If I ruled the world, I would rewrite the economics textbooks. This may seem a small ambition, unworthy of my sovereign office. But it would actually be a big step toward a better civic life. Today, we often confuse market reasoning for moral reasoning. We fall into thinking that economic efficiency—getting goods to those with the greatest willingness and ability to pay for them—defines the common good. But this is a mistake.
Consider the case for a free market in human organs—kidneys, for example. Textbook economic reasoning makes such proposals hard to resist. If a buyer and a seller can agree on a price for a kidney, the deal presumably makes both parties better off. The buyer gets a life-sustaining organ, and the seller gets enough money to make the sacrifice worthwhile. The deal is economically efficient in the sense that the kidney goes to the person who values it most highly.
But this logic is flawed, for two reasons. First, what looks like a free exchange might not be truly voluntary. In practice, the sellers of kidneys would likely consist of impoverished people desperate for money to feed their families or educate their children. Their choice to sell would not really be free, but coerced, in effect, by their desperate condition.
So before we can say whether any particular market exchange is desirable, we have to decide what counts as a free choice rather than a coerced one. And this is a normative question, a matter of political philosophy.
The second limitation to market reasoning is about how to value the good things in life. A deal is economically efficient if both parties consider themselves better off as a result. But this overlooks the possibility that one (or both) of the parties may value the things they exchange in the wrong way. For example, one might object to the buying and selling of kidneys—even absent crushing poverty—on the grounds that we should not treat our bodies as instruments of profit, or as collections of spare parts. Similar arguments arise in debates about the moral status of prostitution. Some say that selling sex is degrading, even in cases where the choice to do so is not clouded by coercion.
I’m not saying that, if I ruled the world, I would ban these practices. I have a bigger goal in mind: to loosen the hold that economic reasoning exerts on the public mind, and on our moral and political imagination.
Not only in textbooks, but also in everyday life, economics presents itself as a value-neutral science of human behaviour. Increasingly, we accept this way of thinking and apply it to all manner of public policies and social relations. But the economistic view of the world is corrosive of democratic life. It makes for an impoverished public discourse, and a managerial, technocratic politics.
So here is how I would revise the textbooks: I would abandon the claim that economics is a free-standing, value-neutral science, and would reconnect it with its origins in moral and political philosophy. The classical political economists of the 18th and 19th centuries—from Adam Smith to Karl Marx to John Stuart Mill—rightly conceived economics as a subfield of moral and political philosophy. In the 20th century, economics departed from this tradition, defined itself as an autonomous discipline, and aspired to the rigour of the natural sciences.
The notion that economics offers a value-neutral science of human behaviour is implausible but increasingly influential. Consider the growing use of cash incentives to solve social problems. The NHS is experimenting with what some have called “health bribes”—cash rewards to people for losing weight, quitting smoking, or taking their prescribed medications. In the United States, some school districts have tried to improve academic achievement among disadvantaged students by offering them cash rewards for good grades, high test scores, or reading books. A charity that operates in the US and the UK offers drug-addicted women £200 to be sterilised, or to accept long-term birth control devices.
As ruler of the world, I would not necessarily abolish these schemes. But I would insist that we ask, in each case, whether the cash incentive might degrade the goods at stake, or drive out non-market attitudes worth caring about. For example, if we pay kids to read books, do we simply add an additional incentive to whatever motivations may already exist? Or, do we teach them that reading is a chore, and so run the risk of corrupting or crowding out the intrinsic love of learning?
If market values sometimes crowd out attitudes and values worth caring about (such as the love of learning for its own sake), then market reasoning must answer to moral reasoning. Standard economic models assume that markets are inert, that they do not touch or taint the goods they exchange. But if buying and selling certain goods changes their meaning, then the case for markets cannot rest on efficiency considerations alone. It must also rest on a moral argument about how to value the goods in question.
While revising the economics textbooks, I would issue one modest decree: I’d ban the use of an ungainly new verb that has become popular these days in the jargon of politicians, bankers, corporate executives, and policy analysts: “incentivise.” Banning this verb might help us recover older, less economistic ways of seeking the public good—deliberating, reasoning, persuading.