It’s a free country. People can do what they want with their lives, unencumbered. But what if one’s circumstances constitute an encumbrance by rendering his right to choose so limited in scope that it becomes effectively non-existent? What should we do then? Possibly eliminate it altogether. Let me explain by way of illustration.
A man signs an employment contract to accept a job from an employer. He starts Monday. Was this an economically (praxeologically) valid hiring? I believe the Austrian/Misesian would say yes. Any voluntary transaction between individuals acting freely in their own interests passes economic muster with no further examination necessary.
Not so fast, says the more benevolent and socially-conscious among us, whose answer would be: It depends. It could be a perfectly legit deal, or maybe not. I need more details, so as to measure it on my equity/social justice scale.
Imagine the applicant has been unemployed for a while, has no savings, is a divorcee who owes alimony and child support, is in danger of losing his house, and isn’t entirely sure where his next meal is coming from. The employer—a large and prosperous firm—is hiring him for a minimum wage janitorial position.
Then the answer is no. It’s a good thing we caught this in time. This is in no way a valid transaction. It’s a nefarious act of exploitation!
You see, the man isn’t freely choosing. His situation forces him to take the job. He has no other choice, except starvation, so the employer is guilty of exploitation by lowballing him, thus taking advantage of a party in an economically inferior position. No one should have to accept undesirable, underpaid employment as a matter of survival. At best, this is predatory hiring; at worst, enslavement. Either way, this deal must not be allowed to take place!
A Few Key Questions
Just what was it that made this transaction improper according to those who would say that exploitation has taken place? The imbalance of resources between the parties. The business owner is coming from a place of abundance, the applicant a place of scarcity; rendering his employment negligible to the former, and crucial to the existence of the latter. Such lopsidedness invokes actions borne out of necessity, thus not freely chosen, on the part of the disadvantaged party. Plus, payment terms were agreed to for mere subsistence; he wouldn’t have accepted under more favorable circumstances because it isn’t “in his interest.”
But is that really true? Are there no other jobs he could have applied for? There may not be much flexibility for wage rates or pleasantness of the work, but if he applied for and accepted this one, he must have found it favorable to his other options. What if his judgement was wrong on this matter? Wrong according to whom? And what is to be done—and by whom—to rectify this wrongness?
Momentarily setting aside government assistance, could he not have asked for money, food, a place to stay, etc. from people he knows? The production of value to exchange for resources isn’t restricted to labor for paychecks, but one can sustain oneself for quite some time on the voluntary generosity of friends. This is what Marx did, depending on Engels during much of his writing career. And speaking of which, what about entrepreneurial possibilities to become his own employer? It may be a longshot, but it does introduce other possible alternatives.
It’s rarely, if ever, true in these cases that “he had no other choice.” If you think that being in a tight spot with limited options is the same as having no choice at all, I suggest you ask an actual slave (there are still many around the world) or a convict, and the answer may cause you to rethink your premises. But, for the sake of argument, let’s say it is true in this case. He absolutely has to take this position to stay alive, and that’s just wrong, it is argued.
If he’s really in such a dire situation, is prohibiting the transaction—thus, denying him the job—really the solution, particularly if he’s actually willing? The premise is that employment contracts—or trades of any type—are only to be undertaken when all parties are dealing from an adequate starting point. This suggests one of two things: 1) It was someone’s obligation—prior to this exchange—to supply the applicant with sufficient resources to put him in a proper bargaining position; or, 2) it’s the employer’s obligation to disregard the interests of his organization and offer the applicant compensation on par with what he needs to graduate to an “adequate” standard of living.
In terms of the first option, what constitutes the correct amount of resources? $10,000 in the bank? $50,000 in the bank? Who decides this magic number and on what basis? Most importantly, who is to provide it?
With the second option—assuming some ideal income threshold can be arrived at—if it’s greater than the marginal value product, then the company will necessarily be losing money on his employment. If that happens, then there’s no longer a job for anyone involved. Any further universalization of this practice portends a pretty dire fallout for any and all industrial concerns.
It doesn’t stop there. This idea—that free exchange is only to be engaged in once certain prerequisites are satisfied according to the views of others who are not involved in the exchange—paints a rather bleak, bizarre, and implausible picture of the human condition itself.
It says, in effect, that we are not independent, sovereign beings that exist in nature, each responsible for acting in order to sustain our own existence by our own judgement, ability, and will. We are instead something like game characters, whose chosen actions are arbitrary. We may engage in them to “play” the game, which we are enabled and permitted to do from on high (which implicitly necessitates some “game master”) once we’re properly equipped and fulfill certain criteria.
Prior to this “correct” starting point, we meager playthings just aren’t ready. Too much is left to chance, and not enough pathways to potentially undesirable outcomes have been closed off. We want guarantees; of “acceptable” poverty and mortality rates and sufficient socioeconomic equality. With the right top-down edicts and pronouncements, we can have these guarantees. Then, and only then, can we maybe talk about this silly idea of “freedom.”
This position was famously argued in different terms by Adlai Stevenson: “A hungry man is not a free man.” So, a transaction can’t be just if all parties aren’t perpetually at a basic level of wealth, and a society can’t be free if there’s poverty anywhere in any measure.
What are we to do until these factors are properly situated? This pre-freedom phase of the plan seems to consist of a centralized resource distribution scheme to put things right. So, if freedom is insufficient to get us there, and perhaps even harms the cause, why should we implement it afterwards, or at all? How much more disturbing are the liberties, power lust, and experimental flexibility likely entailed in the probable forthcoming answers? Particularly since they all boil down to the same fundamental principle: if one man is impoverished, another must be plundered.
