PEOPLE can come and hear Senate or House Committee hearings/deliberations in Washington but they have to queue up to be able to get a spot to get in. Since the demand for seats is usually more than the supply of places, getting to queue up in time is important. The House/Senate could put a price on the seats, and adjust the price to equate demand/supply, but they feel that these places should be free for citizens as they have a right to participate in the political and civic life, and interests of democracy, governance and transparency are better served by keeping access free. So first come, first served, by queuing, is how the spaces are allocated, rather than through the market.

However, there are lobbyists who have a particular interest in attending some hearings. But they are also busy people who do not want to stand in lines. Thus, a market has developed where some people who need money and who have plenty of time on their hands join lines early and when they get close to entering the doors, they give up their place to people who buy that place from them. There are even companies that hire a number of unemployed or homeless people who take places in queues and then these spaces are given to those who pay a price for them.

Does this practice make sense? Most economists would think it is a win-win situation:

people who have time on their hands make money, people who value spaces more than others get them for a price they are willing to pay. Everyone gains and no one loses. It seems to be a welfare enhancing practice. But a lot of people, including Michael Sandel, the author of What Money Can’t Buy: The Moral Limits of Markets, are uncomfortable with the practice. They feel that the purpose of allowing people in for free was to give them an opportunity to participate in governance and in exercise of democracy, and to develop a sense of engagement with civic and democratic traditions. By bringing in the market and pricing, many feel that the other purpose is demeaned or at least devalued. In addition, the principle of equality used in the queuing process is lost as well. However, a legitimate question is that if people have different value for their time, how is allocation on the basis of time any better/worse and/or more egalitarian than one on the basis of purchasing power? But still the larger issue of discomfort stands.

In Pakistan, people line up to pay utility and other bills at banks. What if we had a way to by-pass the line for people who were willing to pay for it? A fast-track just like many airlines have for business and first class passengers? Is that okay? Does it undermine the notion of equal treatment in any way? Clearly any equal treatment expectations would be different in lines in front of a bank or at airline counters compared to ones for Senate/ House hearings.

Many people will think that the use of markets in these queues, though somewhat disturbing, is not a big deal. But here is another example, from Sandel, that might hit harder. In China there are lines in front of public hospitals for tickets for entry and to be seen by a doctor. Since there is high demand for appointments with good doctors at these public hospitals, the queues can be long, sometimes taking two to three days for a person to make it to the top of the queue. There are people here who stand in the queue and then sell their spot to desperate and ill people who cannot wait that long to see a doctor or who have the money to by-pass the line. Should access to health care, meant to be free or very cheap, be sold?

More people must be uncomfortable with this than before. But at another level we do accept the market in health care in Pakistan. Don’t we tell people that if you do not have the money to pay for private doctors and private hospitals, live without health care or go to the public system that we know is quite broken and does not provide good care? Isn’t money giving power to people to by-pass the system? Should access to health be completely market driven?

Sandel argues that markets, through prices, are one way of deciding how to allocate goods and services. There can be many other ways: need, queuing, lottery, rationing mechanisms and so on. The decision to choose one method rather than another is not itself an economic question, it is an ethical one too: should markets be used for allocation here or not? For many goods and services, such as haircuts and Mercedes, markets are fine, but should they be used everywhere, such as for access to health and education, party tickets for contesting elections, allocating human organs for transplant, incentives for teaching and so on.

Sandel argues that though markets have been triumphant over the last couple of decades, they have clearly gone into areas that they should not be in. And this does not make for a good society. He wants us to think this through more carefully.

Markets are not neutral. When a market is introduced in an area it turns that good/service into a commodity and that can change the value of the good/service for us. Should children, up for adoption, be sold to the highest bidder? Does that not affect parenthood in anyway? Do we want to live in a society where children are bought and sold?

Sandel gives a large number of examples, from the mundane to the important, where the decision to allocate through markets could be problematic. Each person will have a slightly different threshold for what he/she finds acceptable, and each society will decide the matter differently. And there will be debate and disagreement about this. Sandel’s point in this book seems to be exactly that: there should be debate about these issues and market expansionism should not go unchallenged and/or by default.

He is very successful in giving us ample material and grounds for this debate. Many people will of course disagree with where Sandel draws the boundaries.

Where What Money Can’t Buy is a little wanting, though, is in articulating what other ways of allocation there could be and how do they stack up from a moral point of view: so how is queuing (allocation on the basis of time) superior to pricing (allocation on the basis of money), for example. But maybe this connects with Sandel’s earlier work on justice and communitarianism and one hopes he will come back in a later book to connect these together.

For the times we live in this is an excellent book. It makes you think and question your assumptions about markets, pricing, valuation and a number of related questions and concerned ethical issues. Given the wave of privatisation, liberalisation and decentralisation that we have been living with in Pakistan, voluntarily and in line with recommendations/dictates of the international financial institutions and the tenets of the Washington Consensus, the book can be an excellent antidote or at least an invitation to think and debate.

The reviewer is associate professor of Economics at Lums

What Money Can’t Buy: The Moral Limits of Markets
(ECONOMICS)
By Michael Sandel
Farrar, Straus and Giroux, US
ISBN 978-0-374203032
256pp. $27