People make countless transactions every day. Most take place without any problem, but some are deemed socially unacceptable even when the parties involved want them and both stand to gain. Certain transactions are even viewed with disgust and treated as something the law should forbid.
Are the transactions society finds repugnant genuinely harmful? That is the question posed by the author, the 2012 Nobel laureate in economics and a leading global scholar in market design, in "The Economics of Forbidden Trades." The repugnance he describes is not simply a matter of personal distaste. It refers to situations in which the parties are willing to trade, but third parties looking on insist it should not be allowed and try to stop it.
The book examines a wide range of human affairs, from sex and marriage, surrogacy and adoption to alcohol and drugs, high-interest lending, price spikes during emergencies, blood and plasma, kidney transplants, medical aid in dying and clinical trials. Through numerous cases, it shows that moral intuition and the actual outcomes of transactions do not necessarily line up.
Kidney transplants are a prime example. The United States and most other countries ban the sale of kidneys and permit only donation. That, the author writes, effectively means the price of a kidney has to be zero. Given the shortage of organs available for transplant, why does paying donors draw such strong repugnance? What is the difference between offering compensation to someone who takes on risk and asking that person to take on that risk for nothing? Plasma, by contrast, has a market in which monetary compensation is allowed. Kidneys and plasma are both essential to saving lives, yet the two transactions are viewed differently. The author asks whether that difference truly rests on a consistent moral principle.
Nor do bans necessarily stop transactions. Outlawing trades and markets that people want to take part in, the author notes, can instead push them underground and leave participants dependent on criminals. Rules meant to block transactions end up creating a more dangerous environment.
The book also offers an intriguing account of the hand sanitizer shortage in the early days of the COVID-19 pandemic. When alcohol ran short, whiskey distillers in Kentucky used their existing facilities and raw materials to produce hand sanitizer. High prices are a burden on consumers, but they can also serve as a signal that draws new suppliers into the market. Even so, the author does not present money as the solution to every problem. Kidney exchanges show that market principles can be put to work without money changing hands.
Ultimately the book moves beyond the question of what may be bought and sold to ask what ought to be banned, and whether forbidden transactions can protect people. Facing that question, readers see where morality and markets, freedom and protection collide, and begin to doubt propositions long taken for granted. Repugnance produces prohibitions, but prohibitions do not always protect the community. 32,000 won.
