SOSC 2340
Intermediate business & society
Lecture 5: Markets & morals
The dominance of the market
Today, people are more dependent on the
market than at any other time in history.
The market is also expanding to include
items which, previously, have not been
exchanged on markets.
We speak of “commodification” when a
good becomes a commodity, i.e. something
that is bought and sold.
Extending the markets: examples
Prison cell upgrades
 The right to immigrate to the USA
 The cellphone number of your doctor
 The right to shoot a rhinocerous
 Your forehead (as a place on which firms can
place adverts)
 Places in the queue for congressional
hearings in Washington
 Insurance on the life of a person

Source: M. J. Sandel (2012) What Money Can’t Buy, pp. 3-5.
Two arguments for the market
Libertarian: markets allow for the
greatest freedom.
2) Utilitarian (economic theory): free
markets maximise social welfare.
1)
Utilitarian (economists’) view
Voluntary market exchange represents a
Pareto improvement.
An exchange brings about a “Pareto
improvement” if the welfare of at least
one of the transactors increases whilst
the welfare of other transactor(s) does
not decrease.
Limiting the market
If a good or service cannot or
should not be bought and sold
for money, we speak of a limit
to the market.
What are these limits?
People
Slavery
Parts of people (kidneys, blood, parts
of liver, teeth)
Politics
Electoral votes
Political office
Rights: freedom of speech, religion,
press
Protecting people from themselves
Health and safety laws (hazardous
jobs)
Narcotics, guns
Prizes and honours
Who gets the Order of Canada?
Why don’t we award students with
grades in accord with who is willing
to pay the most?
Love and friendship
Can one buy another person’s love or
friendship?
Reasons for limiting markets
a)
b)
c)
d)
An exchange can transgress our rights.
Some exchanges are impossible: they
corrupt the good being exchanged.
Some exchanges are blocked because
they would lead to harm.
Some goods should be allocated
according to non-market means.
Cannot and should not
Some items (e.g. friendship, love, prizes)
cannot be sold on the market without
being transformed into something else.
Other items (e.g. kidneys, places in queues,
narcotics) can be sold in markets but
should not be.
Are markets fair? Coercion and inequality
People’s choices in markets appear to be
free, but are some people coerced by
their circumstances to enter into some
exchanges?
Examples: hazardous jobs, joining the army,
prostitution, selling kidneys.
Are markets fair?
Markets allocate goods to those willing to
pay for them.
Economists assume that if you have a high
willingness to pay, you should get the
good in question because you desire or
value it most.
But poor people have high willingness but
little ability to pay (healthcare, housing,
education).