Morality and markets: a paradox?

Janice Turner makes an argument that I find questionable:

Morality should enter economic decision-making, whether it is me refusing to buy flown-in American Pink Ladies in Sainsbury's during the British apple season or Total oil shareholders who should take a tiny hit to ensure that the workforce who earned them great wealth, now in a time of need gets a little back. One could, in theory, ship over Mumbai street urchins to paint one's house. But is the cheapest decision always the right one?

In one sense, yes. The lowest tenderer for a contract is the person who wants the job most - just as the highest bidder in an auction is the guy who wants the good the most. And surely it is morally acceptable - and right in utilitarian terms - to give something to the person  who most wants it.
Of course, it might not be prudent to do so - they could do a bad job or alienate your neighbours - but that’s a different thing. Or it might be that something is cheap because of an unpriced negative externality. Or someone might be desperate for a job because they are the victims of immorality or injustice in other ways, but that is a separate, though important, question.
Ceteris paribus, though, in many cases the cheapest decision can easily be a moral one.
This raises a paradox. Many people would think that an economic system which allows workers to be exploited is immoral. But given that this system exists, it might be morally justifiable for a firm to hire the individual worker it can exploit the most, as s/he most wants the job.
This paradox might justify Marx’s argument - that the problem is not that individual capitalists are immoral, but rather that the system itself is faulty.

Comments

[Dan]

"just as the highest bidder in an auction is the guy who wants the good the most"

If one bidder in an auction is fantastically more wealthy than another he can easily outbid the other guy even if he doesn't particularly want it. The value of that money to the richer guy is less than for the poorer one (concave utility, yadda yadda).

[Will]

"The lowest tenderer for a contract is the person who wants the job most"

You'll never be unemployed if you can afford to work for free.

[chris]

Dan - it doesn't follow that the rich guy values money less than the poorer one. He might have become rich precisely because he values money highly - heterogenous tastes, yadda yadda.
If there's no injustice in the difference between the rich guy and poor one, is there any injustice or immorality in letting the rich guy bid more?

[Dan]

Chris, yeah, the rich guy might have got rich because he values money highly, but he might just be a lucky git. Whatever, it's not clear that the highest bidder wants it most.

But yeah FWIW I agree with the conclusion that it's the system that's faulty and not the individual decisions within it. (Although what about when individuals make decisions within the system that work to strengthen that system? e.g. rich people donating to right-wing political parties.)

[CharlieMcMenamin]

Simple examples of supply and demand have no intrinsically positive or negative morality in isolation from other factors."Ceteris paribus" is the economists' phrase for saying we're going to ignore everything which suggests life might be a little more complicated than that and stick with that isolation.

The Times piece you criticise is overly emotive, perhaps ( only perhaps), and may use the wrong shorthand. It says, "Morality should enter economic decision-making."

Try re-formulating that as:" Economic decision making is about efficiency, but what counts as efficient is a philosophical,social and political matter which can't be decided by economic tools alone...." I'm not sure your objections would then stand up - and you'd still have a clear line of argument back to uncle Karl...

[Will]

Is the system faulty, or is it doing exactly what it was designed to do? The system is just the sum of the individual decisions made within it. In a society where moral arguments have more force than economic ones, the system will be moral. In a society where morals are considered an unaffordable indulgence, any immorality that creeps into the system is a feature, not a bug.

[ad]

"Many people would think that an economic system which allows workers to be exploited is immoral."

I think that people are looking at this the wrong way. If you choose to work for X, you can hardly claim that he is mistreating you worse than anyone else. If you have grounds for complaint against anyone, it is against the people who did not hire you.

[Laban Tall]

"And surely it is morally acceptable - and right in utilitarian terms - to give something to the person who most wants it"

That's an argument I must try out at this year's office party.

[Laban Tall]

"And surely it is morally acceptable - and right in utilitarian terms - to give something to the person who most wants it"

That's an argument I must try out at this year's office party.

[Willox Perez]

Good post!

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[Larry Teabag]

As the Samovar points out, this:

"The lowest tenderer for a contract is the person who wants the job most - just as the highest bidder in an auction is the guy who wants the good the most."

is simply untrue!

[Joe Otten]

It seems to me that the worker undercut by a foreign competitor, is smarting at the loss of an expected economic rent.

Given that most rents accrue to the undeserving wealthy, I am not inclined to complain much about workers getting the odd rent. Except that this time, it was clearly at the expense of other workers (as well as capital, consumers, etc). Is there a way to build in rents for workers without it being at the expense of other workers? Hayek thought not.

[Russell]

The person who want something the most is not necessarily the same as who can spend the most for [it]. BUT can anyone come up with a better way than who can pay more? In most situations (i.e., the vast majority of transactions that take place in life), I think who can pay the most is best (but still crappy). Life is brutally unfair.

But remember that the alternative to the market deciding who gets something is the government (or someone with the implicit/explicit backing of the government). And of course, how does government enforce all of its decisions??? Violence.

So now which is more moral - the market or government? Most of the time it is the market (although, I do firmly believe there are things worth using government violence to enforce for the betterment of society, but these are very few things).