As a true believer in the efficacy and beneficial effects of markets, I am obliged to say what I think a market is.
Is a mother giving suck to her baby a market? One could make arguments that pleasure is being traded on both sides, and that the mother, as with mothers of all species, is trading some of her individual survival fitness for reproductive success and inclusive fitness. But I think most would agree that these descriptions leave out much that is of the highest importance to human beings, and that different categories—love, sacrifice, creative action, spiritual communion, gift, and so on are better descriptions of what is going on.
Likewise, a dedicated poet composing a poem–or artist painting a picture, or singer singing a song–cannot be fully described as engaging in a market. To the extent that market motivations enter into the action, the action is likely to be less effective. These are gifts, and certainly there are many kinds of gift exchange economy among human beings. But that kind of economy, to be what it is, must override considerations of remuneration. Certainly, some gifts are better than others, and when transferred to the market may fetch high prices; and the market may be very helpful in establishing how much better they are. But if they lose their original identity as a gift, sooner or later their market value will fall. This is why art collectors do not erase the painter’s signature and replace it with their own: something beyond ownership is paradoxically necessary to the painting’s value. And this is why artists will starve in garrets: their art is as important to them as their life.
Wikipedia contributors, recyclers, scientists, secret donors, teaching nuns, voters, and many other kinds of people do work that is effective, coordinated, and valuable but cannot be marketized without harm to the work itself. There are things that money can’t buy. The invisible hand works, and works well, but it works on markets and not necessarily on other things.
Take a different sort of case: is an armed holdup a market? “Your money or your life” does have the form of a market offer, but we would not call it a market. You have a free choice, Mr. Bond: Give me the secret code or die a lingering death. This is a joke because with a gun to our heads, or to the head of a loved one, we are not free. Our life has infinite value to us, so the invisible hand, which works with admirable efficiency in comparing relative quantities, must fail. The infinite is not comparable with the finite. Mr. Bond might well be prepared to die for the sake of his duty, as the artist for his art, but his judgement here is between two qualities (two Cantor cardinalities of infinity, a mathematician might say) and not between two quantities.
Again, an invading army can offer us a choice—of cooperation or death—but this is not a market choice.
So in a sense the term “free market” is redundant. A market is not a market unless it is free. The mother, the artist, the holdup victim, and Mr. Bond are not free to choose, but constrained by love or art or mortal fear or duty, whose valence is infinite compared with a quantifiable price. They’re not in the market.
We have established, then, what is a market. A market is an exchange that is a.) free and b.) a matter of finite quantities. If an exchange is free and a matter of quantities, both sides must profit, if only in their own estimation (and what other estimation counts in a free legal action?). The market is the realm of nonzero-sum games. Neither gifts nor holdups can substitute for them.
Two immediate political implications derive from this proposition. The first is that medical care cannot be marketized. With the nicest possible motives, doctors and hospitals are essentially saying “Your money or your life.” They have a gun to our heads, and even more important, to the heads of our loved ones. (There may be a sort of weird auction going on within the mind of an organ donor or terminal patient, weighing the “price” of another person’s life against our own, but as we have already seen, these comparisons are between qualities, not quantities.) In the world of health care we are not free.
Sometimes—often, in fact—we must weigh finites against infinites, quantities against qualities. This is the absolute precondition of being a human being with a body and a conscious self. We make laws that implicitly balance levels of highway safety (whose effect is life or death) against the cost and convenience of travel, doing business, etc; and we weigh the health hazards of the food we eat against the cost of food. But those exchanges—life for money—are not market transactions. Even in practical money terms health care must weigh finites against infinites.
So I have reluctantly come to the conclusion that health care cannot be a marketplace, because it is not a field in which we are free, and not one in which we are dealing only with comparable finite quantities. Given that medical care is ultimately not a market, and not subject to market discipline (we would pay anything to save our child’s life), we must resort to other means of allocating the real material quantities—of equipment, trained expertise, facilities, etc—that medicine needs.
All political communities have already decided that some functions are necessarily reserved to the government. Government by definition possesses a monopoly of coercion, which it executes through its police, its army and its judicial system, thus taking care of those exchanges that are not of the market kind, such as the holdup and the invading army. At least we elect the people who can hold a gun to our heads. Government rightly enforces building safety standards, toxic materials disposal, epidemiological restrictions, and the like. We are coerced by falling buildings, invisible toxins, and infectious diseases, and we give our governments coercive powers to resist them.
But the power of life and death possessed by the medical profession is not delegated to it by the government. It is like a police force or an army not subject to the elected government; potentially a rebel force! Since the medical system has a gun to our heads, and we as individuals have neither the knowledge nor even the legal right in most states to take the gun away, government must protect its monopoly of coercion by taking over the gun on our behalf. To transfer the gun to insurance companies (which, to be fair, are necessary and valuable market participants) does not help: it simply places the ultimatum in less caring hands.
A single payer system is the only rational basis of medical care.
Given that medicine is very expensive, this essentially means rationing. I used to think that a market solution to the problem of health care might be possible, until I realized that perfect health care—basically, healthy and certain immortality—has no upper limit in terms of cost. Its cost is potentially infinite. The human body is the most complicated thing in the known universe, and to understand it well, and thus to be able to heal it from all its ills, would be a task costing many many trillions of dollars. Even if we spent the entire gross national product on medical research, neglecting farming, manufacturing, and all our other activities, we might take a century to fully understand the human body. And of course to withdraw all those trillions of dollars from the economy would result in mass starvation, economic collapse, and chaos, which would at once halt the research project.
We have a case where a finite and comparable resource—capital—must be allocated to competing infinite and incomparable needs. As we give only to our democratically elected government the power of life and death in the case of the police and the army, so we must give government that power in the case of health care. We know that to do so will instantly invite corruption, rent-seeking, favoritism, discrimination, extortion, nepotism, etc, etc, which always accompany coercive power. But it’s the best we can do. Government does have means of estimating whether a given medical expenditure would save more lives than would be lost by withdrawing those financial resources from other necessary activities, such as farming, transport safety, water supply, education, etc. Though lives can not be balanced against amounts of money, amounts of money can be balanced against each other when no net lives will be lost or saved. Democratic government is tasked to find out the tipping point and try to keep us there.
We would indeed need to strive to maintain in the medical sphere (or create where it is lacking) the kind of professional honor and reputation culture that we find in the legal profession, in the professoriate, and in the military, at their best, as checks on the natural corruptions of power. Perhaps we could find ways of weakening the government in other ways to compensate for its now explicit medical control over who lives and who dies.
The other implication of our answer to the question about what is a market involves the need to work. If a citizen is coerced to work at a certain job by the need to survive and/or feed a family, then he or she is not free to choose. This predicament is that of a large fraction of humanity, but its pervasiveness is no objection to the point here. If we are not free to choose which job we take if we are qualified, or, more generally, free to choose whether or not to work at all, then we cannot be part of a market.
Markets, as economists tell us, are ways to involve the maximum number of human minds and wills in the decision on what should get made and done and passed around. In a functioning market, what millions of individual people want, what they feel they need, what they can do, what they can invent, and what means are at hand to do it, are marvelously integrated, as if by a distributed computational device or information processor- the invisible hand- into a set of simple quantitative price signals, comprehensible to all. But if the components of the device are damaged or corrupted by the threat of death, the individual sources of the information skewed by coercive forces, the resulting signals will be wrong. Since freedom of choice is a necessary precondition of the choosers involved, who are both the hardware and the sources of information of the processor, a system of unfree choosers does not constitute a market.
We must thus find a way of relieving the coercive circumstances that skew the choices of individuals and make them fail to function properly. The way that has been suggested by perceptive thinkers on both the right and the left is the guaranteed living wage, or better, a guaranteed dividend from the profits of the collective economic enterprise we call our nation. The idea of the dividend is important, because it is a way of improving the market, not by-passing it. Markets are based on ownership: as owners of our nation we are entitled to our own share in its profits.
If the participants in the market are freer, the market becomes more of a market. Given the power of free choice, workers could turn down jobs that do not match their human dignity or wages that are not proportional to the value they are creating, their refusal thus helping to give an accurate picture of what labor really costs. The ratio of how human attention and creative action are valued against consumer goods would be rectified. Among other things, such a change would constitute a huge economic boost to the development of robotics, and a rise in disposable income and thus in the size of the market and the opportunities for the introduction of new products, services, inventions, and forms of creative action and desire. Children would be valued more, if only because they would themselves have an income. A golden age of capitalism would be the result.
The increase in individual power that would result from such a change would, as a serendipitous by-product, constitute exactly the kind of diminution of the power of government that we were seeking as a compensation for its unfortunate increase as the new wielder of medical life and death. Citizens, by virtue of their dividend as owners of their nation, would have become empowered to choose what jobs they are willing and able to take, and thus able to stand up for themselves by individual strikes and boycotts rather than rely for their protection on political demagogues and bureaucratic government agencies.
Another benefit would be the necessary dismantling of much of the present welfare state, both as a way to help fund the national dividend and as a natural “withering away” for lack of demand. If all citizens have a sound living income, they can fend for themselves rather than be wards of the state. State power would be significantly diminished by the withdrawal of its welfare function.
Another way in which our system could become a better market is in the more accurate estimate of collective loss and profit. The concept of the national dividend would draw attention to the expense of national resources such as clean air, water, habitat, etc, as the loss side of the national balance sheet. Businesses would rightly be charged for their use of these collective properties instead of arbitrarily taxed to raise money for government ideas-people to spend. And on the other hand, the collective profit—the ways in which technological advances make a cell phone more valuable than it was ten years ago, for instance, or the money saved by safer self-drive cars, or the slow accumulation of value in our art galleries and libraries–would also be recognized and play its proper part in the budget. At present citizens (with some exceptions like the state of Alaska) are not permitted to receive the dividends accruing to their collective investment in their state, and the change would redress a long injustice. The true profit of statehood or nationhood would then be acknowledged and reckoned in to the balance-sheet, thus correcting an ancient distortion of our collective system of exchange and making it more of a market.
The water in a complex system of pipes and cisterns has no trouble finding the most perfect surface level as it is filled, and does so almost instantaneously if there are no blockages in it. Individual water molecules, reacting with each other and with gravitation, perform this feat with no Maxwell’s demon ordering each molecule to its prescribed station. If there is an infinite amount of water, there can be no surface level; and if there are blockages, the correct surface level cannot be achieved. In this analogy, the pipes constitute the market, the surface level the best level of prices and wages, and the water molecules the buying and selling population. The requirements for establishing the surface level are thus a finite (if increasing) quantity, and freedom. Freedom requires the removal of obstacles such as health threats and the existential need to work, and their assignment to different systems of decision making.
A market cannot bear the infinites imposed by the fear of death: a single-payer state system of health care and a universal living dividend will free the market to do what it does best.