Libertarians Are Huge Fans of Economic Coercion

Robert Hale was an economically-trained legal realist who plied his craft as a legal scholar in the early 20th century. As his sparse Wikipedia page suggests, he has not had much lasting fame. This is a shame. On the merits, Hale is one of the greatest analytical critics of laissez-faire economic theories that there has ever been.

Among other things, Hale deconstructed the hand waving way in which people talk about economic coercion and voluntary economic behavior. Using a functionalist approach, Hale showed that all economic regimes rely upon economic coercion, laissez-faire ones just as much as socialist ones. The best way to illustrate his argument is with two parallel examples.

Imagine I am looking to find housing to live in. I am presented, in the status quo, with the following choices:

  1. Pay a landlord rent to live in some building.
  2. Be homeless.

If I pay the landlord rent, this will be described as a voluntary, non-coercive transaction. After all, I chose option one because it was the best of the two. But wait a minute, these two options aren’t the only conceptually possible options. There could be this third option: just move into a building and pay nothing to the landlord.

If I had that third option available, I would definitely choose it. Why don’t I? Because the state has violently and coercively foreclosed that option. Through its construction of property law, the state has declared that landlords may call it on the phone and have it violently remove me from the building if I chose option three. That is, the state has–through violent, physical coercion–restricted the options that are available to me. It is only due to this coercion that I choose option one and pay landlords anything. In fact, functionally speaking, I pay landlords to get them to waive their state-granted right to violently restrict me from buildings. That is the quid pro quo of a rental arrangement.

Now for example two. Imagine I am thinking of getting a job. I have the following options in the status quo:

  1. Get a job and pay income taxes on the income from that job.
  2. Do not get a job.

This is an identical situation to the one above. Given this range of possible options, I choose option one. So are income taxes voluntary and non-coercive? It would seem so, right? At minimum, paying income tax is just as voluntary as me paying rent to a landlord. That is, I have chosen that option among all of the available options because it is the best one. But of course, the rub is that this is not a complete set of possible options. There is a third option here that the state forecloses: Get a job and do not pay income taxes.

That third option is the one libertarians would choose, but the state–through violent, physical coercion–has prevented them from having this option.

What’s amusing about libertarians and laissez-faire people (and the loose way certain economists talk) is that they will describe my choice to pay rent as non-coerced and voluntary while describing my choice to pay income taxes as coerced and involuntary. But there is no neutral construction of “coercion” that would ever support such a distinction. As Hale aptly demonstrates, coercion occurs when there are “background constraints on the universe of socially available choices from which an individual might ‘freely’ choose.”

In a world of scarcity, all economic rules–including rules that create private property ownership, contract laws, and so on–impose background constraints on the universe of choices individuals can make (e.g. the choice to move into a building and sleep in it without paying anyone anything). When we talk about the economy, we are not arguing about whether we want coercion. We are arguing about what coercion we’d like.

None of this is to say you can’t make arguments for the laissez-faire system of violent economic coercion. You certainly can. Utilitarian arguments are very much available as are desert theory arguments (though I think those all fail as well). But what you most certainly can’t do is say your reason for supporting laissez-faire is because you oppose economic coercion. Such an argument is either patent nonsense (as explained above) or turns upon an idiosyncratic definition of "coercion" that has packed into it the very normative propositions that libertarians try to justify by appealing to non-coercion in the first place.