How Wage Slavery Could be Abolished in a Free Market

In a previous post, I discussed why laborers do not receive wages commensurate of their contribution to the bottom line. I argued that the problem was not the fault of the market process. That is, it is not inherent in the market process. I was pointing out how government, through systematic expropriation of ownership rights, puts labor at a disadvantage to management when it comes to contract negotiations.

In honor of Labor Day, I want to talk about how a genuinely free market could eliminate wage slavery and other more general forms of exploitation. The market forces I will talk about are in play now but are obviously hampered by government aggression.

Taking it as a given that wage slavery existed, it easy to see how the free market could do away with wage slavery over the course of several years. If a wealthy land owner had a group of laborers whom he exploited, we could imagine that the laborers made some contract with the owner that bound them to his land for a fixed number of years. Under natural law principles, a promise to work is not an enforceable contract. It only requires that a worker pay back any wages advanced for services not performed and pay the cost for any performance bond lost by the owner. Nevertheless, we can add the burden and assume for the sake of argument that enforceable labor contract were in place in this scenario.

First off, it would make sense that workers would not have much of an incentive to become more productive and would tend to decrease productivity relative to non-wage slaves. Since wage slaves do not derive much of any benefit, if any at all, from increased productivity, it would appear reasonable that their level of work would tend to be closer toward the minimum production required to fulfil their contract and remain employed. Each worker might have a different production quota, but no one would have an incentive to go much beyond that.

So comes along another wealthy owner looking for labor to exploit. After all, labor is the most desired form of capital. Since without it, tools and other forms of capital are useless. The second land owner makes an offer to the first. He offers to rent the workers from the first owner but request that the workers choose among themselves who will take his offer. For meeting a certain production schedule, the second owner will pay a bonus above their normal rate of pay. Some of the workers might even reluctantly agree to give a portion of the bonus to the first owner. In any case, both owners expect to benefit, and workers are receiving higher pay, possibly even a greater percentage of their market value. Over time, workers could save enough money to buy out their labor contracts.

You could then argue that the first land owner would just increase his production quota for all his wage slaves. The problem is that future wage slaves would decide to work somewhere with a lower quota, better working conditions, or whatever it is they value (maybe not being bound to arbitrary labor contracts). As the competition for laborer was bid up, land owners would continue to offer better conditions until the point where they paid the market rate of labor. Without the government intervention I mention below, land and rent costs of capital and credit would fall drastically, enabling newly liberated wage slaves to begin their own enterprises. It would definitely decentralize production and further increase competition for labor.

Someone could also raise the point that exploitation of labor exists today, so the free market either cannot eliminate wage slavery or perpetuates it. The problem is that there is no free market that exists, but to the extent that free market principles have been practiced, working conditions have improved. Some of the ways in which governments have stymied a genuine free market are by giving privileges of immunity from liability, raising the regulatory barrier to entry and exit to the benefit of large corporations, and by subsidizing the transportation of goods.

Under state capitalism, intellectual property laws increase the cost of living, central banking discourages savings and gives an advantage to banks with early access to newly created fiat currency, anti-labor laws discourage collective bargaining, government control of vast tracks of natural resources, and the boom-bust cycle of centralized government planning cause additional insecurities to give some people an upper-hand at the negotiating table. Restrictions on mutual banking, legal tender laws, credit monopoly laws, and government deficit financing cause banks to be able to charge higher premiums for loaning credit.

All this leads me to believe we do not live in a free market.

Another objection to this process might be that justice delayed is justice denied. We should demand an immediate end to exploitation. I completely agree. Where there are communities supportive of ending injustice, I support people seizing property they have a moral right to. Like I said, even in a stateless society with widespread despicable authoritarian tendencies, one which basically enforced slaver labor, the free exchange of ownership rights can make egalitarian solutions more palatable. A cultural shift would be needed, and a free market system could play a part in that solution. We would still have to educate and agitate others into taking actions to correct injustice. This can be sped along by upholding market economics so that more come to recognize the dignity of each individual’s life.

These subsidies and privileges I described above come at the expense of other people’s labor. It is slavery in a very real sense. The way to abolish this slavery is not to give power to the same group of people who orchestrated its enforcement.

Further Resources
Image credit: Arturo de Albornoz, with a Creative Commons license

2 thoughts on “How Wage Slavery Could be Abolished in a Free Market”

  1. Don't forget that it's the initial unequal access to land/resources that also gives management and property owners an unfair advantage over laborers (which is also a product of government enforcement of land rights). As Henry George noted, the only 'fair tax' is a ground rent (which has also been noted by Paine, Jefferson, A. Smith, Ricardo, Hayek, Friedman, etc.).

    1. I do not support the "single tax" because I do not agree that previously unused and abandoned resources are held in common. I believe they are unowned.

      I think we could both agree that government does not uphold rights in any just way, particularly since it usurps the rights of others to fund its aggression.

      In the case of a company that receives a majority of its income from government, the stockholders have no claim to that property. I support an individual or a group of individuals, most likely the workers, who come to occupy it as their own.

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