In Markets without Limits, Peter Jaworski and I try to show people that most of the time, their opposition to commodifying certain goods and services isn’t actually about what is being sold, but how it’s being sold. People find something about the market they don’t like, and conclude we shouldn’t have a market in that thing. But, most of the time, the solution is just to change the market. They aren’t in principle opposed to buying and selling, but just buying and selling a certain way.

Toward that end, here’s an excerpt from another paper Jaworski and I have, where we explain how markets are like guitar amps. Some guitar amps sound bad on certain settings. That doesn’t mean it’s a bad; it just means you have to change the settings:

…Consider, as an analogy: Guitar amplifiers have many control knobs on the front, knobs that adjust the volume (or “post-gain”), the equilization (treble, midrange, and bass), the gain (also called “pre-gain”, “overdrive”, or “distortion”), and other factors (reverb, presence, resonance, etc). Some amplifiers are “touchy” or “hard to dial in”; that is, they sound good only with very specific settings. For instance, the Mesa Boogie Mark series of amplifiers—a famous type of amplifier you have heard on thousands of rock, metal, and jazz songs—only sounds right with the bass knob nearly off. Some amplifiers are incredibly touchy and sound good only at one very specific setting. For instance, legendary guitarist Steve Vai’s signature Carvin Legacy amplifier needs to have the presence knob exactly at 7; any higher and the amp sounds shrill, any lower and it sounds flubby. Other amplifiers are “easy to dial in”. For instance, the legendary Marshall Super Lead—another amp you’ve heard thousands of times in thousands of recordings—sounds good at basically any setting.

We think markets are a bit like guitar amplifiers. Guitar amps have various knobs that can be put on different settings, and, as a result, make the amplifier sound good or bad. Similarly, markets might have a range of variables that can be put to different settings. Changing the settings might change the market from good or bad, or bad too good. Just as some guitar amps sound good only on very specific settings, some markets might be good only on very specific settings. Or, just as other guitar amps sound good no matter what the settings, so other markets might be good not matter what the settings.

If markets are kind of like amplifiers, what are the different knobs and what do they do? Consider the following variables, which we can call the nine dimensions of market exchange:

  1. Participants (buyer, seller, middleman, broker, etc; adults, the young; financial experts, lay consumers, etc.)
  2. Means of exchange (money, barter, local currency, bitcoins, gift cards, etc.)
  3. Price (high, low, moderate, etc.)
  4. Proportion / Distribution (how much each party gets)
  5. Mode of exchange (auction, lottery, bazaar, co-op, etc.)
  6. Mode of payment (salary, scholarship, tip, charitable contribution, honorarium, etc.)
  7. Motive of exchange (for-profit, public benefit, cost-recovery, non-profit, charitable, etc.)
  8. Time of exchange (date or time of day the exchange takes place)
  9. Place of exchange (where it is being sold?)

If we describe dimensions one through seven, inclusively, as the manner of market exchange, then the nine dimensions can be redescribed as the time, place, and manner options for market exchanges. If each of the nine dimensions had only three options (although there are many more), that would give us 39 possible permutations, or 19,683 different kinds of market options. The market is not all one thing. For any given object of sale, there are at least 20,000 ways to structure the market in that object.

This is our general challenge to anti-commodification critics. It won’t be enough for them to show us that some markets are bad—morally impermissible—on some or even many “settings”. They need to show us that markets in certain commodities are bad on all possible settings. Otherwise, if we can find even one “setting” for a particular market, then our thesis stands. So, to take a silly example, suppose it turns out to be permissible to buy and sell kidneys only for exactly $56,000 in bitcoins, only while the buyers and sellers are singing “When I’m 64,” and only on the fourth Friday of May. Even then, that means that kidneys are properly the kind of thing that can be bought and sold. The anti-commodification critics would be wrong. They are at best overgeneralizing. [i]

Thus, consider Anderson’s complaints about commercial surrogacy markets. Her objections to surrogacy arrangements are varied and multifold. She objects to the attitude that surrogates take towards the child. She objects to the attitude she discovers towards women’s reproductive labor that she believes is inherent to surrogacy arrangements (1990, 77). She objects to the contractual features that require a woman to give up her baby despite the fact that women may change their minds. They change their minds, when they do, partly because of a gross lack of information – surrogates do not now know how much they will bond with the child once it comes time to fulfill the contract. She objects to the fact that no one represents the interests of the child, just as “no industry assigns agents to look after the “interests” of its commodities” (1990, 76). Finally, she objects to the role that brokers play in contemporary surrogacy arrangements, which can be corrupting. The broker, says Anderson, is motivated and incentivized to try and get the surrogate to release the product of her labors, even if she becomes attached, or changes her mind.

In order for Anderson to get the conclusion that she wants — that we ought to have a full moral (and perhaps legal) prohibition on surrogacy arrangements — it must be the case that there is no way of forming or creating a surrogacy market that is consistent with taking the right attitude toward women’s reproductive labor or towards the child. Perhaps a case like this can be made, but this case has never been made, and Anderson does not even try to make that case. At best, what Anderson has demonstrated is that women’s reproductive labor (and the children that are the product of that labor) were wrongfully and disrespectfully commodified in a market like the one we had in 1990, with brokers, and so on.

In order for her argument to be successful, she would need to demonstrate either that the form that the market currently takes with respect to surrogacy is a necessary and not merely contingent form given the kind of thing that surrogacy is, or that there does not exist a possible form that a market could take that would not wrongfully commodify women’s reproductive labor and the children that are the product of that labor.

Consider: The broker is a contingent, and not a necessary element to the surrogacy market. Brokers probably make the market more “efficient,” and permit us to economize on information and transaction costs (brokers are, after all, experts of a sort). Nevertheless, they are hardly constitutive of markets. We could have surrogacy arrangements without brokers. Indeed, Brennan has friends who are employing a surrogate, and they did not use a broker. So the broker objection can be overcome by designing brokers out of a surrogacy market. Alternatively, we might distinguish between “mean” and “nice” brokers. Mean brokers are brokers that prioritize making money rather than ensuring that each party is treated as an end, and gives genuine and uncoerced consent to the transaction. So we shouldn’t have commercial surrogacy arrangements with mean brokers, but it would be the meanness, and not the broker-ness, that would be objectionable.

The nature of the contract is also contingent. Anderson worries that the terms of contemporary surrogacy arrangements require that a woman give up the child even if she becomes attached, or changes her mind. We note, as a side issue, that courts have not required specific performance, preferring, instead, to grant parental rights to the surrogate as well as the biological or genetic father of the child when surrogates have changed their mind. We can put this worry about surrogacy aside merely by redesigning the terms of the contract in order to include a “change of mind” clause: If, for any reason, the surrogate changes her mind, the contract is null and void. It would still be a market. So, again, Anderson’s objection to surrogacy markets seems to be about the how, not the what.

The fact that no one represents the interests of the child is not a necessary feature of the market. We could institute a rule that requires an agent to function on behalf of the child’s interests in all surrogacy arrangements. We already do this in disputes over inheritance when the inheritor is a young child. We could do the same for surrogacy arrangements.

When it comes to a surrogacy market, we can change the manner in very many different ways. The participants can be (and already are) restricted. The price could be different, and the proportion of the money can be distributed between the seller of the service, the broker, any agencies involved, and so on, differently. The payment need not be money that the seller personally receives, she could be paid in a charitable contribution made on her behalf, or the money could go into a scholarship fund for the baby, or for a baby she might have in the future. We could also insist on price floors or ceilings, or a uniform, standardized price consistent across all surrogates.

Apart from the participants, the mode of payment, the price, and the proportion or distribution, we could also change the mode of exchange. Surrogacy arrangements could make use of lotteries, with surrogates receiving a fixed payment from a pool of hopeful parents who enter a lottery with equal odds of ending up with a child. The babies could, perhaps, be auctioned, although we suspect many of our readers will find that especially distasteful.

Similar remarks apply to many other markets that anti-commodification theorists oppose.

[i] Satz 2012 seems to agree. She thinks that markets in sex are bad under current conditions, but holds that in a properly egalitarian society, they would be unproblematic.

The article first appeared on Bleeding Heart Libertarian.

Posted by The Indian Economist