Project

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Moral Market Mechanisms

English title Moral Market Mechanisms
Applicant Mildenberger Carl David
Number 193578
Funding scheme Ambizione
Research institution Ethik-Zentrum Universität Zürich
Institution of higher education University of Zurich - ZH
Main discipline Philosophy
Start/End 01.09.2020 - 31.08.2024
Approved amount 547'433.00
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Keywords (7)

non-standard market; mechanisms; market design; moral status; allocations; market; social institutions

Lay Summary (German)

Lead
Wenn wir über die Bedeutung des Marktes in unsere modernen Gesellschaft sprechen, so tun wir dies üblicherweise so, als wenn es den einen Markt gäbe. Aber sowohl Ökonomen als auch Philosophen, die sich mit dieser Frage auseinandersetzen, irren in dieser Annahme. Der Markt ist nicht nur schwarz oder weiß, sondern bunt, und besteht aus vielen einzelnen Teilmechanismen. Ändern wir diese, so ändert sich auch der moralische Status des Marktes - was wir zu unseren Gunsten einsetzen können.
Lay summary
Das wichtigste Ziel des Projekts ist es, unser Verständnis von dem, was der Markt ist, was er kann und was er moralisch bewirkt durch eine neue Brille zu betrachten. Märkte sind vielfältiger als wir gemeinhin annehmen. Und erst wenn wir ihre Einzelaspekte und -mechanismen - wie z.B. Währung, Marktteilnehmer, Tauschmechanismus - einzeln in den Fokus nehmen, lernen wir sie wirklich kennen. Erst dann verstehen wir, worauf unser Befürworten oder Ablehnen von Märkten in bestimmten Situationen tatsächlich fusst.
Sobald wir sie besser verstanden haben können wir sie dann gezielter einsetzen, um bestimmte gesellschaftliche Probleme zu lösen. Nicht mit einer "one size fits all"-Lösung die den Namen "der Markt" trägt. Sondern mit Schwerpunkten und gezielt designten Mechanismen und Institutionen.
Der gesellschaftliche Nutzen ist enorm. Statt die immer gleichen Kämpfe zwischen Marktfreunden und Marktfeinden auszufechten, lernen wir durch die Vielfältigkeit von Märkten dritte Wege kennen und ermöglichen neue, für alle vorteilhafte Kompromisse.
Direct link to Lay Summary Last update: 24.08.2020

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Abstract

The objective of the project is to examine how we are to normatively evaluate markets which do not function in the way stereotypical markets do. Many real-life markets are not “ideal type” markets as they feature idiosyncratic mechanisms to govern how the exchanging parties interact. For instance, they may feature alternative payment mechanisms (e.g. data used as a currency), alternative exchange mechanisms (e.g. third-party payments in the healthcare sector), or automating mechanisms (e.g. high-frequency trading on financial markets). The project aims to conduct a one-by-one normative analysis of such non-standard market mechanisms. With this analysis in place, i.e. on the basis of a thorough understanding of what these idiosyncratic mechanisms do from a moral perspective, we can develop concrete practical suggestions for designing better markets. Put differently, the project establishes the normative foundations for moral market designHistorically speaking, the moral status of “ideal type” or “textbook” markets has been in the focus of attention. That is to say, friends and foes of the market have shared an idea of what markets are; namely the idea that a market is a nexus of exchange, where many anonymous buyers and sellers exchange mostly homogenous, legal goods and services for money, so that prices form as the result of the largely unregulated interplay of supply and demand. Against the background of this shared idea, praising or blaming markets has mostly been a game of praising and blaming ideal type markets of the kind you find in economic textbooks. In principle, there is nothing wrong with examining the moral status of textbook markets. We have learnt a great deal about the normative properties of markets asking questions like whether the outcomes of such markets on a social level are just (e.g. Rawls 1971; Nozick 1977; Cohen 1995).But the rationale of the project is that our normative picture of markets is incomplete. Many real-life markets feature idiosyncratic mechanisms for letting the exchanging parties interact - or are explicitly designed to differ from ideal type markets. The question of the moral status of such non-textbook markets, i.e. of markets which are not failed ideal type markets, but structurally different because of the idiosyncratic mechanisms they rely on, is of equal importance. The project employs a variety of philosophical and economic methods to extend the normative evaluation of markets to non-textbook markets (e.g. game theoretical modeling, analytic narratives, or conceptual analysis). This is because, while ultimately motivated by normative philosophical concerns, the project has important economic underpinnings. It bases its normative analysis on a thorough positive analysis of real-life markets and recent economic advances in market design. It thus proposes a realist turn in the debate about the moral status of the market.The project’s novel focus on mechanisms, i.e. on those building blocks of markets that together determine how exactly the exchanging parties interact, breaks with the established paradigm to think of markets and their moral limits in terms of spheres. According to that paradigm, there are social spheres in which the market belongs, and others in which it is noxious (Walzer 1983). This is because there allegedly are some goods which just are not to be bought and sold on markets (Anderson 1993; Satz 2010; Sandel 2012). One of the expected results of the project is that it provides a strong challenge to this paradigm. It probes and morally scrutinizes the market’s inner modes of operation, thus putting the emphasis not on what is exchanged, but on how things are exchanged. While many people’s goal has been to fence or enclose the market for normative reasons from the outside, the project shows that we can instead change and develop it from the inside. This is possible once we possess a good analysis of the moral status of the idiosyncratic mechanisms that jointly constitute non-textbook markets.The project promises to create considerable impact. Because of the realist turn and the attack on the established paradigm, its findings will have a theoretical impact to the field of normative philosophy of economics. But also participants in the examined markets (e.g. regulatory agencies) as well as the wider public will be affected (given the prevalence and importance of non-textbook markets for society). The project highlights that there is a third way besides allocating goods via “undesigned” textbook markets on the one hand and centralized allocations (e.g. by the state) on the other hand. We can normatively improve markets by practicing moral market design.
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