A Market for Values: a possible instrument to reshape economics and politics
By Marco Senatore
In this article I propose to establish a market for experiences of values as an instrument to reconcile economics and ethics, individual and community, capitalism and democracy.
The debate on « reforming economics » for the common good
The reference to sustainability has become more and more relevant in social and political agendas. Some well known economists have also underscored the need to change several dominant paradigms. For instance, Mark Carney, the former governor of Bank of England, has argued that economics needs to get free from the subjective value theory, in which price equals value, and from market fundamentalism. This should help society to face challenges such as climate change and pandemics. And yet, when it comes to the kind of solutions proposed by Mr Carney to improve the general perception of value, the role of money seems to remain dominant, as proved by his support for impact investing.
Money is taken for granted as the only universal means of exchange, but its social and cultural role is often overlooked. On the other hand, at the beginning of last century the German sociologist and philosopher George Simmel analysed with supreme clarity how money is a medium which bridges, yet also creates distance, as well as implying a dematerialisation and contributing to alienation. The universal nature of money makes it possible for each agent to remain fixed in his/her personal role and values.
Another current attempt to foster change in economics comes from Professor Mariana Mazzucato, who has recently proposed that governments, in dialogue with citizens, should define the grand challenges of our times and set missions to solve them in partnership with business. This innovative approach focuses on the ends rather than the means and includes collaboration across sectors. However, I find that it would be crucial to focus also on the modalities through which politicians, citizens and companies would define the « ends ».
For sure impact investments and a « mission economy » may be important tools, useful for making capitalism much more sustainable from an environmental and even social point of view. But if economics has to be fully reconciled with ethics, as argued by Professor Amartya Sen already last century, then it has to embrace the prerequisites of ethical action. By reconciling economics with ethics I do not mean to impose a specific worldview through economic transactions: I mean, from a procedural point of view, to put agents in a position of neutrality towards their own immediate conveniences, and then define a social dialogue on the common good.
The ability to distance oneself from one’s place in the world is crucial. Adam Smith argued that who judges actions should adopt the position of an « impartial spectator ». Immanuel Kant underscored that any action which is motivated by something different from the mere respect of moral law is not a moral one. German sociologist Max Weber argued that modernity put us in the iron cage of instrumental rationality – a place where we lost sight of what is intrinsically good, and where hyperspecialised, bureaucratic institutions are considered the only agencies capable of fostering the common good. And for John Rawls, principles of justice should be chosen from behind a "veil of ignorance", which prevents the individuals from knowing his/her peculiar personal conditions and position in society.
In the long run, the reasons behind our actions are not less relevant than their immediate, apparently « revolutionary » impact on others. After all, if we simply think that we should convince most agents that for them it is convenient to « act well », which kind of arguments could we offer to the ones who still find it convenient to « act badly »? As argued by Kant, the possibility to make one’s actions universal is strictly connected with autonomy, as the condition of a lawgiver in a community where others are also lawgivers in their own right, and hence are to be respected as ends in themselves; Kant calls this community the kingdom of ends.
In my book « Exchanging Autonomy. Inner Motivations As Resources for Tackling the Crises of Our Times » I argued that functional autonomy, as the condition whereby values guide social roles, rather than the other way around, is a necessary precondition for the existence of a community. If worldviews are mostly instrumental to one’s interests, we will have no will or at least a great chance to contribute to a social identity through an open and inclusive dialogue. Lack of autonomy means weak communities. The American philosopher William James stated that “The community stagnates without the impulse of the individual. The impulse dies away without the sympathy of the community”. Authentic individuality, as the autonomous choice of values, and opposed to mere individualism, would make that statement a common experience.
Therefore, if economics has to be fully reconciled with an inclusive, decentralised political dimension, it has to somewhat overcome the division of labour, for which our values are mainly a consequence of our role in the social fabric – for instance of what we produce, where we work. Change of the dominant paradigms of economics and a stronger democracy are deeply interlinked.
Market transactions and economic theory are still based on neutrality towards values. As money is the only universal means of exchange and production and labour are the main modalities to have access to money, our perspective on what we should do, and on how the world should function, is not an autonomous choice. Values are often reduced to interests.
From this point of view, the will to get monetary return for impact investments is quite different from a moral element. And even if I should invest my money not to get such return, but simply to foster activities which are consistent with my values, what would guarantee that the latter are not shaped by my mere personal interests? And why should my decision to invest money in « good industries » have a political relevance for those who still get benefits from unfair, environmentally unsustainable behaviours? Not to mention that ESG investments exclude individuals who simply do not have enough monetary resources to have a significant « impact » on the financial industry. Moreover, simply aiming at political consensus in defining some « missions » would make also important initiatives something radically different from an inclusive, ethical framework.
The role and the functioning of a market for values
A market for experiences of values would offer an economic incentive to choose and apply values that are independent from one’s current social role. In this market firms, individuals and local communities would have the chance to share their own experiences about the benefits of initiatives inspired by some moral, organisational and cultural values. The experiences would be listed in documents, each of which would be referred to a specific value – for instance, environmentalism, social justice, inclusivity.
These documents would be exchangeable with documents referred to other values, or with goods and services - not with money. Therefore, there would be no « commodification » of values – something which actually happens now, when values are an ex-post justification of roles. These lists would rather be a means of payment complementary to money. Moreover, the relevance of each experience should be verified through compliance with which indicator led by law, such as, in the case of environmentalism: a given reduction in CO2 emissions and/or investment in negative emissions technologies (for firms); a given increase in green areas (for local communities); some time spent in green volunteering (for individuals). As for another value, indicators relevant for social justice may include a given reduction in wage dispersions (in firms) and in the Gini index (in local communities).
The exchanges would take place through a centralised platform. Each document would indicate the benefits experienced by its previous owners, the context of society where each owner has acted (for instance, productive sector of a firm, region where an individual lived when it/he/she made the experience) and the price of the document. Such price would be defined as a monetary equivalent usable to purchase goods and services, and in terms of basic units usable to purchase other documents. Moreover, the price of a document would be proportional to the number of experiences listed in it, and the price of the experiences referred to each value would be the same, and fixed on the basis of supply and demand. For each value, the initial level of the price of the experiences may be fixed as the average cost of complying with the relevant indicators. Only after buying a document, a firm, an individual or a local community would know the compliance with each indicator lead to each of the benefits listed.
The economic incentive to enter this market would be the possibility to transfer each document at a price higher than purchase price. This would be the outcome of two factors: the addition of new experiences to the document (exercise of autonomy) and possibly an increase in the price of all the experiences referred to that value (ability to choose a socially relevant value).
For instance, a firm A may prove in a document that it has enjoyed better reputation thanks to the reduction of CO2 emissions. A firm B active in the same sector may buy the document referred to environmentalism, exchange it with its own document, for instance referred to social justice, and decide to comply with a different environmental indicator, for instance a given level of investments in negative emission technologies. After undertaking this initiative and experiencing better soil quality and nutrient retention, B would be able to transfer on the market a document whose price would be two (the number of experiences listed in the document) times the price of all experiences referred to environmentalism and traded on the market.
There would be a form of cooperation in defining the nature and the benefits of a value (in social, economic, reputational terms): for instance, if a document referred to environmentalism went from A to B and then to C, C may profit from the benefits experienced by A and B, even if C decided to choose different indicators. Indeed, those benefits, being publicly known, would contribute to a higher demand of the experiences referred to environmentalism, and, therefore, to an increase in the price of the document held by C.
While the value neutrality of money implies that monetary resources provided today by States for a social purpose may be used tomorrow for the opposite one, the circulation of experiences of values would instead contribute to creating a consistent social identity: the experiences of the past would still usable in the future. While the current proposals to « change capitalism » are based on how much money we and others can get through positive actions, a market for values would be based on how much money we are disposed to give up to embrace new values and create a social dialogue, and then a social decision, about their practical relevance.
In a nutshell, a market for values may be an important instrument for reconciling economics and ethics, individual and community, capitalism and democracy. This would be the outcome of three circumstances:
1. this market would offer an economic – a non monetary one - incentive to exercise individual functional autonomy, and, therefore, choose values before social roles, rather than the other way around. Which is crucial for ethically relevant actions.
2. There would be a public, deliberative and truly political assessment – based on the spontaneous interactions of individuals - of the relative importance of moral, organisational and cultural values. Currently this is not possible, as values are reduced to merely subjective preferences, and society is able to agree only on the laws which are binding for its members, on some economic variables such as the relative monetary prices of goods and services and on the approval rate of political parties.
3. If this market involved a large part of society, it would contribute to building a community, meaning a collective reality with its own identity, that acknowledges individuality as freedom to choose an identity dealing with ends, rather than with means.