"Dead peasants insurance" is a term that sounds as if it comes straight out of Monty Python. If only that were true. Here's an example of what it means: in 1999, Michael Rice, a 48-year-old employee of the supermarket firm Walmart, collapsed while helping a customer carry a television to her car. He died a week later, and an insurance company paid out $300,000 for the loss of his life.
So far, a sad but not unusual story; the twist was in the identity of the people who benefited from the insurance. It wasn't Rice's family, who didn't get a penny, but Walmart. In a subsequent lawsuit, it turned out that Walmart had hundreds of thousands of such policies on employees, so every time one of them died, the huge corporation enjoyed a tiny windfall. And that's dead peasants insurance, or, as it is also known, "janitors insurance". They are forms of what the insurance industry calls Stoli, or "stranger originated life insurance" – in other words, an insurance policy taken out on your life by someone else, not on your behalf but on theirs.
Michael Sandel is a professor of politics at Harvard, and is one of the best known public intellectuals in America. He enjoyed a worldwide hit with his last book, Justice, the subject of a famous lecture course at Harvard, and gave the 2009 Reith lectures. His new book, What Money Can't Buy, is a study of "the moral limits of markets". For him, the story of dead peasants insurance is an example of how the encroachment of market values can change the character of an industry. Sandel shows how life insurance, which had its origins in the idea that we can mitigate the economic impact of death on survivors and dependents – an idea which was always controversial, and indeed was illegal across much of Europe – was gradually corrupted into a form of betting against other people's lives.
Another example of this process was the development of "viaticals". These were insurance policies that had been taken out earlier in their lives by people who were dying of Aids. The life insurance policies of these dying patients were valuable – so a market developed in which these policies were bought by investors, who would give the Aids sufferer a lump sum and would pay for their care during the terminal illness. Then, when the patient died, the policy would pay out: kerching! The catch for investors was that the longer the patient lived, the less money they would make. "There have been some phenomenal returns," said the president of one company that specialised in viaticals, "but there have also been some horror stories where people live longer."
This trajectory, for Sandel, is paradigmatic. We can all instinctively understand the idea of life insurance; most of us will feel an instinctive repugnance at the thought of the viatical industry or dead peasants insurance. As market thinking penetrated the life insurance industry, a moral line was crossed, and the application of market ideas was taken too far.
That shows what has happened with the increasing ubiquity of market ideas. "Over the past three decades," Sandel writes, "markets – and market values – have come to govern out lives as never before." Sandel is no socialist and isn't against markets per se. He is forthright about the positive impact markets can have in their correct sphere. "No other mechanism for organising the production and distribution of goods had proved as successful for generating affluence and prosperity." His focus, perhaps unexpectedly, isn't on the 2008 crash and the great recession that followed. Instead, Sandel is interested in what he sees as a deeper and more consequential loss of our collective moral compass. "The most fateful change that unfolded in the last three decades was not an increase in greed. It was the expansion of markets, and of market values, into spheres of life where they don't belong."
This might make it sound as if What Money Can't Buy is mainly a work of polemic. It's not: Sandel isn't that kind of philosopher. He is clear about what he thinks, and the direction of his argument is clear too, but he progresses patiently, through the accumulation of examples from a number of fields. Too patiently, perhaps, for some readers. Anyone who is already in agreement with the ideas Sandel is advancing – a fairly numerous group of his readers, I'd have thought – may well want a more sweeping, angrier book, one that is more heated about the morally debased landscape brought to us by the ubiquity of market thinking.
I had moments when I wanted What Money Can't Buy to be more charged, to use more of the language of right and wrong and less of the bloodless vocabulary of "norms". But Sandel, I came to realise, is doing something very specific in this book. It's a work of political philosophy more than it is a polemic: he wants to make it unambiguously clear that markets have a moral impact on the goods that are traded in them.
To understand the importance of his purpose, you first have to grasp the full extent of the triumph achieved by market thinking in economics, and the extent to which that thinking has spread to other domains. This school sees economics as a discipline that has nothing to do with morality, and is instead the study of incentives, considered in an ethical vacuum. Sandel's book is, in its calm way, an all-out assault on that idea, and on the influential doctrine that the economic approach to "utility maximisation" explains all human behaviour.
Sandel is methodical about assembling evidence to refute the idea that markets are amoral and have no moral impact. Paying people to queue, for example: Sandel studies this practice in areas such as US congressional hearings and free outdoor theatre performances. In both cases, companies have come into being to allow the well-off to hire a homeless person to go and hold a place in the queue until the rich person turns up just in time for the main event. This is an example of something which is supposed to be a communal good being marketised and turned into cash. This has two consequences that often recur and are stressed by Sandel: one is that the process is unfair, and the other is that it is corrupting or degrading to the thing being marketised.
He sees this dual phenomenon, of unfairness and the degradation of values, at work in many areas: from the market in sports memorabilia to carbon trading to on-call doctor services to Chinese population control policy to the growth of executive boxes at sports grounds – "skyboxification", as he calls it. That leads to one of his most direct statements of political engagement: "Democracy does not require perfect equality, but it does require that citizens share a common life. What matters is that people of different backgrounds and social positions encounter one another, and bump up against one another, in the course of ordinary life."
There's one example in particular that comes close to summing up the entire argument of What Money Can't Buy. It concerns an Israeli daycare centre, which responded to a problem with parents turning up late to collect their children by introducing fines. The result? Late pick-ups increased. Parents turned up late, paid the fine, and thought no more of it; the fine had turned into a fee.
The fear of disapproval and of doing the wrong thing was based on non-monetary values, and was a stronger force than mere cash. The daycare centre went back to the old system, but parents kept turning up late, because the introduction of market values had killed the old ideas of collective responsibility. Once the old "norm" of turning up on time had been marketised, it was impossible to change back.
This is such a vivid illustration of Sandel's thinking that it is almost a parable. Let's hope that What Money Can't Buy, by being so patient and so accumulative in its argument and its examples, marks a permanent shift in these debates. Markets are not morally neutral. Let's all be clear about that. As Sandel concludes: "The question of markets is really a question about how we want to live together. Do we want a society where everything is up for sale? Or are there certain moral and civic goods that markets do not honour and money cannot buy?"