Friday, June 03, 2005

Voluntary Exchange

One of the core principles of Nozick's entitlement theory concerns the just transfer of property (or "entitlement to holdings") from one person to another. Nozick assumes that just transfers will also be justice-preserving, in that the resulting distribution of resources will be just if the pre-transfer distribution was. We'll examine that assumption later. The prior question is, what makes for a just transfer? The obvious answer is 'voluntary exchange'. But what does 'voluntary' mean in this context? We should want to exclude at least coercion, manipulation, and fraud.

Must both parties be fully informed? This would be a very stringent requirement, rendering the vast majority of real-life exchanges "unjust". Perhaps we should settle for avoiding outright deceit. An exchange may be legitimate even if it involves some ignorance.

How about manipulation - how strict should we be about that? Arguably, all advertising is a form of manipulation, but it would surely be going too far to deny that just exchanges can result if one party has been influenced by advertising. It would only be problematic if the manipulation was serious enough (e.g. brainwashing) to undermine the agent's autonomy. It isn't clear where exactly to draw the line, but we will set this aside for now.

Perhaps most important is how we understand coercion. In the libertarian (non-welfare) state, poor people are effectively forced to labour. There are no reasonable alternatives (given that starving to death is the only alternative that would be open to many, and that clearly is not a reasonable one!). This desperation will weaken their bargaining power, so it would seem a mistake to say that they're in any position to give "voluntary consent" for their employment contracts. There's nothing "voluntary" about it -- they have no other options. If you're stuck down a well, and I offer to throw you a rope in exchange for everything you own, you have no real choice but to accept. This would not be a just transfer.

So the principle does not necessarily support free market capitalism after all. Many market exchanges are unjust, due to imbalances in bargaining power, and lack of genuine choice on the part of poorly-off contractors. The principle of transfer by voluntary exchange presupposes a liberal egalitarian society. My next post will look at whether it works even then.


  1. "In the libertarian (non-welfare) state, poor people are effectively forced to labour."

    This is distortion of 'coercion'. Sure, you have do some work, or starve. That's not the fault of your prospective employer; blame God if you must.

    In any case, the 'stuck down a well' analogy is weak; for the people stuck down that well there is not just one person offering a rope; there are thousands, each with a different price for their rope. And some odd fellow in the well next to you describing how you can live well on fish and mushrooms found there.

    And in the world, almost everyone has a choice of employers or trades. That your choice may be constrained by your abilities isn't coercion, nor is the fact that you have to make some choice.

  2. The worker may not be forced to work for any particular employer A, but he certainly is forced to work for some or other employer (A or B or C...). A man is no less forced into slavery when given a range of owners to choose from. Similarly, a range of potential employers does not alter the fact that a man may be forced to labour.

    Now, it may happen that this competition leads one of the employers to give him a decent deal after all. But it's not guaranteed, and the mere fact that the worker "consents" to it does not establish that it is a just deal, which is what the libertarian requires here.

    "blame God if you must."

    No, blame the unjust social system, and the morally deficient right-wingers who support and maintain it! ;)

  3. Craig points out that > " your your choice may be constrained by your abilities "

    well, yes. But I am with richard here. And further, the 'real' value of reward for any labour is altered by certain conditions across the economic community (related to property privilege).
    It is simply not worth getting any nore specific here as I discovered ( when attending some lectures on alternative economics ) that the matter goes pretty deep into peoples' attitudes.

    It was not about reason and logic. You could see people, as they slowly grasped the significance of the ideas, becoming withdrawn and quiet. .. and some left. Realising that it was a different way to look at the reality around, and that it cut across a lot of what was common thinking. It was not complicated what was said, simply outside the normal.

    Since then I ( an absolute nobody believe me!) have foolishly at intervals raved at huge length, about the matter in odd public submisions ... only I'm pretty sure (from comments.. one by a political leader no less!) that you simply can't penetrate some attitudes except in answer to heartfelt questions coming from within the person themselves.
    Well, it is true of anything I might say anyway.

    Could I just suggest instead, that in an ecomomy where ( as is common across capitalist countries) 80 % of wealth is in the hands of 20% of the people that this CANNOT represent a fair return for what the 20% contribute. ( or the 80 %)
    I believe that at times one person may contribute a very great deal, and that many can contribute say twice and more as much useful idea or effort. But the proportion when you do the maths for the above, is massively 'out of whack.'

    which means .. er where was I?
    I guess it means .. I don't agree .
    and that i had better stop raving again.

    cheers anyway.


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