Monday, July 2, 2012

On Libertarianism and Workplace Regulations

Crooked Timber writes an extended post about libertarianism and the workplace. If you have the time, it's definitely an interesting read.

I have many reactions. I admit that I did not page through the entire conversation referenced between CT and BHL. I want to begin by saying I don't believe the workplace restrictions cited are efficient, and in some cases they are not even defensible. I also have a general critique: Chris tends to set up a straw man libertarian argument, knock it down, then acknowledge that BHL have a much more nuanced view.

  1. The first reaction is a comparison to Ronald Coase's famous paper The Nature of the Firm. As Eli Dourado nicely summarizes: there are two ways of coordinating activity. One is command-and-control, and the other is the price system. It is not costless to use either system. In society writ large, the benefits of the price system far outweigh the costs, so that is the main organizing principle of the market. However, at the firm level, the costs of using the price system often outweigh the benefits; entrepreneurs use command-and-control to economize on costs and generate significant benefits. Advocating the use of both systems in these different situations is perfectly consistent theory. Chris complains that libertarians are not sensitive to the limited amount of freedom given in the workplace. I see this as a parallel complaint to the idea that there are not enough prices within a firm. Giving everyone infinite freedom is not costless; within a firm, an entrepreneur is using a different organizing principle because there are significant benefits to doing so.
  2. Where there is power, there is the possibility of coercion. Whether the power is held privately or by the state, coercion is possible. That's the nature of power. Most libertarians are concerned with state power because, as Hayek explains in chapter 10 of The Road to Serfdom, the worst inevitably rise to the top of a state system. Employee exit options are a much better check on private power than anything we have to check state power, which is why most libertarians are less concerned with private power than state power.
  3. Chris states that the exit option would be much more feasible if the Universal Basic Income (UBI) provided by society would allow more than an impoverished subsistence. I counter that a UBI that was a pleasant alternative to work would make me quit my job, where I suffer no serious workplace injustices. I'd much rather read, write some thoughts, and sleep a lot than commute to work every day, and I assume many people feel that way. Providing a UBI that allows freedom of movement between jobs but does not encourage people to spend significant periods of time not working is a serious challenge and Chris doesn't ever acknowledge this opposing side when advocating an expanded UBI.
  4. Freedom of movement between jobs, says Chris, is restricted by "sunk costs" such as long-term financial commitments, children, co-worker relations, etc. All of these, however, are voluntary restrictions a person imposes on himself. If the person does not believe his workplace is a healthy place where he is willing to spend an extended period, he should not take on these responsibilities.
  5. I will add that bosses are humans, too, something that Chris fails to acknowledge. Many (most) bosses do not take pleasure in imposing unreasonable restrictions on their workers, nor do they want the majority of their staff to quit every few months. Human relationships work surprisingly well in lieu of formal contracts.

I could keep going, but this post is already too long. The disagreement, as I see it, is this: libertarians fear abuse of power. They prefer a world with the bare minimum number of power structures, because where there are few power relations there are limited opportunities for power to be abused. Chris seems to prefer a world where power relations are checked by parallel power relations (in this case, private power relations checked by a powerful state). I think this is a fundamental disagreement and it won't be solved anytime soon.

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Compared with the totality of knowledge which is continually utilized in the evolution of a dynamic civilization, the difference between the knowledge that the wisest and that which the most ignorant individual can deliberately employ is comparatively insignificant. ~Fredrich Hayek in The Constitution of Liberty