Values shouldn’t come before empirics. There are many capitalisms and markets, but the empirical record shows market societies generating material, social, and moral advantages over nonmarket alternatives.

STORR: I did. I was very lucky. I’m benefiting from the inequalities in a lot of ways. Certainly in a market society, though, some people will have more and others will have less. It turns out, though, that when you look at the evidence, inequality is way worse in nonmarket societies than it is in market societies, and for a lot of reasons. One, it’s much better to be poor in a market society than in a nonmarket society. The poorest in market societies are better off than the poorest in nonmarket societies.

In fact, the poorest in some market societies—like, say, the U.S.—are much better than the richest in some nonmarket societies. You can name a number of nonmarket, less-developed countries. Even if inequality in the U.S. is as bad as they say, it’s not the social problem that people seem to think it is because it’s better to be poor here than it is to be poor anywhere else. That’s one reason.

Another reason, though, is that it turns out market societies are more mobile than nonmarket societies. In market societies, the rich become poor and the poor can become rich. That’s a feature of market societies. That kind of mobility is less prevalent and less present in nonmarket societies. Again, even if inequality was a problem that was as bad as people thought it was in market societies, the social costs associated with that, the social concerns associated with that, are mitigated by the fact that in market societies the rich can become poor and the poor can become rich.

But it turns out that when you look at the evidence, that economic inequality is actually worse in nonmarket societies. You look at things like Gini coefficients that measure the gap between the rich and the poor in various countries, and nonmarket societies are much more unequal. That said, I think that’d be my first pushback. I do think people are annoyed with inequality, but mostly—and this goes back to my earlier question—I think that they’re annoyed when they believe that the people on the top didn’t get there by their own efforts. They didn’t really earn what they have. And they believe that the poorest amongst us are all artificially kept down.

I know that it gets expressed as an anger about inequality, but I really think when you examine it, when you unpack it, it’s really a concern about legitimacy. It’s maybe a concern about transparency. Most of us, most people are okay with LeBron James being a millionaire. In fact, many will say that he’s probably underpaid, that LeBron James isn’t rich enough, given his talents and what he’s managed to accomplish. We’re less comfortable with the CEO who led a company into bankruptcy getting the golden parachute.

We’re not comfortable with the wealthy buying privilege or political access, but that’s not a concern with inequality per se. That’s a concern with the legitimacy of the process that generated the wealth in the first place, or a concern about how transparent our systems are and the capacity and ability of people to take advantage of the opportunities for rent-seeking and cronyism and privilege. That’s a different sort of thing, to my mind, and I think that’s much more what’s behind when people decry inequality.

KLUTSEY: This also goes back to your earlier point. How much of this is just a misunderstanding of terms, then? You point out the importance of storytelling and ethics in your work. How do we use better rhetoric to change this misunderstanding, if you have any thoughts on that?

STORR: I don’t know that it’s rhetoric as much as it’s inconsistency. Let’s say you claim to be a liberal; you claim to be pro-market, and then you’re not as hard as you maybe should be on cronyism. I think people observe that and they go, “Well, maybe you’re not really a liberal.” But they also go, “Well, maybe this system, this market thing that you’re defending, isn’t really this beautiful space that you’re talking about. Maybe it’s something that is corrupt in the ways that we obviously see this cronyism is corrupt.”

I don’t know that that’s a rhetorical problem. I think it’s a consistency of applying one’s ideals. If someone’s going to defend markets, that means you defend the markets against people who would use regulation to stifle markets, but you also defend markets against people who would use government to give them unfair advantages in markets. If you do one and not the other, then I think it makes it really hard for people to disentangle, on the one hand, what the market system is, and what it delivers and what it does, from the instantiations of the market system that they see that are rife with privilege and cronyism and all these other things.

Markets and Civil Society

KLUTSEY: Really interesting. This is a quote from your book, and I’m referring to Do Markets Corrupt Our Morals? It says, “Our market relationships can develop into meaningful social relationships that can sometimes become deeper than our familial connections. Our market activities also bring us into fellowship with people across the globe and across ethnicities and nationalities that we might not otherwise encounter. The market thus makes it possible for diverse individuals to peacefully reconcile their plans, and so, create favorable conditions for feelings of friendship.”

This is really interesting because we’ve been talking a lot about how we engage in civil discourse and how we foster civic friendships and relationships. Can you walk us through how markets do this?

STORR: Yes. This is an observation we make in our book, but it’s not one that’s unique to us. It’s a feature of markets that has been recognized for a long time. Adam Smith talks about how people working in the same trade, because of their consistent interactions with one another in that trade, can develop feelings of friendship that can mirror brotherhoods. He made that observation.

I think it comes down to the fact that we’re social beings. One of the things that markets do is they bring people together. Markets throw people—often with similar backgrounds, similar skills—in spaces where they work with one another, and because we’re social beings, that frequent interaction often develops into more than just a commercial relationship. [Mark] Granovetter talks about our interactions in the market becoming overlaid with social content.

Just think about buying a house. If you’ve bought a house, you know you end up spending a ton of time with your realtor, not just talking about the houses that you might want or not, but you end up having exchanges about your family and your goals and your plans for the future, and those lead into conversations about his or her family and her goals and her future. That social aspect is a natural consequence of the underlying market interactions. I think that’s the way that markets have been and can be social spaces.

KLUTSEY: That’s interesting. As I read Tyler Cowen’s book The Complacent Class, and also recently Robert Talisse’s book Overdoing Democracy, they both talk about this phenomenon of sorting, whereby we’re increasingly putting ourselves into geographical spaces and virtual groups, and putting ourselves into places that we’re very comfortable with, which is good. The market provides opportunities for us to match ourselves in ways that we prefer.

At the same time, we’ve also become more segregated and more polarized as a result, whereby we consider those who are not part of our groups negatively sometimes. Is this just part of human nature? Is this something the market system fosters? Or is it just that we are tribal as individuals and as people, and this is just one of the things that results from that?

STORR: Have we become more segregated and polarized? I guess I think just the opposite. As segregated and polarized as we are today, could we be less segregated and polarized than we were 50 years ago, 200 years ago—pick your time period? Of course, we’re sorting ourselves geographically and virtually into groups that we’re more comfortable with, and human nature maybe is to be comfortable with people who look like us and think like us and like the same things. I think that’s a part of human nature. I think that’s probably always been true.

But one of the things I think is underappreciated about the social changes that have accompanied the spread of markets and the growth of markets is that they’ve changed what we mean when we say someone looks like us or thinks like us or likes the same things as us. That used to mean—50 years ago, 200 years ago, what have you—that used to mean that the person is from my family or maybe from my village or maybe shares the same religion or race.

Now that means something entirely different. Now that means people who are fans of the Lakers or people who like Star Wars or people who listen to Beyoncé or people who studied sociology in college or people who listen to this podcast. These groupings cut against and cut across racial and ethnic and national, religious and even political lines. And these groupings aren’t rigid. That’s a different kind of segregation and polarization than the kind that we were worried about in the past. It’s a kind of sorting that’s less parochial and less problematic.

Markets Make Us Moral

KLUTSEY: Yeah. In fact, in Robert Talisse’s book, he talks about how negative attitudes towards interparty marriages are much higher now than interracial or interfaith or what have you, which is really interesting and does go to your point. Now, contrary to market critics, you maintain that the markets are moral spaces and that markets do make us moral. Can you elaborate on this? How do markets make us moral?

STORR: In our book, Ginny and I, as you say, find that people in market societies will tend to be more moral. By that we mean more altruistic, less materialistic, less corrupt, more likely to be cosmopolitan, more likely to be tolerant of others. That’s what we mean by that, as well as more trusting and more trustworthy. So we have a particular kind of conception of morality that’s going on there, and we find that market societies are positively associated with measures of morality along those margins.

Then the question is, what causes market societies to outperform nonmarket societies on these measures of morality? We argue that there’s two features of markets that allow them to act as moral training grounds in this way. The first is that market interactions are opportunities to learn about others, and so every trade—every single trade—is an opportunity to cheat. It’s an opportunity for the person selling the good to lie about the thing that they’re selling you and trick you into overpaying for something that they’re trying to deliver. It’s an opportunity for the person paying for the good to promise to pay but to not really pay. Every single market transaction gives us that opportunity.

When a market interaction goes through, when it’s successful, we learn something about the person we’re dealing with. If they cheat us, we learn that they’re a cheat. If they don’t cheat us, we learn that, well, at least in this interaction, they’ve been an honest broker. If we have multiple interactions with them, we might learn that, actually, I know something about this person’s character because given their ability to cheat me multiple times, they didn’t, so I know something about you now.

The same is true in working with someone. If you’re in an office space with someone, or you’re in a factory with someone, you know, well, this is the kind of person that’s lazy, or this is the kind of person that shirks. This is the kind of person when they’re stressed, they’re mean to their fellows. Or, this is the kind of person that handles stress in a way that I find appealing, or what have you. You learn that this is the kind of person with integrity or not. So markets in a lot of ways reveal our moral characters. To the extent that we want to be associated with good people and don’t want to be associated with bad people, markets give us an opportunity to sort those kinds of people out. That’s one way that markets act as moral training grounds.

The other way that markets act as moral training grounds is that they not only reveal character, but they give us an opportunity to reward people who behave in ways that we morally approve of and to punish people who behave in ways that we disapprove of. So the trustworthy mechanic earns a premium. We’re willing to go to them even though they cost a little bit more. The trustworthy contractor earns a premium. We’re willing to pay the trustworthy contractor more than we’re willing to pay the one that cheated us or the one that cheated our friend or the one that, based on the Yelp reviews, seems to have cheated multiple people. The conscientious babysitter makes more money.

Markets give us the ability to reward good behavior, and so markets incentivize good behavior. Because human beings are actually pretty good at detecting whether or not somebody’s being fraudulently nice or is genuinely nice, it actually over time trains us into being nicer people. I think those are the two ways that markets act as moral training grounds, and that that’s why we think at least you observe market societies outperforming nonmarket societies when you look at these measures of morality.

Restricting Markets Has Moral Consequences

KLUTSEY: Now, given the level of polarization that we see in our society—and we talked about this earlier, that they’re not necessarily along certain lines that they were before, but now it’s between parties and things like that—what are your thoughts on how we might leverage markets to help us to depolarize?

STORR: One of the implications of the argument that, perhaps, I’ve been making and that Ginny and I make in the book is that when we limit markets, that has—and this part has always been recognized—that has economic consequences, right? But if we’re right that markets are spaces that promote morality, and a part of morality might be being more pluralistic or being more tolerant or being more cosmopolitan, then if what we’re saying is correct, limiting markets also has a moral consequence.

The greater the extent that markets are limited, the less likely that it’s going to allow for the cultivation of these kinds of positive virtues. If we’re correct that markets make us more tolerant, then limiting markets is actually cutting against pluralism, for instance. It’s actually pushing us to be more pluralistically simple, so that might not be the only way.

To stick with the implications of the book, one of the more natural implications would be to say, “Well, if we give markets more space and we limit markets less, if what we’re saying about markets promoting morality, including pluralism, is correct, then markets will likely cultivate those and give us spaces to cultivate those kinds of values.” I think that’s the way I would answer that kind of question.

KLUTSEY: Interesting, though, because I’m thinking that if we are to foster more pluralism, and there are people who think that the market is excessive in certain areas and that we ought to cut back, by accommodating those views, we will have to in a way limit the market. Hence, all the values and the morals that you’re talking about might be limited in some way. By fostering pluralism, we, in turn, might get less pluralism—that is, if part of pluralism means that we recalibrate and reduce how much of the market system we see in our lives.

STORR: Yeah. To put it in a sound bite, there are not just economic but moral consequences to restricting markets. We might decide that we want to pay those consequences, but we should be mindful of them as we go about thinking about doing that. We can leave for another time, another debate, whether or not pluralism in any way is consistent with limiting markets, if by markets what we mean is individuals making choices about how they interact with one another.

Why Study Markets?

KLUTSEY: Switching gears a little bit, what motivated you to study markets? What is it about your background or interests that got you into seeking to understand more about markets and how they are formulated?

STORR: There are two reasons, and they pushed at it from opposite directions. I won’t say the first, but the first one I’ll talk about—that I’m an economist by training, and I became an economist because I wanted to essentially understand why some people were poor. That was my motivation for becoming an economist. Then you take economics, and one of the things that you quickly discover is that the economics in the textbook and the way that economics talks about markets, they describe a market that doesn’t seem to exist, that’s unrecognizable to anybody who’s actually experienced markets.

They describe this cold, sterile, efficient space populated by hyperrational beings who are concerned only with maximizing utility, something like that. You look at that and you go, “I don’t know who these people are, and I don’t know what this space is.” One of the things that has led me to spend a lot of my career looking at markets is because I wanted to spend time trying to understand how it is that individuals actually experience markets, as opposed to this cold feature, discussion and model of a market that you see in economics.

That was one reason that made me interested in markets. The other reason is that there was this real disconnect between . . . How should I put this? When I was younger, I thought of markets as these amazing spaces where buying and selling took place and you could get what you wanted. That was awesome and that was cool, and I liked that about markets.

Then I went through this period where I read a lot of Marx and I was enamored with Marx, and he obviously had a really negative view of markets. Then I spent some time looking at critiques of Marxism and became convinced that his solution to the problem wasn’t viable. That created for me an intellectual dilemma, which is that it made it essential for me to try to understand how markets actually worked—if it was the kind of early view of markets as spaces where we get what we want, we get money at least, or the kind of Marxist view that markets are these spaces that are alienating and exploitative. Is that the true market? Or is the market something else? So that was the second reason that the market has become a central focus of my work.

KLUTSEY: So it came as a result of curiosity?

STORR: Yeah.

The Culture of Markets

KLUTSEY: Wonderful. You’ve done a lot of work on culture as well. I was wondering whether you’d like to reflect a little bit on the culture of markets, beyond what we’ve talked about.

STORR: I mentioned the more narrow reason that when economists do talk about the market, they talk about a market that’s unrecognizable. But one of the things that struck me as being true, particularly as somebody who moved from the Bahamas and started working in the United States, is how different markets are in different parts of the world. That difference to me often had less to do with there being different rules around the markets or different institutional structures governing the markets. Private property rules, all those kinds of features that are critical for markets exist in a lot of places in the world in more or less perfect ways.

Nonetheless, markets look very different. They have different sounds and colors. The people in those markets seem to be viewing different kinds of activities as being successful or speaking to their success, because as an entrepreneur, different kinds of practices as being legitimate or illegitimate, or different kinds of interactions as being important or unimportant, or different kinds of ceremonies around market interactions as being critical or not critical.

Those differences were striking to me, and, again, particularly as somebody who grew up in one place and then moved to another, those were very striking. I wanted to understand that difference and to make sense of that difference. I ended up in that work spending a lot of time with the work of Max Weber, who wrote what I think is both—it’s a flawed book about the culture of markets, but I think it’s also an important book about the culture of markets. It’s The Protestant Ethic and the Spirit of Capitalism.

He makes in there a particular observation that I think is critically important. It’s that there are a variety of—he calls it “capitalisms”—but, essentially, there are a variety of markets, and each market is animated by a particular spirit or set of spirits. There’s a particular kind of ethos or value system or culture that colors the different markets that we observe. My interest was motivated by that sort of experience, and then the approach that I’ve taken to looking at it has been very Weberian in that way. So, how do you look, how do you discover, how do you find the economic spirits that are actually animating economic life in particular places?

KLUTSEY: How do we distinguish between the right kind of culture around markets—I don’t know if right and wrong are the right terms to use, but the market culture that fosters prosperity—how do we distinguish those things if we’re studying the culture of markets across the board?

STORR: I’m actually very resistant and critical of talking in terms of the right culture or wrong culture. A lot of economists who talk about the relationship between culture and economy do speak in those kinds of terms. They talk as if there’s certain kinds of cultural tools that are useful for market life and there’s certain kinds that are not useful for market life or whatever, or there’s good and bad cultures. One economist actually describes cultures as being progress-prone or progress-resistant.

I don’t agree with that. The reason I don’t agree with that way of thinking is because I don’t think of culture as a tool. Culture doesn’t have this feature as a toolkit. It’s not this thing that we carry with us, and then when we need a particular cultural trait or something like that, we pull it out and use it, and the thing we pull out might be good or bad for the task at hand. That’s not the way culture works. That’s not the way that—it’s somebody you know well belonged to a certain culture, or he’s been enculturated into a certain culture. That’s not how it travels with us. It’s essentially ways that we see the world and ways that we make sense of the world.

In that vein, I don’t think it makes sense to talk about progress-prone and progress-resistant cultures. I think all cultures have aspects of them, I guess, that one might say seem to be progress-resistant and aspects that seem to promote creativity, innovation and whatever. I think all cultures have that capacity because all human beings have those capacities. What that looks like in particular places, though, is going to differ based on the cultures in those different places.

What culture speaks to isn’t the capacity of peoples being able to develop or not develop. What culture speaks to is the way, in some sense, development is going to look and the way they are going to think about that process and the way that they’re going to pursue that process and what have you. It’s less about what a culture can and can’t do. It’s much more about the way that people in a particular culture are going to approach that same thing versus the way people in another culture might approach that same thing, and trying to understand where that comes from.

KLUTSEY: We can analyze different cultures, but the thing that we ought not do is to compare them—good versus bad, that kind of thing.

STORR: Well, comparing them is fine. It’s scoring them that’s the problem. We shouldn’t try to total up the pro-market or the pro-democracy or the pro-whatever aspects of a culture, and total up the negative-market or negative-democracy or negative-whatever aspects of a culture, and then say, “This culture’s good,” or “This culture’s bad.” That doesn’t say you can’t compare, but it says you shouldn’t treat cultural analysis as if you’re checking boxes.