Saturday, 2 November 2013

Jappa Pallikathayil & why I should have been blonde.

The following is from a Tea Party affliated Christian blog which thinks the 'just price' of Aquinas is also always the market price- ' All market-generated prices are just. They are just because they are voluntarily achieved through interactions between buyers and sellers. Buyers tell producers what they want, and producers use up scarce resources to meet demand.' 
' Stewardship: Colossians 3:23-24 says,
Whatever you do, work at it with all your heart, as working for the Lord, not for human masters, since you know that you will receive an inheritance from the Lord as a reward. It is the Lord Christ you are serving.
The scarce resources God has endowed us with have multiple and competing ends. We must make tradeoffs: should we buy another car or send our child to private school this year? Market-established prices help us make these tradeoffs between resources.
Cooperation: Philippians 2:3-4 tells us:
Do nothing out of selfish ambition or vain conceit. Rather, in humility value others above yourselves, not looking to your own interests but each of you to the interests of the others.
God calls us into community to work with and serve one another. Prices guide us in serving others by coordinating our activities. They also give us signals about how to best serve each other.
Friedrich Hayek recognized this coordinating power of prices. He wrote in The Use of Knowledge In Society that,
Prices can act to co-ordinate the separate actions of different people…
Prices help us attain a level of flourishing that otherwise would remain unknown. They harness decentralized knowledge.'
My response was-
'All market-generated prices are just.'- is this true? Suppose there are just two people on a desert island. One has both food and water, the other has nothing but a bag of gold. It may be that compelled by thirst, the latter trades all of his gold for a little water after drinking which he perishes of starvation.

This is a market transaction- indeed, it could be said to be somewhat altruistic in that the other party could just have waited till the thirsty man died and then taken his gold without making any payment.

Would we call this price just?

My feeling is that it is the essence of a market transaction that it is not a one-off but a repeated game with potential positive sum outcomes. Indeed, prices serve no signalling function if transactions are one-off.
The Quaker Economist, Kenneth Boulding- author of numerous beautiful hymns- laid emphasis on the sort of positive 'psychic capital'- trust, mutuality, goodwill- created by markets working on the basis of repeated transactions engendering long term mutually beneficial relationships. The true wealth of a Nation lies in this sort of psychic capital. Good business practice fosters a good Legal and Administrative infrastructure. The 'robber baron' approach of oligarchs, on the other hand, goes hand in hand with corrupt Politics and a dysfunctional Legal system. Long term, there is both 'capital flight ' and 'brain drain' from such countries. People vote with their feet an migrate to more salubrious environments.

From the Christian p.o.v. the notion of just prices, at least under conditions of imperfect competition- i.e. the sorts of markets that obtain in manufacturing and services where product differentiation or local monopoly/ monopsony exists- i.e. market power is asymmetric- can help guide us to better business practice, more 'X efficiency' and greater dynamism in the exploit of potential internal and external economies of scale and scope.

More generally, a notion of just price can be made rigorous with reference to the shadow vector of correlated equilibria in a repeated game such that all exigent circumstances get insured against- i.e. arbitrageurs operate in the market in a manner to equalize risk premiums and also all external effects, information asymmetries (and preference revelation problems) get 'internalised' in the Coasian sense by the co-evolution of Mechanism Design along with the Market. 
Govts. aren't really going to be able to compute that just price and are likely to create deadweight efficiency losses if they intervene in markets for populist reasons. The Shah of Iran lost his throne because he attempted to bring down the price of bread by throwing innocent bakers in jail. Needless to say, he took no action against the greed and profligacy of his own supporters whose reckless spending was responsible for inflation.

A more sophisticated view, from a  Libertarian perspective, is presented by Prof. Nina Bardwan in an essay on the distinction between fully voluntary actions and actions done under duress in the context of market exchanges. She writes-'What, then, is the just price for a kidney, and how is it to be determined? Locke proposes a general answer to the question of a just price when one party is in dire straits in his Venditio. He argues that a ship that is in danger of sinking in a storm because it has lost all its anchors should not be taken advantage of by a ship that has an anchor to spare. The second ship ought to sell the anchor to the first at the price it would charge if the first ship was not in desperate circumstances. This is the price it would charge in a competitive market. Munger and Ricardo A. Guzm├ín agree with, and offer a formal theory to justify, this analysis in *An Analytical Theory of Just Market Exchange” (2012). But what is a competitive market? Whatever else it might be, it is a market in which people are free to buy and sell. The kidney market, then, is decidedly not a competitive market, since kidney sales are banned in every country but one (Iran). If kidney sales were legal everywhere, or at least in most countries, and there was free legal trade in kidneys, many rich people would go to poor countries for kidney transplants (as they do for other medical procedures) and the price of kidneys would rise in those countries. Ironically, it is the attempt to save people from exploitation by banning kidney markets that has led to the unimaginably high levels of exploitation and injustice that we see in underground kidney deals.
'Some libertarians might be inclined to reject my argument in the belief that it implies that all cases of profiting in a disaster, such as selling salt at a higher price when most of the salt mines supplying a community have been destroyed, are unjust. But my argument does not imply this. It condemns injustice, but there is nothing unjust about raising the price of a commodity when it is in short supply, and lowering it when it is abundant. Doing so neither takes advantage of people by making grossly disproportionate exchanges, nor treats them as mere means to the seller’s own ends. Nor is it unjust in any other way that I can see. Rather, it is the only economically and morally rational way to act.'
Why is the above stupid? Well, it ignores Insurance and Reputation effects. Locke's ship captain would have taken out Insurance. He gets lower premiums if he abides by a certain code- e.g. always give a spare anchor at the open market price to a distressed ship likely to have Insurance- and so the market internalizes the problem. Similarly, once our Insurance brokers get organized, organ sales cease to be a 'repugnancy market' because prices begin to look like corrleated equilibria outcomes from a positive sum repeated game. Burdwan can't say that because she'd be doing herself out of a job- Philosophers have a vested interest in remaining ignorant of the subject on which they pontificate.
This brings me to Jappa Pallikathayil who has just penned a blog post on the Morality of Markets. Jessica Flanigan, at Bleeding Heart Libertarians, writes- 'Drawing on a Kantian framework, which says we must never treat others merely as means, Japa explains that we may be blind to the ends of others when we enter into market arrangements with them without treating them merely as means. This is because voluntary exchanges generally further the ends of both parties by enabling buyers and sellers (of labor or goods) to make decisions that reflect their own assessments of the value of a service or a product relative to the wage or price.
But Japa is concerned about exchanges that happen against unjust background conditions. She writes: “there are some contexts in which the use of the norms of marketplace is inappropriate because of the circumstances of the potential participants.” First, market norms are allegedly morally suspect when one participant in the exchange is a victim of injustice. So, for example, if you were only selling a product to me because your landlord is unjustly evicting you from your home it would be wrong for me to profit from that injustice. Instead I should not use an injustice to further my ends in part because I should recognize that you are entitled to greater control over what you are selling than you currently have as a victim of injustice.
Second, when one participant’s ends are clearly more urgent and weighty than another’s, like if you are only selling me something to pay for your child’s chemotherapy, then participating in an exchange “reflects a misunderstanding of the values at play.” She therefore concludes: “those of us who are not subjected to injustice or struggling to survive should be very troubled by most of our market transactions.  These transactions involve us in a blindness to the ends of others that is not justifiable.”
As someone with Kantian leanings, I especially enjoyed reading this post. But it left me with some questions:
1) How is this not the case for a lot of (if not all) market exchanges? It seems like even ordinary exchanges, e.g. most employment arrangements, are motivated by the need to provide for our basic needs or the basic needs of those we love. Of course there are other reasons to work, but I imagine that some people wouldn’t work if they could ensure that their needs were satisfied even if those same people love their jobs. And insofar as at leastsome taxation is unjust, but we must work more to pay those taxes, then some of our market exchanges are also premised on an injustice. If I am an employer, does the fact that my employee is only working for me as much as she is because she is a victim of injustice or so that she will not struggle to survive mean that my transaction is unjustifiable to the extent that this is true? In this way, the account seems over-inclusive.
2) Say that it is true that a transaction is not justifiable if one participant in the transaction is struggling to survive or a victim of injustice. Does it follow that I should not participate in the transaction? Even if there were something objectionably ‘blind to the ends of others’ when someone participates in a transaction instead of addressing the underlying injustice or need, as Matt Zwolinski often points out, this is rarely the relevant counterfactual. Instead, most people who encounter victims of injustice or those in great need don’t do anything at all. In this way participants in voluntary exchanges may do more to further the ends of others than anyone else, even if those participants could do more.
3) Japa argues that the duties to refrain from certain market transactions—duties that we have to people who are victims of injustice or those who are struggling to survive—needn’t be explained by duties of beneficence. Instead she references Kyla Ebels-Duggan’s Kantian account of love, which argues that we should share in our loved one’s ends rather than in aiming to promote their happiness. But most market exchanges do not involve loved ones, and in these circumstances it’s not clear that the same special duties apply. It might even be a mistake to aim to further or share in a stranger’s ends if that distance means that you are not well-suited to fully understand their ends beyond what they express to you, which in this case is an exchange.
4) In at least some exchanges, both participants in the exchange are either desperate or the victim of injustice. For example, Ann might sell a kidney to Bill only because Ann needs to pay for her daughters chemotherapy, and Bill may purchase the kidney only because he will die without it. In these desperate circumstances, there may be no other way for Ann or Bill to further their ends. But Ann and Bill do not treat each other in ways that misunderstand the values at play because presumably the values at play are comparable. Yet why would the permissibility of Bill buying something from Ann at a given price depend on whether Bill is as desperate as Ann or not? Would this view imply that whether exchanges are problematic depends not only on the circumstance of each participant but also on the degree of inequality between the participants? If so, does this mean that it is generally problematic for people who are well-off to enter into exchanges, but not for the badly off?'

Japa responded thus-
Thanks for these really interesting and helpful questions. My thinking on this topic is still in the very early stages and so I’m really grateful for the feedback. Here are some thoughts about the questions:
1) It is worthwhile here to treat the injustice case and the survival case separately. I do think that there is something morally troubling about using market norms in the face of any kind of injustice and that may well mean that all of our market transactions should be troubling. (And I actually think that it is not surprising that fully living up to the demands of morality requires a background of justice, but I won’t try to say more about that now). The post may have been misleading, though, because the main example was of an isolated case of
injustice. And in that case, it does seem to me that moving away from market norms and moving toward a more collaborative interaction is the right response. But systematic or pervasive injustice, of the sort I mention toward the end of the post, may call for a different response. That is, I think this kind of injustice
should also unsettle our use of market norms but it is less obvious what we are
required to do in light of this. Rather than adjusting our attitudes towards particular participants in particular transactions, we may instead need to adjust our attitudes towards our institutions more generally. So, it may be that we are permitted to engage in market transactions in the familiar way in the face of pervasive in justice, but that if we do so we acquire a new source of obligation to work for institutional change. Anyway, that’s an example of the general strategy – injustice should unsettle our use of market norms but the way it unsettles their use may differ depending on the kind of injustice in question.
Regarding the survival case. I think you are right to press on what counts as struggling to survive. It is true that I need a job to be able to afford a place to live and food to eat. But it doesn’t seem plausible to me to describe myself as struggling to survive. I think there is an intuitive distinction here that needs to be drawn out. I am not sure how to do that yet and would welcome any suggestions.

2) Two things here. First, I don’t want to claim that we should never engage in transactions with people who are struggling to survive or the victims of injustice. In the post I was primarily putting pressure on the terms on which we transact and whether the terms that would have been the result of abiding by market norms are appropriate. (And as per the clarification above, there may even be cases in which the market terms are appropriate so long as one responds to the problem in another way.) Second, though, I appreciate the worry that I seem to be impugning interactions that do actually help those in need. And I’d hate
to advocate making others’ lives worse for the sake of keeping clean hands, so
to speak. But I do think it is important to notice that not all ways of helping are morally benign. Suppose I happen upon someone who is on the brink of starving to death. I feed and nurse him back to health but then enslave him for the rest of his life. He may regard himself better off my slave than dead – but this would still be a morally impermissible way of interacting with him.

3) Ebels-Duggan’s account of love is, I think, intended to be broader than the love we have for those we are close to – it is an attitude we are supposed to have generally towards others. I would probably not describe the attitude she has in mind in terms of love but rather in terms of respect. I agree that the language
of sharing ends might be a bit too strong for what I am looking for – regarding
others’ ends as reason giving might be more apt for my purposes. But what I really wanted to draw on from her piece is that taking on the attitude of a benefactor can be dangerous and I think it is often more appropriate to aim to work with others rather than treat them as passive beneficiaries.

4) You are right to point out that in the post I was combining two problems that ought to be distinguished, one about relative circumstances and one about absolute circumstances. The problem of misunderstanding the values in play only obtains if the circumstances of the two parties are significantly different. I’m actually inclined to think, though, that the absolute circumstances matter too and they call out for a particular kind of engagement even among those who are all badly off. I don’t yet have much to say about what kind of engagement this is – it may amount to just a difference in the attitude toward the transaction rather than
the terms. My thinking is still very much in flux about this and I am very interested in what others think.

My response to the above is-
I don't think 'market norms' has a current interpretation in Econ. such that this statement is meaningful- 'it may be that we are permitted to engage in market transactions in the familiar way in the face of pervasive in- justice, but that if we do so we acquire a new source of obligation to work for institutional change.'
This is because there is always a missing market which it is permissible to institute such that the perceived 'pervasive injustice' disappears. Since there is a implicit market for any given market which becomes explicit if information costs change sufficiently and since the information contained in implicit markets themselves get reflected in actual markets (because they contribute to 'derived demand' or 'joint supply') no 'scandal' for 'Market norms' arises- at least for current Economic conceptions of the Market.
Specifically in
1) there are 2 separate issues- information asymmetry (for which there will always be a Welfare improvement through better Mechanism Design) and the problem of meta-preferences (for which there is an Impossibility type result by reason of the underlying impredicativity).
2) the existing Economic analysis of 'repugnancy markets' suggests that Philosophers have no business in this neck of the woods because the ways forward are highly pragmatic and context specific.
3) can be subsumed under the rubric of Ken Binmore's sort of Evolutionary Game Theory or Mechanism Design which aims to' de-Kant' the subject
4) Before speaking of absolute and relative circumstances one needs to understand the difference between what is algorithmically computable and verifiable. After all Markets are a way to compute a certain type of solution. Just saying that they cant compute something else proves nothing because no one can show that the stuff in question is computable at all.
In short, philosophers writing about Markets only do so because they are ignorant of current Market theory. If this weren't the case, they'd be doing Econ. not Philosophy and that sort of thing can become a habit.
The subset of psilosophers writing about Econ who also mention Morality require not just ignorance but also stupidity in order to function. This is because Morality is either Substantive or Procedural or else it is Strategic (i.e. Machiavellian) which is not Moral at all. If it is Substantive, it is empty because even if solutions are verifiable they aren't computable in the life time of the Universe. To suggest otherwise is stupid. If it is Procedural then either it is linked to this world or it isn't. If it is Secular it isn't philosophy but Law & Econ. If it isn't it is ontologically dysphoric and thus merely the Poetry of the untalented which is stupid, but in a pathetic manner, and thus worthy of the attention of this Blog.
The most glaring shortcoming of Jappa's paper- an otherwise estimable example of the ostrich of Humanist Philosophy, escaping the fate of the dodo of Hermeneutic deconstruction, by stupidly sticking its head into the sands of ignorance-  is that she is mistaking a mechanical sort of Social interaction for a considered, rational,' market transaction'.
 She writes- 'I have been puzzlingly lately over the morality of market transactions. My puzzlement has been inspired by Elizabeth Anderson’s “The Ethical Limitations of the Market.” In that piece, Anderson argues that the norms of the marketplace are in tension with the norms of personal and civic relationships in various ways. She uses that tension to argue against the commodification of various goods and activities – some things ought not be available for purchase. I am interested in a somewhat different problem that her framework makes apparent – there are some contexts in which the use of the norms of marketplace is inappropriate because of the circumstances of the potential participants rather than the nature of the items up for exchange.
The central feature of market transactions that Anderson identifies is their impersonality: “The producers and consumers of economic goods are typically strangers. Each party to a market transaction views one’s relation to the other as merely a means to the satisfaction of ends defined independently of the relationship and of the other party’s ends” (Anderson, 182). For anyone with Kantian leanings, and maybe for anyone at all, this language is striking. How could it ever be appropriate for me to view you merely as a means to my ends?
Suppose you are having a garage sale. I come to consider your offerings and spot an attractive vase. You have listed the price as $15 but I judge the vase to be worth only $10 to me. I offer you $10 and you accept. I don’t consider what you would have done with the extra $5 and in that way I am blind to your ends. But I take you to have considered what you valued more – the $10 or the vase – and so I take it that the transaction furthers your ends in some way. And this way of mutually furthering each others’ ends is straightforwardly more efficient than deliberating together about our respective ends. So, I think it is important to distinguish between the blindness towards others ends involved in market transactions and indifference towards those ends. It may be that there are circumstances in which I best attend to your ends by, in a sense, ignoring them.
But there are at least two types of circumstances in which this way of respecting you and your ends is untenable. First, consider someone who has been subjected to injustice. Suppose, for example, I discover that you are having the garage sale because you are being unjustly evicted from your home (your landlord is violating the terms of your lease but you lack the resources to defend yourself.) There are two respects in which this situation should unsettle my use of market norms. First, you lack the control over your resources that you are entitled to have. In this way, your willingness to accept $10 for the vase becomes suspect – it may not reflect the discretion you are entitled to have over your ends. Second, I should worry about being the beneficiary of injustice. Although I am not the perpetrator of the injustice, using the injustice to further my ends taints them.
Before gesturing towards a strategy for dealing with this kind of situation, let me introduce the second type of circumstance in which abiding by the norms of the marketplace does not suffice to respect you and your ends. Suppose that I discover that you are having the garage sale to pay for your child’s chemotherapy. Here the direness of your circumstances should unsettle my use of market norms for two reasons. First, the use of market norms presupposes that I am entitled to discretion about whether to contribute to your ends or not. But I may not be permitted to simply walk away from your plight. Sorting out our duties to aid is, however, a difficult task. I won’t attempt to do that here and, in any case, the second reason market norms are inappropriate in this context does not rely on a view of duties to aid. This second reason focuses on the kinds of ends that are under consideration. There is something grotesque about treating your end of saving your child’s life and my end of decorating my home as equivalently important. But market norms suggest this very comparison – I help you save your child, but only to the extent that this helps me decorate my home, as if these ends were somehow on a par. In this way, using market norms in this context reflects a misunderstanding of the values in play.

Jappa doesn't seem to get that the cases she quotes have to do with either information asymmetry- I don't know why you are selling something, if I did my own Preferences would dictate I give you more money- or with meta-preferences- the preferences I wish I had. Information asymmetry creates arbitrage opportunities and Mechanism Design is internalized by the Free Market. Meta-preferences is bullshit. Once you have the relevant information, if you behave like a scoundrel quoting a stupid reason, you are a stupid scoundrel. Them's your preferences and your statement that you want to want to be nice is worthless.

Jappa is writing about Markets but doesn't know Market theory or else she is strategically choosing to simulate ignorance so as not to do herself out of a job. She writes about coercion but hasn't read Ken Binmore. 
In any case, her analysis fails because her notion of interaction, as applied to the market, could be applied equally well to any social exchange.
Suppose you've seen me a couple of times at the water cooler. Last time I nodded to you, so this time you smile and say 'Hi'. I immediately go to my cubicle and slit my wrists because 'Hai!' in my language signifies extreme disapprobation and woe. If even some random stranger from another Department is saying 'Hai!' to my face then everybody in the firm must hate me and wish for my death. Goodbye cruel world.
Is your saying 'Hi' to me morally wrong?
You may say 'I did nothing wrong. I was just being friendly when I said 'Hi''
My reply is 'you acted with reckless disregard to your duty of care because you did not acquaint yourself with every possible meaning of the phoneme 'Hi'.'
You- 'That was no part of my duty.  As David Lewis has explained, Conventions are Schelling focal point solutions to Co-ordination problems which themselves only arise because information acquisition and processing is costly. Conventions are closely linked to norms. I observed the right convention and thus normatively I have nothing to reproach myself with. I mean, people who come to this country should learn our conventions...'
Me- 'You fucking racist cunt! I knew it! Mum said I should have been blonde!'

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