Unequal Contracts, Unequal Power

As of January 26, based on the Librarian of Congress’s authority to “interpret” the Digital Millennium Copyright Act, it’s illegal to unlock your cell phone and switch to a different service plan without permission from your current provider. This is just another 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 from the party with the real bargaining power.

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.

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Citations to this article:

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