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Library of Congress Cataloging-in-Publication Data
Names: Hermann, Christoph, author.
Title: The critique of commodification : contours of a post-capitalist society / Christoph Hermann.
Description: New York, NY : Oxford University Press, [2021] | Includes bibliographical references.
Identifiers: LCCN 2021011291 (print) | LCCN 2021011292 (ebook) | ISBN 9780197576762 (paperback) | ISBN 9780197576755 (hardback) | ISBN 9780197576786 (epub) | ISBN 9780197576779 | ISBN 9780197576793
LC record available at https://lccn.loc.gov/2021011291
LC ebook record available at https://lccn.loc.gov/2021011292
DOI: 10.1093/oso/9780197576755.001.0001
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Paperback printed by Marquis, Canada
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Acknowledgments
As in most academic work, this book benefited greatly from previous research and publications and from the support of and exchange with colleagues and friends. Particularly inspiring was the work of Ursula Huws, who has been publishing on commodification since the mid-1980s. Her insights into the nature of commodification processes are among the most original and illuminating concepts ever published on the topic. Fortunately, Ursula agreed to read and comment on various draft chapters of the book. While her own book on commodification would likely look different from this one, our conversations were instrumental in shaping my understanding of commodification, and, subsequently, my argumentation as outlined in the following pages.
I am also indebted to Greg Albo, Stefan Kipfer, Colin Leys, Sarah Stoller, Sasha Lilley, and Michael Burawoy, who read and commented on parts of the manuscript and to three anonymous reviewers, who offered valuable feedback on the first draft. The book greatly benefited from their input. I also want to thank my editor, James Cook, who early on saw the potential of the book and superbly guided me through the review and production process.
While completing the manuscript, I received the sad news that Leo Panitch passed away. Leo was not only an intellectual giant, but also a terrific teacher and a gracious friend. I was looking forward to discussing the alternatives to commodification with him. He will be sorely missed.
The book would not have been possible without the emotional and intellectual support of my partner Sandra Eder. The book is dedicated to our son Noah Mpho. For the sake of the next generations, I hope that we will be able to create a less commodified and therefore more just, enjoyable, and ecologically sustainable world. And I hope that this book makes a small contribution toward this goal.
Berkeley, December 2020
Introduction
The argument
“Commodification” has become a widely used term in academic and occasionally even in political discourse. And most people who use it do so critically, i.e., in order to criticize certain aspects of our current economic system. But what is commodification? And what is the problem with commodification? After all, we consume commodities on a daily basis, and many of us enjoy buying goods and services and spend a considerable amount of time searching the internet for bargains. This book attempts to provide some answers to these questions. Its main argument is that commodification entails production for profit rather than social needs, and that production for profit has a number of undesirable and perhaps even harmful consequences— including, for example, the exclusion of those who cannot pay, the marginalization of those whose collective purchasing power is not large enough, and the focus on highly profitable forms of production at the cost of more socially beneficial and ecologically sustainable forms of provision.
As a result of commodification, people are obese while others go hungry. Healthy people in rich countries are bombarded with pharmaceuticals, which in some cases cause drug addiction, while millions of sick people in poor countries lack adequate drugs and treatments. Many are homeless, while at the same time luxury condominium apartments go vacant. Private partners in so-called public-private partnerships make record profits, while public hospitals have to cut beds and staff numbers, resulting in unnecessary deaths. Colleges spend more money for advertising and admissions than they do on teaching. Commodification, furthermore, has fueled the industrialization of agriculture with disastrous effects for the environment, including, for example, marine dead zones that are as big as the state of New Jersey. At the same time, commodification blocks the transition to more sustainable forms of production and consumption, such as public transportation. Last but not least, commodification undermines solidarity and fuels inequality as access to goods and services is solely decided by purchasing power. Given the negative effects of commodification, including the accelerating ecological crisis,
this book suggests that it is time to rethink commodification and to move to a social system that focuses on the satisfaction of social needs rather than the maximization of profits.
While the concept of commodification is widely used in academic discourse, few scholars are aware that it is a fairly new term. Many assume that it goes back to Marx, but Marx in fact never used the term. It was only in the 1970s that Marxist scholars started to talk about commodification in writing on art and culture, the emergence and spread of capitalism, as well as the de-commodifying effects of modern welfare states. For some of these scholars, the influence of Karl Polanyi was more important than Marx. In the 1980s and 1990s, non-Marxist scholars from philosophy, anthropology, and sociology also became increasingly interested in the term. And with the demise of academic Marxism (and the limited influence of Polanyi’s work), these later accounts became dominant in academic discourse. As a result, the notion of commodification is not necessarily used as a wholesale critique of capitalism; some critics only object to the monetary exchange of certain services, such as paid surrogacy, and the marketization of specific goods such as healthcare. In these cases, the objection to commodification is based on moral and pragmatic considerations—paying for children is morally wrong, and markets for healthcare do not work. In contrast, the material critique of commodification insists that commodification is objectionable because it changes material relations, including forms of ownership and the way social needs are satisfied. This book largely follows the material critique but proposes a number of innovations to account for the variety of commodification processes and their distinctive consequences.
In order to understand the material impact of commodification, it is necessary to distinguish use value from exchange value. While largely ignored by contemporary economics, use value previously played an important role in the history of economic thought. Adam Smith, for example, noted that water has a large use value but a small exchange value, whereas diamonds have a small use value but a large exchange value. With the marginalist revolution in economics, these two aspects were merged into the concept of utility, and price became the sole indicator of the value of goods and services. Simply put, objects that have no price have no utility and no value. In this understanding, nature has no value as long as it has no price. Interestingly, the moral critics of commodification rarely acknowledge the existence of use value in spite of their critique of economic thinking and their concern for non-market-based values. For Marx, commodification is essentially the subjugation of use value
to exchange value. It is this process that alters the substance of commodified goods and services.
This book builds on Marx’s understanding of commodification but makes some important specifications. First, it takes market value, rather than exchange value, as the denominator of use value. While exchange value reflects the average labor time expended for the production of goods and services, market value describes the relationship between supply and demand. In an economy with highly competitive markets and with no shortage of supply, market value should more or less equal exchange value. However, today’s markets are frequently subject to manipulation and speculation. To give one example: the production costs, including labor costs, of an Apple iPhone make up less than 50 percent of its price. Second, I argue that commodification is a process rather than a specific state of affairs, and the book subsequently distinguishes between three different forms of commodification: formal, real, and fictitious commodification. Formal commodification describes a situation in which goods and services receive a price but otherwise remain unchanged. Real commodification describes the profit-driven transformation of goods and services. Fictitious commodification refers to the introduction of markets and the invention of quantitative indicators in the provision of goods and services that have no price and are not sold for a profit. Precisely because commodification can be fictitious, commodification policies include not only privatization, liberalization, and deregulation, along with austerity-induced welfare cuts, but also the establishment of quasi-markets, the introduction of performance measurements, and the treatment of users as consumers even when they do not pay for a service.
While much of the existing critique of commodification focuses on moral decay as the main threat of commodification, this book argues that the main threat is the transformation of our livelihoods, including the destruction of the ecological base of human life and flourishing. The book identifies twelve tendencies associated with commodification that have problematic consequences, culminating in the drive for more commodification. For example, the commodification of agriculture has led to a shift from poly- to monoculture cultivation. However, monoculture farming comes with declining soil fertility and increasing susceptibility to infestation. Less fertility and more infestation create the need for artificial fertilizers, pesticides, and more recently genetically modified crops. These commodities are provided by highly profitable chemical and biotech companies. Monocultures, in turn, provide the input for an increasingly commodified food industry that no
longer uses crops as a basis of food, but instead dissects them into their chemical components and then uses some of these components to create increasingly artificial products. Corn, for example, is turned into cornstarch, which is subsequently used for a large variety of food products. In fact, it is hard to find processed food in an American supermarket that does not contain cornstarch. The processing of food, in turn, creates even more incentives for monoculture cultivation. Among the consequences are increasingly obese children and depleted rivers, lakes, and coastal zones. Yet far from being the result of market failure or amoral behavior, industrialized agriculture and processed food are the logical outcome of commodification and the primacy of profits over needs. There may be a demand for organic crops and artisanal food, but with traditional production methods, producers can make only a fraction of the profits of modern agri-food businesses. Breakfast cereals, for example, have a profit-margin of more than 40 percent. Accordingly, this book argues that commodification may face social and political boundaries, but the most severe limits arise from the imperative to expand profits and the ecological damage this causes. Precisely because we do not know how much commodification the planet can take, there is a very real danger that depletion and pollution will reach a tipping point with dramatic consequences for the world ecosystem. The possible result is what the book describes as disastrous de-commodification.
However, the book also discusses alternatives to commodification. It argues that an alternative must shift the goal of production/provision from profits to needs, or from maximizing market value to maximizing use value. In order to do so, it must be recognized that the goods and services that we consume not only have an individual value, but also have social and ecological value. To take the example of transportation: automobility may be useful for an individual to get from point A to point B, but its social and ecological utility is rather disastrous—and it remains problematic even if we switch to electric cars. The favorable social and ecological alternative is public transportation. Yet the question of how to assess (social and ecological) use value remains. In contrast to exchange value and marginal utility, the nature of use value is precisely that it cannot be measured. The answer proposed in this book is democratic decision-making. People can democratically decide which goods and services, or ways of satisfying needs, are preferable. However, in order to make sure that decisions are not made at the cost of those who are not part of the decision-making process, or are part of a minority, use-value maximization must include a commitment to solidarity.
The same holds for the environment: insofar as decisions impact the environment, they also impact future generations that will live on this planet. And because future generations do not have a voice, use-value maximization must operate in the boundaries of ecological sustainability. The combination of democratization, solidarity, and sustainability would result in what the book calls a use-value society.
Plan of the book
Chapter 1 introduces the topic of the book. It traces the intellectual history of the term “commodification” and presents major arguments against commodification from different strands of literature. Commodification was introduced into academic discourse in the 1970s by Marxist scholars who analyzed the transformation of culture, the emergence and spread of capitalism, as well as the nature of the welfare state. The term was then picked up by non-Marxist academics in various disciplines, usually to criticize certain kinds of monetary exchange or specific markets rather than capitalism per se. The chapter identifies three major strands of literature with distinctive arguments against commodification: the moral, pragmatic, and materialist critiques. It argues that only the materialist critique is able to see that commodification threatens the livelihood of people and the environment. After discussing differences between the three approaches, the chapter points to an important commonality: all critics of commodification believe that commodification has gone too far in recent decades.
Chapter 2 follows the materialist critique but proposes a number of theoretical innovations. According to Marx, commodification is a process by which exchange value comes to dominate use value. Markets, money, and profit orientation are instruments that facilitate the subjugation of use value to exchange value. However, the book takes market value, rather than exchange value, as the denominator of use value. Market value depends on supply and demand and is open to manipulation and speculation. The chapter, furthermore, argues that commodification is a process and, subsequently, distinguishes between formal, real, and fictitious commodification. Typically, real commodification (the transformation of goods and services) follows formal commodification (the imposition of a price), but in some cases products first have to be standardized in order to become commodities that can be exchanged on a market. Fictitious commodification, i.e.,
the introduction of quasi-markets in public services and the transformation of service users into consumers, prepares the ground for formal and real commodification.
Even though commodification is a quasi-natural tendency of capitalist economies, the extent of commodification can vary over time, depending, among other things, on government intervention. With the dominance of neoliberalism in the past three decades, we have witnessed a reverse movement. Government policies have in various ways promoted (re-)commodification.
Chapter 3 looks at six major policies: privatization, liberalization, deregulation, marketization, New Public Management, and austerity. Privatization promotes commodification by abolishing non-commodified alternatives to the sale of goods and services. Liberalization fuels commodification by exposing producers to competition and by forcing them to make profits. Deregulation eliminates restrictions that in one way or another limit commodification. Marketization creates markets in economic and social spheres where no markets have existed before, while New Public Management promotes metric output measurements that closely resemble what, in the private economy, are market values. Austerity and related cuts in welfare expenditure drive re-commodification by making citizens more dependent on markets and on private alternatives to the welfare state.
Chapter 4 explores the major consequences of commodification. It does so by focusing on five spheres that are crucial for social reproduction— healthcare, (higher) education, public utilities, housing, as well as food and agriculture. It then highlights twelve tendencies associated with commodification: the exclusion of potential users (e.g., homeless people who cannot afford rent); neglect of needs that are not backed by sufficient purchasing power or cannot be satisfied in a profitable manner (e.g., drugs for rare diseases); focus on those needs whose satisfaction promises high profits, frequently at the cost of needs that are less lucrative (e.g., universities opening overseas campuses and closing philosophy departments); focus on short-term profits at the cost of long-term sustainability (e.g., expansion of monocultures at the expense of crop rotation in agriculture); privatization of profits and collectivization of costs (e.g., various public-private partnerships); standardization and homogenization (e.g., fast food); bureaucratization and expansion of management/administration (e.g., hospitals); sacrificing quality for profitability (e.g., private for profit colleges); manipulation and speculation (e.g., California’s electricity crisis); growing inequality; the marginalization of
motivations not based on profit; and erosion of solidarity and more commodification (as a cumulative effect of commodification).
Given the undesirable nature of these consequences, Chapter 5 asks if there are limits to commodification. The chapter identifies four kinds of limits: social limits consisting of moral norms and standards endangered by commodification; political limits arising from opposition to commodification and resulting political movements; systemic limits fueled by contradictions within capitalist accumulation and the need to increase profits; and ecological limits, which are a specific example of systemic limits that arise from the profit-driven destruction of the environment. This chapter argues that it is ecological limits that present the biggest threat to commodification. However, it suggests that the resulting ecological crisis presents a rather disastrous form of de-commodification.
The last two chapters look beyond commodification. Chapter 6 revisits the definition of commodification as subjugation of use value to exchange/ market value. It shows that the distinction between use value and exchange value goes back to ancient Greek philosophy and that it played an important role in classical political economy. In fact, it was only in the late nineteenth century that use value was replaced by the concept of marginal utility. Use value, subsequently, moved from the center to the fringes of economic thinking. However, even where it survived, such as in Marxist scholarship, scholars debated whether use value was a concern for political economy, or if the material quality of products was something better dealt with by the natural sciences. The chapter, furthermore, explores the value of nature and by doing so unveils the shortcomings of the concept of marginal utility. One problem is that marginal utility denies the existence of collective value. Following Polanyi, the chapter argues that products not only have individual value, but also have a social and ecological utility. And social and ecological utility can differ considerably from individual valuation.
Chapter 7 discusses alternatives to commodification. The opposite of commodification is de-commodification. De-commodification imposes limits on the commodity character of goods and services traded on markets, but it does not provide for an alternative. Following an understanding of commodification as subjugation of use value to market/exchange value, the chapter argues that an alternative must seek to “free” use value and reinstate it as the prime goal of production. Or put differently, an alternative to commodification must focus on the satisfaction of human needs rather than the expansion
of private profit. Three elements are crucial for the promotion of (collective and ecological) use value: democratization, sustainability, and solidarity. The chapter discusses each of these elements in a separate section. It then brings the three elements together into an alternative vision that is called use-value society.
1
The Critique of Commodification
Introduction
Commodification has become a commonplace in the social sciences. According to the Oxford English Dictionary, the term “commodification” captures “the action or process of treating a person or thing as property which can be traded or whose value is purely monetary.”1 I will provide a more useful definition of commodification in Chapter 2. Yet the Oxford English Dictionary also shows that commodification is a relatively new term. It was first included in the 1989 edition.2 As shown in the following pages, commodification emerged in the 1970s as common expression in academic discourses.3 And while initially being part of a fundamental critique of capitalism and the capitalist transformation of society and culture, it increasingly became a notion to question certain effects of market exchange and monetary valuation. However, in nearly all instances, commodification is used as a critical concept to describe unwelcomed effects of capitalist development.4 This chapter has two goals: On the one hand, it traces the intellectual history of the term “commodification”; and on the other, it identifies major intellectual contributions to the critique of commodification. Apart from a materialist critique based on Marxist theory, the latter also includes a moral and pragmatist use of commodification. Accordingly, the chapter proceeds as follows: it starts with an analysis of the emergence of commodification in 1970s English academic discourses. It then presents the main points of critique in the moral, pragmatist, and materialist debates. The chapter ends with a brief conclusion.
The intellectual roots of commodification
Perhaps surprisingly, the author that is most frequently associated with commodification processes, Karl Marx, never actually used the term “commodification” (or Kommodifizierung in German). Instead, he, on at least one
occasion, mentions the process of becoming a commodity, or more precisely of not becoming a commodity. In a passage in which he argues that commodity production depends on the division of labor, but that the division of labor does not necessarily depend on commodity production, he notes that in the ancient Indian community, labor is socially divided although the products do not thereby become commodities (Marx 1990, 132; Haug 2010).
Karl Polanyi is another author who is frequently cited as an early critic of commodification processes. However, Polanyi in his major work The Great Transformation uses the term “commercialization” when referring to the commodification of land, and “proletarization” when describing the commodification of labor (Polanyi 1957, 82 and 179). It was not until the 1970s that the term “commodification” became popular in academic discourses.
There are at least three different sources of the term. First, commodification emerged as an expression in writing on art, literature, and culture.5 A possible explanation is the influence of Lukács and Marcuse, as well as Horkheimer and Adorno, in cultural studies.6 These authors did not actually use the term “commodification,” but they criticized the intrusion of the commodityform into culture, media, and other aspects of life under capitalism. Writing about cultural transformation, French author Guy Debord (1977, paragraph 42) noted in the late 1960s that “[t]he spectacle is the moment when the commodity has attained the total occupation of social life. Not only is the relation to the commodity visible but it is all one sees.”7 Clearly, Debord described a process that later became known as commodification. In fact, in the early 1980s, Kenn Knapp translated the latter part as “[c]ommodification is not only visible, we no longer see anything else” (Debord 1983, paragraph 42). By then, cultural theorists like Fredric Jameson had started to use “commodification” to describe similar processes. In a 1979 article, Jameson argued that following the prediction of the Frankfurt School, universal commodification had meant that mass culture had not become the liberating form as hoped for by some critics of (high) modernism (Jameson 1979).8 Instead, art and especially aesthetics were increasingly integrated into consumer capitalism and had become an essential element of mass consumption rather than being a visionary, let alone revolutionary, force. Commodification, subsequently, became a common expression for the transformation of art, culture, and life in postmodernist cultural production (Jameson 1984; Harvey 1990; Featherstone 1991).
A second source is world system theory. In a 1977 article, Terence Hopkins and Immanuel Wallerstein described capitalist development as a process of
commodification, including, most notably, the commodification of land and labor (Hopkins and Wallerstein 1977, 125). Even though the authors did not reference Polanyi in the article, the focus on the commodification of land and labor seems to follow Polanyi’s analysis.9 Both were familiar with his work. Hopkins attended one of Polanyi’s seminars at Columbia University in the early 1950s and subsequently introduced him to Wallerstein (Dale 2016, 217). Wallerstein acknowledged the influence of Polanyi on his thinking in the introduction to a collection of essays published in 2000 (Wallerstein 2000, xxii).10 Commodification, subsequently, became standard terminology in writings about the transition from feudalism to capitalism and the expansion of capitalism on a world scale (Wallerstein 1983; Giddens 1985; Meiksins-Wood 1986).
A third source is Marxist welfare state literature. Here the influence of Polanyi is even more apparent.11 Polanyi had described the Speenhamland system, an eighteenth-century social safety net, as an obstacle to the emergence of labor markets and, hence, the proletarization of the poor in early industrializing Britain. Claus Offe (1972 and 1976) argued that modern welfare states have a similar effect by granting workers an existence independent from their ability to sell their labor power on the labor market, and he subsequently called the process “decommodification” (see Chapter 7). However, Offe also noted that in the light of growing fiscal problems in the 1970s, welfare protection had become too costly, causing governments to adopt a program of “administrative recommodification” (Offe and Ronge 1975; Offe 1984). While Offe has introduced the term, it was Gøsta EspingAndersen (1990) who popularized de-commodification in his widely read book Three Worlds of Welfare Capitalism. Welfare state scholars have subsequently analyzed welfare state developments in terms of de- and re-commodification (Pierson 2001; Huber and Stephens 2000; Pierson and Castels 2006).
While the three sources seem to have developed independently, all three debates have in common that they emerged during a time of increased interest in Marxist and other radical thought. Europe and the United States had experienced a wave of student protests in the late 1960s in which students criticized racism, patriarchy, anti-communism, imperialism, and other forms of oppression, and subsequently questioned the legitimacy of capitalism, which was about to enter its first major economic crisis after the Second World War. At the same time, the developing world saw massive anti-imperialist movements and the subsequent transformation of
European colonies into independent states, with many governments critical of capitalism. These events did not remain unnoticed in academia and opened space for Marxist scholars to find employment in leading academic institutions and to force fellow academics to engage with Marxist theories, if only to reject them vehemently.12 The growing interest in Marxist theory also spurred the foundation of a series of radical publishers and critical journals. Perry Anderson (1983, 24), consequently, noted in 1983 that “the sheer density of ongoing economic, political, sociological and cultural research on the Marxist Left in Britain or North America, with its undergrowth of journals and discussions, eclipses any equivalent in the older lands of the Western Marxist tradition proper.” Anderson correctly observed the surge of Marxist thought in English-speaking academia, but he likely underestimated similar developments in France, Italy, and Germany (for the German experience, see Altvater 2007).
With the flourishing of (Western) Marxist thinking, the term “commodification” quickly spread outside the Marxist camp and was adopted by nonMarxist scholars in philosophy, legal, studies, anthropology, and sociology. According to Google Books’ Ngram Viewer, the term “commodification” was used thirteen times more often in English academic publications in 1990 than it was in 1978.13 However, non-Marxist scholars no longer used commodification as part of a fundamental critique of capitalism; instead, they used it to criticize certain aspects of capitalism, such as the sale of goods that are not suitable for exchange on markets.
The situation changed after the collapse of communism in Eastern Europe and the Soviet Union.14 Western Marxism, even though mostly critical of the Soviet Union and its dogmatic reading of Marx, lost much of its appeal on college campuses and became increasingly marginalized in the 1990s and early 2000s. With Marxism in decline and the continuous disregard for Polanyi’s work, the non-Marxist use of the term “commodification” became dominant in academic discourses (while the anti-capitalist use remained popular among activists outside academia, such as the proponents of the anti-globalization movement).15 Hence a 2005 volume on Rethinking Commodification could largely ignore the vast body of Marxist literature that deals with commodification. Instead, the editors stated that “scholars across the ideological spectrum use the term ‘commodification’ only to discuss certain kinds of sales. They generally do not worry (let alone write) about the commodification of milk, garbage collection, or soybean futures” (Ertman and Williams 2005, 4).
Contrary to this statement, one of the objectives of this book is to demonstrate the continuous relevance of the Marxist critique of commodification. As shown in following chapters, there is plenty of reason to be concerned about the commodification of food, nature, healthcare, and other public services. For example, speculation with commodities such as soybeans contributed to a dramatic increase in world food prices in 2008, which meant that 40 million more people in the developing world suffered from hunger in that year (see Chapter 4). The following section will contrast the materialist critique of commodification, which sees capitalism as the problem, with the moralist and pragmatist ones, which oppose the existence of certain markets and the sale of certain goods.
The moral critique of commodification
Representatives of the moral critique of commodification do not reject commodification per se. They simply reject the commodification of certain goods, services, or human attributes and relations. Debra Satz is a good example of this approach. She states that “[m]any markets are rightly celebrated mechanisms of freedom and efficiency, yet some markets traffic in things that no decent society should allow its members to be without, some deepen objectionable hierarchies of class and privilege, and some undermine democratic values” (Satz 2012, 112). Hence for moralists the main question is which goods and services can properly be exchanged for money and which cannot, or, put differently, which markets are socially beneficial and which are not.
The moralist critique centers on four major objections to commodification. A first objection follows from the belief that human beings should not be bought and sold. The trade of human beings is called slavery. While slavelike relationships still exist in the contemporary world, slavery is widely considered as a violation of a basic human right and as such banned in most contemporary societies. Yet the moral critique does not stop with the objection of slavery. Moralists such as Margret Radin (1987, 1996) also criticize the sale of human attributes that make up a person’s identity or that give a human being its individual personhood (which in Kantian philosophy makes a human being a person rather than a thing). Personal attributes, in Radin’s words, are market inalienable (Radin 1987, 1853). Moralists, consequently, object to prostitution, paid surrogacy, and the selling of children (the latter
even when the new parents raise them as independent human beings; Radin 1996, chapter 10).16 This does not mean that personal attributes cannot be exchanged: people should have sex and mothers can give up their children for adoption. Yet the exchange should take the form of a gift; i.e., they should be given away for free. As gifts, so the assumption, they do not negatively affect the individual’s personhood; as commodities they do.
A second objection of the moralist critique is based on the observation that not everything can be valued in terms of money. In order to be valued in units of money, goods must be commensurable—which means that they are comparable on a common scale such as monetary value. As a result, an observer must be able to tell if the value of a good is equal, higher, or smaller than another good (Anderson 1993, 55). Elizabeth Anderson (1993, 134) calls such goods “economic goods,” and she argues that they can be properly bought and sold on markets. In contrast, goods that are incommensurable are non-economic goods. And non-economic goods should be provided outside the market. Anderson distinguishes three categories of goods that fall outside the market. The first are personal goods and relations (1993, 151). Here the assumption is that the value of friendship and affection cannot be expressed in dollars and cents (this critique partly overlaps with Radin’s objection described earlier). A second category is what Anderson calls political goods and which are similar to what pragmatists call public goods (1993, 158–159). Essentially, they are shared goods or goods that no one should be excluded from using. Examples include streets, parks, and schools. The production and distribution of these goods should be based on democratic political norms rather than being left to market signals. A third category is professional services such as healthcare (1993, 147–148). Here the rationale is that doctors should care about the restoration of their patient’s health, rather than thinking about how to make more money. The performance of professional services should therefore be judged according to the profession’s internal standards rather than market norms.
A third critique is fueled by the assumption that commodification can corrupt the value of certain goods and services. A popular example is blood donating. In most countries, blood is donated for free by volunteers. In the United States, business(wo)men set up commercial blood banks in the 1950s, offering money in exchange for blood. Yet while the introduction of monetary incentives was supposed to increase the supply of blood, Richard Titmuss (1970, 65–66) found that blood supply actually decreased because fewer people were willing to donate blood. A similar effect was found when
Swiss researchers carried out an experiment in a small mountain village in the early 1990s. The village had been selected as possible location for a nuclear waste repository. The researchers found in an initial survey that a slim majority of respondents were prepared to accept the repository if the Swiss parliament were to decide that it was the most appropriate location. However, when the researchers asked the villagers about their stance when offered money as compensation for the repository, the acceptance rate dropped dramatically (Frey, Oberholzer-Gee, and Eichenberger 1996). In both cases, so the moralist explanation, money has corrupted what previously was perceived as collective responsibility or civic duty. According to Michael Sandel (2012, 9–10) markets embody values. And with commodification, market values crowd out non-market norms that are essential for the proper functioning of societies.17
A fourth critique derives its objection to commodification not from certain characteristics of goods and services that make them unsuitable for market exchange. Rather, it is the nature of specific markets that renders these exchanges objectionable. Debrah Satz (2012) calls such markets “noxious markets.” They are noxious because they produce extremely harmful outcomes, either for some individuals or for society as a whole (2012, 91–99). Common reasons why they produce harmful outcomes include weak agency or high vulnerability on the part of some market participants. Weak agency is usually the result of incomplete information or of the fact that those affected are not directly involved in negotiating the terms of the exchange. Vulnerability is mostly the result of a lack of resources, especially compared to the other party involved in the exchange. Vulnerable individuals often have no choice but to accept whatever terms are offered on the market. The trade of kidneys is a prime example of a noxious market. The individuals in the developing world who sell kidneys are a classic case of a vulnerable group that has no other choice due to a lack of money. They usually also have weak agency, as many of them lack the ability to appropriately evaluate the risks involved in living a life with only one kidney under conditions that are not exactly supportive of good health. Yet because of the health risks, the selling of kidneys can cause considerable individual harm. Kidney markets may even be harmful for society at large when, as reported from India, individuals are pressured to sell their kidneys to settle their financial debt (Satz 2012, 195–202).
While moralists are right to point to the troubling effects of the intrusion of the commodity form into areas of social life that were previously not
dominated by money concerns, a major weakness of the moralist critique is that moralists rarely if ever discuss the legitimacy of the moral standards that are threatened by commodification. They simply assume the superiority of non-market norms over market norms. By doing so, they overlook the fact that by dismantling oppressive non-market norms, commodification can be liberating. For example, many women experience the commodification of their labor as liberation from oppressive patriarchal norms and their confinement to household work. At the same time, moralists focus on the deterioration of common standards of behavior, the moral fabric of society, while ignoring the material consequences of commodification. Hence, moralists worry about prostitution and paid surrogacy, but they are less concerned about the millions of people who are hungry and/or lack a home, healthcare, and access to utilities (see Chapter 4). In the same way, they describe the trade in kidneys as a noxious market, but accept labor markets in which people are poorly paid, forced into self-employment, and are offered zerohour contracts.
The pragmatic critique of commodification
There is some overlapping between the pragmatic and the moral critiques of commodification. Pragmatists such as Robert Kuttner (1996, 11) generally praise the merits of the market system—“[m]arkets accomplish much superbly”—while also pointing to possible negative effects for civility and morality. However, the main focus of this critique is not on the (im)moral consequences of certain market exchanges; the focus instead is on markets that do not function properly and therefore demand some sort of government intervention. In other words, the pragmatic critique focuses on market anomalies or imperfections. Yet because the focus is on market technicalities, most authors that adopt some version of the pragmatic critique do not use the term “commodification.” Rather they criticize liberalization, privatization, deregulation, etc. Kuttner (1996) is an exception in this regard, although he uses the term “commercialization” rather than “commodification.”
One form of market anomaly is what in economic literature is described as market failures. There can be different reasons for market failures. The classical case, as epitomized by Ronald Coase’s (1974) lighthouse, is a situation in which potential consumers cannot be excluded from the use of a certain good or service (e.g., ships cannot be prevented from using the light
signal). Because users cannot be forced to pay, the respective goods and services cannot be distributed through a market. This also means that potential investors are put off because the inability to charge a price makes it difficult to make a profit (as we will discuss in Chapter 3, public-private partnerships are a strategy to solve this problem). Adam Smith (1900, 666–667) therefore noticed that even in a market society, unprofitable but socially desirable goods and services, such as roads and canals, must be provided by the government as “public works.”
While in the case of roads potential users cannot be excluded—except on some highly frequented toll roads—in other cases exclusion is possible but creates undesirable social effects. In economic parlance, these types of goods or services have positive externalities. This is why they are called public goods (Altvater 2004). As mentioned before, Anderson argues that the production and distribution of such goods should be politically determined rather than being left to the market. However, the reasoning of pragmatists is not that the exclusion is morally wrong; the reasoning is that exclusion can negatively affect those willing to pay. Prime examples of goods with positive externalities are healthcare and education. Limited access to healthcare can facilitate the spread of infectious diseases that may even affect those who pay for health insurance. In a similar way, lack of education and skills can undermine the economic growth of a country or region and thereby limit the earning prospects of those who have successfully attended college or university.18
In addition to externalities, some markets also produce excessive inefficiencies. For example, most observers would consider it wasteful to build two railway lines between two cities. The same holds for other kinds of infrastructure like electricity, gas, and water networks. Because these types of infrastructure demand enormous investments, they are sometimes called “natural monopolies.” Not long ago, there was a broad consensus among economists that in these cases the relevant services should be provided by the government or that private provision should be heavily regulated. However, with growing concerns about state as opposed to market failure, this consensus has largely disappeared (see Chapter 3).
Kuttner (1996, 13–16) illustrates the pragmatic critique by comparing the retail and healthcare sectors. The distribution of retail goods such as food works pretty well through the market. Usually there are several supermarkets competing for customers. Competition forces them to provide high-quality goods at relatively low prices. Consumers can make informed decisions about what products they want to buy. In contrast, the market for healthcare
