[Editor’s Note: This essay is part of a symposium on John Tomasi’s Free Market Fairness. For an introduction to the symposium, click here. For a list of all posts in the symposium, click here.]

Let’s start with my points of agreement with Tomasi’s refreshing Free Market Fairness.  (1) Political justification is broadly contractualist: just principles must be endorsable by those living under them.  (2) They would endorse principles of social justice in the neighborhood of Rawls’s principles of equal basic liberties and fair opportunities, and require that socially instituted inequalities redound to the benefit of all, especially the least advantaged.  (3)  We should try to arrange the rules of economic life such that just outcomes are largely produced as the byproducts of fair, general, impersonal rules of property, contract, taxation, etc., which are applicable to all.  (4) Principles of justice should honor people’s concern for the self-respect they attain through their agency:  that they not only enjoy certain outcomes, but do so through their own activities.   (5) The economy is an important domain of agency.  A just regime should arrange the rules of economic life to ensure a rich set of opportunities for people to engage in market activities according to their preferences, consistent with honoring the self-authorship of others.  (6) This includes the freedom to create, own, and operate private productive enterprises.  Tomasi argues that 4-6 constitute important amendments to, or perhaps distinctive market democratic interpretations of, “high liberal” principles of social justice.  I’ll sign on.

Now for the disagreements.

Tomasi argues that rights to economic liberty should be constitutionalized, with economic regulations subject to a high level of judicial scrutiny.  Considerations of social justice may sometimes override economic freedom—but only if judges approve.  I don’t think this is a sensible way to limit economic regulation.  Consider the contrast between the rights to freedom of religion and freedom of movement.  In political philosophy, both rights are equally fundamental.  Legally, however, virtually no regulations on freedom of religion are permissible, but courts rightly defer to the other branches of government with respect to virtually all general regulations of movement on public roads.  You must signal a turn or a lane change, but a law requiring you to publicize your religious conversion would be unconstitutional.  You must wait for green at a stop light, but a law requiring a waiting period before you could leave or join a church would be struck down.  You can pray as fast as you want, even while drunk, but don’t try driving that way.

Why the difference?  Individual exercises of religious liberty rarely interfere with the religious liberties of others, and have little prospect of inflicting serious harm on others.  By contrast, externalities, asymmetrical information, and other collective action problems are pervasive in movement on public roads.  Unregulated, un-signaled traffic can lead to traffic jams and accidents, impairing everyone’s ability to move around freely, and harming others’ life, health, and property.  Regulations designed to facilitate traffic flow consistent with other interests, such as safety, pollution control, and quiet neighborhoods, are liberty- and welfare-enhancing.  Only extreme restrictions, such as racial pass laws or internal passports, raise constitutional questions.

Externalities, asymmetrical information, and other collective action problems are even more pervasive in economic life.  Countless ways of conducting business reap gains for some while imposing unjust costs on others.  Create a cartel.  Stuff rat feces in sausages.  Engage in insider trading.  Dump toxic waste in rivers.  Market useless medicines.  Withdraw renewable resources at unsustainable rates.  Stuff insurance contracts with obscure loopholes, collect premiums from customers, and then deny their claims.  Fill corporate boards with cronies who reward top managers with huge bonuses even when they fail to meet contracted performance requirements.  Rig the terms of a complex loan to trap financially unsophisticated borrowers into spiraling debt and fees.  Get rating agencies to certify worthless assets as AAA. Use leverage to reap profits from self-generated asset bubbles, sending the global economy into financial collapse when they burst.  Without extensive regulation, markets happily accommodate such negative-value-added business plans.  Tomasi sometimes acknowledges this fact.  But he puts a heavy thumb on the scales against regulation by describing economic activity in general in terms of “self-authorship” and “economic liberty.”  Such descriptions cut no normative ice with respect to destructive or predatory business plans.  Nor should judges, who lack the expertise to assess economic regulations designed to stop such abuses, use such exalted abstractions to strike them down.

Tomasi reserves special opprobrium for labor regulations, as of maximum hours and minimum wages, and disparages workplace democracy.  Regulations of labor contracts, he claims, are forms of paternalistic domination.  They deny individuals’ rights to “personally negotiate” the terms and conditions of their employment, and deny their personal “independence” as self-authoring economic agents. He concedes that in the industrial age such regulations were warranted for vulnerable factory workers, but claims they are obsolete in today’s “personalized” capitalism, which offers work options tailor-made to each individual’s preferences.

Has Tomasi bothered to check on the typical conditions of entry and work in the lowest ranks of WalMart, say, or the farming, meat processing, fast food, nursing home, and domestic cleaning industries, where millions of workers toil in the U.S.?  Such workers would be lucky to get a contract of adhesion, with no terms open for negotiation, but at least with all the terms specified.  What they actually get is arbitrary, authoritarian government, with open-ended terms of subjection.  In the default legal regime of the workplace, employers may comprehensively govern workers’ ends and means, and minutely regulate their bodily motions.  They may dictate what workers can wear.  Until recently, many prohibited their workers from urinating on the job.  Workers have no privacy:  bosses can search their possessions, eavesdrop on phone calls (if they allow phone calls), read their emails, and spy on them in the bathroom.  Workers have no freedom of speech:  bosses can forbid them from complaining, speaking a different language, and talking to fellow workers about unapproved topics.  They can be fired for off-hours activities such as supporting an unapproved political candidate or having a same-sex partner.  No wonder 25% of American workers say their workplace is a dictatorship.

While workers at the top have bargaining power to negotiate freedom from such despotism, those at the bottom have long found this a useless tool.  Many conditions affecting them, such as dust levels, assembly line speeds, and equipment safety, are not subject to individual tailoring.  Others could be individually negotiated, but employers prefer to simply impose terms.  Workers have therefore forged other tools to gain control over their work and off-duty lives:  fair labor laws, labor unions, workplace democracy.  Tomasi bizarrely supposes that they function as paternalistic constraints on workers.  But it was not workers who demanded a 14 hour working day, wages paid in scrip redeemable only at the company store, fines deducted from their paychecks for infractions of work rules, quid pro quo sexual harassment, and the like.[1. For those rare workers who do want such treatment, the response to them is the same as to those who want the freedom to use the public roads for drag racing: they are not entitled, in the name of their personal freedom, to undermine the conditions under which the vast majority of others can enjoy more important freedoms.] Fair labor laws, unions, and workplace democracy have always been about making employers treat workers not as mere instruments, but as individuals with lives of their own to lead.  They have been consummate expressions of workers’ agency.

I’m not arguing that workers intrinsically prefer “meaningful work” in workplace democracy, as social democrats suppose, over maximum pay, which Tomasi prefers.[2. Given the substantial appetite of German workers for a say in management, such preferences may be endogenous to the bundle of rights constitutive of the employment relation in a given country.]  I’m arguing that the case for workplace democracy and other democratic constraints on employers is the same as the case for democracy anywhere:  it’s better for securing the freedom and personal independence of the governed than the authoritarian alternative. Tomasi misrepresents the domain of social possibilities in using rhetoric (“independence,” “personal negotiation”) that suggests that all workers in advanced capitalist economies could operate in effect as self-governed independent contractors.[3. It’s worth noting that the dynamics of capitalism are hostile to self-employment, which tends to decline over time as economies get richer.  Ironically, opportunities for self-employment are higher in social democracies such as Denmark, Sweden, and Germany than in the United States, which Tomasi takes to be closest to his favored regime type of market democracy.] This follows from his curious neglect of the theory of the firm, which studies the boundary between markets and hierarchies.  His market rhetoric effaces that distinction, obscuring nature of the firm as a kind of private government.  Once we see this, we can understand fair labor laws—general constraints on the conditions employers can impose on vulnerable workers—for what they are: limited government.  They are not a departure from but an application of a classical liberal solution to despotism—restraint by the rule of law.

Tomasi’s map of social possibilities confuses government with the state and the capitalist economy with the market.  A more illuminating map would identify government with any organization in which some people systematically issue authoritative commands, backed up by penalties, to others.  It would then distinguish liberal democratic from authoritarian governments, and public governments (states) from private governments such as firms.  Tomasi’s defective social map generates a flawed map of political theories.  He describes market democracy as an icebreaker between two frozen coasts of political theory: libertarians and classical liberals on one side, “high” liberals on the other.  This map omits the conservative coast.  Conservatism, the historic enemy of liberalism, stands for social hierarchy and authoritarianism—arbitrary, discretionary, secret, unaccountable government.  This reality is obscured by the fact that, as F. A. Hayek famously argued, conservatism is more a cast of mind than a set of principles.  It opportunistically grabs any available principles to justify the sort of social order it likes, with the people it likes governing their social inferiors. Since Malthus, many conservatives have appropriated free market, limited government principles from libertarians and classical liberals.  But what they mean by limiting “government” in favor of “markets” and the “private sector” is limiting the power of liberal democratic governments—whether states, labor unions, or workers’ councils—to impose limits on the power of private authoritarian governments such as the firm, the patriarchal family, and the church.

The unprincipled conservative appropriation of the rhetoric of free markets and rugged individualism has muddled libertarian and classical liberal thinking.  Thus we find Tomasi offering reasons to the lower orders that their social superiors do not apply to themselves.  Citing Charles Murray, Tomasi claims that social security survivors’ benefits and welfare safety nets strip meaning from people’s lives by depriving them of the status of but-for causes of their family members’ well-being.  Never mind what homemakers and children might think of this patriarchal reasoning, in which the head of household derives self-esteem from the thought that he is the only thing standing between his family and utter destitution.  Do surgeons think their work is stripped of meaning because if they weren’t attending the ER, another surgeon would have filled in and saved those lives?  Tomasi also thinks social insurance diminishes its recipients’ self-respect by detaching benefits from their agency and making them dependent on others.  Never mind that their social insurance benefits are tied to their contributions as workers, and that individuals properly credit their own agency with outcomes they produce in cooperation with others.  Never mind that Social Security and Medicare are overwhelmingly popular. [4. For a libertarian defense of social insurance on this ground, see Jan Narveson, The Libertarian Idea (Temple University Press, 1988), ch. 18. I defend social insurance here, here, and here.] Why is Tomasi so concerned about workers’ self-esteem being damaged by benefits he sees as detached from their agency that he’d shut down social insurance for their sake, but not about the self-esteem of heirs being damaged by passively inheriting vast estates tax-free?  If respecting agency and hard work are important, why should the tax burden fall on workers rather than heirs?

Market democracy is a fresh, important research program.  At the level of ideal theory, high liberals made a serious error in discounting the importance of private enterprise and economic agency.  Market democracy promises to correct this error.  To move forward, it needs a better map of social possibilities that acknowledges the ubiquity and dangers of market-generated collective action problems and authoritarian private government. And it needs to clean its house of conservative ideas that are antithetical to liberalism.  I wish it well.