The Christmas season strikes me as an especially appropriate time to consider the issues raised in this video by Michael Sandel, a professor of political philosophy at Harvard University and Senior Fellow at the Institute for New Economic Thinking (INET).   Having just watched the video and been deeply impressed (I’d strongly recommend watching the entire 49 minutes), I thought I’d take an initial shot at this, which marks my first blog post in more than a year…

Personally, I’ve always found the Christmas season a bit strange, in that it simultaneously intensifies two seemingly conflicting sets of human tendencies.

Given the nature of the holiday, it’s not surprising that one of these threads of human nature is tied closely to the life and message of Jesus Christ, which embody the values of love, generosity and compassion, and remind us to extract the beam in our own eye before condemning our neighbor for the mote in his.

The second and very different human tendency aroused during the Christmas season is an intense and even obsessive focus on buying, selling and marketing, and for economists, journalists and politicians, on measuring how such activity translates into merchandise sales and corporate profits.

Though there is some overlap between these two “Christmas spirits” (e.g., the joy of gift-giving, especially to loved ones and the needy), the mob-level activity on Black Friday (and now even on Thanksgiving Day), the shortened tempers in stores and parking lots, the mawkish, manipulative and relentless marketing, and the intense media focus on sales and profit metrics, makes one wonder whether Jesus, were he physically present to witness them, might respond as he did when he drove money changers from the temple for having turned it, during an important religious holiday, into a “den of thieves.”

By intensifying both these tendencies at the same time, the Christmas season provides a unique backdrop for examining the issues raised in Sandel’s talk, which begins with the question “What should be the role of money and markets in our society,” and ends by asking whether “altruism, generosity, solidarity and civic spirit [are]…commodities that are depleted with use” or are “more like…muscles that grow stronger with exercise.”

To provide a concrete example that suggests where he stands on the latter question, Sandel asks:

[Should] a loving couple…treat one another…when they can, in a calculating fashion, so as to save their love for the moments when they really need it…Or would it turn out that loving acts toward one another would increase this resource?

While this “loving couple” example triggered some laughter from Sandel’s audience, he was nevertheless presenting a serious critique of mainstream economics and many of its leading practitioners.  Among these is Sandel’s Harvard colleague Larry Summers, one of the nation’s (and probably the world’s) most influential economists, who, among other things, has served as Treasury Secretary, Chief Economist at the World Bank and, most recently, director of President Obama’s National Economic Council.

Near the end of his talk, Sandel quotes Summers, who was then president of Harvard and had been invited to give the morning prayer in the university’s Memorial Church. The theme of Summers’ talk was “what economics can contribute to thinking about moral questions.”

As Sandel explains, Summers ended his commentary by saying:

 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.

Sandel traces this line of thinking back to a speech by respected British economist Sir Dennis Robertson at the 1954 bicentennial celebration at Columbia University.  The topic of the speech was “what does the economist economize?”

According to Robertson, economists can and should “reduce the preacher’s task to manageable dimensions” by:

[P]romoting policies that rely whenever possible on self-interest rather than altruism or moral considerations, and by doing this…save society from squandering its scarce supply of virtue…If we economists do our business well, we can, I believe, contribute mightily to the economizing of that scarce resource, love, the most precious thing in the world.

According to Sandel, the economist’s view of love, altruism and other virtues as scarce resources that must be hoarded is misleading. And, as noted above, he offers an alternative metaphor: that such virtues are more akin to “muscles that grow stronger with exercise.” Sandel closes his talk with the powerful and provocative statement that “one of the defects of the market society we have come to inhabit is that it gives us fewer and fewer occasions to exercise those muscles and develop those virtues.”

Earlier in his talk Sandel considers the impact of this defect on our society and its citizens, especially those with less money and ability to generate it:

Over the past three decades, almost without realizing it, we’ve drifted from having a market economy to becoming a market society…where everything is up for sale…in which market values and market thinking begin to reach into almost every sphere of life, family life, personal relations, health, education, civic life, politics.

He then goes on to suggest two reasons why we should worry about this trend, the first of which is that “the more things money can buy, the more it hurts to be poor…if more and more of life is commodified, how much money you have looms much larger.” 

Later on in the discussion, INET President Robert Johnson builds on this point, extending it to what I consider a fundamental critique of libertarianism as a practical guide for real-world policymaking. Johnson suggests that many choices that libertarians (and probably many mainstream economists) might describe as “voluntary” are, in fact “coerced” by the desperation that poverty brings, especially in a market society where “how much money you have looms much larger” than it would in the hypothetical “Robinson Crusoe and Friday on a desert island” scenario often used by libertarians to make their arguments (or, for that matter, than it did in the nation’s early homesteading days, which are also often cited by libertarians to make their case).

According to Johnson, economists too often ignore key elements of real-world context. As an example, he points out that:

A voluntary army will naturally push people who are closer to despair into risking their lives…that’s not a free choice, it’s a coerced choice.

Sandel’s second cause for worry about becoming a market society is “the tendency of market thinking and market values to crowd out or to erode non-market values worth caring about.” To make his point, he engages his audience in a discussion of these value-related issues, using examples ranging from seal-hunting to selling political access, to hiring others to discharge one’s military duties during the Civil War.

Sandel argues that, if this crowding out and erosion of non-market values does, in fact, occur in arenas like health, education, civic life, culture, the environment and family life, then attempts by economists to present their field of study as a “value neutral science” are misguided and unhelpful.  

Sandel suggests that, rather than alleviating it, the economist’s preferred solution to the alleged scarcity of virtue–maximizing market-based interactions–instead turns it into a self-fulfilling prophecy.  We increasingly overwork our “selfish” muscles (for many, just to keep the bills paid each month), while the healthy exercise of our “altruistic” muscles is crowded out of our increasingly busy and money-driven schedules.  As a result, these muscles become weaker and weaker, to the point where they are often inadequate for even the more limited spheres of life for which Summers suggests they should be “saved.”

As I see it, this vicious cycle works something like this:  we come home from a long day of work tense, preoccupied and exhausted and, instead of sharing quality time (i.e., exercising our “altruism” muscles) with our loved ones, each family member grabs some heavily-marketed, additive-rich but nutrition-poor food, then plops down in front their preferred “connected” device (for which which they pay high and ever-increasing monthly connection fees).  There, each is bombarded by slickly-produced and increasingly “personalized” commercial messages (and/or struggles to catch up on an ever-growing list of unfinished tasks from their day’s work) until they fade off to sleep, to be awakened after too few hours of real rest for another day of the same imbalanced and unhealthy exercise regime.  The strains of this cycle are particular intense for the growing ranks of those who have lost or are afraid to lose their job (or pension), work multiple minimum wage jobs, are poorly served by our costly and complex “healthcare marketplace,” or who have college-age children, student loans or underwater mortgages.  All the while, we collectively funnel ever-increasing amounts of money to high-profit enterprises selling legal or illegal drugs and alcohol, in exchange for the often-undelivered promise of temporary relief from some of the symptoms of our chronic imbalance.

If they are to help reverse this unhealthy cycle, contends Sandel, economists should more carefully consider the nature of the goods to which they seek to apply their analytical tools and assumptions, and the impact of doing so on the non-market values related to these goods.  For this to happen, he says, the field of economics must “reconnect with its origins in moral and political philosophy.” And this reconnection must also be reflected in our public discourse, which has come to rely on “market reasoning” as a supposedly value-neutral framework that conveniently but mistakenly allows us to avoid the challenge of addressing moral and political issues on which it may be difficult to reach agreement in a modern pluralistic society.

I hope to write more about the issues raised in Sandel’s talk in future posts, but before ending this one I’ll note a few things that tie back to some of my earlier posts:

1.  As Sandel explains, the realm of “values” is poorly addressed by mainstream economics, yet is a fundamentally important aspect of living together on planet earth and developing systems that serve us as human beings, not just as “consumers” and “producers” in a “market society.”  

The same is also true of the realm of “ideas.”  Though many economists have come to recognize the value of ideas as a key driver of innovation and economic progress, their analytical models still tend to ignore it.  One notable exception is New Growth Theory, which I’ve discussed on this blog.

Together, these two shortcomings highlight the tendency of mainstream economics to ignore fundamentally important elements of reality in order to claim the mantle of “quantifiable science.”

2.  Given these and other shortcomings (see here and here for more examples), the role and influence of mainstream economics in our society and political process is far too great in relation to the value it provides.  While it arguably does a good job of serving the interests of the individuals and institutions that have benefited the most from our modern economic and political system, it’s claim to well serve the rest of us (and future generations) is increasingly without merit.

Fortunately, alternative perspectives exist, but their influence has yet to penetrate very far into entrenched academic and political institutions, due in large part to the excessive influence of money on these core institutions.  Though some progress has been made, much more is needed.

3. If, as Sandel suggests, fundamental human virtues like love and altruism are more akin to “muscles that grow stronger with exercise” than to scarce resources that must be hoarded as we commoditize an ever-broader scope of human activity, then shouldn’t we focus more attention on developing systems that do, in fact, provide those muscles with healthy exercise? And, related to this, can and should we develop and implement such systems on a voluntary basis as much as possible, to help ensure that such exercise is, in fact, healthy and beneficial?

Though I haven’t yet written a lot about this third topic, I do touch on it here and here and look forward, in the year ahead, to writing more about the many encouraging and inspiring developments underway (and possible) on this front…and, on a more personal level, to making sure that I get a healthy enough mix of virtue-strengthening exercise in my own daily life.