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What Does "Class Action" Mean?

June 24, 2011

Tags Legal SystemInterventionism

The news of the Supreme Court decision on Walmart — declining to approve a massive lawsuit against an amazing company — was reported as if it amounted to some devastating blow to American life. Nonsense: the decision actually permits normalcy in economic development to proceed without a new round of destruction of wealth. Some lawyers might be sad, but it is great for the rest of us.

The lawsuit grouped the interests of 1.6 million women who had worked for 3,400 stores since 1998. One can only imagine the looting that would have commenced had the decision gone the other way. It would have been catastrophic. What the Supreme Court did was narrowly decline to wreck even more American labor markets and the gears of free enterprise. It is a small favor, but thank goodness for it.

The lawsuit that was turned back was called a "class-action lawsuit." The word "class" is the English lexicon is usually used in two ways.

The first is the popular sense that refers to social standing. A person can be from the "working class." A person can be part of the "middle class." In American society, there is by tradition no such thing as an "upper class." There might be a "leisure class" or an "upper middle class" or an "upper crust" but no "upper class" — and that probably stems from the charming myth that we abolished such a thing with the elimination of lords and dukes. (A derivative sense is more colloquial. We say that a person "has class," which means that he or she acts and behaves in ways that are generally higher on the social strata than the norm. We might say something is "classy," meaning pretty, beautiful, impressive, or suggestive of wealth and opulence.) This is not the sense in which the term "class" is used for these lawsuits.

The second definition is the relevant one, and it is mostly drawn from academia and the Marxist tradition in particular: The Marxist theory is that all of society is constantly seething in conflicting and exploitative social relationships that pit group against group.

In Marx's view, the core economic conflict was labor versus capital. The idea is that capitalists exploit the workers by sucking the surplus value of production from them such that capital grows ever richer and labor ever poorer. The guy built an entire system of thought based on this idea, and it has inspired revolutions around the world.

It's all a bit strange, because it is so obviously untrue. If I hire you to mow my grass, you are not being exploited. We are cooperating in mutually beneficial exchange. No one has a gun to your head, and we both are free to negotiate the terms of the deal. You can work for anyone who wants to hire you and I can hire anyone who is willing to work for me. This is called peace and exchange; there is nothing exploitative about it.

Marx was just brewing buckets of envy in a time when people were confused about the accumulation of capital and confused about demographic movements and the like. His theory explained nothing and was based on nothing, but somehow it stuck and it still festers, inspiring governments and theorists around the world to try to reinvent Marxism.

One reinvention of Marxist theory is the idea that the gains of whites come at the expense of blacks, or that the gains of men come at the expense of women, or that the gains of abled people come at the expense of the disabled, or that the gains of people in general come at the expense of the environment. They all assume that there is something like a class of people whose interests and outlook are homogeneous in every sense that matters.

This is obviously not the case with the people who joined — or who were joined without their permission, in the usual way — the "class-action lawsuit" against Walmart. First, there is no such thing as the interests of women — or of men, or blacks, or disabled people, or the environment. Interests are always radically heterogeneous because the world is filled with unique individuals with subjective perspectives, ideas, and experiences.

Second, there was no class "acting" in this case. It was a bunch of lawyers using some former Walmart employees — let's just say that these people were being exploited by attorneys — in the attempt to pick the deepest pockets around. Had the lawsuit been won, the women would have received settlements that would pay a day of parking meter fees. The lawyers would have looted it all.

The American legal system should never let such a ridiculous lawsuit make any headway in the court system at all. If we had strict property rights, freedom of association and exchange, and freedom of contract, there would be no such thing as a class-action suit. If we had a real free market, we would be spared that massive social waste that was involved in this preposterous lawsuit.

But then what about discrimination? It comes down to this. If Walmart systematically discriminated against women, there is a wonderful market opportunity open for some other company to hire up all these millions of downtrodden people and make a great killing in the market. It is for this reason that irrational and invidious discrimination is not a feature of the market economy.

There is no such thing as class in a free market. Its members are fluid and based on a huge range of economic conditions that are mostly left to human choice. Class is fluid and nonconflicting. Peace prevails.

As for the Marxist idea of class, yes, its appearance can be created but only by legislation and lawsuits that pit one group against another group. It is wholly artificial and a good example of how the state creates the very problem it purports to solve.

The Supreme Court should never be asked to decide this sort of matter, but its majority opinion grants us a temporary reprieve from more looting of the capitalist class (in the best sense of that term).

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