“To many libertarians on the political and cultural Right instinctively identify with employers, landlords, and service providers on this issue. They are, in my opinion, fundamentally wrong-headed to do so. The proper position for any genuine advocate of freed markets is not to defend everything that is called “property” or “contract,” but only justly acquired property and valid contracts. Contracts whose terms reflect the systematic intervention of the state in the market on behalf of privileged classes are most definitely not valid, and any self-described “free market libertarian” who defends them is unworthy of the name.

Our strategy on the free market Left should be to encourage as many people as possible to look at the man behind the curtain, and to see through the corporate state’s claims that the present system is natural and inevitable.”

Статья впервые опубликована Кевином Карсоном, 1 февраля 2013.

Перевод с английского Tau Demetrious.

A partir del 26 de enero, según la capacidad que tiene la biblioteca del congreso de Estados Unidos de “interpretar” el Acta Digital del Milenio para los Derechos de Autor (DMCA), es ilegal desbloquear tu teléfono celular y cambiar a un plan de servicio diferente sin la autorización de tu proveedor actual. Esto es otro ejemplo más de un viejo problema. En todas las áreas de nuestra vida, estamos sujetos a “contratos” en los que (según la teoría legal) gozamos de igualdad de condiciones, pero que en la práctica son contratos estandarizados por la parte que goza de mayor poder de negociación.

Roderick Long, en “Cómo la Desigualdad Condiciona Nuestras Vidas“, describe el fenómenos en términos generales:

“Supongamos que se te olvida pagar la cuenta del servicio de electricidad… ¿qué sucedería? Tu proveedor te lo coartaría, y probablemente tengas que pagar una penalización para restablecer el servicio. También se vería afectado tu historial de crédito. Por el contrario, supongamos que por la razón que sea (problemas con la conexión a internet, líneas de electricidad dañadas después de una tormenta, o quién sabe), sufres una interrupción del servicio prestado por tu proveedor. ¿Te ofrecen un reembolso? Claro que no. Y te va a ser difícil lograr que le perjudiquen su historial de crédito.”

El mismo principio aplica a la mayoría de las contrapartes contractuales en nuestras vidas diarias, como los propietarios de inmuebles y los empleadores. Nuestra relación con ellos se rige por contratos escritos por ellos mismos, con términos que nos dejan en desventaja, y con cláusulas generales que les dan la capacidad para cambiar los términos cuando lo deseen — dejándonos en una situación en la que nuestras opciones se reducen a “tomarlo o dejarlo”. “Estos no son simplemente casos en los que algunas personas tienen más cosas que tú. Son casos en los que un grupo de personas sistemáticamente tienen el poder de dictar los términos por los que otra gente tiene que regirse para vivir, trabajar e intercambiar”.

El contrato de empleo es particularmente fundamental. Aunque según la teoría legal tú eres una parte contractual que en igualdad de condiciones vende su trabajo a un empleador, la relación de facto equivale a una versión edulcorada de la vieja relación amo-sirviente. En ésta, como en cualquier otra relación en la que teóricamente las partes gozan de igualdad de condiciones, la parte que puede permitirse levantarse de la mesa de negociación dicta los términos del contrato.

El aparato de reproducción cultural del capitalismo de estado corporativo está sumamente abocado a producir una ciudadanía que ve esto como natural e inevitable. Ante la crítica, la mayoría de la gente argumentará que algo llamado “economías de escala” requiere una sociedad eficientemente administrada por instituciones enormes y jerárquicas imponiendo este tipo de relaciones unilaterales.

Pero el hecho es que nada de esto es natural o inevitable. En todos los casos, estas relaciones desiguales resultan de la aplicación deliberada del poder humano. En cada caso, tal como argumenta Long, el estado interviene para limitar la competencia entre proveedores de capital, empleadores de trabajo, distribuidores de información propietaria y propietarios inmobiliarios, de manera que el poder de negociación de los trabajadores se reduce y deben aceptar un sueldo inferior al producto total de su trabajo como condición para obtener un empleo, y pagar alquileres y precios divorciados de toda proporcionalidad al costo de producción. En todos los casos, el estado interviene a favor de los capitalistas, propietarios inmobiliarios y empleadores, poniéndolos en posiciones de de superioridad negociadora desde la que pueden dictar los términos de los contratos con trabajadores y consumidores.

Demasiados libertarios de la Derecha política y cultural se identifican instintivamente con empleadores, propietarios inmobiliarios, y proveedores de servicios cuando se trata de estos temas. Y comenten un error fundamental al hacerlo. La posición apropiada para cualquier defensor genuino de los mercados liberados no es defender todo lo que se llame “propiedad” o “contrato”, sino solo la propiedad justamente adquirida y los contratos válidos. Los contratos cuyos términos reflejan la intervención estatal sistemática en el mercado a favor de clases privilegiadas son incompatibles con los genuinos principios del libre mercado.

Nuestra estrategia en la izquierda de libre mercado debe ser la de alentar a la gente a ver al hombre detrás de la cortina, y a dejar de creer en las declaraciones del estado corporativo como naturales e inevitables.

Un importante hilo conector de todas nuestras críticas a las distintas relaciones de poder desigual enmascaradas como si fuesen contratos, es el concepto de contrato de adhesión. El contrato de adhesión es cualquier contrato que une a partes desiguales, y cuyos términos son dictados casi en su totalidad por la parte más fuerte en detrimento de la más débil.

La oposición a los contratos de adhesión se basa en el principio, central para la ley contractual, del “acuerdo de voluntades”. ¿Cuántos de los contratos que firmas en tu vida diaria — EULAs, licencias de envoltura, contratos de “pulsar y comprar”, acuerdos de tarjetas de crédito, planes de servicio telefónico, términos de servicio de sitios web — son textos densos y estandarizados escritos por los abogados de la otra parte que firmas o aceptas con un click de manera rutinaria sin ni siquiera leerlos? Y la empresa y sus abogados están totalmente conscientes de que nadie lee esos términos, o le importa lo que dicen, o tienen intención alguna de regirse por ellos.

La invalidez de los acuerdos firmados bajo coacción es un principio moral de larga data. Tenemos que adoptar una actitud mucho más crítica hacia los llamados “contratos” que rigen nuestra vida diaria, tenemos que cuestionar su legitimidad y la autoridad de las partes que claman por nuestra obediencia y cumplimiento. El sistema depende de la voluntaria obediencia y consentimiento de la mayoría de sus súbditos. Al matar al jefecito que tienes dentro de la cabeza ordenándote que obedezcas, matas al sistema.

Artículo original publicado por Kevin Carson el 2 de febrero de 2013.

Traducido del inglés por Alan Furth.

Roderick Long, in “How Inequality Shapes Our Lives,” (C4SS, Jan. 9, 2013), describes the general phenomenon:

“Suppose you forget to pay your power bill …. What happens? Your provider disconnects you, and you’ll probably have to pay an extra fee to get service reestablished. You also get a frowny face on your credit report. On the other hand, suppose that, for whatever reason (internet glitches, downed power lines after a storm, or who knows), you suffer a temporary interruption of service from your provider. Do they offer to reimburse you? Hell no. And there’s no easy way for you to put a frowny face on their credit report.”

The same principle applies to most contractual “partners” in our daily lives, such as landlords and employers. Our relationship with them is governed by contracts written by them, on terms primarily to our disadvantage, and with general clauses empowering them to change the terms at will — on a “take it or leave it” basis. “These aren’t merely cases of some people having more stuff than you do. They’re cases in which some people are systematically empowered to dictate the terms on which other people live, work, and trade.”

The employment contract is especially fundamental. Although in legal theory you’re an equal party to a contract by which you sell your labor to an employer, your de facto relationship amounts to a kinder, gentler version of the old master-servant relationship. In this, as in every other theoretically equal relationship, the party which can afford to walk away from the table dictates the terms of the contract.

The cultural reproduction apparatus of corporate state capitalism is heavily invested in producing a citizenry that sees this as natural and inevitable. If challenged, most people will argue that something called “economies of scale” require an efficiently run society administered by enormous, hierarchical institutions mandating such a one-sided relationship.

But in fact it’s neither natural nor inevitable. In every case, these unequal relationships result from the deliberate application of human power. In every case, Long argues, the state intervenes to limit competition between suppliers of capital, employers of labor, distributors of proprietary information, and landlords, so that workers’ bargaining power is reduced and they must accept a wage less than their full product as a condition for employment, and pay rents and prices far out of proportion to cost of production. In every case, the state intervenes on the side of capitalists, landlords and employers, putting them in superior bargaining positions from which they can dictate terms of contract with workers and consumers.

Too many libertarians on the political and cultural Right instinctively identify with employers, landlords, and service providers on this issue. They are fundamentally wrong-headed to do so. The proper position for any genuine advocate of freed markets is not to defend everything that’s called “property” or “contract,” but only justly acquired property and valid contracts. Contracts whose terms reflect systematic state intervention in the market on behalf of privileged classes are incompatible with genuine free market principles.

Our strategy on the free market Left should be to encourage everyone to look at the man behind the curtain, and to see through the corporate state’s claims to be natural and inevitable.

An important common thread running through our critique of all these unequal power relationships masquerading as contracts is the concept of the adhesion contract. The adhesion contract is any contract which binds unequal parties, and whose terms are dictated almost entirely by the stronger party at the expense of the weaker.

Opposition to adhesion contracts is based on the principle, central to contract law, of “meeting of minds.” How many of the contracts you sign in your daily life — EULAs, shrink-wrap or click-wrap contracts, credit card agreements, telephone service plans, website terms of service — are dense, lengthy boilerplate written up by the other side’s lawyers, which you perfunctorily check off or click without reading? And the company and its lawyers are fully aware that nobody reads those terms, or cares what they state, or has any intention of abiding by them.

It’s a long-standing moral principle that agreements made under duress are not binding. We need to adopt a far more critical attitude toward — to question the legitimacy of — both the so-called “contracts” that bind our daily lives, and the authority of the parties that claim our obedience and compliance.  The system depends on willing acquiescence and obedience by the majority of its subjects. Kill off the little boss in your head that tells you to obey, and you kill the system.

Translations for this article:

• Spanish, Contratos Desiguales, Poder Desigual.

This is just one more example of an old problem. In all areas of our lives, we’re subject to “contracts” to which (in legal theory) we’re equal parties, but which in fact are boilerplate written for us by institutions on terms dictated by the party with the real bargaining power.

Roderick Long’s discussion of the phenomenon (“How Inequality Shapes Our Lives,” C4SS, Jan. 9, 2013) is worth quoting at length:

Suppose you forget to pay your power bill …. What happens? Your provider disconnects you, and you’ll probably have to pay an extra fee to get service reestablished. You also get a frowny face on your credit report.

On the other hand, suppose that, for whatever reason (internet glitches, downed power lines after a storm, or who knows), you suffer a temporary interruption of service from your provider. Do they offer to reimburse you? Hell no. And there’s no easy way for you to put a frowny face on their credit report.

Now, if you rent your home, take a look at your lease. Did you write it? Of course not. Did you and your landlord write it together? Again, of course not. It was written by your landlord (or by your landlord’s lawyer), and is filled with far more stipulations of your obligations to her than of her obligations to you. It may even contain such ominously sweeping language as “lessee agrees to abide by all such additional instructions and regulations as the lessor may from time to time provide” (which, if taken literally, would be not far shy of a slavery contract). If you’re late in paying your rent, can the landlord assess a punitive fee? You betcha. By contrast, if she’s late in fixing the toilet, can you withhold a portion of the rent? Just try it.

Now think about your relationship with your employer. In theory, you and she are free and equal individuals entering into a contract for mutual benefit. In practice, she most likely orders the hours and minutes of your day in exacting detail …. [T]he contract is provided by her and is designed to benefit her. She also undertakes to interpret it; and you will find yourself subjected to loads of regulations and directives that you never consented to. And if you try inventing new obligations for her as she does for you, I predict you will be, shall we say, disappointed.

These aren’t merely cases of some people having more stuff than you do. They’re cases in which some people are systematically empowered to dictate the terms on which other people live, work, and trade.

Long’s last example, the employment contract, is especially fundamental. University of Michigan scholar Elizabeth Anderson coined the term “Contract Feudalism” to describe this one-sided relationship. Although in legal theory you are an equal party to a contract by which you sell your labor to an employer, your de facto relationship amounts to a kinder and gentler version of the older master-servant relationship. The reason for this is that, as in every other theoretically equal relationship, the party which can afford to walk away from the table has the power to dictate the terms of the contract.

The cultural reproduction apparatus of corporate state capitalism is heavily invested in producing a citizenry that either fails to perceive this inequality, or — if it does perceive it — sees it as a natural and inevitable state of affairs. If challenged, most people will argue that something called “economies of scale” require an efficiently run society to be administered by enormous, hierarchical institutions to which we have a one-sided relationship.

But it is, in fact, neither natural nor inevitable. In every case, Long argues, these unequal relationships result from the deliberate application of human power. In every case, the state intervenes to limit competition between suppliers of capital, between employers of labor, between distributors of proprietary information, and between landlords, so that workers’ bargaining power is reduced to the point that they must accept a wage less than their full product as a condition for employment, and sellers of goods and services extract super-profits from consumers via unequal exchange.

In every case, it is the state which intervenes on the side of capitalists, landlords and employers, and puts them in a position of superior bargaining power from which they can dictate the terms of contract with workers and consumers.

In fact the very authority by which the state presumes to do these things — the so-called Social Contract — is itself an example of the same phenomenon. Most likely neither you nor your parents nor any of your ancestors ever explicitly consented to obey the commands of the state. The argument for the so-called Social Contract is that you, and your parents before you, “consented” to obey the state’s command either when you were born, or reached the age of reason, and continued to live within its borders rather than picking up and leaving. The obvious question is, was the state in a legitimate position of authority to present you with this choice in the first place. If someone walks into your living room and says “By continuing to reside here you consent to obey all my commands,” do they thereby acquire a legitimate claim to your obedience if you remain?

It’s a lot like the way a bank notifies you that it’s changing the terms of the “contract” between you so that, by failing to cancel your credit line, you “consent” to the interest rate on your credit card balance being raised to 30%. The state says, “Hey, if you didn’t recognize our authority you could have packed up and emigrated when you turned 18. By continuing to live here, drive on our roads, etc., you consented to our authority.”

To many libertarians on the political and cultural Right instinctively identify with employers, landlords, and service providers on this issue. They are, in my opinion, fundamentally wrong-headed to do so. The proper position for any genuine advocate of freed markets is not to defend everything that is called “property” or “contract,” but only justly acquired property and valid contracts. Contracts whose terms reflect the systematic intervention of the state in the market on behalf of privileged classes are most definitely not valid, and any self-described “free market libertarian” who defends them is unworthy of the name.

Our strategy on the free market Left should be to encourage as many people as possible to look at the man behind the curtain, and to see through the corporate state’s claims that the present system is natural and inevitable. An important common thread running through our critique of all these unequal power relationships masquerading as contracts is the concept variously known as the adhesion contract and the odious debt. The adhesion contract is any contract which binds unequal parties, and whose terms are dictated almost entirely by the stronger party at the expense of the weaker. An odious debt is a debt contract which fits this description. The global movement for debt jubilee, to which I am quite sympathetic, argues that any Third World debt contracted by a dictator or authoritarian government unaccountable to its people should be nullified as odious debt.

Opposition to adhesion contracts of all kinds is based on the centrality of the principle of “meeting of the minds” in contract law. How many of the contracts you sign in your daily life — EULAs, shrink-wrap or click-wrap contracts, credit card agreements, telephone service plans, website terms of service — are dense, lengthy boilerplate written up by the other side’s lawyers, which you perfunctorily check off or click without reading? And the company and its lawyers are fully aware that nobody reads those terms, or cares what they state, or has any intention of abiding by anything they regard as unreasonable, when it writes them.

Normally, in contract law, one of the tests for establishing a “meeting of minds” is the normal standards, practices or expectations of a given market. So when the standard practice of consumers in a given market is to click on a EULA or Terms of Service agreement without reading it, or intending to abide by it, the specifications of any such agreement should not rise to the standard of “meeting of minds.”

It’s a long-standing moral principle that agreements made under duress are not binding.  We all need to adopt a far more critical attitude toward the so-called “contracts” that bind our daily lives, and toward the real authority of the parties that claim our obedience and compliance. And whenever and wherever necessary, we need to say “I never agreed to that.” In some cases, the very power differential by which the unequal contract was made in the first place means that open defiance isn’t practical. In those cases, the proper response is passive aggression: to smile, nod our heads, and then do what we want when those in authority are no longer looking. This is, for example, a time-honored model of labor resistance on the job, through such forms of direct action as the slow-down, work-to-rule, “good work” strike, “open mouth” and sick-out.

The most important thing is to kill off, in our own minds, both the legitimacy of these “agreements” and the “authorities” with whom we made them. The system depends on willing acquiescence and obedience by the majority of its subjects. Kill off the little boss in your head that tells you to obey, and you kill the system.

“Unequal Contracts, Unequal Power” on C4SS Media.

Translations for this article:

• Russian, Неравные контракты — неравная власть.

Libertarianism stands for maximum individual liberty — and thus against any kind of slavery. Yet libertarianism also stands for self-ownership; and what I own, I have a right to sell. Apparently, then, libertarianism countenances the legitimacy of selling oneself into slavery, and enforcing the slavery contract against those who change their minds. Thus it seems that the ideals of self-ownership and sanctity of contract can come into conflict with the ideal of maximum liberty and the rejection of slavery. How can this conflict be resolved?

On this issue, libertarians are divided. Robert Nozick, in Anarchy, State, and Utopia, maintained that slavery contracts were permissible and indeed enforceable. Since Nozick is the only libertarian most academic philosophers have ever read, many of my colleagues, knowing my libertarian sympathies, assume that I too favor slavery contracts.

Yet the idea that there are inalienable rights — that is, rights of which one cannot voluntarily divest oneself — is one of long standing in the classical liberal tradition, from Richard Overton and John Locke in the 17th century to the Declaration of Independence in the 18th; and the doctrine of inalienable rights was taken to rule out slavery contracts.

My own view is that we do have inalienable rights, and so that slavery contracts are not legitimate, and should not be permitted, much less enforced, by the laws of a Free Nation. But I need to explain why this should be so, and why I do not think it a departure from the icy-pure libertarianism I cherish to deny people the “freedom” to sell themselves into slavery. Let me try.

Supply-Side Virtue Ethics

Moral theorists are fond of dividing ethical theories into two varieties: consequentialist theories, according to which the rightness of an action is a matter of its having beneficial consequences, and deontological (“duty-centered”) theories, according to which the rightness of an action is a matter of its falling under the appropriate rule. But in recent years, many moral philosophers have begun to revive a different approach to ethical questions, one with roots in Greek antiquity. For the Greek moralists, the central question of ethics was not “What rules should I follow?” or “What consequences should I promote?” but rather “What kind of person should I be?” For the Platonists, Aristoteleans, Stoics, and their modern admirers, the rightness of an action is a matter of its expressing the virtues — that is, those attitudes and dispositions of character that best exemplify what it means to be truly human. This ethical approach is known as Virtue Ethics — and I might as well confess immediately that it represents my own ethical convictions as well.

One distinctive feature of Virtue Ethics is that, to borrow a distinction from Douglas Den Uyl, it represents a supply-side rather than a demand-side approach to ethics. According to a demand-side ethics, the way that A should treat B is determined primarily by facts about B, the patient of moral activity; but for a supply-side approach like Virtue Ethics, the way that A should treat B is determined primarily by facts about A, the agent of moral activity.

Let’s apply this distinction to the special case of justice, that virtue which determines the proper sphere for the use of violence among human beings. My having a right consists, at least primarily, in other people having an obligation to act toward me in certain ways; those others act justly insofar as they respect my rights. The rights-bearer is thus defined as the patient of just activity. A demand-side conception of justice, then, would focus on the rights-bearer; its primary concern would be to determine the features of human beings in virtue of which they possess rights.

It seems to me — though not all Virtue Ethicists agree — that a Virtue Ethics approach should reverse this direction of scrutiny. In questions of justice, the focus should be, not on the person qua moral patient, the bearer of rights, but on the person qua moral agent, the respecter of rights. In other words, from the supply-side perspective of Virtue Ethics, the moral agent’s main question in matters of justice should be, not “What it is about other people that requires me to respect their rights?” but rather “What is it about me that requires me to respect the rights of others?”

Virtue Ethicists, particularly those in the Aristotelean tradition, see the aim of the moral life as one that best expresses what it means to be truly human, as opposed to erring on the side of either the subhuman or the superhuman; for example, Aristotle counsels us to live the life of a human being, not the life of a beast or a god. The cowardly, the stingy, the sensualistically self-indulgent, pay too much respect to their animal side, their vulnerable embodiedness, and neglect the divine spark within them; the rash, the spendthrift, the ascetically self-restrained, pay too little respect to their animal side in their quest to divinize themselves. Only the courageous, the generous, the temperate find the distinctively human path, the Golden Mean between less-than-we-can-be and more-than-we-can-be.

Justice for Humans

How does this apply to justice? Well, just as courage, generosity, and temperance are the virtues that define the appropriately human attitudes toward danger, giving, and bodily pleasures respectively, so the virtue of justice defines the appropriately human attitude toward violence. A maximally human life will give central place to the distinctively human faculty of reason; and one’s life more fully expresses this faculty to the extent that one deals with others through reason and persuasion, rather than through violence and force. To choose cooperation over violence is to choose a human mode of existence over a bestial one.

Hence the virtuous person will refrain from initiating coercion against others. But what will the virtuous person’s response be to the initiation of coercion on the part of others? In this case, cooperation is not an option, and so the moral agent is not faced with a choice between cooperation and violence. Still, it might be thought that the most human response would be one that forswore self-defense in favor of continuing attempts at persuasion, even in the face of implacable aggression. But this, in my judgment, would make the opposite error from the one the initiator of violence makes; to submit passively to aggression is to try to live a superhuman life, and to value our vulnerable embodiedness too little. Forswear the initiation of violence, but employ violence when necessary to repel the initiatory violence of others; this TIT-FOR-TAT approach seems to me to best strike the Golden Mean balance between the subhuman aggression of the criminal and the superhuman aspirations of the pacifist. Our obligation to abstain from the initiation of coercion translates into a right, on the part of others, not to be aggressed against. On the other hand, since we have no obligation to refrain from self-defense, no right is generated on the part of others to aggress against us. In short, libertarianism. (For more on the issue of self-defense, see my “Punishment vs. Restitution: A Formulation,” in Formulations, Vol. I, No. 2 (Winter 1993-94).)

Sticky Rights

So what has any of this got to do with slavery contracts? Well, if a person’s rights consist primarily, not in moral facts about the rights-bearer, but in moral facts about other people, then the rights-bearer cannot simply dispose of his or her rights. You cannot, by a simple act of will, release me from my obligation not to coerce you, since that obligation depends on my calling as a human being, something that is not in your control. Hence, on the supply-side conception of justice, no one can divest him or herself of the right not to be coerced. In short, the right to liberty is inalienable.

In forbidding A to sell him or herself into slavery (or, more broadly, any kind of indentured servitude) to B, then, we do not in any way infringe upon A’s liberty; for what A is offering to do is to transfer to B the right of decision over A’s life and actions; but in fact this right cannot be transferred, as it is not under A’s control. Thus A’s offer to sell this right is fraudulent; A is trying to sell something that is not hers to sell.

How are Contracts Possible?

One objection that is sometimes raised against the defenders of inalienability is this: If slavery contracts are impermissible, how can any room be made for ordinary contractual obligation? After all, suppose I have contracted with you to perform some service — say, to paint your dog. If I break our contract and refuse to paint your dog, can you — or the law, acting on your behalf — legitimately force me to paint your dog? It seems not. For in ordinary circumstances, forcing me to paint your dog would be a morally unacceptable act of aggression. How can the fact that I agreed to paint your dog make any difference? After all, on the view I’ve been defending, no mere act of will on my part can free you from your obligation not to aggress against me. But if I cannot legitimately be forced to fulfill my side of the contract, it seems that contracts in general are unenforceable, and so legally void. This seems to present an unpromising prospect for a political philosophy like libertarianism, committed as it is to the free-market economy — which relies so crucially on the principle of contract.

Here I adopt the solution offered by libertarian legal theorist Randy Barnett. Suppose I offer to paint your dog for 200 drakhmas. You give me the 200 drakhmas, whereupon I pocket the money and skip town. On my view, you cannot legitimately force me to paint your dog; that would be involuntary servitude. But you can force me to give back the money; for you only transferred it to me on condition that I paint your dog; since the condition has not been met, the transfer has not gone through, and so I am holding on to your property without your consent. (I also think I can be required to pay you damages, as restitution for the value I have destroyed by depriving you of the use of your money during the intermediate period; for more on restitution, see my article cited above.) Thus, contracts can legitimately be “enforced” in the sense that a person who has received some consideration in exchange for an unperformed service can be required to pay back the consideration. Even “slavery contracts” could be enforced in that sense; for example, if, in exchange for 2000 drakhmas, I agree to do whatever you want, for the rest of my life, then if I ever back out of the contract (which I am free to do at any time), I have to pay you 2000 drakhmas (plus damages) — but I may not legitimately be forced to fulfill the contract. (If I do not presently have the money to pay, then I simply have a debt, like any other.)

Down with Slavery!

All this has been pretty abstract and theoretical. But what it boils down to is that nothing can release us from our obligation to behave like human beings toward one another, rather than like animals. Our classical liberal forebears fought a long hard battle against slavery, that disgrace upon human civilization. Two centuries ago, a newborn Free Nation’s compromise with slavery started it down the path that eventually destroyed its freedom. As for our future, a Free Nation that undertook to enforce slavery contracts would not be a Free Nation worth fighting to build or to defend.

I recently watched the documentary Hot Coffee. This is an excellent film, and I highly recommend it.

The movie covers a few different cases, brilliantly debunking the myth of tort reform as a check on widespread frivolous lawsuits. The film exposes the reality that tort reform is an intrusion on the proper mechanism for holding wrongdoers accountable in a free society.

Stella Liebeck

The film, at its core, is a defense of the civil justice system against tort reform. Most people don’t understand what tort cases are, or the extremely valuable role they play in effecting positive social change.

I first learned about the truth behind the McDonald’s coffee case from a discussion with John Hasnas back in the summer of 2010. He explained that the popular understanding of the McDonald’s coffee case was completely wrong. Hot Coffee was released in June, 2011, but I only heard about it recently, so I rushed to see it.

You probably dismiss or even scowl at the McDonald’s coffee case as an example of a frivolous lawsuit, in which one greedy and opportunistic woman successfully gamed the system. The popular thinking is that a coffee spill is such a common occurrence that it shouldn’t be grounds for anyone to get millions of dollars. You might think that juries are so stupid and biased against big corporations that they enable widespread abuse of the system, extracting money from big corporations, and passing on the costs to consumers in the form of higher prices. All this is wrong.

There are lots of popular misconceptions about the case. The plaintiff, Stella Liebeck, wasn’t absentmindedly driving. She wasn’t even in the driver’s seat of the car. When the spill happened, the car wasn’t even moving.

In reality, the plaintiff and her son got coffee at their local McDonald’s drive-through. Her son was driving. After getting the coffee, he pulled over into a parking space so that his mother could remove the lid and put cream and sugar into her coffee. When the car was stopped, she took the lid off, and spilled the coffee right onto her lap.

The coffee was so hot that Liebeck suffered extensive third degree burns across her legs and groin, and actually required multiple skin grafts. Liebeck herself wasn’t being opportunistic, and wasn’t even after punitive damages. She only wanted McDonald’s to pay for the difference of the cost of her medical bills, for what Medicare wouldn’t cover.

In the trial it was revealed that McDonald’s had documented about 700 complaints about their coffee being too hot, prior to Liebeck’s spill. McDonald’s even conceded that their coffee would certainly seriously burn someone if they tried to drink it immediately. The official determination was that at such a high temperature, the coffee would only need to make contact with a person’s skin for a few seconds to cause a third-degree burn.

Some portray this case as typical leftist activism by attacking big corporations and absolving individuals of their responsibility. Such framing is entirely wrong.

There’s often a knee-jerk reaction among libertarians and conservatives to defend businesses against the left, and admittedly, the left is usually wrong when they advocate the use of the legislative and the executive branches to regulate businesses preemptively, but the judicial branch is different.

Central planning, and all the destructiveness associated with it, is a product of the legislative and executive branches. In contrast, judicial systems predate centralized governments [PDF], so framing tort reform as a move toward free markets doesn’t make any sense. Historically, in the absence of governments, courts were the premier mechanism to redress disputes and wrongdoings.

The issue of tort reform manifests Haidt’s moral foundations in an unusual way. The progressives who advocate for strong protection of tort law are concerned with power imbalances that favor big companies, and are operating on the oppression foundation, while the conservatives who wish to avoid rewarding societal moochers are operating on the fairness foundation. The equilibrium is sort of backwards. Usually progressives discount how governments subvert spontaneous orders when advocating for central planning that undermines the rule of law, and usually conservatives hesitate to challenge established traditions for fear of unintended consequences. In the case of tort reform, conservatives are advocating for central planning that would subvert the spontaneous order of the civil justice system, and progressives are defending the mechanism that protects the vulnerable.

Tort law is crucial because it is simultaneously surgical and effective, unlike anything you would ever see from the executive or legislative branches. The day after the ruling of Liebeck v. McDonald’s Restaurants, every restaurant in America cooled its beverages to safer temperatures, because they knew precisely what they would be liable for, and what kind of punishment might befall them if they failed to serve beverages at a safe temperature. It would be unthinkable to see compliance like that from a rule out of some bloated bureaucracy in DC. A hypothetical attempt at regulation by the legislative or executive branches might have been to create some ineffective new agency, bureaucratically guzzling millions of dollars, perhaps employing inspectors to roam the country and issue fines.

The jury had originally awarded $2.7 million dollars as punitive damages, but the judge reduced that to $480,000. Those large figures embody what H. L. A. Hart called the Benthamite “economy of threats.” Punitive damages need to be high enough to change the behavior of the wrongdoers, and if the company is quite large, like McDonald’s, it might take a few million dollars to send the message.

Colin Gourley

Tort reform is destructive because it limits liability. In the case of Colin Gourley, an OB/GYN was found to have breached the standard of care, thereby causing Colin Gourley to suffer numerous mental and physical defects in utero. The parents sued for medical malpractice, and won, but a tort reform law limited the offending doctor’s liability.

Colin Gourley will never be an independent adult, and his parents were seeking enough money to insure that their son would be taken care of for the rest of his life, after the point at which they’d be able to take care of him. The tort reform law effectively absolved the offending doctor from their negligence.

Sure, doctors make mistakes, but it doesn’t follow that protecting strong tort law allows just any patient dissatisfied with their results to sue. The standard of care is an established legal concept, and courts can decide with expert testimonies whether it has been breached.

It is incompatible with a free society for a government to limit liability. Just as centrally planned bankruptcy laws are economic interventions [PDF], centrally planned laws limiting liability for doctors, or corporations, or anyone for that matter, are economic interventions. A free market of private business insurance would better weigh the costs and benefits to society of various risky activities. Governments shouldn’t arbitrarily decide in advance how much damage a party can cause. After all, in the course of history, we humans have demonstrated profound creativity in being destructive.

Laws that limit liability systematically favor businesses at the expense of the general public. Tort reform is obviously special interest lobbying for government-created rents.

Oliver Diaz

When discussing the case of Oliver Diaz, Hot Coffee loses focus by pivoting to tangential leftist issues, incorrectly accusing Citizens United v. Federal Election Commission as a primary driver that corrupts the elections of judges. Citizens United correctly protected free speech.

The real culprit is democracy itself. Choosing judges through democratic processes at all opens up the judicial system to politicking. Less democratic alternative institutional structures for the judicial system are perhaps more robust and less corruptible, if support for tort reform is a widespread weak preference. That the preference for tort reform is widespread and weak is probably due to rational ignorance. The preference is probably just expressive, because conservative framing of the issue has been quite effective and popular. We should expect voters to vote against their own self-interest in democratic referenda about tort reform.

Jamie Leigh Jones

When is a contract not enforceable? When shouldn’t a contract be enforced?

Jamie Leigh Jones fought against a mandatory arbitration clause in her employment contract, in the fine print. She wasn’t even aware of the clause.

Jones was an employee of Halliburton, and at the time of Hot Coffee’s release, she was supposedly brutally raped while working for them in Iraq. After the film’s release, Jones did finally win the ability to sue Halliburton in open court, but the jury found that the sex in question was consensual. Regardless, the important broader question is the validity of mandatory arbitration clauses.

These stock arbitration firms conduct much repeat business with the large firms that are their clients, but conduct no repeat business with disgruntled employees, so these arbitration firms are strongly biased against employee claims. Would obviously unfair clauses in the fine print of agreements actually hold up in court, or any sensible common law regime? Can you actually sign your rights away in an iTunes EULA? Fortunately, I don’t believe a lot of these clauses actually hold up.