“But Our Jobs Wouldn’t Be Safe!” - A Free Society, the Labour Market, and Job Security

by Christopher Awuku

February 19, 2008

Evidently, a free market in employment would exist within a stateless society.  This naturally would manifest itself as a labour market lacking any governmental regulation of wages, health and safety issues or methods of hiring and firing.  To seasoned libertarians at the least, a vindication of why minimum wages, or the imposition of health and safety legislation, is negative would be akin to preaching to the choir.   

Still, I seldom hear or read of any rational explanation of how hiring and firing can be conducted in a total free market in employment.  Too often, libertarians cite the common rationale of “employers can hire and fire anybody for any reason,” without putting forward a reasoned outline of how this may take place.  The detractors and naysayers of libertarianism continuously affirm that such a state of affairs is “extreme,” and thus could lead to objectionable consequences.   

In fairness, I can see why a statist might think this.  In many liberal democracies in the world today, there is legislation protecting employees from discrimination.  In the USA , there is the Civil Rights Act and in the UK , we have the Race Relations Act, Sex Discrimination Act, and the Disability Discrimination Act.  As various forms of prejudice are widely censured in contemporary Western societies, these aforementioned laws are highly valued by ordinary people, since they enable members of groups traditionally discriminated against to acquire employment in a fair manner.  Opponents of an entirely free labour market cite that a lack of regulations is a regressive move, and society may well revert to a darker era in which discrimination was more open and rife.  

Furthermore, some opponents of a wholly free labour market claim that job security could be undermined, considering that anybody could be fired for any reason.  Readers of Strike-The-Root.com, in the course of their respective vocations, may possibly place great emphasis in the ideal of job security and thus could relate to such a position.  However, I do not feel that fears surrounding the erosion of job security, within a free labour market, are totally justified.  Let us examine this argument and attempt to devise a rational means of how job security can be safeguarded in a free and voluntary society.  

In the collusion of government and economy that exists in practically all Western liberal democracies, the fundamental mechanics of a free market system are still in place.  We can thus observe that goods and services are traded within a competitive marketplace.  If one desired fast food in the USA , then one can frequent McDonalds, Burger King, Wendy’s, or Subway.  If a person wanted a PC, then one can readily purchase a Dell or Benq PC from any good computer dealer.  To reiterate then, we can patently see that the American fast food and PC industries do contain competitors.   

Because of the workings of a free market, in the real world we can see that employers choose employees who would enable them to compete and prosper in the marketplace.  An employer, in the current statist paradigm, would not retain the employment of somebody who was lazy, incompetent, dishonest, or who stole from the company.  An employee like this might be unproductive and difficult to trust.  Thus, their employment would be detrimental to a business concern, as sustaining or increasing market share and consequently acquiring the highest total of profits possible would be weakened.  In general then, we can note that employers strive for the best employees available at a given time, since the highest quality employees facilitate the best potential performance of the organisation.   

Accounting for this, an employer often forges lures and enticements in order to attract the best employees.  These may be paying wages above the market rate, benefits, or other rewards.  In a free labour market, employers could place all and any kinds of stipulation within their contracts of employment in order to entice the best employees.  A good employee, who would naturally be quite productive in his or her work, is a vital asset to an organisation.   

Since proficient employees can choose to work for any business concern they wish, companies have to make it worth an employee’s while to remain in their organisation or even attract future workers at all.  As many workers in the economy are concerned about how secure their jobs are, employers would be mindful of this, as no worker has to work for them.  An effective method of ensuring job security would be to create contractual obligations, stating that the employer can only dismiss a worker in certain circumstances.  In this sense, an employee can be safe, content, and productive in their occupation with the knowledge that their bosses can only fire them based on specific clauses in his or her contract.  Therefore, in theory, any business owner can hire or sack any worker, for any reason they chose.  In practice, however, responding to the demands and desires of prospective workers might encourage employers to devise methods of allaying their worries.     

What would occur if the employer violated such contractual clauses?  Well, the employee could specify a third party (such as any of the myriad of private protection agencies in the free society) to adjudicate the dispute.  If the employee could prove that his or her boss fired them in a fashion not consistent with the terms of the contract, then such a ruling would be negative press and bad publicity for the business in question.  Potential workers for the organisation might be dissuaded from joining the business concern, in the fear that they too might be double-crossed.  Existing employees may leave the organisation at the earliest opportunity, since trust in their bosses would be destabilised, considering the dispute with a fellow employee.   

Everyday people within the voluntaryist society might abstain from purchasing the company’s products, since they could view the organisation as being too harsh and oppressive of its workers.  With fewer workers, and less sales of goods and services, the likely profits that the organisation can make would naturally be lesser in amount.  Thus, the shareholders of the company would take issue with this, and potentially could withdraw their capital from the company since their investment would become overly risky.  If sufficient workers left and enough shareholders sold their shares, then the business concern could face collapse.  Evidently, its competitors within the marketplace would be all too eager to fill in the gap left by the organisation’s fall.  In short, one should acknowledge that in the free market, honesty, fair play, sincerity, and integrity are of consequence.  If potential business partners were not honest, fair, sincere or genuine, then the inherent risk in investment would be too great.  Without initially demonstrating and earning trust, few would want to do business with you.  For this reason, a dodgy or unscrupulous business associate would stand out like a sore thumb and would not prosper in the marketplace.  A bad reputation, in the world of business, can potentially lead to economic death.  

One should also note that continual contractual disagreements with employees are costly.  The money paid in damages to the wronged party is money that could have been used to pay employees higher salaries, invest in new buildings or machinery to increase production, or give higher dividends to shareholders.  A business concern in the free market does not function like a government.  A government, noticeably, does not operate on a profit motive.  Thus, it can afford to accumulate deficits and disparities between income and expenditure without any direct threat to its existence.  On the other hand, a company in a capitalist economy, by definition, has to make a profit, since this is the prime reason for entrepreneurs founding and operating businesses.  Profit making is naturally central to capitalism.  Funds paid, as a result of losing court cases, detracts from acquiring the highest possible amounts of profits.   

Whilst browsing the World Wide Web, I have read some people comment that smooth employer/employee relations in a free market are too fanciful and unrealistic.  It is as if they assume that the re-emergence of the “satanic mills” and sweatshops of the Industrial Revolution would take place.  Productive relations between bosses and workers in a free labour market are not so far-fetched at all.  Within the present statist model, an average employer would actively dismiss somebody who did not interact well with his or her fellow employees, or was unproductive or consistently failed to arrive at work at the specified time.  Clearly, such actions would be disadvantageous to the business concern in being as successful as possible.   

Taking into account the points outlined in the above paragraph, why would this be any different within a stateless society?  As aforementioned, the elemental mechanics of the capitalist economy would be the same.  Companies would be competing in the marketplace and concurrently seeking to raise market share and thus their profits.  If in today’s world, business owners appreciate employees that enhance the performance of their organisations, I cannot see any evident or apparent reason why they should not within a voluntary society.  If I was a boss in a free society, and I opted only to employ attractive twenty-something women, it would be my right, of course.  It would be my total prerogative, as the company’s owner, to hire or fire anybody for any reason.   

Still, this does not mean that my employees would be adept at their jobs, even if they were all physically attractive.  If they continuously fought amongst themselves, or were not productive in their work, then it may cost my company, as the disruptions may well result in falling behind the competitors within my industry.  Even if someone were pretty or attractive, would it be prudent to retain his or her employment, if his or her poor job performance was hurting your business concern?  

In all likelihood, the workings of a free labour market would not be as “chaotic” or “cutthroat” as one might initially imagine.  Root human nature is unlikely to change in a voluntary society.  Thus, the same factors that motivate employees and workers to opt to join a company would exist.  Would employers, without having to adhere to any governmental edicts, be unscrupulous in how they treated their workers?  Perhaps they may be, but in the present statist world, such things occur already.  In the media, one continually hears and reads of incidents pertaining to workplace bullying and other acts that are harmful to employees.  Such occurrences can evidently tarnish the image of an employer.  In reality, there is nothing preventing private individuals from compiling reports with regard to bad bosses.  Since there would be no state regulations of the labour market, such reports and lists may be invaluable to prospective workers when determining which employer is upright or not.  

Moreover, there would be little to prevent workers from forming cooperative working arrangements, in which all profits and decision-making were collectively shared.  Of course, left-anarchists and Marxists view capitalism as being oppressive since workers are exploited in order for “fat-cats” to reap as much profit as possible.  Such rebukes are only pertinent within the current “state-capitalist” or “crony capitalist” environment that exists in practically all First World nation-states.  In the UK , the government even limits the business structures available to potential entrepreneurs.  Such models include a sole tradership (in which one person has unlimited liability and keeps all of the profits for him- or herself), an unlimited liability partnership, a private limited company and a public limited company that holds the capability to sell its shares to anybody on the stock exchange.  In a voluntary society, the structure of a company (with regard to how profits are divided and the nature of decision-making) would be up to the business owners to determine.  The marketplace would weed out any inefficient business model.  So those who oppose the employer/employee relationship would possess the means to avoid such a scenario within a voluntary society.  

In my own perspective, it is quite comical and amusing to hear statists, and those who dislike market anarchism/voluntaryism, conjure up such scare stories in reference to the nature of a voluntary society.  If people have to go to such extreme lengths in order to discredit a notion, then they are already losing the argument.   

If anything, the points that are persistently raised by statists should make us, as market anarchists, formulate rigorous methodologies to counter those who form scare stories about a free society.  People would be more willing to take us seriously if we present credible and cogent positions because of this.  Educational approaches of disseminating libertarian values might be multi-generational in nature.  If one examines, for example, the abolition of slavery, then it certainly was not an immediate phenomenon.  In the UK , the first abolitionists surfaced during the mid-18^th Century, even though slavery was in due course abolished in the 1830s.  Despite the probability that a free society could materialise after our lifetimes, we should not lose heart.  As long as our modes of argument are sound, then there is every hope of us ultimately prevailing, and thus enabling individuals to live peacefully without the fear of tyranny from the state.