Don Lavoie Fellowship Discussion: Module 5
'Do Markets Corrupt Our Morals?' by Virgil Henry Storr and Ginny Seung Choi
Markets and morality
Welcome to the fifth module of the Don Lavoie Fellowship discussion portal. In this module's discussions you will be joined by Dr. Ginny Choi, Dr. Peter Jacobsen, and Dr. Anne Hobson who will help lead the discussion, pose additional questions and comments.
Today, please watch the author summary video, where Dr. Ginny Choi highlights key themes of his book, Do Markets Corrupt Our Morals? Further, in this podcast, Dr. Ginny Choi presents the book's main argument and is joined in the discussion by Brianne Wolf, Assistant Professor of Political Theory at James Madison College at Michigan State University; Rosemarie Fike, Instructor of Economics at Texas Christian University; and Chad van Schoelandt, Assistant Professor of Philosophy at Tulane University.
Question: What is morality? Did the authors meaningfully capture what it means for people to be moral and immoral in their book? Why or why not?
Aashish Reddy: By 'morality', I take the authors to mean something like 'virtue'.
Morality is about thinking through what acts one should undertake in particular situations (and derivatively, how one should judge acts already undertaken). Virtues are properties of individuals - how courageous, magnanimous, and so on, they are.
Their concern is not primarily with the question, "do markets cause people to act in more moral ways?". I'm not sure that this would be coherent; the kinds of situations and moral judgements that must be made in market societies and non-market societies are rather different. (Setting aside the strange definition of these respective kinds of societies are given by the authors).
The authors are arguing against the concerns of those who would argue that, for instance, companies contribute to climate change through their selfish pursuit of profits over any sustainable outlook on the environment. There are two ways to disentangle such a worry: it may be that markets cause individuals to be selfish in this way; or perhaps the selfishness of individuals is invariant across a range of societies, but markets cause that selfishness to be channelled into particularly harmful endeavours.
The authors are addressing the first possibility. They have a more or less coherent definition that they are pursuing, and asking the question, "if we compare how selfless/generous/etc. individuals are in market vs. non-market societies, are vices really more prevalent in the former?". Their empirical response (that they are not) does not, in my view, touch on the nature of the concern that most people seem to have about markets.
It seems that there is occasional confusion over this point though; ostensibly, they are talking about virtues and vices, which are properties of individuals. Occasionally however, the conversation drifts into consequences of markets that have little bearing on this. The question of whether markets create alienation and loneliness is an interesting an important one, but seems largely orthogonal to the issues on which they claim to be focussed.
Question: The authors view their book to be an attempt to directly respond to the charge that markets morally corrupt people. How successful did you find their attempt? What did you find unconvincing or convincing about their argument? How could they have improved their argument?
Aashish Reddy: Per my previous answer, I do not believe that the charge that markets morally corrupt people in the sense that the authors mean it - that is, that individuals are less virtuous in market societies - is a charge actually put by critics of markets (except occasionally in the heat of polemical diatribe. It would seem strange, for instance, for Marxists to hold that the bourgeoisie oppresses the proletariat, who are the majority, and yet also hold that most people in this society are 'immoral'.
Nevertheless, the charge that the authors are in fact addressing is empirically demonstrated to be largely false.
Question: Do markets improve morality? Having read the book, if someone stated, "markets corrupt our morality", would you agree or disagree? Why?
Aashish Reddy: By creating wealth, markets create conditions such that the necessity of doing immoral things is greatly diminished. They create positive-sum dynamics so that the natural tendency of individuals to pursue their own self-interest is typically (though not always) channelled into productive enterprises that are good for society as a whole.
They can thus have a positive impact on how virtuous individuals seem. Do they affect how virtuous individuals actually are? I see no evidence that markets cause people to become more greedier, or less concerned about other people, relative to plausible counterfactuals. If I had to guess, I would predict that they might make individuals more virtuous if they were cast into a Hobbesian zero-sum dynamic, since they have allowed individuals to be raised in social dynamics where actions of this sort are possible, tolerable, and rewarded. If true of course, that virtue would be maladaptive in the Hobbesian world and be competed away.
All this leads me to disagree with the claim that markets corrupt our morality.
Question: In your own life, where have you experienced the effects of markets on morality? In reflecting on my own experience in the private sector, the interplay between markets and morality has manifested in a few ways:
Employees bring their own moral system to business decisions
Humans are containers for moral systems. For example, a human rights lawyer is going to have a strong sense of what constitutes discrimination or inequity. Their moral viewpoint may result in recommendations to include a wide variety of hairstyles or accessories (like head scarves for muslims or hearing aids) for digital avatar products. Viewpoints can clash as they often do on content moderation - with different opinions on what constitutes hate speech.
Regulations (often proscribed in the name of morality), result in immoral outcomes
Broad privacy regulations in the EU prevent the expansion of what's called multimodal artificial intelligence. Multimodal means that the AI model can react to both voice inputs AND image inputs. A powerful use case for multimodal AI is helping blind or low vision people "see" the world. For example, you can ask the camera on your glasses what you are looking at, or to read the packaging on an item at the grocery store. The intent of the regulation was to protect the moral principle of "privacy" but the outcome is immoral in the sense that it prevents a socially beneficial use case (equal opportunity for the differently abled).
Morality is essential to sustained profitability
On the policy team, my role is to advise product teams on how to best incorporate principles that policy stakeholders care about - which are often morally grounded - like privacy, safety, and accessibility. If people (and by extension, policymakers) don't trust the company to hold their data or keep experiences relatively safe, they won't use its products and this impacts revenue.
Aashish Reddy: I see individuals who are selfish, in the sense that they would like to enrich themselves, figure out that the best way to obtain money is to create value for others. Perhaps they sell their labour; perhaps they start a company.
On the positive side of the ledger, it is almost impossible to obtain their desired ends by 'exploitation' or by stealing. So they must convince others that they are really creating value for them, and usually the best way to make this convincing is to actually create value. However, it is occasionally the case that they in fact pretend to be productive, in order to earn their wages, and are in effect deceiving others into enriching them at their own expense.
Question: Which quantitative evidence did you find most compelling or surprising in support of the argument that markets are more moral than nonmarket societies? Personally, I found the empirical evidence of the Gini Coefficient surprising. This graph (p. 119) showed that market societies actually have less economic inequality. This was not intuitive to me at first. I had assumed that in societies where merit was awarded more often than not, there would be more inequality but also more total wealth (with the poorest better off than their non-market counterparts). However, even non-market egalitarian societies cannot and do not achieve equality. In fact, they paradoxically create greater inequality by incentivising people to do an end-run around the nonmarket system - The "haves" are the people who can figure out a way to get additional resources outside of the nonmarket system through black markets or remittances. The "haves" are also people who abuse their political or hierarchal positions in non-market societies (for example, members of the Casto family in Cuba had access to luxury food when others did not).
Aashish Reddy: I was likewise surprised by the findings pertaining to inequality.
Economic sociology
Question: Unlike scholars of the neoclassical tradition (i.e. the school of economics that is most popularly taught in undergraduate economics courses), Austrian economists understand the market as a process. More specifically, they understand the market as an adjustment process, a competitive process, an entrepreneurial process, and a discovery process. What are the advantages and disadvantages of understanding the market in this manner?
Aashish Reddy: Advantages: it's more realistic, in that it captures the dynamic nature of markets, emphasises the role of innovation, and attempts to avoid the oversimplifications of static equilibrium models. This makes it useful for understanding things like entrepreneurial activity or crises like 2008, where errors and adjustments dominate.
Disadvantages: it's less precise. It's harder to model mathematically or use for actual short-term predictions (which is why policymakers still lean on neoclassical tools). It also assumes market processes generally lead to good outcomes and doesn't always explain issues with monopolies or systemic risk (this may be a sociological fact about the predilections of Austrian theorists rather than an indictment of the theory itself).
It's a rich framework for understanding markets at a conceptual level, but less practical for immediate, quantitative decisions.
Question: Do your daily interactions in the marketspace comport more with either of the two theories about the market - the neoclassical theory of the market as an end or steady state, and the Austrian theory of the market as a process?
Aashish Reddy: Probably more like the Austrian theory. Markets are dynamic, driven by new information, and shaped by the constant interplay of participants' decisions under uncertainty. Parsing real-time events like geopolitical shifts or economic updates feels more like navigating an evolving system of discovery than analysing a steady-state equilibrium.
I think neoclassical tools are (more?) useful as simplifications to think about markets for specific tasks, Austrian ideas about subjective value and dispersed knowledge better capture the fluid, adapting nature of how real-world markets actually work.
Understanding markets and non-market
The authors define market societies to be "spaces where property rights are respected, contracts are enforced, and the rule of law exists" and "where the market system not only operates but operates without significant interference" (p. 9), and label all other societies as nonmarket societies.
Question: In your opinion, for the purposes of their argument, do these definitions meaningfully capture what are commonly understood as market and nonmarket societies?
Aashish Reddy: Enough that I was willing to accept it "for the sake of argument". They capture key distinctions in terms of economic structures - e.g., the prevalence of market-based transactions versus communal or state-driven systems.
But most societies combine market and nonmarket elements; it was surprising to see Spain counted as a nonmarket society rather than a market society on account of low economic competitiveness relative to other European countries, and inefficient government bureaucracy and restrictive labour regulations. This may be so, and I did not extensively survey their categorisations, but suggests to me that the dichotomy is flawed (or, more complicated than their analysis allows).
Question: In the appendix, the authors detail how they quantitatively determined a country to be a market or a nonmarket society, and how they operationalized morality for empirical traction. What did they miss or gain by operationalizing (i.e. quantitatively exploring) morality of markets in this manner?
Aashish Reddy: Clearly they gained greater empirical clarity, and an ability to test hypotheses and compare countries systematically. This made their claims more credible and actionable.
Arguably though, reducing morality (or virtue) to measurable proxies risks oversimplifying its complexity. Hence, they may have missed deeper, qualitative insights into the cultural and historical factors shaping morality, and might have biased their analysis by focussing on easier to quantify traits (trust, fairness) over harder-to-measure concepts (dignity).
Ask the Author
As we round out the discussion of the book this week, please use this space to ask the author, Ginny Choi, questions about the book.
Question: Please use this thread to ask the author of the book further questions.
Aashish Reddy: What explains the general assumption (in popular culture, in academia, in many places and amongst many people) that markets are in fact morally corrupting?