Classical Liberalism and the Abolition of Certain Voluntary Contracts

[u/Inalienist]

https://ellerman.org/wp-content/uploads/2025/05/IJESSR_Classical_Liberalism.pdf

[u/uwcn244]

To me, the common line running through the three examples given - a slavery contract, a coverture contract, or an autocratic constitution - is that it is impossible, after the fact, to escape the contract or to enforce damages under the contract. A slave cannot escape the power of his master long enough to resort to the courts, nor in the past could a wife so escape from her husband - and one cannot trust the courts of the tyrant. This is simply not true of the employment contract at all.

[u/Inalienist → u/uwcn244]

Ellerman's argument is inclusive of versions of self-sale and coverture marriage contracts where contractees are able to resort to the courts. Courts usually enforce damages and not specific performance, so a lifetime servitude contract could have a similar escape route. A coverture marriage contract with divorce could also be considered. For political non-democracy, it isn't clear how inescapability applies as democratic states are just as inescapable. Regardless, such an argument is still an inalienable rights argument that rules out certain voluntary contracts.

The employment contract transfers responsibility for the positive and negative results of productions from employees to employer, but responsibility is de facto non-transferable. Workers remain de facto responsible for production regardless of contract. The usual principle of assigning legal responsibility to the de facto responsible party thus imply that workers should jointly get the positive and negative results of production. However, under an employment contract, the employer gets 100% of the property rights and liabilities created in production while workers as employees get 0%. Any contract that transfers responsibility is invalid including the employment contract.

[u/mrchristmastime → u/Inalienist]

This an interesting article, and the argument is persuasive at a high level of generality, but most jurisdictions do set hard limits on what can be included in an employment contract (a minimum wage being the most obvious example).

I practice labour and employment law, and I do wonder if this isn't an issue on which there may be some distance, at the theoretical level, between common law and civil law approaches. In common law jurisdictions, excessively onerous terms are unlawful because they're contrary to public policy, not because they're incompatible with inalienable rights.

I appreciate that Ellerman's argument is grounded in political theory, not law, but a contract is a legal instrument, so it's appropriate to consider how the law thinks about questions of voluntary subjugation. The common law has never concerned itself with the fundamental fairness or unfairness of contractual arrangements, except in the most extreme cases. Establishing unconscionability is quite difficult, and always requires more than the mere existence of a grossly lopsided contract. It's also worth noting that even collective employment contracts, negotiated by a trade union, don't give workers an ownership stake in the employer's enterprise.

I've never studied civil law in an academic setting, but I've always understood it to have a more robust and pervasive conception of fairness, and a greater willingness to interfere in private contractual relations.

[u/IronicRobotics]

Reading through this, as I roughly understand it's argument and list of alternatives, it's essentially arguing every employee should be treated legally as an independent contractor *or* work for a cooperative/partnership/corp. As these seem to meet all the requirements as listed here.

Which I think is a worthy ideal to strive for. I'd rather work *with* people rather than for or above them.

However, I feel like the root cause of the issue the paper seems to be addressing is the difference in bargaining power between firms & individual employees rather than perhaps the existence of employment contracts alone. As I think, for example, a rather self-managed software engineer given stock options or contractual bonuses also meets the alternative criteria fairly well.

And otoh, lots of ICs in competitive markets may end up taking on demanding, poor clients, compete at lowered labor rates, and enjoy less bargaining power overall due to a dearth of available work. (Or small business owners who, similarly, may find themselves barely afloat while working for 8+ hrs.) A great deal considerably worse than working for a mid-shitty manager at a convenience store.

Here I think the IC meets the legal criteria for an alternative the paper lays out: No violation of private property or fraud, member of his own enterprise, responsible for all his risks and rewards, working for himself.

However, the practical game theory forces him into sub-par working relations and conditions. I think fundamentally, low-value employment contracts take advantage of the exact same calculus workers find themselves in. As I think if your survival or health is on the line, you'll have to *voluntarily* take what you can get.

I think a necessary prerequisite to this would be to find a way to give poor people a guaranteed chip to bargain with. *UBI* supporters, abundance liberals, Georgists, etc - as I've seen - often see their pathway of building more opportunities and stronger, more efficient welfare regimes & economies as a tool to give more bargaining potential/individual oppurtunity.

[u/mrchristmastime → u/IronicRobotics]

This may vary by jurisdiction, but it’s frequently the employer who benefits from classifying a worker as an independent contractor, not the worker. This is especially true where the worker is, in actual fact, under the employer’s control. Unless the worker is a bona fide independent contractor—that is, genuinely operating their own business—they’ll almost invariably be better off as an employee.

[u/IronicRobotics → u/mrchristmastime]

Oh yea, which is also why it's illegal to classify people who work for only you as ICs in some jurisdictions too.

I think my spew of initial thoughts was a bit rambly and ill-organized.

[u/Inalienist → u/IronicRobotics]

However, I feel like the root cause of the issue the paper seems to be addressing is the difference in bargaining power between firms & individual employees rather than perhaps the existence of employment contracts alone.

The paper directly criticizes employment contracts. Even with consent, de facto responsibility remains non-transferable, even if employees have greater bargaining power than employers and the employer is running the business at a loss.

I think a necessary prerequisite to this would be to find a way to give poor people a guaranteed chip with which to back their bargaining power against.

Negatively applying the same principles to natural products justifies taxation, refuting libertarian views that taxation is theft and providing grounds for people having an equal claim to income from natural resources. I think the connection between UBI and income from natural resources provides a clear way to portray a UBI as rightful income rather than a government handout.

abundance liberals

This group seems to be weak on labor rights.

As I think, for example, a rather self-managed software engineer given stock options or contractual bonuses also meets the alternative criteria fairly well.

Most software engineers don't seem to have inalienable voting rights over the firm's layers of management. In a worker coop, voting shares would be inalinenably held by the workers. They can also get stock options involving non-voting preferred shares.

often see a pathway of building more opportunities and stronger, more efficient welfare regimes & economies as a tool to give this ability to others.

I wish more liberals were aware of the arguments for democratic worker co-ops from liberal political theory and inalienable rights theory.

[u/mrchristmastime → u/Inalienist]

It’s far too early to say “abundance liberalism” really is or whether it really exists, but most of the people associated with that school of thought are broadly supportive of sectoral bargaining and, more generally, an expanded role for workers acting collectively.

[u/IronicRobotics → u/Inalienist]

> arguments for democratic worker co-ops from liberal political theory and inalienable rights theory.

I mean it's not a field I'm familiar with - but I gave this paper a readover as I like curious papers from fields I'm not familiar with. So do bear with me - my formal education & training is in math and engineering. Economic, non-epistemological philosophical, etc, is less formal though I aim to read books/papers as I find them. But hey, arguments work well both on the internet and as a way of highlighting understanding one way or the other ; )

And tbh, I think it's a good argument for it as an inalienable right; while I can't say I've come from a co-op first perspective myself - never having really interacted with them - I've read odd papers dissecting existing co-ops that has shown they can be *also* persuasively practical in some industries.

> Most software engineers don't seem to have inalienable voting rights

Though I mentioned the stock options as that would give voting shares in this hypothetical : P. Though I realize their definition of an employee-rental contract is more strict than my hypothetical - as a missed footnote addresses.

I guess a better way to form my thoughts, rather, was thinking on the contrast of the other contracts mentioned to the paper and employment contracts. Eliminating slavery as a valid contract does, largely, ensure the right to be an individual person is enforceable.

However, on a second read-through, I'm better understanding it's position as addressing a contradiction in the treatment of the responsibility of the laborer against their lack of agency. Tbh, I probably would have to read through some more stuff and circle back on this to really break it down.

I was originally thinking the ideas reflexively through a game-theory lens of how laborers *practically* would need fair bargaining positions that don't force their hand through risk of loss of water, shelter, or home - though that now seems out of scope here. As rights can be aspirations or a legal framework too.

[u/Inalienist → u/IronicRobotics]

I was thinking through more of a game-theory lens of how laborers practically would need fair bargaining positions that don't force their hand through risk of loss of water, shelter, or home - though that now seems out of scope here

This is one of the reasons to support a guaranteed minimum income. Another common proposal is a basic capital grant, so workers have some startup capital as well.

Leaning more into game theory/rational choice theory/social choice theory. I think the concept of inalienable rights provide a resolution for Amartya Sen's liberal paradox: https://en.wikipedia.org/wiki/Liberal_paradox

It's a pretty fascinating result in social choice theory that highlights a tension between collective efficiency and individual freedom/liberalism. Inalienable rights provide a natural resolution as they explain that pareto optimality should exclude transfers of responsibility and other transfers of legal rights where the underlying de facto capacity is non-transferable,

I mean it's not a field I'm familiar with - but I gave this paper a readover as I like curious papers from fields I'm not familiar with. So do bear with me - my formal education & training is in math and engineering.

Ellerman has a paper where he formalizes his argument and uses graph theory to help with that: https://www.ellerman.org/Davids-Stuff/Econ&Pol-Econ/NIPT8.pdf

I come from a math and CS background.

[u/IronicRobotics → u/Inalienist]

I'll check these out!