Efficient markets are alienating if they inhibit us from recognizably caring about one another in our productive activities. I argue that efficient market behavior is both exclusionary and fetishistic. As exclusionary, the efficient marketeer cannot manifest care alongside their market behavior. As fetishistic, the efficient marketeer cannot manifest care in their market behavior. The conjunction entails that efficient market behavior inhibits care. It doesn’t follow that efficient market behavior is vicious: individuals might justifiably commit to efficiency because doing so serves the common good. But efficient market systems nevertheless have significant opportunity costs. The discussion yields a range of desiderata for non-alienated economic organization.
In his …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. The relation of the manufacturer to his operatives has nothing human in it; it is purely economic.
Alienation objections to markets have surprisingly few defenders in contemporary moral or political philosophy – certainly as contrasted with distributive objections or concerns about exploitation.
But mere exchange - a voluntary transfer for consideration The economic relation does not exclude from my mind everyone but me, it potentially includes everyone but you.
It is often alleged to be an empirical question which motives predominate in which circumstances.
This cost is not an
My conclusion falls short of constituting an argument for abolishing markets, because we don’t yet have a satisfactory sense of what they might be replaced with. On this point, here’s …the principal problem that faces the socialist ideal is that we do not know how to design the machinery that would make it run. Our problem is not, primarily, human selfishness, but our lack of a suitable organizational technology: our problem is a problem of design.
Alienation is the state of being problematically inhibited by certain kinds of agential structures from certain kinds of positive engagements.
I will be arguing that markets inhibit a certain kind of positive engagement, so let me start by saying what kind of engagement I have in mind. Discussions among Marxists emphasize serving others by responding directly to their needs. Here is
Marxist theorists discuss other conditions of non-alienated engagement, too, in particular concerning the prospects for recognition of one’s service. I’ll return to these in a moment. But the focus of the central argument to come will concern whether one can
Not all caring is part of an ongoing relationship; one can care about a stranger one has just met.
One can care about things other than people, of course – for instance about products and activities and ideals. The
Let me say something about the role of
Let me turn now to the question of what in virtue of which the inhibition of care in productive contexts is
The standard Marxian line is that caring and recognition are constituents of self-realization
But these further explanatory remarks are not essential to the argument. I just need that some such plausible story can be told. The important thing, dialectically, is to separate out two possible sources of disagreement. Firstly, one might dispute that the notions of care and recognition that I am employing constitute constituents of one worthwhile way of theorizing about non-alienation. But disputing this would be an uphill struggle, even without any appeal to self-realization. Secondly, one might take issue with either the axiological conjecture that non-alienation so understood is valuable, or the metaethical basis on which some such axiological conjecture is defended – perhaps by arguing that this requires a dubious essentialist metaphysics, or an otherwise problematically objective theory of human flourishing. I will not engage these kinds of skepticism any further here.
I presume that ‘capitalism’ picks out that subset of market systems in which one class disproportionately owns the means of production, and the other, in virtue of that fact, systematically earns less than the value of their labour.
My argument targets the behavior that would be justified by the efficiency argument for markets. The efficiency argument takes Smith-style invisible hand efficiency models as a premise, as it were, and advocates the kind of behavior, in the relevant contexts, that would collectively realize Pareto efficiency. This is a domain-specific indirect consequentialism, with a heavily restricted axiology. This principle does not direct individuals to perform efficiency-maximizing actions. Rather they are directed to conform to their roles in the efficiency-promoting system.
The most significant version of such an ethical theory has been developed by
An individual marketeer might have such a commitment for different reasons. Importantly, they might have this commitment precisely on the basis of the indirect consequentialist justification. Assume that they do. This justification is not one of their first-order motives; it is a higher-order justification for the principle that issues in these motives. But it is not morally idle. Such a
In my view, the primary instance of alienation is the owner-manager’s relationship with customers, employees, and competitors. Both workers and capitalists are alienated by the kinds of interactions that they enact by participating in the capitalist mode of production. But capitalists have more effective choice about whether to participate in this production and on what terms. (This is perhaps why, in
I focus on owner-managers of mid-sized firms in competitive markets. Grant all the assumptions needed to support the indirect consequentialist justification of their commitment to profitability, and assume managers and other economic participants accept this justification for their commitment. Assume the most benevolent of background political and social institutions.
There are two ways the marketeer’s motives in market contexts might meet the
One further restriction is important. The ethical efficiency argument for markets is, to some extent, constrained by the ‘problem of the second best’ (
For a commitment to be exclusionary is for that commitment to be inconsistent with being motivated by a certain class of reasons in the relevant context.
There are three earmarks of exclusionary commitments. Firstly, these other considerations – e.g., concerning the impacts of your school choice on other children – are still reasons, in some relevant sense. Relating to this, secondly, one may well be affectively responsive to them: perhaps regretful about these implications. And thirdly, one might be motivated by these considerations in counterfactual contexts. Perhaps one sends an email, expressing regret that one couldn’t bend the rules in this case. But still, one will not be
The commitment to profitability is exclusionary. The efficient marketeer will make decisions – about which products to sell to whom under what circumstances, about hiring and firing, about which products to produce or discontinue, which factories to open and close – all on the basis of what will best promote the profitability of their firm, and not on the basis of loyalty to staff, or a sense of pride in making beautiful clocks.
The rationale for this is given by the efficiency argument itself.
Significantly, all three features of exclusion apply to efficient marketeers. Firstly, the commitment to profitability involves not being motivated by the excluded first-order reasons in market contexts; it doesn’t entail that these other considerations are not reasons. The prospect of a loyal elderly employee’s subsequent financial troubles – call him ‘Morrie’
These exclusions only apply in the appropriate contexts. One’s commitment to being a good teacher only constrains one’s motives qua teacher. If you are grading your son’s paper, your commitment to being a good teacher excludes facts about his prospects from motivating you. But these facts can reasonably motivate you when he falls sick during class. The exclusionary nature of efficient exchange does not mean that buyers and sellers cannot care about each other at all. It means that the efficient buying and selling cannot manifest
This is important. I’m not arguing that you cannot care about someone with whom you interact on efficient terms in market contexts. I’m arguing that your efficient market interactions cannot manifest your care about each other, given that care involves the
It is important to note that the exclusionary nature of the commitment to profitability does manifest itself in non-ideal contexts – so long as they are not
The exclusion argument purports to establish that one cannot manifest care in addition to efficient market motives in one’s participation. But this leaves open the question whether one’s market participation might
We can start with this. Caring about an end for its own sake, and hence,
Consider an analogy with ecological systems. We might aim to increase ecosystem health, not because we care about the ecosystem, but because we care about the individual animals in the ecosystem and aiming to increase ecosystem health is the best way to help all the affected animals given either our ignorance about the holistic dynamics of the ecosystem or the difficulties and risks in intervening accurately. As this example suggests, it might make perfect sense to have a fetishistic end in a sufficiently complex system given a sufficiently challenging epistemic situation. And indeed, this is a decent metaphor for the kind of epistemic challenges presented by the standard Hayek-style knowledge arguments (cf.
Just so, the efficient marketeer’s orientation is fetishistic. The efficient marketeer
Of course, sometimes giving someone a bonus, or retaining an inefficient elderly employee, or improving safety standards, will improve overall productivity. Happier and safer and more secure workers are generally more productive. The profit-maximizing marketeer will be motivated to provide such a bonus. Strictly speaking, though, the marketeer’s motive is of the form ‘this happiness-inducing action will make these workers more productive,’ not simply ‘this happiness-inducing action will make these workers happier.’ Not only do facts about persons fail to appear in the content of the efficient marketeer’s motives, facts about their welfare also fail to appear.
The argument here is analogous to, but cuts deeper than, the objection to impartial moral theories that they yield unduly abstract motives in friendly contexts. The Act Consequentialist can avoid some of these concerns because they can be motivated by considerations bearing on an individual’s welfare
This appeal to the consequentialist literature suggests an alternative response. I have been assuming that the efficient marketeer is always motivated by profit as such. But this assumption is actually rather dubious. Managers who ruthlessly fire staff, close factories, and lower the quality of their products in precise responsiveness to profitability calculations, are probably less successful at promoting the profitability of their firms than managers who exercise compassion, show loyalty, and who
Profitability, like happiness, is not best promoted directly.
There are two problems with this defence. The first is that it can’t capture all the cases. A manager who is only 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 face a choice between these values and their commitment to profitability. Indeed, the main point of the ethical efficiency arguments is to provide a justification for the kinds of deviations from ‘ordinary morality’ that are likely in competitive market contexts.
The second problem concerns their commitments themselves. Consider an analogy from
Likewise, there is something problematic about our sophisticated marketeer. The problem is not just with their first-order motives, which I grant will sometimes meet the
Lots of activities are exclusionary and/or fetishistic without being problematic. Exclusion is a common feature of social roles, as illustrated by the examples of judges, teachers, etc. Some activities are both exclusionary and fetishistic: in particular, competitive games. But competitive games seem unproblematic. I have argued that efficient markets are exclusionary and fetishistic, but it doesn’t follow that they are in any way problematic.
Competitive games are usefully analogous to efficient markets in various respects: both involve intrinsically valueless ends (e.g. getting a small ball into a distant hole) and both are exclusionary (since one ought not be motivated in the relevant context by one’s opponent’s concern to win). Games have a process-inducing end rather than an intrinsically or consequentially valuable end.
The problem with the analogy is this. Competitive games are constituted by attempts to engage in otherwise
It is plausible enough that efficiency is the ‘point’ of a
Interestingly, it would be better if economic organization were
I offered a sketch of some of these values earlier, referring to meaningfulness, authenticity, and recognition. The dialectical point, in response to the games-markets analogy, is simply that there are many important values at stake in economic activity, many of which are central to the good life, and many of which are inhibited by efficient market participation. There is, in consequence, a significant opportunity cost to markets. Rather than games, markets are more analogous to activities in which some end is pursued without realizing the values that can be instantiated by alternatives: opaque but moderately efficient bureaucracies, or ‘teaching to the test,’ or walking through the Highlands without enjoying the view.
Consider another objection. Even if market interactions themselves fail to meet
One thing the exclusion-fetishism argument might yield is an ethical justification for
This connects with another line of defence specific to market socialism. Suppose that our basic needs were guaranteed beyond the market: not just health care and lifelong education, but guarantees of free time, a safe working environment, well-designed recreational spaces and robustly funded public arts. Throw in a comfortable basic income. There are tricky political and economic questions about provisioning this, but set them aside for now. Suppose that market systems were carefully restricted just to the distribution of private resources that we merely want – leather jackets, haute cuisine, and subwoofers. It seems reasonable enough that people ought to trade-off their access to some of these goods with their access to others. Suppose that sufficient overlap might be found between such a restricted market system and the domain of mere wants. Does this offer the prospect of a market without alienation?
I don’t think so. There are two key points here. The first point is that we can manifest care not just in the meeting of basic needs but in providing anything of significance to someone. In friendship, for instance, the spontaneous indulgence of a whim can be just as meaningful as providing food. Likewise, a pastry chef might show their love by agonizing over tiny details in a cake. You can manifest the fact that you care about me by fixing either teeth or my speakers. By doing the latter, you can also manifest your care about music appreciation.
The second point – and this is also why the alienation argument doesn’t merely establish a justification for
This line of thought relates to a third objection, this time to the necessity of
It is true that the specific standards of care in personal contexts, such as with close friends or family, cannot be expected to provide a fully satisfying set of standards for interactions in a massive economic system. There are degrees of attentiveness to one’s friends that one could not possibly meet for all of one’s customers, for instance. In order for care to yield a fundamental ethical standard in economics, we need a theory of how standards of care vary in different kinds of contexts. This is a big task that cannot be fully undertaken here. However, I will aim to say enough to undermine the contention that ideal behavior in efficient market systems is a fully satisfying way of caring about one another in our productive lives.
The first point to notice is that institutionalizing interactions can
There are also some familiar limitations associated with institutionalizing care. One concerns
Now recall two structural features of alienation: firstly, that it comes in degrees, varying with the extent to which one manifests care and can expect recognition for one’s productive endeavours, and that it is imposed by will rather than nature. I submit that productive institutions are more alienating, the worse they fare concerning the provision of caring enhancements and caring limitations (as introduced in the previous two paragraphs), relative to the extent to which these constraints are imposed by will rather than nature. And here, it is striking that efficient markets fare poorly concerning all these standards.
In the case of the market, the allocation rule is responsive to all resource use by everyone across the global economy. It may be true that an individual accepts their role in the market system because everyone’s doing so serves the common good. But the choice principle that guides their motives and behavior in particular market contexts leads them to make decisions on the basis of considerations that are very distantly related to the needs of the person they are ostensibly serving. There are various kinds of additional distance. These features intensify the degree of alienation between agent and patient.
Firstly, the price of the good is sensitive not just to the supply and demand for this resource. It is also sensitive to the supply/demand functions for all the other resources that bear on its production. This sensitivity is, famously, invisible to the individual at the point of withholding a resource. This has a familiar upside, but also a less familiar downside, since the very invisibility of the mechanisms determining price means that often neither of us can know why you are withholding a good from me in a particular instance.
Secondly, an individual’s willingness to pay a certain amount for a good is a
Thirdly, insofar as the price system plays an important epistemic role, it has significant limitations. As noted above, institutionalizing care can yield considerable epistemic
Fourthly, the allocation system will usually itself be larger. The allocating institution in the market case is not the firm but the entire market economy. The logic of invisible hand arguments pushes for more extensive markets: more competition, more substitutes, more flexible factors of production (including labor), etc. This is also part of the ‘logic’ of the microeconomic models: the tendency is to bring more phenomena into market contexts – consider the Pigouvian (
At this point, on behalf of efficient markets, one might appeal to the ‘will’ condition, arguing that the various inhibitions of care, and failures to enhance care, in market-structured production are imposed upon us by nature rather than by will, and hence are not alienating, any more than other natural constraints, such as the distribution of raw materials. And there some reasons to be sceptical. Consider the complexity of the supply chain in producing a car, for instance. Complete transparency is hardly likely to be worthwhile in any satisfactory productive system. But clearly,
This discussion has suggested various approaches to mitigating alienation. One is to limit the scope of markets, meeting basic needs collectively and distributing on market terms only things that we merely want. This is an instance of a more general strategy. The extent of alienation in society is responsive to a number of gradable properties, in particular the degrees of distance between service and need: the invisibility of the price system, the complexity of trade-offs manifested in market behavior, the exclusion of non-price-related information, and the overall size of the economic system. The extent of alienation in a society can be mitigated by institutions that are designed to reduce these degrees of distance.
But these reforms will run up against the grain of the efficiency arguments themselves, which, as noted, are constantly pushing to expand the domain of the market and to purify the standing of its own rules in its own domain. It is an open question for further interdisciplinary investigation what will remain of the efficiency arguments when the extent and nature of the market domain is modified this way or that to accommodate alienation concerns.
But market socialism is not the only decentralized alternative to capitalism.
The central point is that the very depth and complexity of our productive interactions is a tremendous – and currently missed – opportunity to realize a range of important values in our productive lives. It seems worth entertaining the prospect of a more caring alternative: with individual caring relationships that are collaboratively responsive to relevant distributions of abilities and needs, at all levels of organization: the level of a particular service, an individual role, a particular organization, an industry; and that preserves important continuities with the values at stake in our un-marketized commitments – for instance reproductive and domestic labor, aesthetic pursuits, productive traditions and our relationship with the environment.
For a sense of the richness of these other discussions, see
For discussions of this ‘mixed motive’ defence, see
This is the standard definition; for discussion see
It is common (following Sen 1985) to distinguish consequentialist and deontological (freedom or rights-based) arguments for markets. I’ll mostly set aside the latter. Among the former, some concern the inculcation of virtues or the egalitarian advantages of markets. I’ll mostly set these aside as well. I will focus on that large class of Smith-style invisible hand arguments according to which there is a domain of market activity the nature and point of which justifies a choice principle for participants. Important instances include
And for their part, sociologists tend to restrict themselves to such empirical questions; see, for instance,
For helpful discussions of alienation, see Schacht, 1970;
For examples and discussion, see
I am heavily influenced here by the feminist tradition that emphasizes care, especially
Cf. Brudney (2010, 152),
Marx,
I do not quite insist that this agency condition is essential for anything that can properly be
See
I restrict my attention to questions about being problematic in terms of a loss of important values rather than in terms of a conflict with standards of justice. For discussion of the claim that non-alienated labour is a requirement of justice, see
cf.
The modal status of these appeals can vary. Most strongly, with Marx, these appeal to what is essential to human nature. More weakly, these might appeal to sufficiently robust facts about human beings, with human beings perhaps restricted by some prior ethical condition (as in Aristotle’s minimal decency or Rawls’s reasonableness).
It is not a coincidence that
This is the first condition of capitalism in
The simplest example is with the Carens’ scheme (
Cf.
Compare
In virtue of these alienated relationships, managers are also alienated from their product (insofar as they are not guided by the meeting of needs as such, but by the prospect of exchange at market prices), and their own activity (assuming they have the right values). This relation of alienation is symmetric with other profit-oriented competitors. Customers are derivatively alienated from profit-oriented managers, and from their products, insofar as the manager’s commitment to profitability is sufficient to preclude a certain relationship of caring recognition between them (more on this later). Customers may also be alienated non-derivatively from products and producers insofar as they exchange products precisely in response to the maximization of their household’s narrow material interest (as required to avoid ‘consumption externalities’); but I do not address this question directly here. Employees may also be non-derivatively alienated in the same way, e.g., in a willingness to switch from one job or community or product to another just on the basis of income-maximization. (Here I’m distinguishing the alienated manager deciding to sell inferior widgets from the alienated worker readily disposed to make them.) For reasons of space, I also do not address the fiduciary relationship between shareholders and managers, and between managers and employees.
On this point, see especially
A separate argument for exclusion maintains that managers have fiduciary duties to shareholders (cf.
Morrie Cohen was “dismissed because it no longer paid the boss to pay him” (Cohen, 2000, 181).
I intend ‘manifest’ to means something like ‘partially constitute’ here, rather than the sense of ‘manifest’ in which it is consistent with the possibility of insincere signalling.
Under
It is an interesting question for another time how the exclusionary nature of efficiency connects with the exclusionary nature of property more generally, which latter is also clearly significant in non-ideal contexts.
Cf.
Cf.
For further discussion of ‘enlightened’ behavior in market contexts, see
The coordinating model assumes (like the welfare theorems) that competitive firms are, by and large, price takers, so that the marketeer is responsive rather than pro-active; prices direct activity, in the first instance, and individual market participants merely respond in profit-oriented ways. Managers need not be looking for ways to make profit
The coordinating marketeer knows people only make exchanges that benefit themselves relative to social cost. They know that in hiring and firing, buying and selling, their allocations of resources, in also being so responsive to interest and social value, conform to optimal efficiency rules. Everyone just wants resources allocated with maximal efficiency, and everyone knows the rules. So, when the cost of one factor increases, so that employers have to lower wages, they expect to lose a percentage of staff, and the staff know this too. No hard feelings. Similarly, the coordinating marketeer isn’t
On the bargaining model, marketeers bargain ‘creatively’ for the terms of an exchange; and prices reflect this bargaining process. Individuals need to attend carefully to the particular situation of their opposite number, and to the needs and interests of consumers in the future, and they need to respond creatively and dynamically to opportunities that they see and create. Here, individuals are more actively engaged in the market process as adversaries. A defence lawyer might work hard to defend a client they know is guilty only because of their common-good argument for the adversarial trial system. Likewise, the bargaining marketeer might work hard to make a profit at another party’s expense only because of their common-good argument for the adversarial market system.
Cf.
Cf. Railton (1984, 140 and following)
See especially
Cf.
Compare Miller (1990, 221).
Compare the assumption in the title of
It is likely that Joseph Heath would agree, since he understands the end of Pareto optimality as a ‘third best’ solution to the problem of economic organization (
Compare
This is implicit in Cohen’s camping trip example (
On the contrast between trustworthiness and mere reliability, and some connections between trustworthiness and continuities across one’s commitments, see
For more on this kind of level-specific suitability, see my ‘Rewiring Ethics’ (ms).
Compare Elster on adaptive preferences (
See, e.g.,
Notice that central planning would also be alienating, since individual contributions are still a significant organisational distance from any needs-meetings.
Many thanks to Michael Bratman, Geoff Brennan, Brookes Brown, Anthony Cross, Joran Dannenberg, Dave Estlund, Guy Fletcher, Johann Frick, Dave Gottlieb, Joseph Heath, David Hills, Chris Howard, Pat Hughes, Nadeem Hussain, the sadly late Waheed Hussain, Chris Melenovsky, Tristram McPherson, Ryan Muldoon, Austen McDougal, Oded Na’aman, Jeppe von Platz, Debra Satz, Geoff Sayre-McCord, Jonny Thakkar, Leif Wenar, Jack Woods, and audiences at The University at Buffalo, The University of Edinburgh, Stanford University, Washington University in St. Louis, and the Wharton School of Business.