I first came across Michael Sandel when I was editing the Better Humans? collection for Demos. I’d been immersed in the world of singularity thinkers and was feeling slightly queasy about some of their philosophy when I found his piece for the Atlantic called The Case Against Perfection. By the end of the process of editing the book, I realised that amidst the chaos of other opinions, Sandel’s was the one that made most sense to me. I’ve read pretty much everything he’s written since.
His new book ‘What Money Can’t Buy’ turns to the finance sector and is a really good read. There’s much in there that we all now know (subprime mortgages and Â liborgate like manipulation) but the story I didn’t know about is the swaps and trades in ‘death bonds’ (companies taking out life insurance on their employees without their knowledge) which is perhaps the most shocking section of the book.
Sandel’s argument is pretty straightforward — if you let people pursue profit relentlessly without fetter then the public realm will be damaged, so you need laws and regulation. The thing that struck me was that we’re actually pretty good at writing laws but regulation is markedly less mature as a social system. I got a glimpse into the way the FSA worked a few years ago and was a bit shocked at how few tools and resources they had at their disposal.
The other big question raised in the book is should you be able to exploit people because of their financial vulnerability (cough, Wonga)? Probably not. Just because people want something, doesn’t mean it’s a good thing. However it’s often a failure of other systems (in the case of Wonga I’d say the retail banks) that creates the opportunity. But should you ban those services? I’d say probably not because it will just drive the market underground or even possibly offshore.
There’s not much in the book about the role of technology in finance but it’s an area that fascinates me. As algorithms increasingly determine what we buy or don’t or how public markets work, we need to think about their ethical role in the way money flows.Â Tom Standage’s excellent piece for the Economist on robot ethics raises many of the right questions. He takes the more dramatic image of how drones decide targets, but the questions in finance are very similar if more abstract. A single calculation can alter the financial situation of hundreds of thousands of people and increasingly those calculations are made by machines rather than humans.
I think we do need far better regulation of the finance world and if that means it ends up being smaller and slower, so be it. Finance shouldn’t pretend that it’s morally neutral — it should be a tool to make the world a better place.
- What Money Can’t Buy: The Moral Limits of Markets by Michael Sandel (frequentlyarsed.wordpress.com)
- Michael Sandel: ‘There are fewer and fewer things that money can’t buy’ (guardian.co.uk)
- What Money Can’t Buy: Amazon Interviews Michael Sandel (omnivoracious.com)