Home > Uncategorized > Necessity of Freedom of Contract?

Necessity of Freedom of Contract?

John Quiggin enters the debate I outlined here and here.   He asks whether the following would suffice to guarantee that freedom of contract is sufficient for avoiding workplace coercion, he says:

Suppose that the following conditions were met

* Full employment, so that the cost to a worker of finding a new job is no greater than the cost to an employer of hiring a replacement

* A minimum wage adequate to allow a decent living standard without requiring acceptance of degrading working conditions

* A universal basic income sufficient to ensure that, even without working no-one need be poor

* A default employment contract, incorporating prohibitions on sexual harassment, rights to regular breaks and so on, unless these are explicitly contracted out

Would we then feel that legislative restrictions on employment contracts were needed, and, if so, which and why? Or, is the question badly posed in some way

Judging from the rest of his post, I’m guessing that Quiggin would support the statement that contract rights are neither necessary, nor sufficient, for guaranteeing labor rights.

The problem, as I see it, is that the employer/employee relationship is always unbalanced in important ways.   When an employee contracts with an employer, she cannot possibly include every contingency which might arise.   Contracts are incomplete by nature.

Whenever two parties contract, the chances that the two parties will agree on the meaning of that contract in every possible eventuality is precisely zero.   That means that, with probability approaching one, one side to any relationship will always have the advantage over the other.  Power relationships are inevitable, and power relationships–unlike markets at their best–are destabilizing, not equilibrating.

You may be tempted to think that laws and norms would fill in the gaps left by an incomplete contract.   You would be wrong.   The laws and norms of a nation are just another kind of contract so that they are inevitably incomplete as well.   At some point, someone needs to step in and offer a fair settlement to any dispute.

So, is the Freedom to Contract sufficient for workplace justice:  no.   Is the Freedom to Contract necessary for workplace justice: maybe (like Quiggin, I could be convinced).   I would say no because a contracting employee is subject to the alternatives that the market provides, and those alternatives may not embody any notion of workplace justice that I could endorse.   Suppose, for example, that every business in an industry requires sex with the boss–say in the porn industry–as a precondition for hiring.   Even if the employee agrees to do it, I would have to label that as a form of coercion.

Categories: Uncategorized
  1. No comments yet.
  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: