They demonstrated that the power of markets has to be respected. PA Images / Alamy Stock Photo

Are markets amoral?

Markets are not inherently evil, but they can license evil—and politicians should manage them with caution
November 3, 2022

In 2009, in the wake of the financial crisis, the American philosopher Michael Sandel was heralding the end of an era characterised by heady, reckless deregulation. He was referring to Thatcher and Reagan’s “market fundamentalism” and the Blair and Clinton years, which had “moderated but also consolidated the faith that markets are the primary mechanism for achieving the public good.”

Nowadays, these old orthodoxies have become the new heresies. With the climate catastrophe unfolding, extractive and exploitative markets are blamed for bringing us to this precipice. Free markets have released tons of the carbon stored in the earth into the atmosphere, torn down rainforests to grow feed for shed-dwelling livestock and consigned hundreds of millions of workers to low-paid drudgery—all to meet the desires of greedy consumers.

Yet markets are not moral agents and nor are they inherently good or evil. It is those who trade in them who bring in the good and the bad. You only need to go to an actual market to see this. In caricature, a market is a place where the only value is profit. In a real market, profit is one value among many. Customers can choose to buy and sell foods that are fairly traded or eco-friendly. They often spend more to support their local trader in preference to buying goods from a cheaper supermarket. As for the vendors, they have sometimes given up higher salaries for the independence of self-employment.

Markets do not force anyone to prostrate themselves before Mammon. So long as there are people who value something other than maximising wealth, markets will respond to their preferences. Markets are amoral, not immoral.

However, they are also powerful. Liz Truss and Kwasi Kwarteng set out to slash regulation and taxes to “unleash” market forces, but when set loose they turned on their would-be liberators with ferocity. Truss and Kwarteng demonstrated, unwittingly, that the power of markets has to be respected and managed. To do this well, we have to understand three reasons why amoral markets can be forces for bad.

Start with human nature. It is true that people value some things more than money. However, time and again it turns out that, when faced with concrete choices, we put our material self-interest first. People tell pollsters they want higher taxes for public services and then don’t vote for parties that will impose them. They say they care about human rights, the high street and the environment but buy polluting electronic goods made in China and delivered by Amazon, because it’s cheaper and more convenient. It turns out the market doesn’t have to coerce people into putting money first: most of the time, they freely choose to do so. The farmers’ market that expresses other values is just a weekend leisure trip. Tesco provides most of the week’s provisions.

Markets are not moral agents. It is those who trade in them who bring in the good and the bad

What’s more, there are no pure markets anyway. Governments regulate what is made, grown and traded. These rules have the power to turn amoral markets good by, say, improving welfare for workers. But in reality regulatory frameworks often incentivise bad practice. In agriculture, for example, incentives have encouraged farmers to grow commodity crops using unsustainable methods, undercutting farmers who are genuine custodians of the land. So-called “free markets” too often merely leave some actors free to behave badly and profit as a result, limiting the freedom of others to compete.

The final problem with markets is the one that most exercised Sandel back in 2009. What is and what isn’t subject to market forces is a political decision. For decades, most developed nations have provided public services, rather than leaving them to the market. The rich could pay for better schools and healthcare if they wished, but most people do not have to pay profit-making providers.

Sandel argues that when these public goods become subject to market forces, as they have increasingly done, values such as duty, service and community are supplanted by those of profit and self-interest. Appeals for blood donations draw on our altruistic impulses; offers to pay for them turn our bodies into commodities. If my blood is my property to sell, I might be less inclined to part with it for a relatively small amount than I would be to offer it as a gift that could save lives.

While it is harmful to overly restrict trade, it does not follow that it is good to introduce market forces wherever possible, as much as possible. Markets do not by necessity corrupt. But when we are in the dynamic of trade and exchange, our worst instincts often come to the fore.

Perhaps it is the very amorality of markets that invites immorality. They encourage us to view interactions through the lens of pure cost and benefit, as though this were a value-free zone. If morality seems irrelevant, and thus all-too-easy to ignore, we don’t need any more encouragement to set it aside.

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