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Thursday, May 21, 2009

Labor Economics from a Free Market Perspective: Employing the Unemployable

Notwithstanding its title, this is not a textbook on labor economics. Rather, as the author stipulates in the introduction, it is “an ideological book.” It is a collection of papers written, sometimes with coauthors, by Block during the 1990s and 2000s on various labor-related topics. Of the 29 chapters, all but three were first published elsewhere (some as blog posts).

Block’s free-market perspective is libertarianism. Throughout, he searches for “the proper libertarian answer” to several labor-related questions. He begins, as did his mentor Murray Rothbard, with the two foundations of libertarian thought: The nonaggression principle and the law of free association. Taken together, Block writes, they imply, “In the free and prosperous society everyone may act precisely as he pleases, provided, only, that he does not initiate violence against non-aggressors.” Following Rothbard, Block’s theory of justice in original acquisition of property is the Lockean homestead principle, without Locke’s famous proviso, and with Nozick’s principle of justice in transfer of property rights based on voluntary exchange.

I think the book best serves as a handbook for teachers and students on how to apply libertarian thought to several labor questions. Unfortunately, the book has no index so it is rather difficult to find Block’s treatment of any specific issue. For example, the National Labor Relations Act (NLRA) imposes mandatory good-faith bargaining, exclusive representation, and “union security” on private-sector collective bargaining. Each of these egregiously violates the law of free association. Block briefly considers these topics, but it is impossible to pick up the book and quickly find his statements about them. His main free-association argument against NLRA-style unionism focuses on the use of picket lines to stop “scabs” and others willing to engage in voluntary exchange with strike targets. His argument is brilliant, but I wish he had applied it to those other issues as well. On strikes, Block draws out the important distinction between NLRA-style strikes and strikes that can be justified as applications of the principles of voluntary exchange. Chapter 8 (a blog post) presents a short but effective argument in favor of “yellow dog” (union-free) contracts among consenting adults.

In addition to unions, Block and his coauthors discuss other standard labor topics, including wage determination, the minimum-wage laws, the negative income tax, academic tenure, worker’s compensation, and unemployment insurance. In Chapter 15, Block chastises two Heritage Foundation authors for conceding too much to those in favor of increases of legal minimum wages. In Chapter 23 he demonstrates the irrelevance of “perfect competition” to policy questions. Chapter 25 is an interesting short paper which demonstrates that comparative advantage is a sufficient but not necessary condition for mutual gains from trade.

In three papers Block argues in favor of absolutely open borders for all immigrants who seek only to engage in voluntary exchange with natives. In two of these papers Block argues against the more restrictive views of his fellow libertarian Hans-Hermann Hoppe.

Two papers take up redistributive justice. In Chapter 21, which examines reparations for slavery, Block takes issue both with those who advocate reparations and also with David Horowitz, who famously opposes them. Here Block deploys his theory of justice in property rights to destroy the arguments of both sides of the debate. Chapter 22 is a devastating response to the Pontifical Council for Justice and Peace’s ill-informed ruminations about land reform. As a Catholic I am constantly embarrassed by economically illiterate authoritative statements by spokesmen for the Church. Block demonstrates that if the Church were really interested in its vaunted “preferential option for the poor” it would join the fight to promote economic freedom rather than coercive redistributionism. His paper is an excellent addition to the growing effort to educate religious thinkers about free-market economics.

In sum, if you want to know to what conclusions a rigorous application of libertarian thought leads on several labor-related questions, this book is where they can be found. Block’s arguments are on point, clever, pithy, humorous, and effective. Unfortunately it is not easy to find them.

  • Walter Edward Block is an American economist and anarcho-capitalist theorist who holds the Harold E. Wirth Eminent Scholar Endowed Chair in Economics at the J. A. Butt School of Business at Loyola University New Orleans. He is a member of the FEE Faculty Network.
  • Charles Baird is a professor of economics emeritus at California State University at East Bay.

    He specializes in the law and economics of labor relations, a subject on which he has published several articles in refereed journals and numerous shorter pieces with FEE.