The moral limits of the market

There was a really good book review in the Guardian on Saturday. I don’t mean a review of a really good book, because in all honesty it isn’t very likely that I will read the book itself, but a review that was genuinely informative and thought-provoking in itself.

It was a review by John Lanchester of What Money Can’t Buy: The Moral Limits of the Market, by Michael Sandel.  You can read it here.

Sandel argues that markets are not neutral but have a moral impact on the goods that are traded in them and the people engaged in those transactions, backing this view up with numerous examples from different fields.

The example that Lanchester focuses on in his review is that of an Israeli daycare centre for children. Like many such centres the most persistent problem for this organisation was parents collecting their children late — after the agreed closing time.

To try and solve the problem and discourage late pick-ups the centre introduced a fine. Guess what happened? The number of late collections soared. Once a fine was introduced for late collection, it seems, many parents simply saw this as a fee they were able and willing to pay. The problem had been ‘marketised’ and people reacted accordingly, their behaviour determined only by whether or not they could afford to pay the extra amount.

But perhaps more surprising than this, when the centre realised the unintended consequences of their action they dropped the fine — but they couldn’t get the number of late pick-ups back down again. ‘Marketising’ the problem had, it seems, killed the old non-cash values of reciprocal responsibility and collective co-operation with which most parents had conformed most of the time. Expectations and behaviour had changed for good. A ‘new normal’ based on market values had been established.

Why is this so interesting? Well,  it tells us that market relations have a long-term impact not just on people’s expectations but also on their behaviour towards each other and the institutions that serve them. This should be of especial interest to social enterprises, I think, and particularly now. As the state continues to recede and market-based investment models become the norm for financing services and many social enterprises, the new “market opportunities” this creates will require not just a financial analysis but a moral one too….

Remember the Israeli childcare centre — its lessons so clear it could be regarded as a parable for our times…

  1. John Grayland Reply

    He was on ‘start the week’ on radio four this morning (monday). sure it will be on iplayer for anyone who wants to catch it.

    • Alun Severn Reply

      Thanks, John — always good to hear from someone who can listen to R4 at 9.30 on a Monday morning!

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