Bargaining Power
Some recent conversation on Kevin Carson’s “Free Market Anti-Capitalism” blog has focused on the notion of bargaining power, and the visceral reaction that talk about bargaining power seems to evoke among some libertarians. One commentator suggests that “[t]he inability to recognise bargaining power comes from a profound methodological individualism or atomism among many American style libertarians.”
Some libertarians of various stripes may be atomists. And, if they are, rescuing them from that dubious metaphysical position may be a worthwhile endeavor.
But I wonder whether “inability to recognize bargaining power” may also reflect another difficulty or family of difficulties.
I suspect that the primary underlying objection on the part of the libertarians who are uncomfortable with talk about bargaining power may not be that bargainers’ different positions don’t give them unequal influence over the outcome of their bargain. I’m not sure they’re—necessarily—denying this point. Rather, I suspect, their claim is often, instead, that, even when this is the case, the use of unequal bargaining power does not involve the use of physical force, and therefore doesn’t justify the legal system’s becoming involved in altering the outcome of the bargain. Because appeals to unequal bargaining power have lain at the roots of much modern labor legislation, such appeals raise the hackles of some libertarians, since they seem designed to pave the way for interference with contracts these libertarians regard as free because not grounded in the aggressive use of physical force.
There are multiple objections, I think, to this line of reasoning. I will attend only to two:
1. Someone could express concern about unequal bargaining power without being committed to any particular view regarding what would count as an appropriate response to a contract concluded on the basis of an unequal bargain. Someone could, that is, regard making a bargain the terms of which one is able to shape unfairly to one’s own advantage as wrong without taking any position one way or the other on what sort of response the wrongness of the bargain ought to trigger on the part of the legal system (whether in our world or in a stateless society).
The point is that claims about unequal bargaining power are claims about (potential) moral wrongs, not about remedies.
The difficulty in acknowledging the potential unfairness of a contract concluded on the basis of unequal bargaining power reflects the Remedial Fallacy to which too many libertarians seem to me to be prone. The proponent of the fallacy says something like: If the legal system can’t use force to remedy the supposed harm caused by this conduct, then there’s really nothing wrong with the conduct. The unavailability of a particular kind of remedy is taken, fallaciously, to imply the absence of a wrong in the first place.
In fact, of course, other legal options aside, there are multiple force-free options (which, BTW, could, though need not, be facilitated non-coercively by the legal system in a stateless society—the range of remedies needn’t be exhausted by forceful legal remedies and non-forceful non-legal remedies) that might be pursued in response to the abuse of bargaining power in a stateless society. These might include boycotts of various kinds, public shaming, non-appearance on endorsement lists published by anarchical Better Business Bureaus, etc. (It is also not clear to me why a non-state court system in an anarchic society—not, after all, backed up by the threat of state violence—couldn’t simply announce that it was not going to enforce contracts emerging from what it judged—in light of publicly specified criteria—to be unfair bargaining situations. No libertarian would presumably want to use force to compel such a court system to decide in certain ways.)
But the wrongfulness of an action is not determined by the kind of remedy available for it. To take an obvious example: does anyone imagine that people have stopped objecting to infidelity by their partners in those jurisdictions in which criminal and civil penalties for adultery aren’t available? If exploiting unequal bargaining power to one’s unfair advantage is wrong, it’s wrong quite apart from the question whether it can justly be remedied using forceful legal remedies. The concern about force here is a red herring.
2. It is also a mistake to suppose that unequal bargaining power, where it exists, is unrelated to the prior use of force in multiple ways. As Kevin Carson has emphasized—for instance, here and here—the background conditions for many, perhaps the vast majority of, economic transactions are shaped by centuries-old histories of dispossession and oppression. Even if an individual trader does not act unjustly in making choices within the constraints set by those histories, the existence of bargaining disparities can be seen as a pointer to background injustice. And, of course, the relationships may sometimes be much more intimate, as when wealthy landowners who are themselves responsible for (or in partnership with those responsible for) dispossessing peasants of whose circumstances they then take contractual advantage, or when employers opposing strikes choose, or threaten, to do so violently. Even people for whom force is seemingly the only visible factor ought to be able to acknowledge its significance here.
Some libertarians of various stripes may be atomists. And, if they are, rescuing them from that dubious metaphysical position may be a worthwhile endeavor.
But I wonder whether “inability to recognize bargaining power” may also reflect another difficulty or family of difficulties.
I suspect that the primary underlying objection on the part of the libertarians who are uncomfortable with talk about bargaining power may not be that bargainers’ different positions don’t give them unequal influence over the outcome of their bargain. I’m not sure they’re—necessarily—denying this point. Rather, I suspect, their claim is often, instead, that, even when this is the case, the use of unequal bargaining power does not involve the use of physical force, and therefore doesn’t justify the legal system’s becoming involved in altering the outcome of the bargain. Because appeals to unequal bargaining power have lain at the roots of much modern labor legislation, such appeals raise the hackles of some libertarians, since they seem designed to pave the way for interference with contracts these libertarians regard as free because not grounded in the aggressive use of physical force.
There are multiple objections, I think, to this line of reasoning. I will attend only to two:
1. Someone could express concern about unequal bargaining power without being committed to any particular view regarding what would count as an appropriate response to a contract concluded on the basis of an unequal bargain. Someone could, that is, regard making a bargain the terms of which one is able to shape unfairly to one’s own advantage as wrong without taking any position one way or the other on what sort of response the wrongness of the bargain ought to trigger on the part of the legal system (whether in our world or in a stateless society).
The point is that claims about unequal bargaining power are claims about (potential) moral wrongs, not about remedies.
The difficulty in acknowledging the potential unfairness of a contract concluded on the basis of unequal bargaining power reflects the Remedial Fallacy to which too many libertarians seem to me to be prone. The proponent of the fallacy says something like: If the legal system can’t use force to remedy the supposed harm caused by this conduct, then there’s really nothing wrong with the conduct. The unavailability of a particular kind of remedy is taken, fallaciously, to imply the absence of a wrong in the first place.
In fact, of course, other legal options aside, there are multiple force-free options (which, BTW, could, though need not, be facilitated non-coercively by the legal system in a stateless society—the range of remedies needn’t be exhausted by forceful legal remedies and non-forceful non-legal remedies) that might be pursued in response to the abuse of bargaining power in a stateless society. These might include boycotts of various kinds, public shaming, non-appearance on endorsement lists published by anarchical Better Business Bureaus, etc. (It is also not clear to me why a non-state court system in an anarchic society—not, after all, backed up by the threat of state violence—couldn’t simply announce that it was not going to enforce contracts emerging from what it judged—in light of publicly specified criteria—to be unfair bargaining situations. No libertarian would presumably want to use force to compel such a court system to decide in certain ways.)
But the wrongfulness of an action is not determined by the kind of remedy available for it. To take an obvious example: does anyone imagine that people have stopped objecting to infidelity by their partners in those jurisdictions in which criminal and civil penalties for adultery aren’t available? If exploiting unequal bargaining power to one’s unfair advantage is wrong, it’s wrong quite apart from the question whether it can justly be remedied using forceful legal remedies. The concern about force here is a red herring.
2. It is also a mistake to suppose that unequal bargaining power, where it exists, is unrelated to the prior use of force in multiple ways. As Kevin Carson has emphasized—for instance, here and here—the background conditions for many, perhaps the vast majority of, economic transactions are shaped by centuries-old histories of dispossession and oppression. Even if an individual trader does not act unjustly in making choices within the constraints set by those histories, the existence of bargaining disparities can be seen as a pointer to background injustice. And, of course, the relationships may sometimes be much more intimate, as when wealthy landowners who are themselves responsible for (or in partnership with those responsible for) dispossessing peasants of whose circumstances they then take contractual advantage, or when employers opposing strikes choose, or threaten, to do so violently. Even people for whom force is seemingly the only visible factor ought to be able to acknowledge its significance here.
Comments
But aside from whether or not they actually use the words, the substance of bargaining power is central to Austrian economics. As one of the commenters at my blog post said, bargaining power can be described very well in terms of Bohm-Bawerk's marginal pairs. When the state's policies result in a disappointed seller being left over at the end of the dance, it's a buyer's market--and vice versa. When Rothbard said that artificial land scarcity (enforcing title to vacant and unimproved land) increased the marginal return on land relative to labor, what he was describing was bargaining power--precisely.
And even stipulating that reduced bargaining power does not result from force in a particular case, it's an unfortunate tendency in libertarianism to reject moral criticism of any outcome of a free market, so long as coercion is absent (e.g., criticism of authoritarian culture within hierarchies, or any example of revealed preference--unless the revealed preference is honoring a picket line or buying fluorescent bulbs, in which case it is fair game). As with thick libertarian critiques of cultural domination and hierarchy, the thin libertarian rejection of such criticism when coercion is absent is (as Charles Johnson put it) *weird*. It undermines the values you'd normally assume led people to libertarianism in the first place.
You don't have to go as far as suggesting that most libertarians are "whim-worshippers" to suspect that most didn't start from self-ownership and nonaggression and then arrive at libertarianism deductively. Most people were attracted to the arguments for self-ownership and nonaggression because cultural values (like hating to see people pushed around and preferring to see them left alone and treated with respect) that predisposed them to accepting such arguments.
Some of these people, the ones who act like the kind of bluenose Stepford Wife Republican for whom "God" is spelled B-O-S-S, you have to wonder what attracted them to libertarianism at all. At my worst moments, I suspect their libertarianism is grounded in authoritarianism: deep down, they really believe that the main effect of the free market will be simply to remove the state as an outside interference in the little killing jars, where the authoritary figures they worship so much can have a free hand to brutalize those subject to their will. It's an Archie Bunker attitude: if it weren't for all the bleeding-heart liberals in the government, bosses would be free to torment workers, landlords torment tenants, etc., the way things were back when men were men and sheep were nervous.
In some of the viscerally negative reaction I've seen to feminism, ant-racism, environmentalism, labor, etc., I've sensed authoritarian ressentiment: what are THOSE PEOPLE doing, coming in here and spoiling our nice clean little movement.
But aside from whether or not they actually use the words, the substance of bargaining power is central to Austrian economics. As one of the commenters at my blog post said, bargaining power can be described very well in terms of Bohm-Bawerk's marginal pairs. When the state's policies result in a disappointed seller being left over at the end of the dance, it's a buyer's market--and vice versa. When Rothbard said that artificial land scarcity (enforcing title to vacant and unimproved land) increased the marginal return on land relative to labor, what he was describing was bargaining power--precisely.
And even stipulating that reduced bargaining power does not result from force in a particular case, it's an unfortunate tendency in libertarianism to reject moral criticism of any outcome of a free market, so long as coercion is absent (e.g., criticism of authoritarian culture within hierarchies, or any example of revealed preference--unless the revealed preference is honoring a picket line or buying fluorescent bulbs, in which case it is fair game). As with thick libertarian critiques of cultural domination and hierarchy, the thin libertarian rejection of such criticism when coercion is absent is (as Charles Johnson put it) *weird*. It undermines the values you'd normally assume led people to libertarianism in the first place.
You don't have to go as far as suggesting that most libertarians are "whim-worshippers" to suspect that most didn't start from self-ownership and nonaggression and then arrive at libertarianism deductively. Most people were attracted to the arguments for self-ownership and nonaggression because cultural values (like hating to see people pushed around and preferring to see them left alone and treated with respect) that predisposed them to accepting such arguments.
Some of these people, the ones who act like the kind of bluenose Stepford Wife Republican for whom "God" is spelled B-O-S-S, you have to wonder what attracted them to libertarianism at all. At my worst moments, I suspect their libertarianism is grounded in authoritarianism: deep down, they really believe that the main effect of the free market will be simply to remove the state as an outside interference in the little killing jars, where the authoritary figures they worship so much can have a free hand to brutalize those subject to their will. It's an Archie Bunker attitude: if it weren't for all the bleeding-heart liberals in the government, bosses would be free to torment workers, landlords torment tenants, etc., the way things were back when men were men and sheep were nervous.
In some of the viscerally negative reaction I've seen to feminism, ant-racism, environmentalism, labor, etc., I've sensed authoritarian ressentiment: what are THOSE PEOPLE doing, coming in here and spoiling our nice clean little movement.
“And even stipulating that reduced bargaining power does not result from force in a particular case, it's an unfortunate tendency in libertarianism to reject moral criticism of any outcome of a free market, so long as coercion is absent (e.g., criticism of authoritarian culture within hierarchies, or any example of revealed preference--unless the revealed preference is honoring a picket line or buying fluorescent bulbs, in which case it is fair game)”
Yes. Yes. Yes. There may be good reasons in any particular case to oppose the use of certain kinds of remedies for particular wrongs. Whether that’s so or not is irrelevant to whether or the the conduct in question is unfair or otherwise unreasonable in a morally relevant sense. Why can’t people make this simple distinction?
Boy, that's a convoluted sentence. Hopefully it made sense. If contract enforcement is left to moral sanction, bargaining power would seem to be a perfectly acceptable consideration.
I was led to libertarianism out of belief in self-ownership. If you like to live an egalitarian life that's what you should do. If you like to follow the commands of a leader that's what you should do. (I'd personally prefer the former). What *I* find weird is redefining libertarianism as egalitarianism and then asserting that libertarians qua libertarians should put social pressure on people to make them adopt, whether they want to or not, an egalitarian way of life. Smacks of left-wing authoritarianism only without the state.
I am disinclined to accept either of these views. But it seems to me that someone who did accept them couldn’t consistently go on to say that social pressure was problematic. Aren’t economic and social pressure on, as the English would say, all fours?
I for one wasn’t arguing that someone who wanted to follow a leader should be socially pressured not to do so (though I can imagine contexts in which this might be the thing to do, as I suspect you can). My point had, rather, to do with pressuring people who were exercising institutional power to share that institutional power.
It’s not obvious to me why it’s weird to say that someone who doesn’t like the state telling her what to do might well not like a corporate hierarch (or a nosy neighbor) telling her what to do, either. Can you say more about why these aren’t congruent impulses?