I. A PRINCIPLED JUSTIFICATION FOR THE BASIC INCOME GUARANTEE

The extent to which the classical liberal theory of freedom as defended, for example, by Friedrich Hayek can lead us to some original conclusions about social justice has not been sufficiently appreciated. This article remedies such a shortcoming. John Tomasi, a leading figure of the neoclassical liberal movement, recently said this about Hayek advocating for state coercion to support social service programs: “Like many others before him, Hayek leaves us to guess at his precise reasons for advocating these familiar features of the classical liberal political program” (2012, 22). Similarly, Jason Brennan and Tomasi (2012, 119) wrote that “while classical liberals such as F.A. Hayek and Milton Friedman advocate a social safety net, their advocacy seems ad hoc given their strong claim about the sanctity of property rights.” Although it is understood that classical liberalism allows for a social safety net, say in the form of a basic income guarantee or a negative income tax, it is thought that such a safety net is not necessary in a classical liberal polity, and that its justification is somewhat lacking.

This article suggests an original response to such a problem, showing why an unconditional basic income guarantee is not only allowed but also required by the classical liberal theory of freedom. The classical liberal justification for the state consists of the need to reduce the amount of coercion to which individuals are subject. Such a concern for non-coercion can be used not only to limit the scope of the modern welfare state, as is often the case, but also, perhaps more interestingly, to explain why social justice is necessary from a classical liberal viewpoint. More precisely, this article will propose three main arguments. First, classical liberals view the purpose of government to be the reduction of coercion, both public and private. Second, a proper understanding of the nature of coercion indicates that parties subject to certain types of hardship are being coerced. Third, where the total amount of coercion is reduced by eliminating the hardship, the classical liberal state must do so to fulfill its purpose.

After establishing (section II) that private relations in market settings can be coercive, I will examine three classical liberal theories of coercion: first (section III), a legal approach supported by Ludwig von Mises; second (section IV), an economic approach endorsed by Richard Epstein; and, third (section V), an autonomy-based approach championed by Friedrich Hayek. I will argue for the latter as the only one with which we can satisfactorily deal with the problems of private coercion. The classical liberal concern with coercion is thought to lead to a defense of the minimal state. For such a conclusion to be sound, however, the state has to deal with private coercion in the labour market. Along the way, I will relate three tales to illustrate some problems of coercion in market societies, so as to arrive in the end at a principled argument for a basic income guarantee.

It is true, as Alistair Macleod (2008) noted, that whether a given institutional arrangement is coercive depends on whether the arrangement is morally defensible in regard to both the content of its rules and the process by which they have come to be adopted. For the sake of the argument, and this is not a controversial point from a classical liberal standpoint, I assume that market institutions are indeed morally acceptable. Hence, this article argues that if the total amount of coercion in society can be reduced by the state employing the amount of coercion necessary to maintain a social safety net, then the classical liberal state is obligated to maintain such a safety net by its underlying justification. This will permit us to offer a principled rationale for a classical liberal unconditional basic income, which is thought to be missing by many neoclassical liberals, and which, indeed, was never explicitly given by, say, Hayek or Friedman. Let us begin by identifying the problem of private coercion accurately, which is not always so simple in view of the many contradictory theories of coercion we can find in the liberal tradition.

II. PRIVATE COERCION IN MARKET SOCIETIES: THE TALE OF SVEINN AND HARRI

“Capitalist theory typically assumes that market transactions are voluntary and uncoerced,” Alan Wertheimer explained (1987, 4-5), “even if they are made against a background of economic necessity.” If we are to take further steps to reconcile market capitalism with social justice, such an assumption must be challenged. Overall, many classical liberal proponents of market institutions have endorsed a forgiving understanding of voluntary exchanges, establishing a distinction between coercion proper and circumstances that limit alternatives non-coercively (Nozick Reference Nozick1974, 262-63). As Wertheimer noted, however, the viability of such accounts of coercion is somewhat unclear. It becomes even murkier once we examine how market institutions can contribute to many problems of private coercion. Paul Gowder (2014, 331-33), for example, recently wrote about what he calls “unfree immiserating work,” say jobs with extremely low pay, unusually long hours, unpredictable scheduling, and a likelihood of long-term physical degeneration. Similarly, Chris Bertram, Corey Robin, and Alex Gourevitch (2012) have shown how there is often a “systemic denial of freedom in private regimes of power, particularly the workplace.” Employers sometimes invade employees’ privacy, firing them for resisting such invasion, and they also fire workers for supporting some political candidates, for trying to join a union, and, what is even more bizarre, for drinking in the privacy of their own homes. These are indeed problems of coercion, as this section will now establish, and thus they must be addressed by the state.

The usual problem with coercion is straightforward: getting one to do something by threatening one with some evil is generally inadequate in the liberal tradition. The use of interpersonal violence by individuals is an obvious example of coercion, say criminal activity, and yet we should note that coercion cannot be summed up by such violence. According to Matt Zwolinski (2015, 523), for example, it is “relatively uncontroversial that all systems of property rights are by their very nature coercive.” Now, although I agree with Zwolinski, we must recognize that this point is quite controversial for classical liberals. In fact, that the capitalistic organization of society itself includes some inherently coercive features is often categorically denied, which is one thing this article will address.

But we may want to take a step back. A limited state is justified in the classical liberal tradition by the fact that it protects us from our fellow citizens. Simply put, as Friedman explained (2002, 2), the major function of government is to preserve law and order. Enforcing criminal law is coercive by nature, but since it reduces the amount of coercion to which individuals are subject it is nonetheless warranted. Talking about libertarians, Bertram, Robin, and Gourevitch (Reference Bertram, Robin and Gourevitch2012) rightly observed that “in fact, the idea that private action can diminish individual freedom is central to their justification for the state, which is that some state coercion is required to stop people from dominating, enslaving, and generally harming others.” Market capitalism is justified in quite the same way. Such a system counters the capacity monopolies or cartels would otherwise have to exercise coercion – for example, in withholding services that are essential to my existence (Hayek Reference Hayek1978, 136). This is uncontroversial. It is not clear, however, that some horrible condition of employment may lead to coercion in a market capitalist framework.

Let me immediately introduce a first story, the tale of Sveinn and Harri, which captures one facet of the problem of private coercion in market societies. Harri means “master” in Old Norse, and Sveinn means “free servant.” Let us accordingly imagine that Harri is a tyrannical foreman, while Sveinn has to work for Harri all day every day, not being able to find a better job. Sveinn’s job is repetitive, dangerous, backbreaking, while Harri is disrespectful and is looking for any excuse for firing Sveinn. Sveinn is paid the minimum wage, but the best he can hope is for such an awful job, which he is forced to endure because of economic desperation. He could go work for someone other than Harri, but it would be more of the same; for example, mining, fruit-picking, textile sweatshops, and meatpacking factories. “Raw statistical data,” rightly said Gowder (2014, 330), “cannot truly capture the lousiness of these jobs.” The question, then, is whether Sveinn is coerced. Intuitively, the answer is yes – economic desperation has led Sveinn to a life of servitude.

A first objection could go as follows: people like Sveinn are free to starve to death, as Gerald Cohen observed, sarcastically. Such a response, however, is too all-encompassing. It can defeat any understanding of coercion, since starving is always an option. Yet the concept of coercion, as Cohen explained, does not imply that one has no alternative whatsoever. “When I am forced to do something,” said Cohen (1983, 4), “I have no reasonable or acceptable alternative course.” Sveinn has no reasonable alternative to immiserating work, and therefore, we could say, he is coerced. He could become a beggar, or go work for another tyrannical foreman, but these are not reasonable options. Classical liberals, though, will resist such an account of coercion. We cannot, as Karl Marx thought we should, “hunt in the morning, fish in the afternoon, rear cattle in the evening, criticise after dinner” (1998, I.ii.17, 53). Poor people have limited options in market societies, and yet classical liberals like Hayek will nonetheless insist that they are not truly coerced – or, at least, if they are coerced, it is not because their reasonable alternatives are too few or nonexistent.

There is one exception, which Hayek briefly mentioned, although it is a crucial one. Periods of extensive unemployment are situations in which employed people may be “at the mercy” of employers, having no alternative, and accordingly coerced. “In periods of acute unemployment,” Hayek wrote (1978, 136-37), “the threat of dismissal may be used to enforce actions other than those originally contracted for. And in conditions such as those in a mining town the manager may well exercise an entirely arbitrary and capricious tyranny over a man to whom he has taken a dislike.” Unskilled employees are particularly vulnerable to manipulation by others in the labour market, and therefore, from a classical liberal viewpoint, we may say that they are vulnerable to coercion. Such an account of private coercion is consistent with the customary cases of coercion classical liberals debated, say being mugged or conscripted, but it also accommodates economic coercion.

“Coactus tamen voluit,” once said Max Weber (1978, 334), that is, “although coerced, it was still his will.” Such a phrase is an oxymoron, and the reason why so many understandings of coercion fail to grasp the evils of economic coercion is because they do not see the contradiction in such a phrase. One is coerced when one must act according to another person’s will rather than one’s own. As Arthur Ripstein explains (2009, 107-08), according to Kant, “consent is fundamental to a system of equal freedom,” as it expresses “each person’s entitlement to be his or her own master.” Alternatively, Michael Weinstein wrote that “coercion as compulsion produces the condition of slavery, in which the actions of the coerced become means to the realization of another’s plan” (1972, 66). Simply put, when someone attempts to mug you, when the state enacts a system of conscription, and when your boss threatens to fire you if you join a union, then you are not acting as your own master anymore. Such an understanding of coercion has been championed by Hayek (1978, 13), and it is a key component of the classical liberal rationale for market capitalism:

The key point is that one is coerced to the extent that one is made to submit to the will of others, and one is vulnerable to coercion to the extent that one is vulnerable to manipulation by others. Having no reasonable alternative does not define coercion, but it can certainly make one vulnerable to coercion. Market capitalism provides people with an assured private sphere, and thus it reduces the amount of coercion in society, or so classical liberals have argued. Economic necessity, however, often provides opportunities for coercion. Having to do awful work for very low wages with no reasonable alternative but starvation may place one at the mercy of one’s employer. The manager may then become a “private tyrant,” requiring employees to submit to his every caprice, say random drug testing, as Gourevitch notes (2016, 18). Such an account of coercion is central to the classical liberal rationale, as it can be used to explain its noted preference for market capitalism, limited government, and decentralization. But it can also be used, as this article will demonstrate, to vindicate a basic income guarantee.

Now, a second objection could go as follows: As Hayek said (1978, 120), most employed people are not coerced in a market society because they act according to their own will. “To do the bidding of others is for the employed the condition of achieving his purpose. Yet, though he may find this at times highly irksome, in normal conditions he is not unfree in the sense of being coerced” (Hayek Reference Hayek1978, 120). Such a thought had already been introduced by Adam Smith (1776, III.iv.12) in his discussion of the tradesman who “derives his subsistence from the employment, not of one, but of a hundred or a thousand different customers. Though in some measure obliged to them all, therefore, he is not absolutely dependent upon any one of them.” As Philip Pettit mentioned (2006, 142), markets reduce dependency and domination – or, if you will, it reduces the amount of coercion. Markets decentralize power. They are characterized by a large number of buyers and sellers, none of whom may manipulate specific people. Hence, Robert Taylor (Reference Taylor2013) recently argued for a celebratory attitude toward markets. Economic coercion in the labour market, we could then say, should be addressed by more competition, that is, by a flexible labour market, not a more robust safety net.

Classical liberals will thoroughly agree with Taylor, as, indeed, the rationale for market capitalism rests on the fact that competition reduces the total amount of coercion. Yet this is not enough from a classical liberal viewpoint. As I explained elsewhere (Melkevik Reference Melkevik2016b), although market societies will make most people vastly better-off, they will also make a few people worse-off, that is, some people will inevitably fall through the cracks of market institutions. This is a problem since, as Zwolinski notes (2015, 523), the classical liberal theory “focuses on individuals, not on aggregates.” Though markets reduce the total amount of coercion, they may not do so for everyone equally. There is thus still a problem of coercion, if only because we know that some people like Sveinn will have to submit to their tyrannical supervisor. Before we go on to argue such a point, however, we have to consider three alternate understandings of coercion favoured by some classical liberals and libertarians.

III. THE STATE AS AN APPARATUS OF COERCION: THE TALE OF EDWIN AND SÓLI

Let us now consider two alternative theories of coercion championed by classical liberals like Ludwig von Mises as well as by libertarians like Robert Nozick, focusing not on manipulation but on the state as an apparatus of coercion. Such theories respond, for example, to Robert Lee Hale, a leading figure of the first law-and-economics movement, who criticized laissez-faire liberalism. Simply put, Hale’s challenge to laissez-faire (1923, 470) goes as follows: “The systems advocated by professed upholders of laissez-faire are in reality permeated with coercive restrictions of individual freedom.” Private coercion is ubiquitous and unavoidable for the working class, Hale claimed, as private coercion is actually backed by the law of property in market systems. Or, as Zwolinski said, property rights are by their very nature coercive.

Suppose a worker wants to eat a bag of peanuts, said Hale, and let me add that this worker is named Sóli, which fittingly means “poor man” in Old Norse. The bag costs five cents, which Sóli does not have. Of course, Sóli may not use violence to get the peanuts from Edwin, name which means “rich friend,” as forcible dispossession is one of the most obvious cases of coercion. This, however, is not the real problem of coercion in the tale of Edwin and Sóli. According to Hale, the problem is as follows. Edwin may remove at his discretion the legal duty under which Sóli is in regard to the bag of peanuts. Provided Sóli really wants to eat peanuts, he may then have to obey the will of Edwin. For example, Sóli may agree to pay five cents for the legal permission to eat a bag of peanuts, or, in other cases, Sóli may have to conform to the terms of Edwin in ways which are much more unpleasant, say working at disagreeable toil for a slight wage. “Unless, then, the non-owner can produce his own food,” said Hale (1923, 473), “the law compels him to starve if he has no wages, and compels him to go without wages unless he obeys the behests of some employer. It is the law that coerces him to wage-work under penalty of starvation – unless he can produce food.” Can Sóli produce his own food, then asked Hale? Probably not. The law of property forbids Sóli to cultivate any particular piece of ground unless he happens to be its owner. Hence, as Hale thought, Sóli is truly coerced in a market capitalist system, and it is the law of property that enables such private coercion.

Many classical liberals and libertarians disagree. “A person’s choice among differing degrees of unpalatable alternatives,” Nozick explained (1974, 263f), “is not rendered nonvoluntary by the fact that others voluntarily chose and acted within their rights in a way that did not provide him with a more palatable alternative.” One is not coerced to the extent that the circumstances that limit one’s alternative are not themselves coercive in nature, for instance when the circumstances are just other people exercising their rights. Nozick assumes, for example, that Edwin cannot be said to coerce Sóli in acting within his rights, and that if all people act within their rights with respect to Sóli, then, no matter how poor Sóli’s condition, Sóli is not coerced. Therefore, following Nozick, libertarians have established a distinction between coercion and circumstances that limit alternatives non-coercively, and market exchanges are thought to be non-coercive inasmuch as such exchanges stay within the bounds of the law. Such a theory, however, leads us to some conclusions that cannot be reconciled with the broader classical liberal philosophy.

First, we would have to say that the legal owner of a spring in a desert would not coerce people dying of thirst by asking an unreasonable price for his water, inasmuch as he is simply exercising his rights over the spring. This case, though, is the textbook example of a coercive monopoly. In the classical liberal rationale, it is used to explain why anti-trust actions may be necessary to break up monopolies, or it is used to explain why property rights must be arranged as to prevent such monopolies to arise in the first place.

Second, we would also have to say that there is no market coercion involved when, for example, Edwin threatens to fire Sóli for no good reason. As Gourevitch explains (2016, 18), in the United States employers have legal powers called “managerial prerogatives,” which, within some broad boundaries, permit them to engage in a master and servant relationship with their employees. For instance, “managers may fire employees whose political views or sexual orientation or even physical appearance they disapprove of” (Gourevitch Reference Gourevitch2016, 18). Were such powers exercised by the state, surely classical liberals would condemn them as coercive.

The general problem, as Hayek explained (1978, 139), is that “in defining coercion we cannot take for granted the arrangements intended to prevent it.” The rights employers have are such arrangements, and therefore we cannot say that Edwin does not coerce Sóli in asking him to work at disagreeable toil for a slight wage because he is permitted to do so per property and contract law. The same goes for the oasis case. It means that one cannot identify people’s rights by the criterion “minimize coercion,” and that people’s rights cannot define non-coercion in a given system. If the background institutions of markets can be shown to lead to economic desperation or manipulation by others, then we should not conclude that there is no problem of coercion inasmuch these institutions have appropriately defined people’s rights. It probably means that we should have additional institutions, say a safety net, which will further minimize coercion in markets. ^{Footnote 1}

Now, we may think, without authorized power to use violence, an institution cannot be called coercive, such that only the state and some agencies can coerce. Such a theory was championed by Ludwig von Mises. That is, private organizations within market societies are not coercive, as they are not expressly authorized to resort to violent action. More precisely, in a review of Hale’s book Freedom through Law, Mises (1953, 410) wrote:

As Barbara Fried noted (2001, 47), moreover, Mises clearly implied that an institution that lacks this power can never be called coercive. Edwin does not have the authority to beat Sóli into submission, as Sóli may very well look elsewhere if he wants a bag of peanuts, and therefore, Mises would say, the relationship between Edwin and Sóli is not coercive. Edwin lacks authorized power, or the monopoly of violence to put it in a Weberian way.

Such an account, however, misses several important points. First, it is not because the state has a monopoly on legitimate force that it also holds a monopoly on coercion. In fact, one may remember that Max Weber (1978, 313-9, 334-6, 729-31) established a distinction between “legal coercion” monopolized by the state, “physical coercion” typical of a robber, “psychological coercion” as exercised by a church, and the “indirectly coercive force of the market,” the latter of which is what is missing in many classical liberal theories. Second, and more importantly, the monopoly the state has on force is not total. People can legitimately use force in self-defence. If Sóli tries to grab Edwin’s bag of peanuts, Edwin is presumably authorized by the state to use some force in resisting this invasion of his property rights. Hence, what the state has is not a monopoly on legitimate use of force, but a monopoly on the authorization of use of force, or, if you will, a monopoly on authoritative decisions about who can and cannot use force. For instance, the state authorizes homeowners to use some force in order to defend their property.

These two accounts of coercion proposed by Nozick and Mises, therefore, fail to fit within the broader classical liberal rationale for market capitalism. A system of property rights is indeed coercive, or, in other words, the law allows some people to coerce others. “In protecting property the government is doing something quite apart from merely keeping the peace. It is exerting coercion,” said Hale (1923, 472). To be more precise, the state reduces the total amount of coercion in society by employing the amount of coercion necessary to maintain property and contract law. The same rationale is used more generally for limited government – though coercive, criminal law reduces coercion. Hence, market capitalism has never been a system of laissez-faire for classical liberals, as, say, Aaron Director (1964, 2) and Jacob Viner (Reference Viner1960) explained. It is rather a carefully designed system whose purpose is to limit coercion in society. That Nozick and Mises do not acknowledge the coercive nature of markets should make classical liberals wary of their understandings of coercion. These theories are non-generalizable, or ad hoc if you will, such that they cannot be used to shed light on many classical liberal objectives, save for vindicating limited government.

IV. ON MALIBU SURFERS AND BEACH BUMS:THE TALE OF VALDR AND LÓNI

The previously discussed theories of coercion do not satisfactorily capture the classical liberal objective of reducing the total amount of coercion in society. Whereas Nozick’s theory defines coercion through the arrangements intended to prevent it, namely a system of rights, Mises refuses to even consider the possibility of private coercion in market societies. Overall, it therefore seems like classical liberals should favour a theory of coercion as manipulation, following Hayek. That is, one is free to the extent that one can expect to shape one’s course of action in accordance with one’s present intentions. Now, the problem is the following: economic desperation as well as periods of extensive unemployment can lead to coercion in market societies, even though, of course, state redistribution will be coercive as well. Classical liberals, therefore, are facing a dilemma. A system of property rights will create specific sets of circumstances that will make some people vulnerable to coercion, being at the mercy of tyrannical employers, and yet the state cannot address such a problem without having recourse to some coercion of its own.

Broadly speaking, in a market society, there are only two ways in which the state can ameliorate poverty. First, and this is the usual strategy favoured by progressives, we may alter the proportion of the gain received by each individual member, such that we take from some to give to others. Second, we may increase the total social gains possible from political organization, or, as Epstein explains (1985, 4) with a tale of two pies, government action may move a society from a small pie to a larger pie, while preserving the relative entitlement among the members of the group. A rising tide, we are told, lifts all boats. Classical liberals normally favour this second Pareto improvement strategy, which is thought to be non-coercive, and which is certainly the best way to tackle poverty in the long run. But we could also ask the following question: What about the short run for people like Sóli and Sveinn who are faced with immediate problems of private coercion?

Let me introduce a third story, which I call the tale of Valdr and Lóni. The conveniently named Valdr, which means “ruler,” is in fact the ruler of Malibu, while Lóni is a Malibu surfer, whose name fittingly means “the lazy one” in Old Norse. Malibu is peopled with somewhat affluent residents, though Lóni is certainly not one of them. He is what we might call derogatively a “beach bum,” someone who is resistant to work. It just so happens that Lóni likes to spend his days surfing, that is, he has a high preference for leisure. Now, say Valdr is embarrassed by the inequality between Lóni and everyone else in Malibu, and therefore he enacts a new municipal tax – the Malibu surfer tax. There are about 13,000 people in Malibu, each of whom now must pay $2 each year, which is then given to Lóni, hypothetically the only poor individual in Malibu, as a basic income guarantee. This is an obvious case of coercion for classical liberals – it is forced redistribution. Though I will later argue for an even more comprehensive guarantee to counter the evils of private coercion, we must first understand why state coercion has always been such a problem for classical liberals, so that we may, later on, compare the evils of redistributive and private coercion.

The problem is then the following. A free market economy will make everyone better-off in the long run, including Sóli and Lóni, though it will also create the conditions under which Sóli may have to agree to work for Edwin at disagreeable toil for a slight wage in the short run. Meanwhile, Lóni will surf all day, as long as there are still waves on Zuma Beach. “In the sweat of thy face,” says the Book of Genesis (3:19), “shalt thou eat bread” – and yet Lóni could not care less about working, even if it means he has to fast until someone like Valdr is compassionate enough to present him a bit of bread free of charge.

To be more precise, we are now faced with three problems. First, if the state alters the proportion of the gain received by each individual member, it is state coercion. Second, if the state does nothing, then poor people like Sóli will have to endure some cases of private coercion, perhaps forced to do some immiserating work, thus becoming vulnerable to manipulation by others. Third, as Epstein noted (2002, 147), state coercion will benefit some individuals greatly, like lazy Lóni, while others will benefit only a small bit. Classical liberals may then prefer the evils of private coercion to the evils of state coercion, as the latter carries additional risks; for example, state coercion may promote idleness and skew the distribution of gains. After all, “The strongest of all the arguments against the interference of the public with purely personal conduct,” said John Stuart Mill, “is that when it does interfere, the odds are that it interferes wrongly, and in the wrong place” (2008, 92). Many classical liberals have indeed been distrustful of state intervention, but, I want to suggest, such a position is inconsistent with their concern for non-coercion.

Overall, we could think, classical liberals favour the following theory of coercion. One coerces when one does not preserve the relative entitlement of the people in a given society, as determined through a certain baseline – for example, the state of nature or laissez-faire. “The implicit normative limit upon the use of political power,” said Epstein (1985, 4), “is that it should preserve the relative entitlements among the members of the group, both in the formation of the social order and in its ongoing operation.” Such a theory permits us to explain why a limited government is needed to address private coercion – as, for example, the mugger disrupts the relative entitlements of the people he robs. It also explains the classical liberal distrust of progressive taxation, although as I have shown elsewhere (Melkevik Reference Melkevik2016a), such a distrust may be misplaced. More importantly, such an account of coercion echoes the intuition behind the famous “enough and as good” proviso John Locke has championed (2003, 112, II.v.27):

Such a proviso, as Nozick understood it (1974, 175), “is meant to ensure that the situation of others is not worsened.” Similarly, as Zwolinski notes (2015, 519), the proviso says that, “Natural resources should be used, in some sense, for the benefit of all persons, not just a privileged few.” Now, although we may agree that market capitalism makes most people better-off, as it dramatically increases the stock of goods that can be acquired through trade, the problem is that some people will not benefit from such a coercive system of property and contract law. Markets do not benefit “everyone.” Hence, that people like Sóli cannot afford to buy a bag of peanut without having to submit to the will of Edwin is a problem for classical liberals, or at least it should be. It is true that people will develop legitimate expectations around their property rights, permitting them to shape their course of action in accordance with their intentions. But a given system of property rights can only be used as a rough benchmark to decide what is or what is not coercive in a given society, since such a system of rights cannot have any normative authority over our understanding of coercion.

Redistribution will indeed alter the pro rata division within a given society, but that may not be such a problem if the goal is indeed to reduce the total amount of coercion. It is unlikely that a single mechanism, say market capitalism, will be able to fulfill on its own such a classical liberal objective, and thus we may have to accept some redistribution as a way to compensate for the shortcomings of market capitalism that cannot address some forms of economic coercion in the labour market. In this case, redistribution supplements market institutions, as we accept some coercion to reduce a greater amount of coercion.

We should remember that private coercion is a problem in market societies hic et nunc, that is, here and now, for a few people living destitute lives. Valdr is certainly coercing Malibu residents with his Malibu surfer tax, but, I argue, he is also preventing another kind of coercion. The crucial lesson from a classical liberal point of view is that market capitalism will radically reduce the total amount of coercion in society, which will benefit most people, though not everyone, unfortunately. A few poor people like Sveinn and Sóli will have to submit to the unsavory character of people like Harri and Edwin, that is, some tyrannical foreman or exploitative businessperson. Since, as Zwolinski notes, the classical liberal tradition is individualistic, not aggregative, we therefore have to have a mechanism that ensures that the total amount of coercion is reduced for everyone, not just for most people. A basic income guarantee is such a mechanism, and, as I will suggest, such a guarantee should aid everyone, including people like Lóni, as lazy as they may be, if we are to be consistent with the classical liberal theory of liberty.

V. FROM PRIVATE COERCION IN MARKETS TO THE BASIC INCOME GUARANTEE

The classical liberal theory of freedom follows Kant’s intuition according to which people have a strong interest in having no other person determine their own purposes (Ripstein Reference Ripstein2009, 111). Using such an account of coercion, I would now propose three conclusions, each linked to one of the three tales I recounted, so that we may see how the classical liberal theory of freedom justifies an unconditional basic income guarantee, without assuming any altruistic motive.

First, concerning the tale of Edwin and Sóli, there is private coercion in market societies, inasmuch as poor individuals often have no real possibility for autonomy-exercising choice. Though some people may be ready to consent, for example, to the conditions of sweatshop labour, it does not follow that such consent is also an expression of self-mastery. Following Justice Holmes, we may say that “the fact that a choice was made according to interest does not exclude duress” (Union Pac. R. Co. v. Public Service Commission of Missouri, 248 U.S. 67, 70 [1918]). Of course, we have to be careful with such an assumption, since not everyone can be a professional baseball player. Most courses of action are only open for so many people, and yet recall that a limited course of action does not make one unfree according to Hayek. The question is rather about having a private sphere with which no one can interfere. Extreme poverty, we could then say, cultivates private coercion, as it makes it that much easier for someone else to manipulate one. Economic desperation forces some people to submit to the will of others. In this case, that there are many well-off employers who would offer lousy jobs does not make the would-be employees any more free. Sóli’s consent to work for Edwin at disagreeable toil for a slight wage is not necessarily an autonomy-exercising decision.

Hence, classical liberals should follow Gowder (2014, 306) in saying that the most plausible version of economic liberty requires the state to “guarantee, if possible that no one will be driven by economic desperation to engage in immiserating work, which may impair rather than facilitate his or her pursuit of the good.” Simply put, a classical liberal polity should be concerned with the pressing issue of occupational choice. For many unskilled workers, entering the labour market may be a coercive experience, in which they can be made to agree, through a binding agreement, to submit to the will of an employer so not to starve.

Second, concerning the tale of Sveinn and Harri, and building on our first conclusion, we must consider an additional side of private coercion, namely what could be called the problem of “little tyrants.” Though Sóli may face coercion, having to go work for Edwin if he wants to eat, we must acknowledge that people like Sveinn also face coercion within the workplace. Such a point was well-understood by Nozick (1997, 16), as he gave the following example of workplace coercion: “You threaten to get me fired from my job if I do A, and I refrain from doing A because of this threat,” and therefore “I was coerced into not doing A.” In some industries, say the worst service-sector jobs, workers are regularly faced with such instances of private coercion, which should perhaps make us question the justice of the doctrine of employment-at-will, too often enabling “little tyrants” within a given company. Save for some protections against gender and race discrimination, employees may then be fired for good or bad reasons, as well as for no reason at all, which may enable bizarre and undignified cases of private coercion. For example, employees are sometimes forbidden to pee, or commanded to pee, or asked to dress in some unusual ways. As Bertram, Robin, and Gourevitch noted (2012), employers are then granted powers forbidden to the state – they are free to punish without due process.

The tale of Edwin and Sóli demonstrated that the capitalistic organization of society itself includes some inherently coercive features, forcing people to enter the labour market, less they starve. The tale of Sveinn and Harri, conversely, shows how people often have to face cases of coercion inside the workplace. Overall, then, there are problems of private coercion both inside and outside the workplace, which must be addressed by the state. A basic income guarantee is one such way to address the problems of private coercion. It permits people, first, to resist having to integrate the labour market under coercive circumstances, and, second, to refuse to go along with the caprice of tyrannical foremen. If no one is to be left behind, then classical liberals must embrace such a guarantee. This conclusion can be accepted by most, if not all, classical liberals. For example, we may remember that Hayek has argued for an assured minimum income (2013, 249), that is, a non-market safety net, or “a floor below which nobody need to descend.” The basic income, however, if made unconditional, will lead us to the Malibu surfer problem we examined.

Third, then, concerning the tale of Valdr and Lóni, the Malibu surfer problem is not as serious an objection to a social safety net as may be thought. Some classical liberals like Epstein may very well complain against giving a 22-year-old $10,000 per year for living at home with his parents and hanging out with his friends (2002, 166), and yet, we should ask, what is the alternative? Are we to give money only to the “deserving poor,” like the Old Poor Law did? As a matter of fact, Epstein thinks so (167), as he wrote that “no gift of assistance should be made in unconditional fashion. Some investigation should be made of the condition of the recipient, and some restrictions should be imposed on the way in which the gift, whether in cash or kind, is used.” If we are to reduce the total amount of coercion for everyone, and not just for most people, our third conclusion must be that some gift of assistance should be made unconditionally, without which the so-called “underserving” poor would be vulnerable to private coercion. Also, we would then have to invade the private life of all those who would receive state assistance, which is not something that can be welcomed by classical liberals. Will an unconditional guarantee lead to a life of self-indulgence for some people like Lóni and idle teenagers? Yes, it will. But the problems of private coercion Sóli and Sveinn are facing are serious enough that we must be ready to shoulder such a cost. As undeserving as a few people may be, an unconditional safety net safeguards market societies from the evils of private coercion, permitting people to avoid intolerable works, be they degrading or unbearably tedious (Gowder Reference Gowder2014, 306).

“For the ‘underserving poor,’ those responsible for their own fate,” once stated the Charity Organisation Society, “abuse of the relief system could only be curbed by ‘making it as distasteful as possible to the applicants; that is, by insisting (as a general rule) on a labour test or residence in a workshop.’” After approvingly quoting that passage, typical of the Benthamite rhetoric used in the Poor Law Amendment Act 1834, Rothbard (1978, 148) explained that the libertarian position calls for “the complete abolition of governmental welfare and reliance on private charitable aid, based as it necessarily will be on helping the ‘deserving poor’ on the road to independence as rapidly as possible.” Some classical liberals have indeed defended a similar position as they argued against the welfare state. The main problem was perhaps better captured by Jeremy Bentham (1843, III.ii.1, 401) when he explained the following: “In this country, under the existing poor laws, every man has a right to be maintained, in the character of a pauper, at the public charge: under which right he is in fact, with a very few exceptions, (amounting not to one perhaps in fifty,) maintained in idleness.” Simplifying greatly, welfare benefits putatively encourage laziness, and social justice is consequently not to be understood as a reciprocal relationship among different parties. It rather becomes an institutional protection of idleness.

Such a problem, following John Rawls (1988, 257), is now colloquially known as the Malibu surfer problem, that is, the welfare state is thought to lead to a life of self-indulgence for some people who consume more than their fair share of public resources. To use state coercion to support these idle persons, it is therefore thought, is wrong. This article has disproved such a thought from a classical liberal viewpoint. It is not viable to merely help the deserving poor. Leaving aside the intractable problems that would accompany any attempt to pick up those who are indeed “deserving,” we need to consider how market institutions can be coercive, either directly or indirectly, which, of course, needs to be remedied if we accept the classical liberal rationale.

Consider what may be called the “exploitation objection,” which says that it is wrong to live off the labour of others (Rawls Reference Rawls2001, 179). Stuart White proposed three responses to this objection, but for classical liberals only one of these answers suffices to justify an assured income. The “balance of fairness response,” explains White (2006, 4f), goes as follows: “Introducing a basic income will, on balance, prevent greater injustice than it might create.” For classical liberals, the greater injustice is private coercion, such as having one’s privacy invaded by one’s employer, having to obey the impulsive will of your manager, or having to do demeaning sweatshop labour so not to go hungry.

As White noted, such a response concedes that the basic income guarantee will introduce some injustice. It will disrupt the relative entitlement of the people, making some people worse off so as to make others better off. Such redistribution is coercive. It is also most probably exploitative for Lóni to live off the labour of Sóli and Sveinn. But, overall, the argument is that the evils of private coercion are greater than those accompanying a comprehensive social safety net, and the evils to be removed by such a safety net are greater than those that accompany the governmental interference necessary to carry out such a net. If we follow Hayek in defining coercion as being made to act according to someone else’s will rather than one’s own, then it seems the above examples of private coercion are worse than being forced by your government to pay a few more tax dollars.

Such a “balance of fairness” argument shows why classical liberalism should indeed be committed to an unconditional basic income guarantee. A different liberal tradition that would not be so concerned with coercion, however, may have to use additional arguments to justify such a guarantee. But the classical liberal concern for non-coercion is strong enough that no additional argument is needed, provided that we can show that the total amount of coercion in society can be reduced for everyone by the state employing the amount of coercion necessary to maintain such a basic income guarantee.

We have now established that the classical liberal state is obligated to maintain a basic income guarantee by its underlying justification. Yet one could want additional reasons to support an unconditional guarantee rather than a conditional one. Let me propose the following thought. The purpose of the basic income guarantee is to enhance everyone’s capacity to refuse to do immiserating work, which makes people vulnerable to coercion. To make such a guarantee conditional on willingness to work, therefore, would be self-defeating. That is, if we assess the people’s willingness or ability to work before we provide the basic income, then we essentially defeat the initial objective of the guarantee, which is to create a private sphere so as to counter the coercive nature of the labour market. In this case, coherence requires of classical liberals that they endorse an unconditional guarantee, because their individualistic theory cannot justify leaving anyone behind, and because they cannot invade the private life of all those who need or would need state assistance.

It is regrettably common to say that the classical liberal tradition is consequentialist and focused on aggregate happiness (Gray Reference Gray1982, 50), especially following John Rawls (2000, 366) and Samuel Freeman (2007, 45). Yet to do so is almost certainly to misread classical liberalism. After all, Hayek did not call his book The Constitution of Happiness but The Constitution of Liberty, and, similarly, Friedman did not title his book Capitalism and Happiness but Capitalism and Freedom. The classical liberal justification for the state consists in the need to reduce the amount of coercion to which individuals are subject, not to make people happier, and therefore the above argument for an unconditional basic income guarantee can explain both the wider features of a classical liberal polity as well as the principled commitment to that guarantee – which was never explicitly given by Hayek, and which is often thought to be missing by neoclassical liberals.

In conclusion, following the theory of coercion championed by Hayek, this article has provided a thoroughly principled classical liberal argument for an unconditional basic income guarantee. Of course, classical liberals should try to find institutional ways in which we may lower the cost of such assistance, but the assistance itself cannot be questioned. As Friedman noted (2002, 192), any redistributive measure to ameliorate poverty will reduce the incentives poor people have to help themselves. This is a problem, and yet it is nowhere as serious as the problems of private coercion in a market society. “In the general course of human nature,” said Alexander Hamilton (Hamilton, Madison, and Jay Reference Hamilton, Madison, Jay and Rossiter1999, 471), “a power over a man’s subsistence amounts to a power over his will.” If we are to accept the classical liberal rationale for market capitalism, this is simply not something that can be allowed: Sóli and Sveinn should always be able to act according to their own will, never according to whim of their boss.