Yesterday, I finished reading Michael Sandel's
What Money Can't Buy: The Moral Limits of Markets.
I found the book interesting albeit a bit disappointing since much of
Sandel's discussion failed to penetrate deeper into the relationship
between market thinking and morality--or even to take a step further to
discuss the relationship between capitalism and morality. (If such
matters interest you, read the book forum from last fall's edition of
The Hedgehog Review).
In one of his chapters, Sandel mentions a Morning Prayers address
that then-president of Harvard University Larry Summers delivered at the
university's Memorial Church. After reading the excerpts, I wanted to
read the full speech, knowing I would enjoy criticizing Summers's
arguments.
As you probably know, it seems increasingly likely that Obama will
nominate Summers to chair the Fed despite the reservations that many
Democrats have about him and despite his key
involvement
in the financial deregulation that paved the way for the financial
collapse, his notoriously bad temperament, his refusal ever to
acknowledge that maybe--just maybe--he might have been wrong, his having
lost
Harvard a ton of money, his vocal support for
outsourcing and contempt for its critics, his past
support dumping toxic waste in third-world countries, his
chauvinism, etc., etc. The strikes against him are too many to name just now.
The
Morning Prayers address
that he delivered ten years ago exactly (September 15, 2003) reveals a
lot about his worldview and his sense of morality and economics, and
it's not flattering.
I'm going to skip the first two paragraphs because they are just introductory. So here goes.
I want to reflect this morning on what the discipline that I
am trained in -- economics -- can contribute to thinking about moral
questions. Economics provides just one perspective, but one that I think
is too rarely appreciated for its moral as well as practical
significance.
Indeed, it is fair to say that economists like me rarely appear in
places like this. Just why is not altogether clear. But when it comes to
preaching economists, it strikes me that there is both a lack of demand
and a lack of supply. A lack of demand because so many believe that any
economic way of thinking is one that knows the price of everything and
the value of nothing. A lack of supply because many economists are
instinctively uncomfortable with moral, let alone spiritual, discourse.
Maybe people tend not to invite economists to speak in such venues because, as studies have shown, they tend to be
more selfish than those in other disciplines. (Go
here for a review of such studies.)
And yet, it seems to me there are some aspects of
characteristic economic modes of reasoning that complement other modes
of moral thought. One important thing that is distinctive about the way
economists approach the world is their great emphasis on respect for
individuals -- and the needs, tastes, choices and judgment they make for
themselves. It is the basis of much economic analysis that the good is
an aggregation of many individuals' assessments of their own well-being,
and not something that can be assessed apart from individual judgments
on the basis of some overarching or separate theory.
Economists often like to believe that they have a realistic view of
individuals. However, Homo Economicus--the utility-maximizing, rational,
self-interested individual of the economics textbook--is more imagined
than real. Economists, rather than respecting individuals as such,
impose their own set of morals on them. Neuroscientists and behavioral
economists (not just philosophers, theologians, and artists) have been
challenging the economistic view of the individual.
Summers's comments here imply a denigration of public goods and a
failure to acknowledge that public goods like health and education have
spillover effects, providing benefits to others beyond the immediate
recipient of such services.
I was reminded of these issues as I had a chance over the
weekend to engage with many students at the freshman barbecues on issues
of moral concern to all of us. For example, many believe that it is
wrong to buy imported products produced by workers who are paid less
than a specified minimum wage of some sort. We all deplore the
conditions in which so many on this planet work and the paltry
compensation they receive. And yet there is surely some moral force to
the concern that as long as the workers are voluntarily employed, they
have chosen to work because they are working to their best alternative.
Is narrowing an individual's set of choices an act of respect, of
charity, even of concern? From this perspective the morality of
restrictions on imports or boycotts advocated by many is less than
entirely transparent.
This reminded me of
Matt Yglesias's argument after the tragic garment factory fire in Bangladesh that other countries don't need stronger safety laws.
Larry Summers fails to acknowledge that not all choices made in the
market are completely free because individuals do not have equal power
in market relationships. Rather than offering the widest array of free
choice and action, markets can actually constrain individual choice,
forcing those with less power or agency into unfavorable arrangements
because they lack other alternatives. Boycotts are by no means perfect
as a mechanism for influencing corporate behavior, but they aim to shame
the employer into improving the conditions for labor, a worthwhile goal
by all means. If the sweatshop is the "best alternative" available,
then we should demand better labor standards and support greater
bargaining and organizing power for the workers. We should also demand
better national and international standards for labor conditions and
corporate accountability. Summers exhibits a rather crude
humanitarianism that reminds me of the arguments of those who defend
child labor or oppose the minimum wage and accuse their opponents of
paternalism.
Such boycotts are not motivated by "charity," if we take that word in
its common meaning. "Concern" and "respect" are closer to the sentiment
present. The prominent labor term "solidarity" is probably even more
fitting because such boycotts are a way of saying that you will not be
complicit in the violation of the dignity of the exploited workers for
the profit of the employer.
In a similar vein, it is often suggested that the
marketization or Westernization of indigenous cultures is doing great
damage. And surely in some cases it is. But here too, the
individual-based perspective may help us to see a different side of the
moral question -- for an economist would attend first to those directly
affected rather than to the judgments of those who are new to the
situation. It disturbs the sensibilities of many of us to imagine the TV
show "Survivor" being beamed to satellite dishes in rural villages or
the pervasiveness of the Nike symbol, but if that is what people want,
we need to be cautious about opposing their having it.
Summers appears to believe that a show like "Survivor" or a product like
a Nike shoe are born from the dreams of countless individuals, rather
than the ideas of a few people in a marketing or product design office.
He also appears unable to comprehend that there could be indigenous
opposition to the commercialization of their societies and the
infiltration of foreign corporations that comes with the trade
liberalization pushed on Latin American countries by the IMF and the
World Bank.
There is another observation that is closely related. There
is much that is wrong with the market, but one of the things that most
bothers many people of faith about market mechanisms is the idea that
there is something wrong with a system where we are able to buy bread
only because of the greed or profit motive of the people who make the
bread. Here I would be very cautious. We all have only so much altruism
in us. Economists like me think of altruism as a valuable and rare good
that needs conserving. Far better to conserve it by designing a system
in which people's wants will be satisfied by individuals being selfish,
and saving that altruism for our families, our friends, and the many
social problems in this world that markets cannot solve. This is not
just an abstraction -- the far larger degree of private charity in this
country than in Western Europe, and in Western Europe than in the
socialist economies, is worth some reflection -- especially in
institutions like this one that are made possible by acts of private
altruism.
I'm going to make some of my quick responses first and then go into the longer one.
First, what, in his mind, are the "many social problems in this world
that markets cannot solve"? He does not specify what they are or
whether he believes that they should be solved by government (i.e. the
organized public) or by voluntary individual charity. I'd guess he'd say
the latter.
Second, I do not think that anyone is saying that said baker should
only bake bread so that he can selflessly provide it for others. He is
working for a livelihood; insofar as he is paid, his work is not
entirely selfless. He is not merely handing out loaves of bread to the
poor on the street. Rather, the critiques of capitalism from people of
faith (or lack of faith but ample humanism) seek to eradicate, limit, or
deprioritize the role of profit. The quest for profit should not be the
reason why the baker bakes bread. His motivations should entail the
development of talent, intellect, and personality; the advancement of
craft; the performance of a service beneficial to society; and the need
to provide for himself and his family if he has one. (I could go on a
long tangent on the different moral qualities of dividends and interest,
influenced by
R. H. Tawney, but I will refrain.)
The underlying ethic of an economy rooted in service would not be
altruism alone and certainly not selfishness, but rather a sense of
jointness (or interdependence or mutuality), both other-regarding and
self-regarding.
Next, to which countries is he referring when he says "socialist
countries"? As of now (and it would have been the same in 2003), there
are only four countries that ascribe to a
Marxist-Leninist form of socialism as state doctrine: China, Cuba, Laos, and Vietnam. China's economy is really more
state capitalism than socialism. Vietnam has also been described as operating under a system of
state capitalism. Laos has also moved in such a
direction. The left often critiques Cuba for
state capitalism as well.
Bangladesh, Guyana, India, North Korea, Portugal, Sri Lanka, and Tanzania all also make references to socialism in their
constitutions.
Most of these countries have encountered significant privatization
since the writing of their constitutions, and North Korea has also
received critique and praise for moving in the direction of
state capitalism.
But the claim of the contrast between the U.S. and Western Europe is
much more clear, so let's look at that one more closely. We can look at
charitable giving in two ways: the percentage of people who give and the
total amount given.
Every year, the Charities Aid Foundation releases the
World Giving Index,
which ranks countries by the percentage of people who volunteer time,
donate money, or help strangers. (They determine this through a survey.
Go to their site if you have questions on methodology). In 2012, the
U.S. ranked #13 for "giving money." Ahead of the U.S. (in descending
order) were Ireland, Australia, the Netherlands, the United Kingdom,
Indonesia, Thailand, Denmark, New Zealand, Malta, Canada, Hong Kong, and
Cambodia. Sweden and Luxembourg ranked just below the U.S. The U.S.
actually came out last among the Anglo nations, and it was beaten by
four Western European countries: Ireland, the Netherlands, the U.K., and
Denmark. It did, however, score far better than countries like Germany
(#28), Italy (#35), and France (#53).
In terms of charitable giving as a percentage of GDP, the United States does come out on top according to the
Johns Hopkins Center for Civil Society Studies.
About a third of charitable giving in the U.S. goes to houses of
worship--some of that will go to altruistic purposes like soup kitchens,
but not all of it will.
However, the size of the philanthropic sector in the U.S. parallels
the weakness of its welfare state. Charitable giving that goes to
address poverty, food insecurity, lack of health care access, lack of
quality education, etc., are signs of a failure of the state to provide
for the basic needs of its populace. Western European countries are much
better at
providing such public goods and services. An ethic of solidarity or
community replaces one of mere charity. And I'd say that's a good thing.
There is much to argue with what I have said. But I will
have served my purpose if I have suggested that many of the viewpoints
that are dismissed as selfish or "just economic" are motivated not by an
unwillingness to grapple with moral issues but with an insistence that
often the highest morality is respecting the choices and views of people
who we all want to help.
This is very similar to the arguments that Milton Friedman would always make, accusing his critics of being paternalists.
As I noted earlier, Larry Summers fails to comprehend that in the
market, not all individuals have equal power or agency; consequently,
their freedom of choice is constrained by the market itself. Summers's
argument is the ultimate defense of the status quo: Everything is the
way it is because individuals have chosen it, so there is no need to
change anything.
"You want to raise the minimum wage? Clearly, people are choosing to
stay at their jobs with their low wages; they could have chosen to work
somewhere else. How dare you liberals try to interfere with the choices
made by others!"
And I hope also to have demonstrated in some tiny way, on
this first day of classes, what we at Harvard are all about -- the
continual search to come closer and closer to veritas through the
juxtaposition and consideration of very different perspectives.
At least, he ended the speech well. The juxtaposition and consideration
of very different perspectives is central to a vigorous public and
intellectual debate. If Obama ultimately decides to nominate Summers for
chairman of the Fed, I hope that we see many different perspectives
from that of the administration on display in his hearings.
