The Cognitive Corruption of Markets

Research

The Cognitive Corruption of Markets

Abstract

Markets are often portrayed as amoral realms of self-interest, yet empirical evidence shows that people in market societies consistently act morally. What explains the discrepancy? I argue that market participants tend to exhibit behaviors that track moral principles (respect, reciprocity, and self-respect), which constitute the minimal morality of markets. However, through a process of institutionalized oblivion, these principles are internalized and automatized to ensure robust cooperation, rendering them invisible. This is the cognitive corruption of markets: the misperception that markets are amoral realms of self-interest. Failing to recognize the minimal morality of markets may provoke cynical responses that undermine trust, moralistic reforms that fail to address the misperception, or overmoralistic transformations that dismantle the institutions fostering moral behavior. These responses misdiagnose an epistemic problem as a moral one, creating the risk of transforming cognitive corruption into moral corruption.

Keywords:

  • Keyword: markets
  • Keyword: cognitive corruption
  • Keyword: institutionalized oblivion
  • Keyword: moral corruption
  • Keyword: self-interest

How to Cite:

Juarez-Garcia, M., (2026) “The Cognitive Corruption of Markets”, Political Philosophy 3(2). doi: https://doi.org/10.16995/pp.27804

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I. MARKETS CORRUPT OUR MORALS (BUT NOT LIKE YOU THINK)

It is commonplace to think of markets as amoral realms of self-interest. Some celebrate markets as a “morally free zone”1 in which the pursuit of self-interest is the main engine of wealth creation.2 While recognizing their material benefits, critics worry that the cost of markets’ efficiency is moral corruption. As G.A. Cohen puts it, a market relation “promotes ‘efficiency,’ but it also corrupts humanity. Business turns human producers into commodities.”3 The concern comes from the observation that markets have the potential to transform relationships shaped by moral values into relations exclusively driven by the pursuit of self-interest.4

Empirical research complicates this dialectic. Evidence shows that market societies (characterized by strong property rights and contract enforcement) correlate with frequent moral behaviors—even if not moral motivations. In a cross-cultural study, Joseph Henrich et al. underline the high levels of prosocial behaviors in societies that heavily rely on daily market exchange.5 Delia Baldassarri provides further evidence that market societies foster altruism and other cooperative behaviors.6 Some scholars go even further and assert that individualism increases charitable giving.7 Virgil Storr and Ginny Choi collect some of these findings and conclude that market societies do not corrupt our morals. In market societies, people tend to be more altruistic, less materialistic, less inclined to offer bribes, more inclusive, and more trustworthy than those living without market institutions.8 While the full empirical picture has been contested, the convergent evidence that market societies foster prosocial behaviors (regardless of motivations) across methodologies and disciplines is strong.9 This body of evidence appears to establish a prima facie case that market societies foster patterns of prosocial behavior. Some might even think that these findings end the debate: actual markets foster moral behaviors. Instead, I suggest that this empirical research poses a new puzzle: if markets consistently foster moral behavior, why are they so often perceived as morally corrupting?

The answer, I argue, is that markets do corrupt our morals, but not in the way we typically think. Corruption is historically an ambiguous term, which leads to imprecise controversies.10 To clarify the debate about the corrupting nature of markets, consider the following distinctions. Critics of markets typically understand corruption as moral corruption: the deterioration of moral beliefs that tends to lead to immoral behavior. By contrast, Storr and Choi investigate behavioral corruption: the deterioration of moral conduct.11 While their findings show little evidence of behavioral corruption in market societies, Storr and Choi do not fully address the critics’ concerns since moral corruption is fundamentally about moral beliefs. This epistemic dimension is untouched by the evidence in support of good behavior in market societies. Instead, the puzzle that emerges from the mismatch between the perception of immorality and moral behaviors points toward a sort of cognitive corruption: the deterioration of one’s beliefs about one’s moral behavior.12 I argue that markets do not directly lead to moral corruption or behavioral corruption; rather, they corrupt by rendering market participants’ moral actions opaque to themselves.

This article addresses the curious epistemology required for market institutions to work efficiently. Cognitive corruption is a feature and a bug of markets. Participants internalize the institutional rules of markets (respect for others’ decisions, reciprocity, and self-respect), which grounds cooperative behaviors but obscures their moral dimension. At the same time, market participants remain attentive to their interests, which shapes the perception that market interactions are governed only by the pursuit of self-interest. The distinctive internalization of the rules of markets fosters unawareness of cooperative behaviors but a constant observance of self-interest. The puzzle is thus mainly epistemic: the partial internalization of market rules distorts beliefs about our moral behavior, which might explain why markets are often experienced as realms of self-interest, even when the data show that they foster moral behaviors.13

This analysis however is not good news for the champions of markets. The danger of corruption might be more worrisome than critics believe. If cognitive corruption is intrinsic to well-functioning markets, moral philosophers and economists have misdiagnosed the threat faced by market societies. Champions of markets who insist that these are amoral but socially beneficial institutions may inadvertently encourage cynicism. Critics who seek to restrict markets may preserve the cognitive corruption or, worse, inspire institutional reforms that undermine moral behaviors. A correct diagnosis of the corruption in markets is thus crucial for anyone concerned with sustaining the resulting moral behavior and social benefits.

To explain the dangers of the cognitive corruption of markets, Section II outlines the fundamental rules of markets, which coincide with the moral principles of respect, reciprocity, and self-respect. Section III shows why, from an institutional perspective, the minimal morality of markets remains largely invisible, except for the duty of self-respect. Section IV argues that the cognitive corruption of markets is dangerous: it creates the perception that markets lack a normative dimension, which may provoke three possible responses: the cynical, the moralistic, and the overmoralistic. The cynical and the overmoralistic threaten the very institutional rules that sustain consistent moral behavior in markets. Section V concludes and acknowledges that a permanent solution to the cognitive corruption of markets might be out of reach.

II. THE MINIMAL MORALITY OF MARKETS

Acting morally often means restraining our actions within the limits of moral considerations. By this measure, markets are not amoral realms of self-interest: individuals are bound by moral principles as conditions to participate in market exchange.14 However, market participants often lose sight of these principles. This section elucidates the moral principles that shape market interactions.

A. The Fundamental Rules of Market Exchange

The defining feature of markets is voluntary exchange, which shapes distinctive behaviors: “in market exchanges both buyer and seller are entitled to the resources with which they transact, have the freedom to accept or refuse an offer of exchange, and can attempt to make another offer or strike a better deal with someone else.”15 From this description of market exchanges, we can distill three fundamental rules that restrain market participants’ actions: respect for others’ acceptance or refusal of a deal, the requirement to offer something in exchange for a received good, and the tendency to pursue better deals for oneself. These fundamental rules track three traditional moral principles: respect, reciprocity, and self-respect.16 In their actions, market participants comply, often unbeknownst to them, with these moral principles as preconditions to engage in market interactions.

Beyond these fundamental rules, people can adopt other moral behaviors either to fulfill ethical obligations (e.g., not selling noxious products), comply with further obligations, or maximize their clientele by giving them exceptional moral treatment, but if they don’t follow at least the fundamental rules of markets, others would refuse to trade with them. If only a few break these rules, they may be excluded by those who comply through their refusal to exchange or through coercion. In the following subsections, I expand on each one of the three moral principles as they apply to the market. For now, consider the following illustrations. If Avital does not respect Ben’s refusal to trade with her and still tries to obtain his products, Avital will be expelled from the market either due to her bad reputation or by whoever is enforcing private property laws. If Chad fails to reciprocate with Darby and does not deliver what he is selling in return for her payment, Chad will be expelled from the market by either law enforcers or a bad reputation for committing fraud. If Eric does not value his own time and works for free, he will sooner or later go bankrupt, be unable to offer his services for free, and hence, market participants will not engage in voluntary exchange with him.17 These fundamental rules require behavioral constraint.

Since the fundamental rules of markets track moral principles and constitute the minimal set of constraints required to engage in market exchange, I will refer to them as the minimal morality of markets.

Notice that desirability of this minimal morality depends on its consequences. As the evidence shows, the fundamental rules of markets tend to foster prosocial behaviors more frequently than the rules of nonmarket societies: social cooperation, wealth creation, and individual moral actions—regardless of motivations.18 However, the minimal morality of markets is not sufficient for a full moral theory of market behavior. Moral problems still remain within the restrictions imposed by the minimal morality of markets. Fully desirable behavior of individuals within market relations requires additional moral rules for different purposes, including decisions to maximize profit,19 when to engage in moral discussions,20 and how to treat other market participants.21 The minimal morality of markets certainly falls short of a full business ethics approach. Yet, a defense of additional rules needed for full moral behavior within markets lies beyond the scope of this article.

B. Respect for Others’ Decisions

One of Adam Smith’s most cited passages is, I argue, often misread: “We don’t expect our dinner from the benevolence of the butcher, brewer, or baker but from their regard for their interest; we appeal not to their humanity but to their self-love and talk to them not of our needs but of their advantages.”22 Elizabeth Anderson correctly points out that “Smith isn’t celebrating selfishness here. He is commending a norm of addressing others that recognizes their dignity, as people who have interests of their own that must be respected.”23 This passage underscores the centrality of respect for others’ decisions.

The topic of respect is philosophically vast. I build on Stephen Darwall’s classical distinction of two kinds of respect: recognition respect and appraisal respect. Recognition respect “consists in giving appropriate consideration or recognition to some feature of its object in deliberating about what to do,”24 whereas appraisal respect “consists in a positive appraisal of a person, or his qualities …”25 Market participants respect others’ decisions not because they approve or appraise them, but because they recognize that each individual has the final say over their labor and property. Recognition respect shapes market interactions as every market participant has a unilateral veto over what is theirs and relies on others’ respect for their decision. David Schmidtz and Jason Brennan categorize such a veto power as a right to say no.26 Exchanges can only occur with the agreement of both parties, which means that they prefer the exchange to happen rather than not; that is, voluntary exchanges tend to lead to Pareto improvements for the participants.

We may take this recognition respect for granted in market interactions, but respecting others’ decisions requires considerable restraint, particularly when we desire something that others are unwilling to give. Market participants must recognize that the motivations and reasons of others are their own, not theirs. Acting within the market requires restraining our behavior to respect others’ decisions, even when doing so frustrates our own goals or the satisfaction of our needs. When our offers are rejected, we might feel disappointment and frustration, and yet we ought to stay calm and accept that others have the right to decline. Respect for others’ decisions constitutes a moral constraint intrinsic to market interactions, embedded in the very practice of trading, whether or not we explicitly articulate it. Without this moral constraint, the high levels of trust necessary to make each other vulnerable in a market exchange would not be possible.

C. Reciprocity

Trade is a paradigmatic case of reciprocity. In markets, we cannot act purely out of self-interest: to obtain what we desire, we must offer something in return. It is a practice of exchanging goods for goods, a tit-for-tat, that grounds cooperation in markets.27

Reciprocity, however, requires more than returning the favor. True reciprocators do not offer a single handshake in exchange for a house, or a thank you note in return for cleaning services; they try to exchange goods of comparable value. Typically, the moral principle of reciprocity holds: “return good in proportion to the good you receive.”28 Markets contain a simple tool to calculate the adequate “proportion” that is to be returned: the price mechanism.29 Reciprocators exchange goods at an agreed price. Needless to say, prices represent the numerical value in a certain currency for which a seller is willing to give a good away or provide a service. Paying for a product is in itself reciprocating: returning goods in the form of currency in proportion to the goods received.

To highlight the simplicity of reciprocity in markets, compare it to reciprocating in nonmarket settings; e.g., with friends or family members who do something for us. It is difficult to calculate a favor’s worth. Sometimes, it does not really have one. For instance, if my friend Avital took me to the airport when I was in need, and now I want to reciprocate, do I owe her a ride to the airport? What if she does not need one? Do I owe her a bottle of wine? Of what quality? Should I even ask these questions given that she took me to the airport as an act of friendship? These are complicated questions that often lack a clear answer, but that is just part of what reciprocity among friends means. The complexity, sophistication, and deep personal knowledge that are required to satisfactorily reciprocate in non-market settings illuminate the importance of the price mechanism for the moral principle of reciprocity among strangers. Thanks to the price mechanism, the interactions between buyers and sellers define what it means to return the favor with some good of a proportionate value. Prices allow us to easily reciprocate.

Breaking the rule of reciprocity puts an exchange outside the market in different ways. First, taking something without giving something in return constitutes theft, which in functional markets implies sanctions. Second, giving something without requiring anything in return is not a market interaction, but an act of altruism.30 Third, accepting a voluntary gift renders one a beneficiary of charity instead of a market participant. Each violation has a distinct normative weight, but all fall outside the market institution.

D. A Duty of Self-respect

Moral principles shape not only our interactions with others but also our interactions with ourselves. Moral philosophers frequently recognize duties to oneself.31 Alison Hills, for example, asserts that “if one has an unwaivable duty of beneficence, […] one also has a self-regarding duty to promote one’s own well-being.”32 In the market, one has a duty to recognize others’ interests through respecting their decisions, but one also has a duty to respect one’s actions as worthy. The duty of respecting our self-worth, which is a part of a larger duty of self-respect, is also fundamental to markets.

Building on Darwall’s distinction, Robin Dillon explains that “taking it that all persons have equal fundamental moral worth and standing in the moral community, which entitles each to respect from all, recognition respect for oneself as a moral equal involves living in light of an understanding of oneself as an equal person among persons.”33 Being a market participant requires not only respecting others but also respecting oneself as a worthy agent with needs, wants, and interests. We must bring something to the table to cooperate with other people, but treating ourselves as agents requires acknowledging that our services are valuable, that we are worthy agents of cooperation. One of the fundamental rules of the market institutions is that people ask for the value of their labor and that individuals have the ability to find the deals that satisfy their intentions better given their circumstances. Market institutions thus allow us to respect ourselves as agents whose labor and time are worthy.34 Some say that being remunerated for our labor is the concrete expression of the social recognition resulting from work.35

Beyond speculations, there is good empirical evidence “suggest[ing] that income is especially related to self-respect.”36 Evidence suggests that people with higher wages experience higher self-esteem on average.37 The direction of the causality is not clearly established; however, recent studies find that “changes in personal earnings prospectively predict intraindividual changes in self-esteem and, to a smaller extent, vice versa.”38 Taken together, this evidence suggests that providing services without appropriate compensation tends to create the impression that our efforts, time, and labor are underrecognized and undervalued. There is a risk that unpaid workers believe that they are not worthy of being recognized, which might lead to further problems; for instance, some empirical evidence suggests that unpaid work leads to mental health issues.39 These findings indicate that, to protect our self-image, as a general rule, we ought to demand compensation in exchange for our time, skills, effort, and labor. This is in itself not the result of a vicious pursuit of self-interest, but a moral duty to ourselves.

At this point, an important clarification is necessary. Achieving self-respect requires much more than simply recognizing the worth of one’s time and labor. I am not arguing that market institutions provide the sufficient conditions to satisfy the duty of self-respect, but they allow participants to find ways to respect themselves as workers in their particular circumstances. Participating in a market does not guarantee that one will find the goods, services, or activities that will make it possible to respect oneself. The activities that are possible to undertake depend on the scope and particularities of the market institutions. A market with more alternatives and exit options tends to increase the possibilities for respecting oneself by increasing one’s options.

However, even in the worst-case, when all the options are self-deprecating, the duties of self-respect remain relevant. It might be the case, for example, that we prefer to take a job that undermines our self-respect if the alternative is to let our kids starve.40 One may ask: can I still respect myself even if I take a degrading job to feed my family? Even in this case, seeking the least degrading work that still provides for one’s family might make it possible to respect oneself and one’s interests as much as possible in bad circumstances. While markets do not guarantee that there will be good options to respect oneself, the options that they open enable a comparative judgment. In bad circumstances, one might prioritize one dimension of self-respect over others. Markets cannot ensure self-respect, but open the door to recognize our worth and strive to find better ways to respect ourselves.

III. THE DISAPPEARANCE

Growing up in a market society means constantly respecting the rules of markets and often failing to notice that they are moral principles. We just act. The behaviors remain, but the moral principles have, some might say, disappeared. The robustness of market institutions, I argue, explains why the persistence of moral behaviors occurs in parallel with the disappearance of the minimal morality of markets.

A. Institutionalized Ethics and Institutionalized Oblivion

To understand the disappearance of the minimal morality of markets, we must first grasp the function of institutions as frameworks for cooperation. Institutions restrict individual behaviors through rules that shape social interactions. Douglass North famously defines “institutions [as] the rules of the game of a society or more formally [as] the humanly devised constraints that structure human interactions.”41 Scholars often highlight the importance of rules to solve coordination problems.42 Individuals might have the same goals, might even want to help each other, but if there is no coordination, it is difficult to cooperate. Fostering coordination is the function of most institutional rules.

For Frank Hindriks and Francesco Guala, this feature is the key to understanding institutions.43 Game theory illuminates this core feature. A coordination game is one in which players can coordinate in different ways.44 Now, even if players aim to coordinate on the same action, since there are more than one coordination point, they might end up accidentally miscoordinating.45 Hence, the importance of rules: they often act as devices for coordination. In Hindriks and Guala’s words, “the rules represent equilibria […].”46 By promoting cooperation through rule compliance, institutions transform the decision-making processes of interactions: from strategic choices about coordination to parametric choices about rule compliance.47 In functional institutions, rule compliance tends to ground cooperation.

When institutions are strong, individuals need not worry about others’ knowledge or anticipate the risk of miscoordination; they only care about complying with the rule. Strategy does not guide interactions within institutions, but a sort of logic of appropriateness, in which “institutionalized rules, duties, rights, and roles define acts as appropriate (normal, natural, right, good) or inappropriate (uncharacteristic, unnatural, wrong, bad).”48 Within functional institutions, individuals often cooperate simply because following the rules is what they ought to do. When rules are experienced as ethical demands, we can talk about an “institutionalized ethics.”49

Now, when individuals have to decide every time whether they comply with the rule or not, there is uncertainty that they don’t. The more agents internalize institutional rules and automatize their behaviors accordingly, uncertainty diminishes.50 Optimal outcomes multiply as uncertainty is significantly reduced. When it becomes common knowledge that individual actions are guided by the rules and agents no longer perceive rule compliance as a matter of choice, trust is reinforced, cooperation stabilizes, and institutions strengthen.

Strong institutions however come at a cost. Agents lose awareness of their own rule compliance when mindless habits govern their behavior. There is oblivion of those rules that are unreflectively followed, that are acted most of the time. Robust coordination comes at the cost of the awareness of the rules that make it possible. Strong institutions make us opaque to ourselves so that we become predictable to others. The cost of institutionalized ethics is institutionalized oblivion.

Different scholars have stressed the relation between oblivion and cooperation. Alfred Whitehead famously claimed that “civilization advances by extending the number of important operations which we can perform without thinking about them.”51 In the same vein, Hindriks and Guala hold that, by making agents mindlessly decide their actions, “institutions help individual players not only to reach coordination, but also to economize cognitive effort.”52 When we no longer have to think strategically but only decide what to do, we free up cognitive resources for other activities. When we can trust that others’ actions are predictable, we need not think about anticipating them. Cristina Bicchieri talks about “cognitive shortcuts” that allow to guide “behavior […] by default rules stored in memory that are cued by contextual stimuli.”53 Complying with institutional rules thus becomes an unreflective action. Developmental psychologist Michael Tomasello observes that “the cultural rationality of modern humans was thus to freely relinquish much control of their individual actions to an unreflective conformity to the conventions, norms, and institutions of their group […].”54 These converging perspectives reinforce the claim that institutionalized oblivion strengthens coordination.

B. Institutionalized Oblivion in Markets

Market participants act on the minimal morality of markets in their interactions with others. If Avital is selling something, she expects Ben to (i) respect her decision whether she wants to sell it to him or not, (ii) reciprocate if she decides to sell it to him, and (iii) try to negotiate the best deal for himself. Respecting and reciprocating carries the risk of being exploited. If Avital goes to the market to offer her products, Ben could rob her or give her something of a lower value in exchange for what she offered. Theft and fraud, which are permanent risks in market interactions, are, however, mitigated when reputation enters the picture, as free riders might experience short gains if they avoid formal sanctions, but long-term reputational losses by violating the rules.55 As said, institutions transform strategic interactions into parametric choices about rule compliance. When market institutions are strong, Avital does not have to worry about Ben not respecting and reciprocating; she just needs to care about pursuing her interests. Risk is reduced and trust emerges when decisions to cooperate become parametric choices.

Markets become robust institutions when rules are internalized. Market participants often do not perceive their own compliance with the minimal morality of markets as rule-following. They do not need to think about the rules to cooperate. In societies with strong institutions, individuals are seldom aware that they can break them themselves—even if they know, and in some cases fear, that others can. The complex legal apparatus and reputation-tracking mechanisms reveal the difficulties of trusting others when stakes are high (e.g., buying a house). And even in those cases, when institutions are strong, individuals take for granted that any violations will be sanctioned. On most daily exchanges, however, contracts are seldom required. When I buy a coffee at my favorite coffee shop, I rarely think twice about whether the barista will hold up his end of the exchange. In some airport stores now, respect and reciprocity are so thoroughly internalized that no shopkeeper is needed to monitor the transaction: travelers pick what they want, pay, and leave. And no one experiences this behavior as a moral accomplishment—even if it indeed is. Most market interactions run on unreflective respect and reciprocity. It is in these routine exchanges that institutionalized oblivion does its work.

People’s actions reflect the minimal morality of markets without requiring conscious recognition of these rules as moral principles, which makes cooperation both robust and more productive. This phenomenon may explain the empirical findings regarding the frequency of moral behavior in market societies.56 However, institutionalized oblivion causes market participants to overlook the fact that their behaviors embody moral principles. The minimal morality of markets consists of genuine moral principles that can in principle be reflectively endorsed; what institutionalized oblivion does is interfere with the practice of reflective endorsement by making it unnecessary through habituation. This does not mean that people cannot be made aware of the minimal morality of markets. Yet, within strong market institutions, people forget most of the time that they are cooperating, and instead believe that they are only pursuing their self-interest, competing, and taking advantage of each other. Constant observance of one’s self-interest in the market is a feature of markets that has an institutional explanation, as well.

C. The Duty of Self-Respect Turns into the Pursuit Of Self-Interest

Respect for others’ decisions and reciprocity operate in tandem with the duty to respect self-worth. While the first two moral principles disappear after internalization, the third moral principle disappears because only part of it remains in our conscious activity. The institutionalized oblivion of the principle of self-respect is only partial. The practical activity of identifying our interests must remain conscious. This raises a distinctive complication: the duty of self-respect in the market is experienced as the pursuit of self-interest. This requires a more detailed explanation.

One can distinguish two parts that work together in the duty of self-respect in markets. One part is asking for compensation. The other part is identifying one’s interests. Both parts are necessary for asking for compensation that reflects the worth of our labor. These parts can act as two distinct activities. We can ask for compensation without knowing our interests, and we can recognize our interests without asking for compensation. Some illustrations might help explain this point. If Avital knows what her interests are but consistently accepts whatever compensation others offer to her, effectively working for whatever others want to give her, then she fails to respect her effort and time in market interactions. If Ben can negotiate for high compensation for his labor, but fails to recognize his interests, he might accumulate a lot of money, but he will not respect himself, as he would not know how to achieve his interests with that money.57 The more we interact within market institutions, the more chances we have to learn to exercise our duty of self-respect; i.e., we tend to learn that asking for compensation is aimless without knowing our interests. Yet, the awareness of the link between compensation and self-knowledge is not required in market interactions.

Market institutions automate the ask for compensation, but not the identification of one’s interests; hence, the duty of self-respect is only partially automated. The specific terms of compensation (e.g., how much to charge, the adequacy of job offers) require ongoing attention to our personal situation. What becomes automatic is not the calculation but the disposition: the expectation that one will be compensated at all. In market interactions, most of the time, we unreflectively ask for something in return for what we are selling, for a product or service when we are buying, or for a wage when we work for someone. Unless we are dealing with friends or family, we tend to ask for something in return in the market. We all take it for granted and don’t think much about it. However, identifying our interests requires us to make a conscious effort to recognize what we want in exchange for what we are giving and how much we want to spend on what we want. Most of the time, our interests change according to the circumstances or adapt to our available options, so we strive to understand our willingness to pay or buy. This reflexive activity might be easier to notice when we make big purchases like a house or a car. Yet, also in our daily purchases, we often ask ourselves about our interests. Even if the price system frees us from daily bargaining, we still need to recognize what we want to spend our money on. We still bargain with ourselves, when we compare prices, analyze products, and think of possible substitutes. This reflexivity enables market participants to adjust to new circumstances and evolving preferences. This activity, by itself, without the perception of the respect for others’ decisions and reciprocity as restrictions on our conduct, is experienced as the pure pursuit of self-interest.

Once most restrictions imposed by the minimal morality of markets are automated, respect for others’ decisions, reciprocity, and compensation can be automated and disappear from our awareness, but the reflexive observance of our interests cannot. As a result, we perceive market participants as unrestrained by moral duties. The distinctive institutionalized oblivion of their minimal morality grounds the cognitive corruption of markets.

IV. THE DANGER OF OBLIVION

The cognitive corruption of markets is the result of the internalization of respect for others’ decisions and reciprocity and the partial internalization of the duty of self-respect. The misperception of markets as realms of self-interest plants the seed of moral corruption. This may happen in two ways: either cynicism reigns and trust perishes, or overmoralistic reformists dismantle market institutions jeopardizing moral behaviors.

A. Cognitive Corruption in Markets

Institutionalized oblivion grounds cognitive corruption in markets. The oblivion of the minimal morality of markets together with the conflation of self-respect and self-interest distorts our understanding of our actions within markets. Institutionalized oblivion obscures the perception of our moral constraints while zooming in on our interests. This might explain why in market society, even altruistic behaviors tend to be experienced as self-interested, as Weiss-Sidi and Riemer show.58

When we interact within the limits of the minimal morality of markets, it is enough to pursue our interests so markets can create wealth. At times, we may impose reflective moral restraints on ourselves to temper our interests and avoid egoism. Nevertheless, we often project this sense of self-centeredness onto others, failing to identify both their internal moral struggles and the minimal morality of markets. Institutionalized oblivion might make us feel that the only thing that everyone does in the market is pursuing their interests. This speculation aligns with results of experimental economics suggesting that “market-like situations induce self-regarding behavior, not by making people intrinsically selfish, but by evoking self-regarding behaviors in their preference repertoire.”59 Bicchieri talks about the strength of social norms of self-interest in market societies and anecdotically highlights, “it is remarkable to observe how many people (especially in the United States) expect others to act selfishly, even when they are prepared to act altruistically themselves.”60

When the moral restrictions on behavior disappear and the observance of self-interest appears as the only distinctive activity of markets, we experience and believe that markets are amoral realms of self-interest. What remains is the perception that we are surrounded by “insatiable ambition,” “secret jealousy,” and “mask[s] of benevolence” instead of a network of reciprocal and respectful cooperation among agents who strive to respect themselves.61 This might explain the widespread intuitions about the morally corrupting influence of self-interest, even when market societies constantly exhibit behaviors in accordance with moral principles. Cognitive corruption obscures the normative dimension of markets and may generate the perception that markets are arenas of ferocious selfish competition, a sort of quasi-Hobbesian state of nature.

The coexistence of morally principled behavior and widespread perceptions of selfishness in market societies is explained by the specific nature of the minimal morality of markets and the strength of their institutionalized ethics. Put simply, the distinctive function and internalization of the morality of markets explain the resulting cognitive corruption.

B. Reactions to Cognitive Corruption

When cognitive corruption makes the moral dimension of markets disappear, participants no longer see themselves as virtuous cooperators but as potential rivals. Instead of cooperative institutions, the market is experienced as a quasi-Hobbesian state of nature. The misperception of the moral dimensions of their actions in the market might lead moral agents to react in different ways. Some may simply go on with their lives and enjoy the hedonic gains of being in a productive market society without thinking too much about the morality or immorality of their behaviors. However, some market participants might experience moral dissonance, which “arises when the displayed behavior is experienced to conflict with a morally more desirable behavior (ought).”62 More precisely, in markets, moral agents are often committed to doing the right thing, but they experience their behavior as immoral acts of self-interest.

Individuals may react in different ways when they experience moral dissonance. Some may strive for moral consistency by reacting to the conflict between the wrongful behavior that they experience in the market and the moral behavior that they desire.63 In the following, I consider three possible responses to address the moral dissonance in favor of consistency: the cynical, the moralistic, and the overmoralistic. The cynical response leads to moral corruption, the moralistic response misdiagnoses the problem, and the overmoralistic response might create behavioral corruption.

i. The cynical response

One way that agents face the moral dissonance when they perceive that they are doing something wrong is by rationalizing their perceived immoral action and finding a justification for it. This means that some market participants may embrace the widespread belief that markets are realms of self-interest and rationalize selfish behaviors as morally acceptable. They opt to govern their actions only by the pursuit of self-interest. This cynical response not only embraces egoism but may even legitimize it as the main engine of material growth. The cynical response vindicates the critics’ concerns about moral corruption and the expansive nature of self-interest, but, following the champions of markets, highlights the social benefits of market economies.

The cynical response posits, however, a more worrisome problem than the critics believe. The expansion of self-interest not only endangers non-market moral values, but it also jeopardizes the minimal morality of markets. Psychologists notice that the rationalization of (perceived) wrongdoing tends to increase the scope of justified morally wrong actions. Psychologist Jo-Ann Tsang affirms that “moral rationalization plays an important role in allowing an individual to autonomously engage in immoral behavior while still seeing the self as moral. The individual then engages in more and more extreme behavior, until small unethical acts escalate into large atrocities.”64 If rationalization expands immoral behavior, those who embrace the selfish pursuit of self-interest in the market may legitimize breaking the fundamental rules of markets for selfish reasons. The cynical response might lead selfish agents to restrict their behavior only to avoid punishment.65 This means that there is no more institutionalized ethics, and parametric actions become strategic again (see Section III). Fraud, deception, and cronyism may follow if there are no effective monitoring institutions.

The awareness of alternative paths of actions other than cooperation undermines institutionalized oblivion. When strategic reasoning regarding the fundamental rules of markets reappears, distrust tends to follow as agents realize that they can maximize their profit by strategically cooperating only when they have strong reasons to do so (e.g., when there is a real risk of punishment). The institutional solution to secure cooperation erodes. Trust seldom arises in such an environment. When people opt for cynicism, markets are not only perceived as but are at risk of becoming the quasi-Hobbesian state of nature. The cynical response to cognitive corruption acts as a sort of self-fulfilling prophecy: it is because of the widespread belief that markets are a realm of self-interest that participants might unapologetically embrace selfishness.

ii. The moralistic response

A different way to address the perceived immorality of markets is to protect moral values by restricting the scope of market exchanges. Agents can solve the moral dissonance by shielding non-market values from the perceived dominance of self-interest. When realizing that the root of self-interest interactions lies in the predominance of market institutions, some agents might aim to reform institutions to defend moral values.66 Call this kind of response moralistic.

Critics of markets often advance moralistic responses to mitigate moral corruption of distinctive values within markets. These types of criticisms often acknowledge the efficiency and wealth creation of markets while urging limits on market exchange in order to preserve non-market values.67 Anderson, for example, holds that “each party to a market transaction is expected to take care of himself and not to depend on the other to look after his own interests. Every extension of the market thus represents an extension of the sphere of egoism.”68 This egoism is part of what makes the market efficient. However, there are activities and products that ought to be protected from commodification, as they represent important non-market values.69 That is why, she concludes that “the realization of some values demands that certain goods be produced, exchanged, and enjoyed outside of market relations, or in accordance with nonmarket norms.”70 Debra Satz offers a different argument for limiting markets. She stresses that there are different kinds of goods in the market, and we must distinguish between those that can be freely exchanged and those that risk harming people or compromising their status as equals, by exploiting and manipulating vulnerable parties.71 She calls noxious markets those that “undermine the conditions that people need if they are to relate as equals.”72 Satz thus adds a distinct egalitarian concern: the amorality of markets risks harming citizens’ standing as equals. Her conclusion is that “certain goods need to be provided outside the market if citizens are to be equals.”73 Even if Anderson’s and Satz’s analyses differ, their goal is similar: to remove from market interactions things, services, and relationships that should not be subject to market norms or unrestricted voluntary exchange. The aim of the moralistic response is not to dismantle market institutions but to make marginal institutional adjustments to protect non-market moral values.

The moralistic response is attractive inasmuch as it preserves the efficiency of markets while trying to prevent the moral dissonance of the perceived permanent moral corruption of markets. And there certainly are reasons to restrict certain markets. However, the moralistic response is unlikely to address the deterioration of moral beliefs as it misdiagnoses the source: markets do not deteriorate our moral beliefs directly, but our beliefs about the morality of our actions. The perception of markets as realms of self-interest does not arise from the expansion of market transactions into morally sensitive domains, but from the partial institutionalized oblivion of the minimal morality of markets itself. Banning certain transactions (including organs, sexual work, drugs, and votes) leaves this epistemic dimension untouched. As long as the minimal morality of markets remains invisible and attention to self-interest remains dominant, participants will experience markets as realms of self-interest regardless of the limits on what is traded. The problem lies not in jurisdictional scope but in the distinctive internalization of moral principles that strengthens market cooperation. Therefore, even if it seems like an attractive response to protect the best of both realms (wealth creation and non-market values), it is likely to fail.

Critics might still argue that the moralistic response is an improvement over no response or the cynical response. Publicly debating which exchanges to ban might make salient the importance of moral reasoning for market institutions. Agents might exercise their moral reasoning and realize that markets cannot function correctly without following the fundamental moral rules. Nevertheless, such debates typically reinforce the perception that markets are realms of self-interest requiring external moral constraints, rather than revealing their minimal morality. The moralistic response orients moral reasoning towards regulative rules imposed from outside market institutions, rather than paying attention to the minimal morality of markets. No matter how many regulative rules are imposed, the perception that remaining voluntary exchanges are driven by self-interest will persist as long as voluntary exchanges often occur. Those who adopt the moralistic response will find it necessarily insufficient. They might turn to the cynical response or adopt a more radical moralistic stance.

iii. The overmoralistic response

Call the overmoralistic response a more radical version of the moralistic one. Its aim is the dismantling and fundamental restructuring of market institutions in order to shield moral values from the perceived corrupting influence of self-interest. Rather than adding regulative constraints, the overmoralistic response targets the institutional rules of markets themselves, namely, a private property regime and the enforcement of contracts.74

There are at least two main problems with the overmoralistic response. First, evidence suggests that moral behaviors arise in market societies more frequently than in non-market ones. Second, fundamental institutional changes tend to create unexpected results and often promote immoral behavior. If either of these problems holds, the efforts to replace market institutions in the name of moral improvement are likely to backfire. The overmoralistic response, despite its avowed moral aspirations, risks generating precisely the form of behavioral corruption it seeks to avoid.

Those who favor the replacement of market institutions by non-market institutions often speculate that the result of non-market institutions will be improved behaviors and stronger values; however, evidence does not support these speculations. Cohen acknowledges that “the principal problem that faces the socialist ideal is that we do not know how to design the machinery that would make it run.”75 The concern about design is reinforced by empirical evidence about how existing institutions actually perform. As mentioned, empirical data show that individuals in market societies reliably exhibit behavior in line with moral principles more often than people in nonmarket societies. The evidence thus suggests that, by replacing market institutions with non-market rules, the overmoralistic response may ultimately lead to behavioral corruption (the deterioration of moral conduct).

The second problem for the overmoralistic response concerns the unexpected consequences resulting from changing institutional foundations. Suppose critics of markets discovered a non-market institutional arrangement that reliably produces better moral behaviors than market institutions. The problem would then lie in the transition from market rules to non-market rules. Since institutions shape behaviors and expectations (often referred to as culture for simplicity), when fundamental institutional change takes place, new institutions are necessarily affected by the culture that emerged from former ones.76 This means that changes at the institutional foundations typically produce unexpected behavioral consequences due to path dependency, even if the target institutions theoretically foster robust moral behaviors. Unexpected results from institutional change do not only happen when market societies turn into non-market ones, but the most interesting cases appear when non-market societies fail to create functional markets since they fail to adopt the minimal morality of markets.77 A case in point is the post-Soviet countries in which the behaviors promoted during the socialist regime hinder the adoption of the behaviors of market societies, even when the formal institutions were fundamentally reformed according to the foundational rules of markets. Piotr Sztompka affirms,

The entire social milieu of real socialism acted against the emergence of [market behaviors]. And thus, planned, command economy effectively paralyzed entrepreneurship. Political autocracy alienated the masses and blocked the emergence of citizenship. Imperial domination constrained sovereignty and national identification. Shortages and poverty preempted any concern with everyday virtues of civility, aesthetics and comforts of everyday life.78

The post-Soviet experience and the failure to impose functional market institutions should raise doubts for those who think that fundamental changes can achieve the behavioral goals of those who designed them.

In short, cognitive corruption can inspire institutional reforms that undermine the very moral behaviors resulting from market institutions, which is likely to trigger behavioral corruption.

V. CONCLUSION

The starting point was a puzzle: if market institutions empirically tend to produce moral behavior, why do both champions and critics of the market perceive them as amoral realms of self-interest? I argue that strong market institutions lead to cognitive corruption: due to the partial internalization of their minimal morality, cooperative individuals do not perceive the moral principles that govern their actions. As the data show, behaviors in market societies often instantiate moral principles. Yet, due to the distinctive institutionalized oblivion of the market, participants recognize only the pursuit of self-interest as the main driver of their actions. Market institutions obscure the moral principles that shape interactions within them, which is why many believe that there is something morally corrupting about them, something that deteriorates moral values and behaviors. The cognitive corruption that takes place does not create moral corruption, but severs the connection between the behavior and the awareness of its moral character. This kind of corruption is not without risks. It often leads to moral dissonance: agents with strong moral convictions experience their actions in markets as selfish and immoral.

If this is correct, both champions and critics of markets have incorrectly diagnosed the corruption of market institutions and inadvertently endanger their minimal morality. While the phenomenon is mainly epistemic (a lack of reflective awareness, not a deterioration of behavior), they have treated it as a phenomenon directly affecting morality. The ways in which champions and critics have thought about corruption in markets address the moral dissonance of markets and either lead to moral corruption through a cynical response, to frustration with the marginal changes recommended by the moralistic response, or to behavioral corruption if an overmoralistic response dismantles market institutions. Moral corruption may paradoxically arise from efforts to preserve moral values in robust markets.

Correctly diagnosing the corruption of markets as an epistemic phenomenon is crucial to avoid the self-fulfilling prophecies of champions’ and critics’ reactions to the moral dissonance of markets. When we acknowledge that what deteriorates is our perception of our behavior within markets, not primarily our behavior itself, we realize that the problem does not lie in market interactions but in our misunderstanding of them. A way to address cognitive corruption is therefore to remember what strong institutions make us forget: the minimal morality of markets.

A possible strategy to mitigate the institutionalized oblivion of markets is to establish mechanisms that remind us of the minimal morality of markets, thereby recovering our awareness of the moral principles that market participants embody. According to a certain approach to moral theory, its task is to restore that connection between our behaviors and the moral principles that they instantiate. Moral education that makes the morality of markets explicit thus appears as a possible way to mitigate cognitive corruption. This is not a new proposal. Adam Smith already favored education to mitigate the loss of cognitive abilities resulting from the division of labor.79 Moral education about the principles that constitute market participants’ behaviors might protect market institutions from falling into misdiagnoses. The hope is that institutions gain stability when individuals reflectively endorse what they had been doing unreflectively. It might be possible to find a sweet spot between moral awareness and institutional stability. Yet, perhaps, the curious epistemology of markets (which requires reflective attention to self-interest while automatizing behaviors that instantiate moral principles) may admit no permanent solution to cognitive corruption.

Notes

  1. Gauthier 1986, p. 84. [^]
  2. See Mandeville (1732), Friedman (1970), Brennan and Jaworski (2015). [^]
  3. Cohen 2000, p. 181. [^]
  4. See Marx (1844), Cohen (2009), Deneen (2023). [^]
  5. See Joseph Henrich et al. (2010). [^]
  6. See Baldassarri (2020). [^]
  7. See Cai et al. (2022, p. 880). [^]
  8. See Storr and Choi (2019, pp. 167–180). [^]
  9. Other studies find that people in wealthy societies tend to help strangers less frequently (Levine et al. 2001). However, there is a distinction between wealthy societies and market societies. The effects of market institutions in the helping behaviors are less clear, as “the cultural value of collectivism-individualism was unrelated to helping” (Levine et al. 2001, p. 556). Wealth effects and market effects are thus not equivalent. Others question the motivations of prosocial behaviors in market societies. Weiss-Sidi and Riemer (2023), for example, argue that in individualist societies altruism is impure, as it is driven by self-interest, whereas in collectivist societies, helping others is done for the benefit of the recipient. [^]
  10. The term corruption has been used to describe phenomena as diverse as ontological decay (Aristotle 1984), the misuse of public office for private gain (Nye 1967), and political decline (Montesquieu 1989). For a detailed history of the term corruption see Buchan and Hill (2014). [^]
  11. See Storr and Choi (2019) [^]
  12. See Blau (2017, p. 204). [^]
  13. Friedrich Hayek (1988) and Joseph Heath (2014) offer alternative explanations for the difficulty of recognizing the morality of markets. Hayek (1988) argues that our evolved moral intuitions, calibrated to small-group cooperation, might create tensions when applied to market exchanges among strangers. And Heath (2014, Chapters 4 and 7) holds that while morality is often thought of as consisting of rules of cooperation, morality in the market requires competition, an “adversarial ethics.” These explanations are not incompatible with the cognitive corruption thesis I develop here. My claim is that institutionalized oblivion supplies an epistemic mechanism that can explain the moral tension. [^]
  14. See Buchanan (2005), Norman (2011), Hasnas (2013), Heath (2014), Juarez-Garcia (2025). [^]
  15. Satz 2010, p. 15. [^]
  16. Self-respect indeed pushes us to find a “better” deal for us, a deal that better fits our interests—not necessarily, one that gives us more money. [^]
  17. This point applies even in cases where Eric is moved by care for others and does not ask for compensation for his work. This is consistent with Barry Maguire’s argument that “the efficient buying and selling cannot manifest their caring about each other” (2022, p. 8). [^]
  18. See Henrich et al. (2010), Storr and Choi (2019), Baldassarri (2020), Weiss-Sidi and Riemer (2023). [^]
  19. See Robson (2019). [^]
  20. See Juarez-Garcia (2024). [^]
  21. For instance, Cohen’s story about his father, Morrie Cohen, who was callously dismissed from his lifelong job, illustrates that “the market does require people to handle people, to manage them, in a particular sense” (2000, p. 181). See also Maguire (2022). [^]
  22. Smith 1776, I.2. [^]
  23. Anderson 2023, p. 142. [^]
  24. Darwall 1977, p. 38. [^]
  25. Darwall 1977, p. 39. [^]
  26. See Schmidtz and Brennan (2010, p. 29). [^]
  27. Robert Axelrod (1984) showed that the practice of conditional reciprocity in a game theoretical setting grounds strong networks of cooperation even among self-interested individuals. [^]
  28. Schmidtz 2007, p. 76. [^]
  29. See Hayek (1945). [^]
  30. Notice however that even for altruism, we must respect others’ decision to take our gift or not. [^]
  31. See Singer (1963). [^]
  32. Hills 2003, p. 131. [^]
  33. Dillon 1997, p. 229. This is one form of recognition self-respect, grounded in the demand for dignity; conversely, evaluative self-respect is grounded in the idea of merit (Dillon 1997). [^]
  34. For the importance of the perception of one’s value for self-respect, see John Rawls’s idea of self-respect (1999, p. 386). [^]
  35. See Gheaus and Herzog (2016). [^]
  36. Renger et al. 2024, p. 20. [^]
  37. See Twenge and Campbell (2002). [^]
  38. Bleidorn et al. 2023, p. 1170. [^]
  39. See Ervin et al. (2022). [^]
  40. Similar arguments are made in articles about the exploitation, see Zwolinski (2007). [^]
  41. North 1990, p.4. [^]
  42. See Lewis (1969), North (1990), Guala (2016). [^]
  43. See Hindriks and Guala (2015). [^]
  44. In technical terms, they have more than one Nash equilibrium in pure strategies. [^]
  45. Consider the famous game Battle of the Sexes. Avital wants to go to the movies with Ben, but he prefers to go to the soccer game with her, and both prefer being together to being separated. If they try to read each other’s mind when they decide where to go, they might end up in different places; they might end up miscoordinating. But, if they find a rule to coordinate their action, they can maximize their utility. [^]
  46. Hindriks and Guala 2015, p. 468. Alternative theories of institutions include the rules-based approach (North 1990) and the equilibria-based approach (Bicchieri 2006). [^]
  47. See Greif and Mokyr (2017, p. 27). [^]
  48. March and Olsen 1996, pp. 251-252. [^]
  49. See Buchanan (2005). [^]
  50. See Hayek (1945), Parsons (1951), Ostrom (1990), Bicchieri (2006). [^]
  51. Whitehead 2012, p. 46. [^]
  52. Hindriks and Guala 2015, p. 469. [^]
  53. Bicchieri 2006, p. 5. [^]
  54. Tomasello 2016, p. 86. [^]
  55. See Brennan and Pettit (2004). [^]
  56. See Henrich et al. (2010), Storr and Choi (2019), Baldassarri (2020), Cai et al. (2022). [^]
  57. Think about the story of the poor man’s son in Adam Smith (1759, IV.1). [^]
  58. See Weiss-Sidi and Riemer (2023). [^]
  59. Bowles 1998, p. 89. [^]
  60. Bicchieri 2006, p. 9. For empirical evidence about altruistic individuals who expect others to act selfishly, see also Wuthnow (1991) and Dawes (1972). [^]
  61. Rousseau 2004, II. [^]
  62. Te Brake and Nauta 2022, p. 3. [^]
  63. See Campbell and Kumar (2012). [^]
  64. Tsang 2002, p. 48. [^]
  65. Patrick Deneen asserts that markets produce individuals who restrict their behavior only because of the law: “individuals pursue liberalized liberty, fulfilling the desire to do as one wishes, all that is not restrained by law or causing obvious harm. […] The only authority that can now adjudge those claims is the state, leading to an increase in legal and political activity in local affairs that were once generally settled by cultural norms” (2018, p. 88). [^]
  66. See Skitka and Bauman (2008). [^]
  67. See Anderson (1990a), Satz (2010). [^]
  68. Anderson 1990a, p. 183. [^]
  69. Anderson 1990b, p. 71-73. [^]
  70. Anderson 1990a, p. 201. [^]
  71. See Satz (2010, p. 102). [^]
  72. Satz 2010, p. 94. [^]
  73. Satz 2010, p. 208. [^]
  74. See Marx and Engels (1848), Deneen (2023). [^]
  75. Cohen 2009, p. 57. [^]
  76. See Bednar and Page (2018). [^]
  77. See Fitzpatrick (2006). [^]
  78. Sztompka 1993, p. 89. [^]
  79. See Smith (1776, V.3). [^]

ACKNOWLEDGMENTS

I would like to thank Chiara Cordelli and Robert Goodin for their editorial work, and two anonymous reviewers for their generous, challenging, yet encouraging feedback. Their comments made this article substantially better. I presented the argument of this article at the International Conference for Economic Philosophy, the PPE Society Meeting, and the New Orleans Political Economy workshop (hosted by the Murphy Institute). I would like to thank the audiences for their helpful comments, especially Elvira Basevich, Bruce Brower, Brookes Brown, Jeff Carroll, Kobi Finestone, Harrison Frye, Aaron Salomon, Eric Schliesser, Sam Schmitt, Jack Stetter, and Matt Zwolinski. Initial versions of the ideas presented in this article appear in the article “La Moral de la Sociedad de Mercado” published in the online magazine Revista Átomo; I thank Pablo Paniagua for inviting me to write my initial thoughts on the topic. I am enormously thankful to Gregory Robson and Alexander Schaefer for reading previous drafts of this article; their feedback was invaluable. Finally, I would particularly like to thank Chad Van Schoelandt for the deep influence on the ideas presented here and for all he does to make Tulane a great place to do philosophy.

COMPETING INTERESTS

The author declares that he has no competing interests.

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