my post on his first lecture) has dealt with how the government can mimick the market:
“It’s the idea that government should try to replicate the outcomes that competitive markets would produce if all goods and resources were properly priced.”
Sandel descrbed how trying to price goods that can’t be priced – accurately or morally – often results in dysfunctional outcomes::
“Consider environmental policy. If air and water are “free” - that is unpriced - then companies and consumers will produce too much pollution. So government’s job is to set regulations to correct for this market failure - through cap and trade, for example, or a carbon tax.
To do this, the policymakers have to ask how much pollution is too much. And to answer this question, they have to figure out what value to place on clean air, clean water, and the resulting health benefits. Here’s where “market-mimicking governance” comes into play. In order to make these calculations, regulators often use “cost-benefit analysis”: they place a monetary value on the benefits of clean air and water, compare them with the costs, and set regulations accordingly.”
It sounds perfectly sensible. What’s wrong with comparing the costs and benefits of government regulation? Nothing - if by comparing costs and benefits you simply mean assessing the advantages and disadvantages of a given policy.
But cost-benefit analysis aspires to scientific rigour. It tries to assign a monetary value to costs and benefits. It tries to mimic the market. And here’s where it goes wrong. Many of the benefits of public policy involve values that can’t be captured in monetary terms - most notably, the value of human life…
Monetising all costs and benefits makes for a spurious science that shifts decision-making from democratic politics to technocrats.”
As with Sandel’s first lecture, I’d make the point that these concerns apply within organisations too. There is always going to be a desire to value things like social capital – firstly, because they are so important, and secondly, as a result of the human need to manage and control (for example, as a result of the oft quoted but in my view, erroneous belief that ‘you can only manage what you can measure’).
But I don’t think this is appropriate. And I think Sandel has nicely expressed why.
Photo credit: AntonyB