On Hayek And Rothbard

September 14, 2011 Longrider Blogs & Blogging, Political 6

Trooper Thompson has expanded on the discussion that took place this past couple of days on the matter of boycotts. I spent ages leaving a thoughtful comment in response and it disappeared into Blogger’s ether. Bugger, bugger, bugger!

Update. While I was writing this, TT has rescued it from the spam queue.

Okay, so I will try to formulate the thoughts again here…

Firstly, let me reiterate that at no time have I suggested that boycotts are illegitimate. Nothing in my previous post and the subsequent discussion intimated this. Pointing out that such behaviour is coercive is merely an objective statement of fact, it does not imply that it is illegitimate. Such action is a perfectly legitimate use of freedom of association and freedom of speech. The mistake that TT, Left Outside and bnszz seem to be making is conflating my disapproval of a specific boycott and pointing out the coercive nature therein with their legitimacy as a whole.

TT turns to the likes of Rothbard for intellectual backup in these discussions. I, however, turn to etymology. Are the words I am using accurate? Do they convey my meaning? Is my use of the term “coercion” correct? Actually, yes, it is. When we talk of using force, we must remember that force does not necessarily mean the use of physical violence. It can be subtle pressure that applied appropriately causes a change in behaviour on the subject. To use the term in a broader sense is neither torturing the English language nor does it lead to confusion. Frankly if it does confuse you, then may I politely suggest that you are easily confused.

An example of this would be damage to reputation. Enough bad press could cause serious damage to an organisation warranting a significant change in its behaviour. An extreme example would be public outrage in the event of an incident causing loss of life. I have commented on this phenomenon before. Equally, word of mouth can do likewise for a local business. I recall some thirty-odd years ago one of the Swedish bookshops opened up in our local High Street. Planning was approved and it opened up despite local people campaigning against it. When it did open, protestors stood outside and prospective customers had to walk a peaceful gauntlet. Eventually it shut up shop, as, presumably, enough of those prospective customers decided not to bother. Coercion clearly took place here. To suggest otherwise is to deny reality and coercion was the objective of the protestors.

TT refers to Hayek and Rothbard. He suggests, correctly that I would agree with Hayek.

there are, undeniably, occasions when the condition of employment creates opportunity for true coercion. In periods of acute unemployment the threat of dismissal may be used to enforce actions other than those originally contracted for. And in conditions such as those in a mining town the manager may well exercise an entirely arbitrary and capricious tyranny over a man to whom he has taken a dislike.

Rothbard disagrees with this.

Yet, “dismissal” is simply a refusal by the capital-owning employer to make any further exchanges with one or more people. An employer may refuse to make such exchanges for many reasons, and there are none but subjective criteria to enable Hayek to use the term “arbitrary.” Why is one reason any more “arbitrary” than another? If Hayek means to imply that any reasons other than maximizing monetary profit are “arbitrary” then he ignores the Austrian School insight that people, even in business, act to maximize their “psychic” rather than monetary profit, and that such psychic profit may include all sorts of values, none of which is more or less arbitrary than another. Furthermore, Hayek here seems to be implying that employees have some sort of “right” to continuing employment, a “right” which is in overt contradiction to the property rights of employers to their own money. Hayek concedes that dismissal is ordinarily not “coercive”; why then, in conditions of “acute unemployment” (surely in any case, not of the employer’s making), or of the mining town? Again, miners have moved voluntarily to the mining town and are free to leave whenever they like.

The reason I agree with Hayek and not Rothbard is because Hayek’s comments are rooted firmly in the real world. Employees may be free to move town, but this is expensive, time-consuming and may well not resolve the situation anyway. And in the meantime, the employee still needs an income. So, sure, in the rarified atmosphere of political philosophy, it is fine to say that the employee is free to walk away if the contract is no longer equitable to him. Meanwhile, down here in the real world things are markedly different. And to deny this is to deny reality again and to deny the external pressures that affect the relationship in that contract. Pressures that one party may use to his advantage and the disadvantage of the other.

Also bear in mind that the employer in this example is not “refusing to make further exchanges” he is unilaterally varying a previously agreed contract (been there, done that –  walked away on that occasion because I could). He is doing so from a position of strength. If I was faced with this coercion today –  for coercion it most certainly is –  I would either comply or find myself without an income. Hobson’s choice. Rothbard’s assertion that this in not coercive is absurd beyond belief. In a time of economic downturn, work is hard to come by. Sure, in my own sector I am easily finding myself short listed for interview (and I’m getting better at them all the time after twenty years absence), but the competition is fierce, so time must pass before I find a suitable opening. For temporary unskilled stuff, I’m not getting a look in –  far too qualified. So Rothbard’s questioning of Hayek’s statement is odd –  of course high unemployment makes a difference. It creates an external pressure that strengthens the hand of the employer that he may use when applying pressure to the employee to conform; this is particularly so if this is the only mining town within a reasonable distance and the employee has no other qualification or skill to offer the marketplace. The fault for this is irrelevant. I find Rothbard’s position remarkably naive here.

Neither Hayek, nor I are claiming nor implying that employment is a right – but once engaged in a contract, it is reasonable to expect the other party to adhere to it and not unilaterally amend it to the other party’s detriment without very good reason. Using the threat of dismissal in the event of refusal to comply with an unreasonable unilateral change to contract (working extra without pay, for example) is most certainly coercive behaviour knowing full well that the employee has limited options when faced with the ultimatum.

So, yes, interesting discussion, but people who campaign for boycotts are still engaging in coercive behaviour just as are people who refuse to do something they would otherwise do –  striking, for example. Coercion does not need physical force to be effective nor, indeed, to exist.

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Update: Following my response to TT in the comments below, I said that I would prefer less law rather than more and that, for the most part, I am not arguing for the law to be doing anything. However, I recall that we have a piece of statue called the Unfair Contracts Terms Act. Having suffered the wrong end of an unfair contract some twenty-odd years ago, it is something in which I take an interest. It is much like consumer protection law. The pure libertarian stance is that such law should be unnecessary and yes, I would love to agree. However, we do get rogue traders who will take advantage, just as we get folk who use unfair contracts, contracts that the other party may feel coerced into signing because of those outside pressures we have been talking about.

Should the law be invoked? Well, the answer is both yes and no. It should not be a statutory thing requiring an act of parliament. However, the injured party should have easy access to legal redress in the case of harm. In my case, it was significant loss of income –  not to mention the anguish of someone attempting to use the law to enforce the contract once I’d walked without notice. I did so because the contract was unfair and eventually, having wasted significant sums of money on legal fees, won. As it was, the matter was entirely civil, statute was not involved at all.

The point buried in all of this, is that political philosophising is all very well, but sometimes it seems to forget that people behave badly and they do so in ways that is not always easy to remedy with simple solutions.

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6 Comments

  1. Liked Rothbard overall but agree with this:

    The reason I agree with Hayek and not Rothbard is because Hayek’s comments are rooted firmly in the real world. Employees may be free to move town, but this is expensive, time-consuming and may well not resolve the situation anyway.

  2. It’s at times like this that I diverge form libertarianism. It’s one thing to say that people have a choice, but the reality is all too often that that choice is loaded due to pressures outside of their control, effectively meaning no choice at all.

  3. Right. On y va.

    The matter of word definition should not cloud the issue. What is important is that we have a shared language so that we understand one another. In any case, my OED says: ‘to restrain or constrain by force, or by authority resting on force’. With science and law, strict definitions are needed. With rhetoric, the opposite is the case.

    “Pointing out that such behaviour is coercive is merely an objective statement of fact, it does not imply that it is illegitimate.”

    It is coercive going by your definition of coercive, but not by Rothbard’s definition (nor, I would say, the OED quoted above). Under Rothbard’s definition it is clear-cut that coercion is illegitimate. Under yours, it covers a multitude of acts which, as you say, may be legitimate or illegitimate. Therefore, under your definition the word has no particular use, because it doesn’t designate an act as one thing or the other.

    The claim that Rothbard is in some kind of ivory tower, unlike the ‘real world’ Hayek, is a straw man. Rothbard is looking at the issue from a dispassionate, rational, consistent viewpoint. He makes a definition, sticks to the definition and follows it through. What you praise in Hayek is his failure to come up with a definition that serves any meaningful purpose, because it stretches from a wife nagging a husband to mow the lawn to a man holding a knife to your throat and demanding money.

    “Rothbard’s assertion that this in not coercive is absurd beyond belief.”

    No. It is correct, given his definition of coercive, which he had already stated.

    As for the whole issue of work and contracts, the question is; what do you want the law to do? Uphold property rights or enforce a moral code? One reason, among others, for the former rather than the latter, is that it is a lot easier to assess contentious issues from the point of view of property rights than morality. Given the mass of legislation on the subject of employment rights and the actual situation, which you know as well as I do, if not better, I could claim that it is Rothbard who is in the real world, and Hayek who’s off with the fairies, because at least Rothbard has a system which is simple and pragmatic, and doesn’t require the machinery of the state to step in to arbitrate every last matter, or indeed an assessment of external conditions, such as the current jobs market.

    The point you make about contracts is certainly important. However, what’s the reality? In my experience, the job description usually ends with a clause along the lines of: “and any other tasks or responsibilities that may come along”, so, as we both know, the employer usually has the upper hand. However, when a contract is shown to have been violated, the injured party does have redress, and would also do so in the mythical libertarian world where I go to dance with Rothbard.

    Finally (I think!) I will reiterate a point I have made before: morality and law should be separate spheres. Just because something is permissible by law (whether actual law now, or the law as it would be under libertarian principles) does not at all mean that it is moral. The boycott is a means to bring pressure to bear on someone or something we find immoral. As long as no violence is used nor any threat of violence to persons or (lawfully-owned) property, then it is lawful. Whether it is moral is another matter. In the case of the teeshirt, you would say that it is not, and I would probably agree with you.

    Now I must lie down.

  4. Firstly, let me point out that the OED is not the only English dictionary available and even that will acknowledge subtle shifts in meaning and usage over time – and I do not use just one dictionary for my research when using words. My use of h term coercion is indeed accurate according to dictionary definition and English usage. It is not “my” definition at all, as I do not (nor ever have) choose to define words, it is a legitimate usage found in a variety of dictionaries, just as the term “force” is not confined to a physical phenomenon. Rothbard may well be using “his” definition. However, the English language allows for broader usage perfectly legitimately. Outside of the narrow confines of political discourse, the average person would understand my meaning perfectly well and likely as not will never heard of Rothbard or Hayek.

    I stand by my point regarding Hayek. It is all very well having a dispassionate and theoretical argument – and it is one that makes sense until it hits the real world with real world influences. We know from history that ideology that refuses to conform to real world influences ends in tears and in some cases, piles of corpses.

    What you praise in Hayek is his failure to come up with a definition that serves any meaningful purpose, because it stretches from a wife nagging a husband to mow the lawn to a man holding a knife to your throat and demanding money.

    And Hayek is correct in this. He doesn’t need to come up with a definition, the dictionary does it perfectly well for us. He is using a definition the man in the street will easily recognise. Coercion and force are not confined to narrow, strict usage, there are degrees. Hayek is acknowledging this. It is not confusing to do so as it is a rational observation of the world and how it works. We use force and coercion in a variety of contexts from the brutal to the subtle – even two people bartering are attempting to coerce the other to obtain the best deal. The “force” or persuasion used will be loss of the trade or the rarity of the commodity. It is merely that this type of persuasion is at one end of the spectrum and the knife at the throat is at the other. One is perfectly legal and moral the other is neither. I have no problem differentiating between the two and neither will our man on the Clapham omnibus, so I fail to see why people are claiming that it is confusing. To attempt to gainsay our language and restrict it to rigid and narrow definitions of one’s own preference is attempting to hold back the tide. Try using the term “gay” in its original context these days and see where it gets you.

    No. It is correct, given his definition of coercive, which he had already stated.

    Sure, but Rothbard does not have a monopoly on the English language. He does not get to set the definitions of words. I realise that L Ron Hubbard had a go at this in his Dianetics book, but most people tend to use available dictionaries and commonly understood definitions 😉

    On the matter of contracts I was not suggesting that the law did anything, I was merely reiterating Hayek’s point that the contract may be one sided. In general, I would prefer less law. However, what Hayek was talking about was an unreasonable variation to contract – or as I have been experiencing, a set of rules so wide ranging and petty that just about everyone will be in breach at some point. In such a situation, a manager can exercise a tyranny against someone he takes a dislike to and do it perfectly legitimately when viewed from the outside. This is precisely what I am experiencing. There is nothing the law can do about it, nor, I suggest, should (although I intend to use their failure to exercise their statutory and civil duty of care to my advantage when the time comes). However, Hayek’s acknowledgement of the problem is spot on. I wonder if I would have thought so had I not had personal experience of it? Rothbard is ignoring the influences and pressures that exist when the contract is drawn up. Of course the level of unemployment is a factor as it strengthens the hand of one of the parties to the contract. In a reverse situation, the employee could find himself calling the shots. This has nothing to do with either law or morality, but it does exist in the real world and to ignore it would be foolish. One cannot just walk from a job during periods of high unemployment as most people cannot exist for very long without an income. In most contracts, the employer has the upper hand and Rothbard is tending to ignore this reality. Saying that the employee has a choice and can walk is highly unrealistic to the point of naivete. Those of us in the real world realise that this just isn’t the case. I would have walked from Sainsbury’s long ago if it was so. Yes, sure, I still can according to Rothbard. How, precisely, does he suggest I live without an income? Choice, my arse!

    So, sure, Rothbard’s theories are fine as a starting point. However, any political philosophy will find itself under strain once introduced into the wild. It must then either adapt to recognise real world pressures or it must force the world to comply – we all know where the latter leads, don’t we?

    On your final paragraph, yes, we agree. We always have. Again, I reiterate, nothing I have said gainsays it.

  5. It’s at times like this that I diverge form libertarianism

    Good for you. It has always struck me that libertarianism is a utopian ideology that like that other utopian ideology, communism, is capable of great harm when its disciples hold to it in the absence of common sense and reality. Any government that was run along wholly libertarian principles would disssolve into a feudal state, in which rich warlords held the power of life and death over everyone else and where the libertarian state was too enfeebled to do anything about it. The reality is that there are bad people and destructive forces out there and you need some ‘coercion’ to protect other people from their depravities.

  6. Stephen, staying with your thought there, we have seen how Rothbard’s logic pans out. In 1801 parliament passed the first piece of safety legislation – the Health, Safety and Welfare of Apprentices act. Now, think about what was going on at the time – apart from the Napoleonic wars. We had the industrial revolution in full swing and no employee rights legislation, merely the capital owning employer deciding to use his capital as he saw fit. Parliament decided that abuse was going on and saw fit to intervene. Given that the abuse was pretty horrific, parliament could hardly be accused of control freakery.

    Given free reign in a real world situation, some employers will use the power their position gives them to abuse employees. It is human nature. Hayek is merely acknowledging this truism.

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