The Perception of Morality within Markets

Introduction:

If everybody in the world jumped out of a window, would you? This question may seem irrelevant at first, however, it has more to it than what meets the eye. If everybody were to jump out since everyone is doing it would the significance and danger of the act have the same level? Throughout this paper I will explore whether markets promote behaviors that could be morally questioned and whether or not we as a society should rethink their role and place. Although the question above may seem irrelevant to the topic at hand now, as we explore markets and what the market environment entails the relation between the two will be clearer. I will evaluate the aforementioned points through the use of two articles: “Falk, A., and Szech, N. (2013). Morals and markets” and “Benabou, R. and Tirole, J. (2010)”. Moreover, through questioning and evaluating the current world order I will create an argument which in turn will allow to dive deeper into the subject to explore the research question. In the following essay I will partially agree with the research question at hand. With the findings I support the statement that markets do incentivize individuals to commit morally questionable acts however I conclude that rethinking the role and place of the markets won’t be nearly as effective as creating an environment where individuals hold each other accountable to a greater extent and government involvement is larger within the context of
regulations.

Market:

To explore the effects of markets on morality we need to fully grasp what a market is. A market is not a physical entity but is “a meeting together of people for the purpose of trade by private purchase” – Merriam-Webster. Thus, a market is not an entity on its own but a noun used in order to describe a collection of people who are looking to make transactions of goods/services that benefit them. Markets are useful because they create a space where buyers and sellers come together, and this creates competition. A competition between sellers on who will be able to sell, say a chair, for the cheapest. And a competition between buyers on who is willing to pay the most for this chair.

The competition between the sellers in this chair market on who will be able to sell it the cheapest brings about productivity, efficiency, innovation, and technological improvement to reduce costs. Therefore, although markets themselves are not a physical entity they bring about these very important factors that have allowed and will allow humans to evolve and develop.

Morality within the Market:

Falk and Szech(2013) conducted a study to investigate this relationship between markets and morality and they found out that people were more willing to let the mouse die when it was within the buying/selling context then when they were asked on a individual basis. They took this as evidence that markets do corrupt the moral values of individuals participating in the market and I would agree with this statement. However, as I’ve discussed before a market is nothing other than a collection of people making transactions. With this in mind, is it the market that corrupts the values of these individuals or is it the simple fact that once people see other individuals already involved in a certain type of action, in this case selling the mouse, its easier for them to do so as well. I would argue the latter. Moreover, a collection of people doing transactions also brings about competitive instincts which also makes it easier to commit these immoral acts. Coming back to my very initial point couldn’t it be said that if everybody jumped out of a window, it would be more normal, easier for you to jump out as well?

Increased Accountability:

As discussed before markets create an environment that brings about innovation and progress which is very desirable for the economy. Also knowing what we do now it can be said that the moral corruption that occurs in individuals within a market is related to the collection of people, and the competitive environment it brings. Therefore, although the fact that markets corrupt morality can be argued, since the collection of people is created through the market, the argument of rethinking its place and role is invalid. This is due to the simple fact that “a market” is just a resemblance of individuals making transactions collectively. A more effective method to approach would be holding those individuals accountable as a society. As Benabou and Tirole(B&T) have concluded within their paper, individuals care about their social image therefore getting these individuals to hold each other accountable would be an effective method. Moreover, it can be argued that the caring of one’s social image is a byproduct of a market setting which creates pro-social behavior by itself. Getting individuals to hold others accountable would also work in a broader sense in the market due to the Corporate Social Image aspect. As discussed by B&T, CEO’s of companies are more involved
with the short term aspect of the company. However, if companies were to be held more accountable in the present it would bring CEO’s and their companies to a new light hence incentivizing them to be more pro-social. Ghanem, Kassem A. and Castelli, Patricia A. (2019) also argue the positive relation accountability and morality have. Within their study they conclude increased accountability in a market structure is an effective method to increase ethical values and therefore morality.

Increased Regulation: Another effective method would be to get the government involved with appropriate punishments for immoral acts. Hence, increasing regulations, thus disincentivizing individuals from committing these acts and creating a market environment that is more moral. More regulation would create pressure on companies to be more prosocial as well due to the fear of negative publicity driving down profits.

Conclusion:

In conclusion markets do seem to demonstrate a demoralization on individuals. However, this is not a result of the market itself but more of a consequence of the collection of people and the competitive environment that creates. Therefore, although I partially agree with the market’s corrupt morality argument, I do not agree that we need to rethink their role and place in society. I believe pursuing this would only lead to inefficiency and negative externalities which would have heavier consequences than the current order. When all things considered I suggest getting individuals to hold each other more accountable and getting the government more involved in terms of regulations.

Bibliography:

(2022). Retrieved from https://www.merriam-webster.com/dictionary/market
Ghanem, K., & Castelli, P. (2019). Accountability and Moral Competence Promote Ethical Leadership. Journal Of Values-Based Leadership, 12(1). doi: 10.22543/0733.121.1247
Falk, A., & Szech, N. (2013). Morals and Markets. Science, 340(6133), 707-711. doi: 10.1126/science.1231566
BENABOU, R., & TIROLE, J. (2010). Individual and Corporate Social Responsibility. Economica, 77(305), 1-19. doi: 10.1111/j.1468-0335.2009.00843.x