connections to one another as a community: We are no longer full and equal citizens congregating in the public square. Instead, we lose our shared, communal identity and become a collection of individual, atomized consumers.
The Rise of Loneliness
Sandel writes that advertising and the rise of a consumer-focused society have undermined our collective spirit and isolated us from one another. Sure enough, social science research shows that loneliness has been increasing since 2015, with nearly one-third of American millennials reporting feeling isolated and unconnected. In the UK, then-Prime Minister Theresa May even appointed a Minister for Loneliness to tackle what she called, “the sad reality of modern life.”
Ironically, however, the forces of unfettered capitalism that Sandel and others blame for this rising social alienation and unquenched thirst for human connection have sprung into action to profit from it. This can be seen with the growing popularity of commercial services like RentaFriend, in which users pay an individual $40 per hour to serve as a temporary friend; or professional cuddlers, who are paid as much as $80 per hour to cuddle and caress their clients.
Sandel writes that a market society tends to lead to a wealth gap—where more and more wealth is concentrated in the hands of fewer and fewer people. Beyond its economic or political consequences, however, Sandel is primarily concerned with the social consequences of inequality. Specifically, he warns that the financial gap between the affluent and the poor leads to social divisions, in which these groups share fewer and fewer common spaces and experiences.
The Growing Divergence of Rich and Poor
There is data supporting Sandel’s assertion that rich and poor people lead separate lives, at least with regard to housing. One study found that, in 1980, only about 12% of the US population lived in areas that were either extremely rich or extremely poor in terms of median household income. By 2013, that number had jumped to over 30%.
What this reflects, the researchers argue, is a growing polarization and stratification that is increasingly evident in the spatial distribution of the national population—rich people are choosing to live in affluent neighborhoods where they only interact with other rich people, while poorer Americans have no alternative but to cluster together in poor neighborhoods. This speaks directly to Sandel’s concerns: that the wealth gap leads to a physical distance, which ultimately undermines any shared sense of community and commonality.
Sandel argues that these developments are very dangerous for a democratic society, in which all citizens are supposed to be equal and share a common stake in the community’s welfare. When society’s wealthiest members lead such vastly different lives from everyone else (and have so much more power than everyone else) those bonds of commonality get weaker.
For example, the richest citizens might feel that they have little stake in the welfare of their fellow citizens because they have enough money to never have to worry about underperforming schools, crumbling infrastructure, or an antiquated healthcare system. The poorest citizens, meanwhile, might feel alienated from the common civic project if they come to feel that the political and economic system has turned its back on them.
Wealth Inequality and Democracy
Other commentators have noted the dangerous effects of wealth inequality on democracy. In How Democracies Die, Steven Levitsky and Daniel Ziblatt identify widening wealth inequality as one of the main factors driving what they see as the corrosion of democracy in the United States. They write that the growing gap between rich and poor since the 1980s has coincided with the sharpening of divisions between the party coalitions. As people feel they are competing with each other for ever-smaller slices of a shrinking pie, they increasingly turn to the politics of resentment and to authoritarian political figures who skilfully exploit that resentment.
To combat inequality and the political polarization that follows in its wake, Levitsky and Ziblatt argue that policymakers should reject means-tested benefits, which are targeted to lower-income people but taper off as one’s income level rises. These programs tend to instill in middle-class people a belief that the government is taking their hard-earned money and giving it to the undeserving poor—which undermines the social cohesion that writers like Sandel argue is so fundamental to the preservation of a democratic society.
Instead, Levitsky and Ziblatt make the case for universal benefits like childcare, healthcare, and even a universal basic income. Because everyone benefits from this version of the welfare state, a broader coalition can form in support of it—one that cuts across racial, cultural, and socioeconomic lines.
Throughout this guide, we’ve seen Sandel make several moral objections to the marketization of modern society. He notes the tendency of markets to exploit the vulnerable and present us with the illusion of choice, while actually restricting our real freedoms; their negative effect on our collective virtue; and their destructive impact on the common good.
In the end, Sandel writes, we must collectively discuss and decide: What are the moral limits of markets? Should we allow the free market to put a price on social goods like education and healthcare, as well as values and ideas like privacy, democracy, civic participation, and community? And what should money not be able to buy?
The Moral Case for Markets
A common critique of markets—and one that is voiced consistently by Sandel throughout What Money Can’t Buy—is that markets blur the line between morality and immorality by giving tacit approval to socially undesirable traits like selfishness and greed.
However, some commentators argue precisely the opposite: that the market economy rests on a solid moral foundation that encourages morally correct behavior. As William Easterly writes in The White Man’s Burden, markets require a high degree of social trust (a morally positive trait) among strangers. This is because an economy based on voluntary transactions is only viable if customers can trust that they won’t be ripped off, that what’s being sold is genuine, and that people will honor debts and pay for goods they’ve ordered. Thus, according to this line of reasoning, free-market capitalism fosters virtues like self-reliance, social trust, and self-restraint.
Moreover, markets produce better results, as capitalist societies are, on the whole, more prosperous and equitable than the preindustrial, precapitalist, traditional societies that came before them. This has led market proponents to dub capitalism the most moral and virtuous economic system in human history.
Explore the proper balance between markets and morality.
Imagine you were participating in Sandel’s discussion about markets and morality. What role would you argue for markets to play in our society? Should we place greater restrictions on markets or remove existing restrictions on them? Explain your answer.
What other solutions would you propose to moderate the influence of markets in our lives? (For example, should we do a better job of educating children about civic values and intrinsic rewards?)
Sandel argues that our market society exacerbates the divide between rich and poor people. Reflect on what that divide looks like and what, if anything, we can do about it.
Do you agree that we live in a stratified, polarized society with a large gap between the rich and poor, as Sandel describes? Explain why or why not.
Do you think that we should encourage rich and poor people to intermingle more? If so, what two measures could we take within the next decade to make that happen? If not, what do you see as the benefits of keeping people with differing levels of income separate?