Barry Maguire (University of Edinburgh), "Efficient Markets and Alienation"
Philosophers' Imprint, 2022
(This post first appeared here at the Law and Political Economy [LPE] Project).
‘Your Boss Doesn’t Care About You’
In his Comments on James Mill in the 1840s, Karl Marx complained that, “the mediating process between men engaged in exchange is not a social or human process, not human relationship; it is the abstract relationship of private property to private property … men engaged in exchange do not relate to each other as men.” And here’s Friedrich Engels, around the same time: “The relation of the manufacturer to his operatives has nothing human in it; it is purely economic.”
Sounds plausible enough. But such alienation objections to markets have surprisingly few defenders in moral or political philosophy nowadays – certainly as contrasted with the massive literatures discussing concerns about inequality or exploitation. This is regrettable. For it has been shown (by Joseph Carens and John Roemer, for instance) that such distributive concerns can be met, in principle, without altering the basic infrastructure of market systems. Through taxes and transfers, or perhaps a scheme cooperative ownership, we can correct any deficiencies of distribution while still harnessing the power of markets. This is, at least, the promise of market socialism. But worries about alienation cut deeper. As I argue in a recent paper and will briefly sketch in this post, they inhibit us from recognizably caring about one another in our productive activities.
One reason that many have dismissed alienation objections to markets begins from the observation that individuals can enter into exchanges for lots of different kinds of reasons. You can sell your cow to help yourself, to help the buyer, or perhaps to help the cow. It is often presumed to follow that any motives that might be required to avoid alienation can be encouraged in market contexts without altering the organizational infrastructure of the market system.
However, the most significant class of arguments for markets – namely Adam Smith-inspired invisible hand arguments – do not merely call for us to engage in exchange. Rather, they require that we act with a certain set of motives in exchange, ones that will be conducive to overall efficiency. And it is these market motives that inhibit an agent from manifesting care for their fellow participants.
To manifest care for someone, I suggest, is to be non-instrumentally motivated by the fact that the option in question would have a positive impact on their needs. There are two ways that market motives, issuing from a marketeer’s commitment to efficiency, might be compatible with such an ideal: their market motives might exist alongside caring motives, or they might themselves be caring motives. I reject both of these possibilities, by arguing that the commitment to efficiency is both exclusionary and fetishistic. Let’s consider each in turn.
EFFICIENT MOTIVES AS EXCLUSIONARY
Joseph Raz introduced the notion of exclusion with the following example. Suppose that you promise your partner that you’ll decide which school to send your child to just on the basis of considerations bearing on their welfare, hence not, for instance, on the cost, or the impacts on the choices other parents might make, or your egalitarian scruples. This promise doesn’t make it the case that these other considerations aren’t reasons, or that you aren’t affectively responsive to them, or that you don’t respond to them in other contexts. It just makes it the case that, insofar as you comply with the commitment, you aren’t motivated by them in the context of making the decision about school choice for your child.
Lots of role-based commitments are exclusionary. As a teacher, you presumably fail to attend to considerations of student welfare in marking their papers. That’s not to say that you won’t be sad if you know they’ll suffer, nor that you won’t respond to their welfare in other contexts. Likewise, facts about your personal relationships are excluded in your role as a judge; and facts about the feelings of the opposing team’s fans (perhaps more numerous, and more deserving) are excluded in your role as a football player.
For participants in the market, the commitment to efficiency is exclusionary in this sense. The marketeer may well care about their employees, customers, competitors, wider patterns of production, and so on, in their free time. But they do not take those considerations to be reasons in market contexts.
There is a good rationale for this. In an efficient system, responsiveness to prices already takes into account the distribution of impacts on peoples’ interests. To attend separately to those interests on their own terms would involve a kind of naïveté about the systemic nature of the decision-making context – a kind of ‘double counting.’ By selling to this person below market price, for example, the marketeer would be depriving some needier person of the same resource or expectably creating less with more – either way misallocating scarce resources. What’s more, given suitable social and political institutions, and a robust labour market, the marketeer can reasonably believe that the individual in front of them will not suffer. And that individual knows that too. Both respectfully accept these rules on the same basis.
But still, the fact remains that in those contexts, the efficient marketeer will make decisions that affect individual lives profoundly. These decisions might affect whether an individual has to take their children out of their schools and move them across the country, or whether they’ll lose their social community at work, or perhaps have to retrain for a different career altogether. The marketeer will make these decisions without being additionally motivated by these facts about the welfare of the affected individual. These facts are still reasons, and the marketeer may be affectively, and counterfactually responsive to them. But they are not motivated by them in this context.
EFFICIENT MOTIVES AS FETISHISTIC
Now to the claim that efficient motives are fetishistic. Roughly, a motive is fetishistic if it concerns something that is not itself of value, rather than some pertinently related value. Teaching to the test, seeking public office to enhance one’s status, helping others to please God – these all involve a kind of fetish. There are values nearby one should be motivated by instead: education, public service, and the needs of others.
In multiple ways, the efficient marketeer’s motives are fetishistic. Their own end, the profitability of their firm, is not valuable. Neither is the end of the system, efficiency, valuable for its own sake. Efficiency merely correlates with welfare, which is presumably valuable. It is also worth noting that the condition the marketeers are attentive to – namely individual willingness to pay – is also not itself something of value, even if it does correlate with value on the average.
The efficient marketeer is directed, by the very terms of the efficiency models and the associated ethical arguments, to promote profit within the relevant constraints.
So, when it comes to choosing whether to sell some good at some price, or produce this rather than that, or retain this worker on these terms, or open or close a factory, the considerations that bear on the choice concern the impact on the bottom line. Again, there is a good rationale for this, for they might do so on the basis that everyone’s doing so in these contexts will serve everyone’s interest, more or less. If they retain an inefficient employee, who could perhaps do more useful work in another firm, they will produce a lower output from a given stock of scarce resources. And if they break the rule here, they should perhaps also do so elsewhere – all at a rippling cost to system-wide efficiency.
A manager who is motivated by loyalty, compassion, and aesthetics might survive for a while in a competitive marketplace. But insofar as they are genuinely responsive to some higher-order condition of long-run profitability, there will be many situations in which they will face a choice between these values and their commitment to profitability. Indeed, the main point of the Smithian invisible hand arguments is to provide a justification for the kinds of deviations from ‘ordinary morality’ that are likely in competitive market contexts. Managers have this very justification for prioritizing profitability in such cases; and we can allow them the reasonable presumption of political institutions that provide unemployment benefits, lifelong education, etc. But then it follows that the sophisticated marketeer will not have caring motives in a wide range of productive contexts.
So, if all this is right, how should this change our stance toward markets? In the paper, I suggest various ways to mitigate alienation. But the main point is this. To avoid alienation, we must be able to see our acts of service as meeting needs. And markets are terrible at this. The very invisibility of the price system is the most obvious culprit. Decisions in the market about what to consume, and what to produce, are responsive to a massive range of unknowable considerations. And all sorts of cultural, aesthetic, and personal sources of information are excluded (for instance, that the customer could get the same thing for half price across the road).
It is worth pointing out that command-based economic systems have a similar problem. Production decisions are made by massive systems that delegate responsibilities to huge numbers of individuals on the basis of overall assessments of supply and demand. Individual contributions in such a system are still a problematic organisational distance from the meeting of anyone’s needs.
The solution is to look for decentralized alternatives to both capitalism and central command communism. There is another important class of alternatives, called ‘municipal socialism’ or ‘participatory socialism’ or ‘socialism from below’ (for some discussion, see Hahnel and Albert’s work, or this excellent recent piece by Mary Robertson). Here the emphasis is, in the first instance, on decommodifying the means of production and reallocating control of capital from private corporations to local workers and municipalities. The ‘Community Wealth Building’ project could well be an important part of this alternative approach. This participatory approach is often pitched in response to worries about exploitation and inequality; but it might also mitigate worries about alienation, insofar as individuals and communities are empowered individually and collectively to reorganise production to meet one another’s needs.
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