A Viewpoint for the Future Markets Consultation
In this article I propose to create a non-monetary market for moral, organizational and cultural values, that would contribute to a deep renewal of economics and foster a deeper sense of community.
The role of autonomy for individuality and a sense of community
In the current juncture we perceive a fundamental contraposition between the individual and the community. This is reflected in the political and cultural domains, where neoliberalism opposes (but somewhat also fuels) populism, and economics is generally separated from ethics. The birth of rational, inclusive communities –cornerstones of well-functioning societies- is crucially fostered by authentic individuality1. Authentic individuality is, in my approach, synonym of autonomy2. Both are necessary for societal well-being, and affected by a great deal on how economic systems are shaped.
I will focus here on functional autonomy, implying the will and ability to shape and act on one’s worldviews (i.e. values), without being influenced by one’s immediate needs. Values are not a mere consequence of one’s specific role in society such as a consumer or producer, worker, or voter. A functional autonomous individual does not reduce values to interests for the self, but rather chooses to act on the basis of a comprehensive, consistent relation with the world. This implies getting out of instrumental rationality, meaning the approach to the world that, according to Max Weber, puts us inside an iron cage. In that cage, we only seek the best means to pursue our own, subjective aims, having lost sight of what is intrinsically good: the common good.
Functional autonomy is very important to foster the birth of flourishing communities. If we know that our worldviews are only instrumental to our direct, material interests –in particular money and goods –, we will not have any incentive to challenge those worldviews, compare them with those held by others, and spread them to the rest of society after properly assessing them. Instead, communities provide the opportunity to share experiences, challenge one’s own worldviews and foster a public discourse about the common good.
Against this backdrop, a market for moral, organizational and cultural values would provide an incentive3 to adopt values that are independent from one’s current, limited social role. Such an economic market system would foster functional autonomy and, thereby, a deeper sense of community enhancing overall societal well-being.
A market for values and its role for functional autonomy: how would this work in practice?
A market for values would make it possible to profit from both the exercise of individual autonomy and the ability to assess the relevance of a given value for society. In this market, individuals, companies and local communities (from now on “agents”) would exchange documents describing the importance of applying values such as environmentalism, social justice, propensity to innovation and inclusivity towards minorities. In particular, each of these agents would have the chance to purchase documents, each of which would list experiences – made by previous owners- that describe the social, economic and reputational benefits obtained through initiatives inspired by a given value. These benefits should be objectively verified and may include, for instance: a given increase in the market share of a firm that has previously invested in renewables; the reduction in crime in cities or regions that have undertaken projects in the area of social inclusion; the professional advancement of individuals who have better known the needs of the communities where they work.
The experiences would be certified on the basis of indicators defined by law. The indicators may include, for example in the case of social justice: a given reduction in the Gini index (in towns or regions); a given reduction in wage dispersion (in companies); a minimum amount of donations to charities (for individuals). Similarly, indicators referred to environmentalism may include a given increase in green areas (for towns or regions), a given reduction in CO2-emissions, some investments in negative emissions technologies (for companies), a minimum amount of time spent volunteering for green charities (for individuals).
After buying a document and adding one’s own experiences, a firm or an individual would be able to resell the document on an online platform established for this goal. In particular, each agent interested in entering the market (i.e. the online platform) would be able to know a) which documents are currently for sale, b) which benefits are listed in each of the documents and c) their prices.
The delivery of the documents would take place at local branches of the platform. In particular, a seller would transfer a document to a local branch, which would verify that the new experiences added in it have been certified. The local branch may also download any given document available on the platform and print it in order to deliver it on request of an agent. Each document would be identified with a code, so that it would not be possible to sell a document to more than one agent at a time.
Only after buying a document, an agent would be able to know which kind of experience led to each of the benefits listed in the document, and in particular the compliance with which indicator produced a given result obtained by a previous owner. What would be publicly known regards a) the list of quantitative indicators that may be applied to pursue a given value and b) the list of benefits in each document.
To add one or more experiences to a document, an agent may choose an indicator that has already been complied with by previous owners, or rather add a new kind of experience. Each document would be exchangeable with those referred to other values or with goods and services, not with money.
The following diagram depicts the basic elements of a market for values and their functions.
provided by the State, they would list experiences referred to moral, organizational and cultural values. Each document would be exchangeable with other documents, with goods and services.
The incentive to take part in this market would be the possibility to get, in exchange for a document, an amount of goods, services or other values which is greater than the amount that was used to purchase the document, as a result of two factors: the addition of new experiences to the document and a possible increase in the price of the experiences listed in it.
As stated above, the documents should not be exchangeable with money. Rather, the documents would be a medium of exchange complementary to money. In fact, buying experiences with money and selling them with the aim of profit maximization may overlook the importance of functional autonomy. Functional autonomy allows for the free choice of values to be implemented, for the transmission of one’s experiences referred to them, and therefore for a personal contribution to how society considers these values.
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.
What implications would a market for values have for society?
By fostering individual functional autonomy, a market for values would have relevant implications for ethics within economics6.
In economics, the notion of capital does currently not include moral, organizational and cultural values. But the market described above would give an economic and social relevance to that dimension – the idea of justice – which is currently confined only in a private domain. Economists cannot and should not refrain from making value judgments, as the study of wealth and welfare and of the way to improve them has to go beyond purely formal, mathematical calculations7.
Prices gather disperse information8 better than any central planner would be able to do. However, in a market for values prices would offer relevant information not only about quantitative elements, such as the relative scarcity of resources. The price of the experiences referred to a given value would be the outcome of a collective form of deliberation on the common good (in terms of shared knowledge of the benefits of the values, of how it is possible to experience potentially all of these benefits only by being available to change one’s social role – even just by pursuing a quantitative indicator-, of how much each single value is worth according to the whole society). This is crucial for shaping a social identity, without any form of centralized imposition from above.
Societies would greatly benefit from the possibility for individuals to act on their convictions, to the point of making of collective preferences not the simple aggregation of utilitarian calculations. Rather, societies should focus on becoming a community, meaning a society that fosters
- authentic individuality,
- the open exchange among autonomous individuals and
- the acceptance of the prevailing attitudes.
Living in a community means understanding how important justice, innovation, inclusivity or other principles are for societal well-being. This knowledge should then serve to assess the rationality of political and economic strategies, and the associated level of consensus. From this point of view, my proposal offers an alternative to both neoliberalism (the idea according to which markets are value-neutral, as values are merely subjective preferences) and nationalism (which states that values such as nation and tradition are better than others, which do not need to be challenged, experienced and proposed through a rational and inclusive process). Individuals may be (apparently) privileged over society and community as long as only goods and services are exchanged on the market. Currently, markets serve individualism rather than authentic individuality, and a market for values would overcome this.
Exchanging values as described here, implies introducing qualitative economic growth: an increase in the overall amount of goods and services (net of inflation) that may be purchased in exchange for all the documents traded in the market for values. This can be facilitated9 if, in a given period of time, the relative importance – to the overall set of experiences – of experiences whose price decreases (and which have therefore become less socially desirable) is more than compensated by the number of new experiences whose price increases (and which are therefore more socially desirable). As long as GDP growth leaves the distribution of moral, organizational and cultural values unchanged, it is not necessarily conducive to qualitative growth. However, a market for values would change the allocation of (projects inspired by) principles such as social justice and environmentalism. This may in turn trigger quantitative growth if, for instance, after a first phase of lower profits for companies that endorse these values, the general diffusion of best practices made the latter compatible with and conducive to better economic performance.
In order to offer further detail on the exchanges that would take place in a market for values, let us suppose that an individual A has experienced financial savings and greater security by using car sharing and public transport. After reaching the target defined for this choice, the individual would be able to sell his/her experience through the centralized platform. The buyer may be a company B that has already implemented policies to contribute to another value (e.g. social justice). After adopting conservative agriculture based on strip cropping, in order to improve its environmental sustainability, the company may prove in the document that it has experienced enhanced productivity. After the sale of the document (featuring the two previous experiences), the latter may be bought by an individual C, who decides to pursue another target: a given number of hours dedicated to environmental volunteering. Later on the document may be purchased by a local community D, that decides to pursue environmentalism through the creation of some eco-districts.
The following is a representation of how the document referred to environmentalism would look like after these exchanges:
|Entity applying environmentalism||Initiatives carried out||Benefits obtained from the initiatives||Target||Values exchanged with environmentalism|
|Individual A||Use of car sharing and public transport. Use of an electric car||Greater security, financial savings||Percentage of distance covered by using public transport and/or an electric car||Social justice|
|Company B||Use of precision agriculture to refine irrigation schedules and conservative agriculture based on strip cropping||Better use of nutrients and chemicals,|
enhanced productivity due to use of farm machinery in closer array
|Percentage of investment dedicated to precision and conservative agriculture||Civic engagement|
|Individual C||Environmental volunteering||Socialization, self-esteem||Hours dedicated to environmental volunteering||Inclusivity towards minorities|
|Local Community D||Creation of eco-districts||Significant decrease in urban total waste, better protection against risks like urban flooding||Relative size of the eco-districts (percentage of surface that is part of these districts)|
By connecting individual values to initiatives that have a strong, positive impact on societal well-being, markets can truly contribute to fostering autonomous individuals, and the strengthening of communities. Markets for values would favor human flourishing through a public judgement of society about the importance of some moral, organizational and cultural values – a judgment made possible by the fact that these principles would not spring merely from private interests, but would rather express autonomous individual worldviews.
- Hannah Arendt, The Human Condition, Chicago: University of Chicago Press, 1958.
- Friedrich von Hayek, “Scientism and the Study of Society I,” Economica, 9: 267–91, 1942.
- Friedrich von Hayek, “The use of knowledge in society”, American Economic Review, 35, 4: 519-30, 1945.
- Immanuel Kant, Grundlegung zur Metaphysik der Sitten , (The Groundwork of the Metaphysic of Morals, tr. Allen W. Wood, 2002).
- Karl Marx, Das Kapital , Capital. A Critique of Political Economy, translation by Ben Fowkes, Penguin Classics, 1990.
- Laura Pennacchi, De Valoribus Disputandum Est. Sui Valori Dopo Il Neoliberismo, Mimesis Edizioni, 2018.
- John Rawls, A Theory of Justice, Belknapp Press of Harvard University, Cambridge MA, 1971.
- Amartya Sen, On Ethics and Economics. Oxford and New York: Basil Blackwell; 1987.
- Marco Senatore, “Exchanging Autonomy. Inner Motivations As Resources for Tackling the Crises of Our Times“, Xlibris, 2014.
- Marco Senatore, A market for values as an option to foster individuality, a sense of community and good policies, The World Bank, Public Sphere Blog, 5th December 2017.
- Marco Senatore, A market for values is what the world needs to reconcile democracy and capitalism, community and the individual, Public Seminar, 24th September 2019.
- Marco Senatore, A market for values would reconcile profit with a higher social purpose, London School of Economics Business Review, 25th October 2019.
- Marco Senatore, The current state of economics and politics and the role of a market for values, Rethinking Economics Italia, 1st April 2020.
- Marco Senatore, The implications of a market for values for individual autonomy and a sense of community, Rethinking Economics Italia, 8th April 2020.
- Marco Senatore, The role of a market for values in fostering a new identity for politics, economics, spirituality, Rethinking Economics Italia, 21th April 2020.
- Adam Smith, The Theory of Moral Sentiments , Knud Haakonssen (ed.), Cambridge University Press, 2002.
- Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations , University of Chicago Press, 1977.
- Max Weber, The Protestant Ethic and the Spirit of Capitalism, T. Parsons (trans.), A. Giddens (intro), London: Routledge, 1905.