The Proper Limits of the Market: Communitarians vs. Economists

Many communitarians deplore the expansion of the market beyond its traditional confines, turning our market economy into a market society. We should go beyond the narrow view of pure economic rationality, as market expansion may cause repugnance and crowd out morality and intrinsic motivation. This paper extends the traditional economic analysis to incorporate such wider effects. This does not provide a general case for or against the market expansion. However, in combination with the first welfare theorem in economics and the principle of treating a dollar as a dollar in specific issues, it provides a framework to estimate the relevant social costs and benefits in a more adequate way, providing a better guide for welfare maximization in public policy. Applying to specific issues, the paper finds that legalizing kidney sale is likely to be welfare improving in most cases, while possible inadequate blood supply in retaining voluntary and nonmonetary donation could be solved by education on the point that frequent blood donation is good for the donors. As a society progresses in income, education, liberalism, etc., the scope of using the market may be expanded with general acceptance. Corresponding, public policy may moves towards larger scope for the market.