Three Big Questions about Obfuscated Exchange

I was very lucky to have three insightful responses to my essay from three colleagues who have thought deeply about the nature of exchange. These thoughts should prove helpful in shaping my continuing research agenda on exchange taboos and how people obfuscate them. Overall, the comments fall into three broad categories: What is the nature of a taboo on exchange?

What counts as an obfuscation of a taboo? And what are the impacts of obfuscation?

 

What Is an Exchange Taboo?

In Michael Munger’s response, he suggests that “most of the time, general objections to market exchange, for any commodity whatsoever, are misplaced objections to the pre-existing (possibly unjust, and in any case unequal) bargaining power of the participants in the exchange.”^[1] For instance, if Munger were lost in the desert and saw me off-road driving in my Sparklett’s water truck, I would seem like a jerk were I to demand he sell me his house in exchange for saving his life by providing him with a jug of water and a ride to the nearest bus station. In explicating the nature of exchange taboos (but not in his normative attitude towards them), Munger has a lot in common with many contemporary moral philosophers who have engaged the issue. This type of objection is what Michael Sandel calls the argument from “coercion,” by which he means coercion by desperate circumstances.^[2] The emphasis on fairness and equality underlying the moral intuition against coercive exchange is typical of liberal moral philosophy.

In contrast, Alex Tabarrok provides a radically different conception of moral conceptions of exchange grounded in visceral disgust (“the lizard brain”) at trading in sex or human tissues. This conception follows what Sandel calls the argument from “corruption,” by which he means corrupting something’s nature. Some things simply strike people as wrong to sell because they are sacred. Some moral philosophers, such as Debra Satz, working within what social scientists now call the Western Educated Industrialized Rich and Democratic moral framework, reluctantly acknowledge the existence of corruption as a matter of folk ethics but consider it a normative embarrassment and so either reject corruption norms or reconceptualize them as coercion norms.^[3] In the nomenclature of Jonathan Haidt’s moral foundations theory, Munger is framing exchange taboos in terms of care/harm or fairness/cheating and Tabarrok is framing them as sanctity/purity.^[4] Together they engage in several of Haidt’s moral foundations as well as both parts of Sandel’s coercion/corruption framework.

I am not arguing that coercion is important and corruption unimportant, or vice versa. Rather both are true for different perceptions, of different taboos, at different times. For instance, Americans who oppose payday loans think about them as a coercion issue: are desperate borrowers getting ripped off? However Thomist and Sharia contemplations of usury give much more emphasis to questions of whether interest is wrong by nature as a sort of alchemy that conjures profit for the lender without really doing anything for it. Likewise, one of the reasons Das Kapital is so hard to read is that we come to the text expecting Marx to be basically social scientific, but his writing about the M-C-M cycle, the labor theory of value, and especially his technical meaning of “exploitation” are every bit as Aristotelian as anything in Summa Theologica.^[5]

Tabarrok adds a further issue, which is to note that if exchange taboos are those involving the commensuration of sacred and profane, then sacred-sacred exchanges may be legitimate. Tabarrok gives the example of kidney swaps, which are so legitimate that Al Roth and Lloyd Shapley won a Nobel Prize for work facilitating these exchanges. Likewise, anthropologists frequently document special forms of money or prestige goods. David Graeber refers to these as “social currencies” since they often are only meant to be commensurable with such weighty issues as marriages and wrongful death torts, but not for more mundane exchanges involving daily necessities.^[6] Most famously, the Tiv people traditionally exchanged brass rods, tugudu cloth, cattle, and slaves for one another and exchanged food, garden tools, and kitchen ware for one another, but to exchange brass rods for yams would be shameful.^[7] Just as Tabarrok would expect, the Tiv can trade sacred for sacred and profane for profane, but not sacred for profane.

However, in our own culture we can see moral opprobrium at trading sacred for sacred. For instance, it was an obvious bit of mockery when a Missouri state legislator introduced a bill requiring that lobbyists legally disclose when they had sex with a lawmaker.^[8] Likewise, one of the few offenses severe enough to justify stripping tenure from judges and professors is if they trade sex for legal judgments or grades. Nor is it even necessarily acceptable to trade a sacred good for a sacred good in the same category, as left-wing activists discovered in 2000 when prosecutors thwarted their plans to swap votes between Nader supporters in swing states and Gore supporters in blue states. Ultimately, what makes an exchange morally disreputable defies simple explanation and is not reducible to a single heuristic like exploiting the vulnerable or commensuration of sacred with profane.

 

What Is an Obfuscation?

Alan Fiske’s remarks center on relational models theory, his influential typology of human relationships and the transfers that accompany them. He argues that exchange obfuscation in my sense often consists of framing exchanges that are essentially market pricing as if they were one of the three types of gift exchange, especially communal sharing or authority ranking. This is a particularly apt way to frame my model of gift exchange and draws our attention to the fact that there are different forms of gift exchange varying in terms of intimacy and equality.

More profoundly, Alan notes that we not only obfuscate disreputable market relations as if they were gifts but can obfuscate disreputable gifts as market relations (or other types of gifts). Although my research emphasizes cases where a society balks at commodification, Alan is right to note that there are other cases when we positively demand it. The sine ira et studio imperative of impartiality is often operationalized in our culture through demanding market pricing and/or excluding intimate relations. So some objects taken by the police or an insurance company but where a citizen is the residual claimant may be sold at auction to avoid any appearance of principal-agent problems that could be alleged through an in-house assessor. And if a company holds a promotional contest for its customers, it typically excludes those customers who are also employees (an authority ranking relationship) or their close relatives (a communal sharing relationship). More broadly, it is possible to view the overarching theme of modernity as legal-rationality, of which market pricing is the culmination, crowding out particularistic loyalties.^[9] We see examples of this in my extended case of Lyndon Johnson, who in principle purchased his radio station, but who in fact used political connections to clear out other bidders and otherwise facilitate his business.^[10] Of course we do not see a preference for markets only in ensuring impartiality. For instance, in many cultures rough trade (sexually dominant straight-identifying male prostitutes) insist on payment for sex rather than gift exchange in order to assert their heterosexuality.^[11]

Alan’s well-taken point is that there is a fine line between obfuscation and polite pretense. For instance, letters between Roman emperors and officials typically show the officials demonstrating sycophancy consistent with their authority ranking relationship, but with the emperor magnanimously addressing the official as if their relationship were communal sharing.^[12] We can view this conflation of authority ranking and communal sharing as mere etiquette. However, this undersells the importance of the pretense, which is revealed by the glee with which moralists, cynics, and comics shatter it, as in Juvenal’s Satire #5.

A related issue is how to demarcate obfuscation versus sincere reconceptualization. Tabarrok cites a vignette experiment by McGraw and Tetlock, which is also one of my favorites, showing that respondents preferred obfuscated exchange between roommates wherein one cleans and the other assumes responsibility for a utility bill.^[13] Tabarrok argues against an etic view of the arrangement as exchange (of money for domestic labor) and for taking seriously the emic view of this as roommate’s sharing responsibilities. In this respect Tabarrok closely echoes Zelizer, who argues that her “relational work” perspective provides a third way between “nothing but” economic reductionism and “hostile worlds” moralism.^[14] This might very well be the best way to describe roommates dividing up responsibilities, but it seems almost naive for describing the wink-nudge of LBJ making legislative supplicants buy ads reaching customers in the wrong market, or of websites like “Seeking Arrangements” that are explicitly designed to facilitate transactional sex.

Alan Fiske provides a useful operational definition for obfuscation as exchanges where there is not explicit common knowledge that an exchange is occurring. That is, we can say there is obfuscation if Smith gives Jones a sacred good, and Jones gives Smith a profane good, but Smith and Jones never tell each other that the sacred and profane goods are being exchanged for each other. Of course Tabarrok might argue that this is not necessarily obfuscation, but perhaps more like Zelizer’s relational work. And so we can add a further criteria that we can call it obfuscation if there is shared knowledge. That is, Smith knows he traded his sacred good for Jones’s profane good, and Jones knows he traded his profane good for Smith’s sacred good. This model of obfuscation as shared but not common knowledge that an exchange is occurring closely resembles Bourdieu’s argument that gifts simultaneously follow an explicit logic of generosity and an equally important sublimated logic of exchange.^[15] Of course to sublimate a logic is to render it less comprehensible, which has implications for the last issue raised by the responses.

 

What Are the Effects of Obfuscation?

Munger’s response notes that from the economic perspective, obfuscation is a transaction cost and this deadweight loss will further reduce the already meager producer surplus of the humble people driven by desperation to disreputable trade. I will take the issues of transaction costs and surplus separately. First, Munger is correct that from the perspective of economics, obfuscation creates transaction cost. Indeed this is an understatement since, as the term implies, obfuscation creates a fairly radical break from the assumption of perfect information. The entire point of obfuscation is to render exchange less rationally calculable, which by nature means it will be less efficient when conceptualized as a market. Even when we see market institutions spring up to facilitate obfuscated transactions, they will tend to downplay (implicit) prices. Seeking Arrangements may be explicit about the mercenary intent of its users, but its user interface still basically resembles that of OK Cupid and lacks a “sort by price (lowest -> highest)” option that one would find on almost any commercial website. Nor could it; Seeking Arrangements profiles do not have prices because it is a website for obfuscated exchange. (In contrast, RentBoy.com profiles had explicit prices, which is one of the reasons the federal government shut it down). One of the testable implications of this property is that obfuscated (real or experimental) markets should have greater market failure and price dispersion than otherwise similar unobfuscated (real or experimental) markets.

Munger’s argument that transaction costs reduce surplus is more debatable. Obviously Munger is correct as a matter of arithmetic if we assume that there would be gains from trade but gains are reduced or trades are foregone because of transaction costs. However, there are problems with this conceptualization. The most obvious is that there are externalities, as in Tabarrok’s argument that we ought to prohibit political corruption or murder for hire. One answer to this problem is the principle that “if you may do it for free, you may do it for money.”^[16] which solves the problem of hiring assassins since uncompensated murder is also illegal, but it seems to allow for political corruption, since voting for a candidate for free is legal, and once elected that candidate can pass my preferred legislation, also for free. One can argue that policy is a Tullock lottery anyway, so let’s just make it an open one, but suffice it to say that this would be an unpopular position.

Moreover, to prohibit open exchange can transform how the system operates. To use Munger’s example, if we raise the monitoring costs to vote-buying, we will have market failure in the vote-buying market (which is to say, honest elections). From one perspective, this forgoes the producer surplus of the political machine client who would like to sell his vote to the ward boss.^[17] From another perspective, though, this facilitates a transition from patronage politics to the kind of ideological politics characteristic of advanced democracies. And this isn’t even to get into such details as that in practice vote-buying income often doesn’t accrue to the people whose votes are sold, but to the caciques, tribunes, or bosses who sell them.^[18]

More radically, establishing a price ceiling of zero for things that simply cannot be paid for can benefit parties through Schelling’s power of constraint. In particular, under some circumstances this can benefit the more desperate party. For instance, I could benefit by paying my life savings to kidnappers, but I benefit even more if the state suppresses the ransom market and so I am not kidnapped in the first place. One of the problems with the Coase Theorem is that it assumes that externalities are exogenous rather than generated as a sort of extortion racket.^[19] Obviously this doesn’t apply to Munger’s examples of peasants who might like to sell corneas, or kidneys, or sex, but it could apply to debt slavery, which is a severe and persistent problem throughout history and across cultures for peasants.

Finally, I think Alan Fiske is right to emphasize that obfuscation is a special case of reframing relationships and to note that doing so preserves options available in the alternative type of relationship. However, I would note that it also forecloses opportunities. To obfuscate an exchange or otherwise reframe a relationship gives the set of transfers both the possibilities and constraints characteristic of the purported relationship form and reduces those of the sublimated form. Obfuscating a disreputable exchange may open up possibilities, such as (partial) moral legitimacy, but it can also foreclose possibilities, such as calculability and arms-length transactions. For instance, transactional sex (i.e., a sugar daddy / sugar baby relationship) can be understood as obfuscated prostitution, but only certain types of prostitution: a girlfriend experience, but not an hour or a sex act sold a la carte. And to bribe a politician or radio programmer through gift exchange inherently makes the interaction less calculable and certain than would be an explicit quid pro quo. So to obfuscate an exchange is not merely to accomplish a disreputable exchange with less moral stigma, but it is also to partially transform an exchange into another type of relationship, with all that implies.