(A prefatory note:  Most of the references are omitted.  This is a summary, not an academic paper.  Some of the argument here is adapted from Guzman and Munger, 2013)

David Hume gives an example of what we might call “coercion by circumstance” (Hume 2000, Book III, Pt. II,  Sec. V):

“A man, dangerously wounded, who promises a competent sum to a surgeon to cure him, wou’d certainly be bound to performance; tho’ the case be not so much different from that of one, who promises a sum to a robber.”

Now, Hume was interested in the question of whether the wounded man would be bound by a promise to pay.  I think the more interesting question is whether the surgeon is morally permitted to elicit such a promise in the first place.  Or, what amounts to the same thing, is the wounded man able to enter into a contract for services?  To answer “no” is to condemn the wounded man to death.  But to answer “yes” means that the surgeon is permitted to act immorally.  Choose carefully. (MORE AFTER THE JUMP…) If people can judge their own abilities, resources, goals, and life plans, and if they have the ability to make choices among genuinely feasible, usable alternatives, the case for allowing such private choices is very strong.  Any argument for state restriction of truly voluntary actions would face “strict scrutiny,” a  presumption in favor of voluntary, mutually beneficial actions. The compass of voluntary action can be limited only for good cause, on clear grounds, and (one might argue) with the consent of the person whose compass for voluntary action is being restricted. The liberty of individuals to engage in voluntary actions rests on two intimately connected rights:

1. Freedom of contract: the right to enter voluntarily into binding agreements, violation of which leads credibly to punishment for the violator or compensation for the victim.
2. Property rights: the rights to control the use, benefit from, transfer or sell, and exclude others.

When presented in these abstract terms, many people agree that the essence of liberty is the ability to enter, and leave, voluntary agreements.  What if there were no state to restrict the form of contracts? How would people act?  How would norms look, in the absence of formal enforcement, and what limits might be placed on agreements by moral intuitions? James Buchanan (1975: 3, emphasis added) famously answered the question this way:

To the individualist, the ideal or Utopian world is necessarily anarchistic in some basic philosophical sense. This world is peopled exclusively by persons who respect the minimal set of behavioral norms dictated by mutual tolerance and respect. Individuals remain free to “do their own things” within such limits, and cooperative ventures are exclusively voluntary. Persons retain the freedom to opt out of any sharing arrangements which they might join. No man holds coercive power over any other man, and there is no impersonal bureaucracy, military or civil, that imposes external constraint.

If norms could guide human exchange behavior, either in the setting with legal restriction or in an anarchic setting, we quickly confront moral dilemmas. And if laws come to instantiate and reify the norms we use to resolve moral dilemmas, understanding these norms is an important part of the research agenda. In the discussion above, I have used the word “contract.” But I have been careful not to use the word “exchange” or “markets.”  Because our side always gets hung up on the wire, searchlights blinding our eyes, and all that small arms fire enfilading our line, before we even get a chance to start to make our actual core argument.  It is just not true, not in the popular mind and not in terms of vernacular definitions and usage, that “markets are what happens when the state doesn’t interfere.”  What happens in the absence of state interference is society, voluntary private organizations, and contracts for capturing gains from cooperation.  Not exchange.  Cooperation. A caveat:  I’m perfectly happy to call the voluntary contracts people write and enforce an “exchange theory of politics,” after Buchanan and Tullock’s notion in The Calculus of Consent.  Because I know what Buchanan meant by “exchange.”  As James Buchanan put it:

…basic “political exchange,” the conceptual contract under which the constitutional order is itself established, must precede any meaningful economic interaction.  Orderly trade in private goods and services can take place only within a defined legal structure that establishes individuals’ rights of ownership and control of resources, that enforces private contracts, and that places limits on the exercise of governmental powers…Even within a well-defined and functioning legal order, “political exchange” necessarily involves all members of the relevant community rather than the two trading partners that characterize economic exchange. (p. 50; emphasis original.)

Buchanan had a “state of nature” theory about politics.  His metaphor for the state of nature is Robinson Crusoe, on Thursday (that is, the day before Friday).  Crusoe faces some of the standard economic problems, in terms of optimizing his use of resources and looking for efficient solutions.  But there is no exchange, no social interaction, in the system. And then Friday shows up.  The first thing that happens is not exchange.  There first has to be an agreement, perhaps an implicit agreement, that the two men not kill each other, at least not today, not now.  That’s the “political exchange,” and for Buchanan it is logically prior to markets or economic exchange.  The conceptual contract, or small-c “constitution” under which the men don’t kill each other comes first. Is the contract binding? Did they formally “consent” to it? No, and no.  And yet there is a constitution.  You start from where you are.  Changes require consent.  If there are going to be new rules, we have to agree to them.  From that starting point, people may be able to develop an infrastructure within which exchange is possible.  Most importantly, the exchange is not private goods, or money.  The exchange is cooperation, with the result being the capture of the mutual benefits from solving collective action problems. That’s an important distinction, and we often lose sight of it.  To solve collective action problems we need politics, agreement, and cooperation.  Do we need a state?  Maybe, maybe not.  That’s a legitimate question. But all too often in debates our side gives up too much when, eager to unjustify the state, we also prohibit voluntary collective actions.  Public goods cannot be provided by bilateral, impersonal, one-off market exchanges.  But that does not imply that state provision is therefore necessary.  There are a variety of private, voluntary, collective contracting forms that would occupy this terrain. What does voluntary mean? Is it sufficient that consent not be extorted at gunpoint? Many believe that an absence of coercion by direct human agency does not suffice.  People also must not be coerced by the absence of alternatives.  A choice can’t be voluntary if it is not a choice. Michael Sandel (1998:  78) formulates the objection in this way

The… objection [to the claim that an exchange is truly voluntary] is an argument from coercion. It points to the injustice that can arise when people buy and sell things under conditions of severe inequality or dire economic necessity. According to this objection, market exchanges are not necessarily as voluntary as market enthusiasts suggest. A peasant may agree to sell his kidney or cornea in order to feed his starving family, but his agreement is not truly voluntary. He is coerced, in effect, by the necessities of his situation.

To eliminate the ambiguity in the meaning of voluntariness, I proposed the formal notion of euvoluntariness, or “true voluntariness.” For a market exchange to be euvoluntary six conditions must be met:

1. The parties own the objects or services being exchanged, according to the conventional interpretation of ownership.
2. The parties have both the legal and practical capacity to transfer these objects or services.
3. There is no fraud, and no psychological compulsions such as addiction or neuropathy.
4. The exchange does not produce large-scale uncompensated non-pecuniary externalities, and does not impose costs on third parties without their express voluntary consent.
5. Neither party is coerced in the sense of being forced to exchange by threat of violence or other form of active aggression.
6. Neither party is coerced into exchange by dire necessity, and neither party has enough bargaining power to impose an unconscionable price.

Conditions 1–6 are standard requirements for a valid contract in the common law. Conditions 5 and 6 could be summarized as “no duress.” A market exchange is voluntary if conditions 1–5 are satisfied, but it is not be euvoluntary unless condition 6 is satisfied as well.  Condition 6 requires that no one is “coerced by circumstance.” Final There has been a bunch of argle-bargle here.  It is useful to summarize.  The basic claim I want to make goes as follows:   Groups of humans require society, and in fact it’s hard to stop humans from constructing voluntary societies to achieve shared goals.  (The state can stop society, or stunt it, but people will always try.)  In a society, collective or group decisions must be made, because the scope of some activities—externalities and public goods, even just local public goods like trash pickup or police protection—goes beyond the individual.  Either my actions affect others, or the cooperation of many is required to provide any of the good, at all.  We have to solve collective action problems. The way groups of people solve collective action problems is called politics.  It is not market exchange. The key insight of Public Choice, especially from James Buchanan, is that “politics as voluntary exchange” allows us to understand society and how contracts might work to solve collective action problems.  But those solutions are not market solutions. Then I tried to describe what “voluntary” means, what it means for something to be truly voluntary.  Because the argument for politics as voluntary exchange relies on people being able to enter binding contracts, contracts that allow, even require, the use of force or coercion if the terms of the contract are violated. That is what freedom requires:  I have to be able to enter into voluntary contracts that imply I will be coerced, because I gave my consent to be coerced, voluntarily. For that reason, the nature of what is voluntary is central to the problem.  Can we really say that people give consent?  Under what circumstances is consent binding?  And how have economists “solved” this problem by simply begging it, the way economists  usually do?  I will try to talk about these questions in part III.