‘Commoditised’ services?

I’ve been pondering my recent conversation with Branko Milanovic about ‘commodification’ and whether or not it’s a good thing. As he says in his reply on the subject, it is happening as a matter of definition. He puts this in terms of the formalization of economic activity as economies grow richer. I’d express it as the increasing share of services in economies as they grow richer. Goods have been largely commoditized (as it were) in the west for aeons and nobody really thinks there’s any social problem with buying your shoes and fridges in the market. As the growth process continues, the division of labour and specialization extend into areas of services.

On the whole, I disagree with Branko that there is a tradeoff, that while people clearly value these market exchanges, they weakens social ties: “[W]hile in many cases, greater commodification has made our lives better and responds to a definite choice of people, it has also in many cases weakened personal ties and in some cases made us more callous because our knowledge that any pesky little problem can be solved by throwing money at it made us less concerned about our neighbors and family.” He links this to the emerging ‘gig’ economy.

For many or perhaps most services, I don’t see this. If I specialize in economic consultancy, my neighbour in translation, a friend in gardening, another in teaching in a gym, what’s the social problem that arises from these being market exchanges? Indeed, the argument that these sorts of monetary transactions undermines relationships seems demonstrably false: services of this kind require a high level of trust for transactions to occur because there is a huge asymmetry of information between the seller and the buyer. If Paola translates a paper into Italian for me, I have no idea how good it is. This asymmetry is why professional services are regulated and in some countries provided by the public sector, presumed to have an ethos of public service.

The social problems come with a particular category, the personal, labour intensive services often badly paid. This could be because they are paid for by squeezed public funds (hospital cleaners), or because they are jobs that might not exist if the pay had to be higher (supermarket checkouts – now getting automated – or domestic cleaners – some working women would do without if their pay doubled). One could argue that some of these activities should as a matter of ethics never be marketed, but this was my original challenge to Branko, as child care and cleaning are still typically mainly done by women. Barbara Ehernreich in her terrific book Nickel and Dimed argued that anyway nobody should be asked to clean somebody else’s toilet, as a matter of (self-)respect. I’m more interested in interventions in the market to ensure good pay and conditions, rather than – what? banning these transactions?

As for the ‘gig’ economy, this seems to me a question of how good or bad the workers’ outside options are (as well as the corporate behaviour). Nobody is forced to drive for Uber or ride for Deliveroo, so their other options are probably worse. This is an argument for a reasonable minimum wage properly enforced, and a legal framework that is updated to protect the rights of all individuals doing paid work – I’ve been arguing for this since The Weightless World in 1997.

I’d go further and say there are areas where we need more market exchange. Like many economists, I’d like to see more market instruments used to serve the interests of environmental protection and the safeguarding of natural capital. I admire Al Roth’s work on bringing a market-type (but non-monetary) exchange process to kidney donations, literally life saving work.

PS Apologies about the ongoing tech problems with the blog. I keep thinking it’s fixed. The fix is short term but hopefully it will be sorted long term within a week or two. This is a problem of success, with more traffic and an accumulation of posts, so I hope regular readers will be patient with the tech issues.

A rant about markets

Harvey Cox’s The Market As God, published in a couple of weeks, drove me nuts. I alternated between scribbling ‘X’s and ‘?!’s in the margin, and skipping over long chunks about Christian theology, in which I have zero interest. The book is built out from the notion of orthodoxy and heterodoxy in economics. Of course, ‘orthodox’ economists would use an adjective like ‘mainstream’ to describe themselves, which I guess (self-described) heterodox economists would say is the point. These debates always seem to me more relevant (or rather less irrelevant) to macro than to the empirical applied micro-economics so many of us do; I never know which label to wear myself.

Anyway, back to the book. The conclusion sums up the message: “First, the Godlike role The Market now exercises is misplaced, and the web of values, narratives and institutions it anchors needs to be critically re-examined. Second, precisely because The Market, despite its disavowals, does operate as a surrogate religion, the kind of rethinking that is needed has been deflected and discouraged.”

Many people will agree with this. I’d guess the ever-thoughtful Branko Milanovic would – he and I had a brief debate here, here and here on ‘commodification’ (ie the status of the market) recently. There are some truly interesting ethical questions in this territory.

Not in this book, however. One of my problems with Cox’s account is the assumption that there is substantial overlap between people who worship The Market and economists, because isn’t that what economics is all about? Given that I teach a whole course exploring the subtleties of the relationship between state and market in public policy, this is personally irritating. It’s also factually incorrect: many economists work on how government/collective intervention can fruitfully bring about higher economic welfare, including by influencing markets. Sure, economists are perhaps more likely than Ms Average to believe markets operate in beneficial ways (or than Mr Average when he is a businessman running a large, dominant company), but that’s far from religious faith in markets.

Market-worship was always more of a political than an economic project, although certainly there was a tide in economics of free-market rational expectations modelling – a tide at its height in the mid to late 1980s. Even the politics seems to be changing. This book comes just as here in the UK we’ve seen the new Conservative Prime Minister pronouncing the need for an industrial policy, while the system shock of the Brexit vote/Trump propularity has alerted the political classes in both the UK and US to the fact that we’re not in libertarian free market-land any more.

There were also minor irritations in the book. For instance, it paints Adam Smith as the ‘saint’ of modern economics, “the patron of the unfettered free market.” This overlooks a raft of recent work highlighting the importance of The Theory of Moral Sentiments to any interpretation of Smith – from Emma Rothschild’s Economic Sentiments, Nicholas Phillipson’s biography Adam Smith: An Enlightened Life, through Roger Backhouse’s history of economics to Russ Roberts’ [amazon_link id="1469029758" target="_blank" ]How Adam Smith Can Change Your Life[/amazon_link].

Anyway, it will be clear that The Market As God falls foul of my regular gripe that it would be great if critics of economics from outside the discipline had more of an idea of what economists actually do. It would have been far more interesting if Cox had addressed, say Al Roth‘s question about repugnant markets, kidney exchanges etc. Or maybe the questions raised by behavioural economics about when humans are more or less rational than pigeons or capucin monkeys. Still, if you enjoyed Michael Sandel’s What Money Can’t Buy: The Moral Limits of MarketsWhat Money Can’t Buy: The Moral Limits of Markets by Sandel, Michael on 26/04/2012 unknown edition (which also irritated me hugely), you might well like this book too.

The imagined north

I’ve felt weirdly silenced for the past few days while this blog was down – am sincerely hoping the tech problems are fixed for good now. Meanwhile I’ve been writing a paper, an outline, a research proposal, and reading for light relief Peter Davidson’s The Idea of North. It’s a cultural history that does what it says on the cover, a lovely book. It has many wonderful passages but the most quirky, I suppose, was the revelation about the economic significance of beaver pelts in the exploration and staking of claims in Canada. The highly desirable fur led to ever-expanding hunting of the creatures, which in turn prompted fighting between different tribes as well as competing imperial explorers. “The pursuit of ever more distand beavers thus become the impetus both for mapping and for the creation of empires, indigenous and colonial.”

It set me thinking about what else I’ve read about norths. I have a treasured signed copy of Seamus Heaney’s North. There’s Paul Morley’s The North about the north of England. Ted Hughes and Faye Goodwin’s Remains of Elmet, ditto but more poetic. Charles Nevin’s Lancashire, Where Women Die of Love, ditto, in a very different way. Elizabeth Bowen’s novel To the North.

Moving to a wider geographic stage, Jill Ker Conway’s memoir, True North, Into the Silence by Wade Davis about George Mallory and Everest, Francis Spufford’s brilliant (like all his books) I May Be Some Time: Ice and the English Imagination.

I’m sure there must be others. As Davidson says, there is something so simply evocative about the phrase: “To the North.”

Wandering around looking at people

My concentration has been rubbish this week, waiting for the youngest son’s A Level results (he did well). So I indulged in reading Laren Elkin’s Flâneuse: Women Walk the City. Very enjoyable reflections on women walking in cities, on women writers carving out independence, and also on uprooting in this globalised world.

Flaneuse: Women Walk the City in Paris, New York, Tokyo, Venice and London

It joins my list of excellent books about wandering around cities looking at people. Two by Rebecca Solnit, Wanderlust and A Field Guide to Getting Lost. Patti Smith’s latest memoir, M Train. The Lonely City by Olivia Laing. Jan Morris, Trieste and the Meaning of Nowhere. Geert Mak’s In Europe.

I’d have thought this was a rich vain, so I’m sure others will have suggestions. Anyway, with son 2’s next steps sorted, it’s back to economics books for me now.

Trieste In Europe: Travels Through the Twentieth Century Wanderlust: A History of Walking [ WANDERLUST: A HISTORY OF WALKING ] by Solnit, Rebecca (Author) Jun-01-2001 [ Paperback ]

On difference

Steve Silberman’s Neurotribes was the last of my holiday reading, just finished. It is as excellent as you’d expect from all the reviews and prizes. As well as being a fascinating account of the intellectual history of psychiatric/medical approaches to autism, including the dramatically changing approaches to diagnosis and treatment/support, it’s very well written. For instance, I liked the description of Leo Kanner, a central character, as having “the woebegone countenance of a sad beagle.” The book also has sections on the links between autism and the technology and sci-fi fan communities, dating back well before SIlicon Valley. The book quotes an expert on science fiction as describing the “subversive impulse at the heart of science fiction as an expression of ‘cognitive estrangement’ from the mainstream.

[amazon_image id="1760293288" link="true" target="_blank" size="medium" ]Neurotribes: The Legacy of Autism and How to Think Smarter About People Who Think Differently

I was frustrated to learn on page 375 that, throughout the disputes and discoveries in the US I’d been reading about so far, British researchers and doctors were “light years ahead of their American peers in their understanding of autism”; this is a highly US-centric book. British readers might also be surprised that Simon Baron-Cohen gets just two passing mentions. I’m certainly no expert but think he’s quite well known on this side of the Atlantic. The despicable Andrew Wakefield does get appropriately – ie. highly critically – described. My other frustration was that – given my lack of knowledge of the subject – there wasn’t more of a summary of the state of play at the end of the book. It’s clear enough that there is no ‘epidemic’, but rather a better understanding of the character of autism and much more diagnosis; and that the explanations are to be sought in genetics, not environmental factors. Still, I’d have liked a bit more.

Of course, wanting more of a 520 page book is a good sign. Interesting, compelling and important.