A Fruity Response
| Peter Klein |
Much of the resistance to markets and “market-like” mechanisms within firms seems to flow from a belief that market exchange is somehow crass, profane, and uninspiring, at least compared to communal or family relationships. An example is the horrified reaction of many bioethicists to economists’ proposals to allow markets for cadaveric organs, particularly kidneys.
I’ve avoided commenting on the organ-market controversy, though I’ve been using it as an example in my introductory courses for years. I have little to add to the excellent discussions by Kaserman and Barnett, Epstein, Mankiw, Becker, etc. (not to mention this observation from Robin Hanson). But I can’t resist pointing to a letter in today’s Wall Street Journal by one Charles Fruit, chairman of the National Kidney Foundation. Responding to Richard Epstein’s earlier op-ed in favor of markets, Mr. Fruit declares himself “among the millions of other ‘high-minded moralists’ who oppose treating life-saving organs as commodities.” Closing his letter with a presumed coup-de-grâce, Fruit adds: “We moralists can only pray that [Epstein’s] proposed market mechanism for the transaction of hearts, lungs, kidneys and other life-saving human organs would work a little better than it does for the nation’s consumers of gasoline.”
Cute. But how exactly should gasoline be allocated to consumers? Gasoline producers should donate supplies of fuel to consumers out of, um, love? A sense of community responsibility? Altruism? The federal government should allocate gasoline, Soviet-style? I await Mr. Fruit’s proposal.
Seriously, like Mr. Fruit’s argument, much of the management literature critical of markets seems to suffer from a lack of attention to comparative institutional analysis. Of course, markets are imperfect. So are hierarchies and hybrids. So, too, I suspect, are loving, communal, family-oriented firms.
Update: Division of Labor gives us this great moment in non-market allocation.