Abstract
It is a maxim of Public Choice that voluntary exchanges should not be interfered with by the state. But what makes a voluntary market exchange truly voluntary? We suggest, contra much of the economics literature, that voluntary exchange requires consent uncoerced by threats of harm, but that this is not sufficient. In particular, a person pressured to exchange by the dire consequences of failing to exchange—e.g., dying of thirst or hunger—is still coerced, and coerced exchange cannot be voluntary. The weaker party’s desperation gives the other party unconscionable bargaining power. We argue for a distinction, based on a neologism: in the case of coercion by circumstance but not by threat, exchange is still voluntary in the conventional sense, but it is not euvoluntary (i.e., truly voluntary). We will argue that all euvoluntary exchanges are just, while non-euvoluntary exchanges may or may not be unjust; that in competitive markets all exchanges are just, even those that are not euvoluntary, while in bilateral monopolies some exchanges are neither euvoluntary nor just. We will propose a mental device, the “fictitious negotiation”, to determine the just price in non-euvoluntary market exchanges. A primitive version of these ideas can be found in a little known monograph by John Locke, which we will analyze in detail.
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Notes
An interesting paper on the problem of consent in contractarian theories is Müller (2002).
The Greek prefix “eu” means well, truly, pleasing, or happy.
There is a substantial literature on the nature consent, and coercion and voluntary aspects of consent. Olsaretti (2004) examines the problem of voluntary consent and desert, and reviews the literature. But it is worth pointing out that “consented” coercion is an old, and highly contestable, concept. It was discussed at length by Gramsci (1929/2011), in the context of the pretext of “consent” in a capitalist system. We intend the consent to be explicit, and of course voluntary. Gramsci claimed the consent is involuntary, and is itself coerced. For practical considerations of when consent to bargain is “coerced”, see Lamba and Mace (2013).
The paper, initialed by Locke, captioned “Venditio” and dated “[16]95,” was found in Locke’s “Adversaria 1661.” This was a large folio notebook containing 321 numbered leaves and 149 blank leaves. “Adversaria 1661” was written (apparently by Locke) inside the front cover. The earliest entries in the book date from 1668 and was in use through at least 1669. The notebook was formerly a part of the Lovelace Collection and was used by Lord King in his “Life of John Locke” (1829). It became separated from the collection before its acquisition by the Bodleian Library, and has remained in private hands. For a time, it was owned by Arthur O. Houghton, Jr.; it is presently in a private collection in France. Microfilm copies are available in the Houghton Library, Harvard University (MS. Eng. 860.1) and in the Bodleian Library (MS. Film 77). This reference is from the URL http://www.libraries.psu.edu/tas/locke/mss/c1695.html#m0006, at the Penn State University Libraries, accessed January 4, 2013. Our copy of the document comes from Locke (1661/2003: 442–446). David Wootton got permission from the private owner to reproduce the document. Wootton gives the source as “From the Commonplace Book, 1661.” The discrepancy in dates (is it 1661, or 1695?) may reflect the fact that Locke made sketchy notes in his Commonplace Book of 1661 while he was a lecturer at Oxford, but only fleshed out the argument after he had written his major economic tract, Some Considerations of the Consequences of Lowering the Interest Rate and Raising the Value of Money (1692). These works are discussed in Vaughn (1980).
It would be a mistake to think that Venditio represents a complete statement of Locke’s economic thinking, and we make no such claim. For a much fuller vision of Locke’s economic writings, see Lamb (2010). For an overview of Locke’s writings and life, see Rowley (1998); for a deeper understanding of the connections among Locke’s ideas on markets and money, see Vaughn (1980) and Kelly (1991).
[sic]: The singular “hand” is original.
Not only was this view not very controversial in Locke’s time, it was a fairly standard formulation that emerged from the writings of the church Scholastics beginning with St. Thomas Aquinas and culminating with the School of Salamanca in the 16th century (Liggio 1999). In fact, the outline of Locke’s argument closely mimics Thomas Aquinas’ essay “On Buying and Selling.” The importance of Venditio is not so much that it was a novel argument, but rather that it bridges the sophisticated medieval understanding of just price and the modern conception of market economies as having sources of variation in the prices observed in markets. We are grateful to an anonymous reviewer for substantially clarifying this understanding of Locke’s contribution.
We develop these ideas in extenso in Guzmán and Munger (2013).
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Acknowledgements
This paper was presented as the Otto “Toby” Davis Lecture at George Mason University, October 18, 2012. We thank Jonny Anomaly, Neera Badhwar, Geoffrey Brennan, Jo Anne Burgess, Juan Pablo Couyoumdjian, Craig Davis, José de la Cruz Garrido, Gerald Gaus, Michael Gillespie, Ruth Grant, Eugenio Guzmán, Daniel Houser, John Jackson, William Keech, Dan Klein, David Levy, Lotta Moberg, Dan Moseley, James Otteson, Carlos Rodríguez-Sickert, Geoffrey Sayre-McCord, and David Schmidtz for helpful comments. Guzmán acknowledges support from Anillo Conicyt Grant SOC-1101, and Munger acknowledges support for the Center for the Study of Public Choice at George Mason University, and the family of Otto “Toby” Davis. Errors that remain are the responsibility of the authors.
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Guzmán, R.A., Munger, M.C. Euvoluntariness and just market exchange: moral dilemmas from Locke’s Venditio . Public Choice 158, 39–49 (2014). https://doi.org/10.1007/s11127-013-0090-x
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DOI: https://doi.org/10.1007/s11127-013-0090-x