It is a remarkable fact about our current intellectual milieu that capitalism is considered to be positively associated with democracy. One reason is the either/or mentality of the capitalism/socialism debate. Since capitalism and socialism are "the alternatives," and since socialism has been so undemocratic, capitalism must represent "democracy."

A deeper reason for the alleged association between capitalism and democracy lies in a basic tenet of classical liberal social philosophy, the tenet that a person's rights and duties in society should be based on voluntary arrangements, not on inherited status. Liberty is the cardinal virtue. Individuals should have the liberty to determine their role in society by means of voluntary contracts. Liberty entails the absence of coercion by other individuals, organizations, or the state, or coercion by an status role imposed from the past. We will use "liberal" in this classical sense which should be juxtaposed to "illiberal" rather than "conservative." Many political conservatives (e.g., Hayek or Friedman) are quite liberal in the classical sense [see Friedman 1962, 5 for a discussion of classical liberalism].

A classic statement of this basic liberal theme is Sir Henry Maine's assertion that

Liberalism, as a social philosophy, has, above all else, emphasized the importance of voluntariness (informed consent free of individual or government coercion). In ancient and medieval societies, the cake of custom had crystallized into hereditary roles, master and slave, lord and serf. Liberal capitalist democracy depicts itself as the outcome of a progressive historical trend to loosen the chains of the past so that each person's role in the political and economic system is based on explicit or implicit voluntary contractual arrangements.

This is the liberal vision in simple and stark terms. Democracy, or at least the liberal conception of democracy, and capitalism both fit into the vision. The liberal conception of democracy is government based on the consent of the governed, as expressed, for example, in an explicitly or implicitly agreed-upon political constitution. The democratic form of government is thus typically juxtaposed to the hereditary monarchies of the past or the imposed authoritarian regimes of the present.

A similar stark juxtaposition is made in the economic sphere.

Coercion or contract? That is the basic choice according to liberal social thought.

Capitalist production is pictured as the economic correlate of democratic government because it is also based on consent, on the web of market contracts between the employment firm and its suppliers and workers.

Much of the progressive and radical criticism of capitalism has accepted the liberal definition of the issues ("Contract or coercion?"), but has disagreed on the factual question of the voluntariness of the employment contract. This is the involuntariness critique of the employment relation.

The contracts available to an individual will depend, in large part, on the property and resources of that individual. While status in a strict sense is not inherited in liberal society, property is inherited. Moreover, a class-based system of education has made even the subtler intellectual abilities and "human capital" into resources which are inheritable or transmittable along class lines. Hence, it is argued, when one is born with little or no inherited capital (financial or otherwise) and with only one's labor to sell, then the "choice" to be a wage-worker is no choice at all. It is, for all practical purposes, an inherited status.

This involuntariness argument is superficial both in its content and in its presuppositions. It does not criticize the presupposition that the employment contract as a contract for the sale of labor as a commodity would be acceptable if only it were voluntary. If that presupposition were wrong--if the employment contract were invalid even as a voluntary contract—then the whole involuntariness critique would be as pointless and superficial as quibbles about the quality of consent in a self-enslavement contract.

The involuntariness critique is also superficial in its content. Of course, our choices are limited and structured by our social as well as biological inheritance, but our choices may still fall well within any workable juridical definition of voluntariness. As a market contract, the employment contract (particularly a collectively bargained labor contract) offers much more latitude than typical consumer contracts which are just take-it-or-leave-it contracts of adhesion. And the special plea that limited choices amount to "social coercion" is used in attempts to degrade the quality of individual decisions and to justify throwing open the floodgates for open-ended governmental action. If the factors limiting choice are themselves unfair or unjust, then those factors should be specifically addressed by the government or legal system. But that is quite different from the general argument that choices constrained by social circumstances are therefore "socially involuntary."

The involuntariness critique also seems to be used in bad faith by authoritarian socialists since the suggested alternative in fact involves more rather than less coercion. The predetermined or socially involuntary aspects of the employment contract are nowhere more evident than in the "company town"— where there is essentially only one employer (who may well be able to enlist the police power). Yet the alternative of state socialism is widely perceived as reorganizing society into one big company town.

Thus the involuntariness critique of the employment contract has, for all but the most doctrinaire, led not to more government ownership but to legislation reducing the one-sidedness and increasing the "fairness" of the contract. Thus progressive liberals sponsor more labor legislation, anti-trust laws, industrial regulation, social welfare legislation, taxation of inherited property, and improved public education. Such is the well-worn path of modern liberal thought in the capitalist democracies. Modern liberalism does not question the association of democracy and capitalism, and it does not question the basic juridical validity of the employment contract. It strives to increase the fairness and the voluntariness of the contract.

The liberal question of coercion or contract is superficially posed. Here again, Marxism has proved a godsend for liberal capitalism by allowing the debate to stay at the simplistic level of coercion or contract. But voluntariness is not the basic issue. Of course, voluntariness is a necessary condition for any acceptable political or economic system. But this has been accepted in sophisticated political debates within the liberal tradition from at least the late Middle Ages and Renaissance onwards. The proponents of democratic government and the contractarian defenders of traditional non-democratic forms of government both agreed on the criterion of voluntariness—on the foundation of government on the consent of the governed.

What is the basic issue? The real issue is not consent, but whether or not consent can alienate and transfer the right of self-government to some sovereign person or body such as a constitutional monarch, a body of oligarchs, or, in the parlance of modern libertarianism, a "dominant protective association" [Nozick 1974, 113]. If the rights to self-government may be alienated, then a non-democratic government may be based on the consent of the governed. If, however, the rights to self-government are "unalienable," then "to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed." That is a democratic government where those who govern are the representatives or agents of the governed. Some political philosophers, such as Hobbes, based autocracy on a pactum subjectionis, a contract of subjection, while others saw the social contract as only delegating the right to govern to governors acting as the agents of the governed.

The issue was not coercion or contract. Contract was the common coin of the classical liberal tradition. The basic issue was and is the voluntary alienability versus the inalienability of the right to self-government and self-determination.

Translatio or concessio; a social contract of submission or a democratic social contract?

The same fundamental issue arises for individual rather than collective contracts: whether or not an individual may voluntarily alienate the natural right of self-determination as in a voluntary self-enslavement contract.

"Two hearts beat in the breast" of liberalism. There are two fundamentally different schools of liberalism. Far from being "associated," capitalism resides in one school and democracy in the other. The difference comes in whether people's basic rights are alienable or inalienable so the schools or traditions will be called the alienist tradition and the inalienist tradition of liberal thought.

In the inalienist school, people's basic rights are usually called "natural rights" and they are viewed as personal rights which are inalienable in the sense that the rights may not be alienated even with full, free, and informed consent. A "contract" to alienate these rights would be null and void on natural law grounds—even though such "contracts" might be recognized as "valid" by some systems of positive law. Political democracy is part of the inalienist tradition since it is based on people being endowed "with certain unalienable rights." The inalienist tradition is the democratic tradition of liberal thought.

The alienist school might also use the language of "natural rights" or it might be couched in the terms of utilitarianism. People's basic rights might be viewed as natural rights or solely as utilitarian creations of positive law. The point is that the alienist school views the rights essentially as property rights which are alienable with full, free, and informed consent. Capitalism is part of the alienist tradition since it is based on the employment contract wherein people alienate the right of self-determination over their worktime (i.e., their "property" in their "labor services") to the employer. The alienist tradition is the non-democratic (but not necessarily anti-democratic) tradition of liberal thought.

Modern liberal thought in the capitalist democracies is a curious schizophrenic mixture of the democratic inalienist and the non-democratic alienist traditions. Declarations about the political sphere tend to be draw from the democratic inalienist tradition while pronouncements about the economy are based on the non-democratic alienist tradition of liberal thought. There is little clear understanding of the two opposite traditions—and thus political democracy and economic capitalism are thought to be associated together as the political and economic components of a liberal consent-based social order.

Instead of being "associated," political democracy and capitalism lie in the opposing traditions of liberal thought. Each one has its own "associated" form within its tradition. The economic correlate of political democracy (political self-determinaton) is economic democracy (economic self-employment) realized at the level of the firm as democratic worker ownership. The political correlate of capitalism is the system where the political right of self-determination may be alienated to a ruler or sovereign. The best-known example of such a collective contract is the Hobbesian pactum subjectionis which would establish a constitutional dictatorship. The individual version of that contract would be the self-enslavement or self-sale contract.

Both of the correlates—democratic worker ownership as the economic correlate of political democracy, and constitutional autocracy as the political correlate of capitalist production—are "blind spots" in conventional liberalism. For all that has been written about democracy within the field of political science, there has been precious little written about applying democratic principles to the workplace (Dahl [1985] being a recent exception which "proves" the rule). Conventional thinkers have been somewhat reluctant to apply their philosophical principles to the political sphere (Nozick being a refreshing honest exception) or to admit to the whole alienist tradition which stands behind their thought. In the next section, we trace the intellectual history of the alienist liberal tradition, the hidden ancestry of capitalist ideology.

The purpose of this section is to put a spotlight on the non-democratic alienist tradition of liberal thought which forms the hidden ancestry of capitalist ideology.

The non-democratic alienist tradition of liberal thought has two principal themes:

The Bible forms a convenient and customary starting point for the intellectual history of the alienist tradition. The Old Testament law was that, after six years of service, any Hebrew slave was to be set free in the seventh year, the year of the Jubilee.

Thus voluntary slavery was sanctioned in the Bible.

The Bible also contains the idea of a contract of rulership between a king and a people.

Just before he died, King David said of his son, Solomon,

Thus the elective kingship became hereditary like property ("my throne") passing from father to son indicating the covenant was an alienation of authority rather than a delegation.

Ancient Rome developed detailed laws dealing with slavery. Roman law, as codified in the Digest and Institutes of Justinian, provided three legal means of becoming a slave:

In addition to outright contractual slavery, the other two means were also seen as having aspects of contract. A person born of a slave mother and raised using the master's food, clothing, and shelter was considered as having agreed to a tacit contract to trade a lifetime of labor for these and future provisions. And Hobbes, for example, clearly saw a "covenant" in this ancient practice of enslaving prisoners of war.

The point is not the factual absurdity of interpreting this as a covenant; the point is the attempt to ground slavery on the liberal basis of consent. An alienist liberal would disagree only on the factual question of what constitutes "consent." Roman Law thus contemplated three legal means of becoming a slave, and all were based on an implicit or explicit contract.

The sovereignty of the Roman emperor was usually seen as being founded on a contract of rulership enacted by the Roman people. The Roman jurist Ulpian gave the classic and oft-quoted statement of this view in the Institutes of Justinian (Lib. I, Tit. II, 6):

The American constitutional scholar, Edward S. Corwin, noted the questions which would arise in the Middle Ages about the nature of this pact.

It is precisely this question of translatio or concessio —alienation or delegation of the right of government—which separates the alienist and inalienist traditions of liberal thought.

As the idea of grounding rulership on land ownership receded in the Middle Ages, the idea of a contract of rulership became widespread.

The intent of this contractarian thought was at first not to attack undemocratic power but to found it on consent:

In terms of the liberal "coercion or contract" dichotomy, this alienist natural rights tradition was grounded foursquare on contract.

A state of government which had been settled for many years was ex post facto legitimated by the tacit consent of the people. In about 1310, according to Gierke,

William of Ockham (1290-1349) is sometimes cited as the first to expound the idea of consent-based legitimacy in The Dialogue (1343).

Tuck [1979] has traced another root of alienist natural rights thought to a seemingly obscure medieval controversy about the meaning of apostolic poverty. Is a monk's right (ius) to use food, clothing, and shelter a property right (a dominium) even though a monk may not sell these commodities? The thinkers who foreshadowed the non-democratic liberal tradition argued that one's right or liberty to use commodities and, broadly, to act in the world, was indeed a property right (a dominium).

In 1402, the Parisian legal theorist, Jean Gerson, treated man's right to act in the world and, indeed, man's right to liberty as property. This led to the conclusion that liberty could also be traded away.

A Dominican theologian, Silvestro Mazzolini da Prierio, argued in 1515 that a free man could sell himself into unconditional slavery [see Tuck 1979, p. 49]. A Portuguese churchman, Luis de Molina, asserted in 1592 that:

The influential Spanish scholastic philosopher and jurist, Francisco Suarez, reiterated the basic theme in the alienist concept of natural rights:

Suarez developed the connection between voluntary slavery and the political pactum subjectionis which is a recurrent theme in the alienist natural rights tradition.

The feudal relations between lords and vassals or serfs were sometimes seen as contractual. The vassals held a higher station than the serfs.

As an example of a feudal oath from around 920 A.D., a man might say to his lord:

But scholars disagree about the contractual aspects of medieval serfdom.

Hugo Grotius (1583-1645) was a pivotal figure in the development of natural rights political philosophy, but he also, in the alienist tradition, viewed man's natural right to liberty as a right which could be transferred with consent.

Grotius cites some explicit examples.

Grotius was followed on the Continent by Samuel Pufendorf (1632-94), who, as Rousseau pointed out, continued the alienist tradition of treating liberty as a property right.

Thomas Hobbes (1588-1679) made the best-known attempt to found an absolute monarchy or oligarchy on the consent of the governed. Without an overarching power to hold people in awe, life would be a constant war of all against all. To prevent this state of chaos and strife, men should join together and voluntarily transfer the right of self-government to a person or body of persons as an absolute sovereign. This pactum subjectionis would be a

In the previous chapter, we saw how one of the fathers of modern liberalism, John Locke, criticized only the self-enslavement contract that gave the power of life and death to the master. A self-sale contract with limited rights for the master was quite acceptable but he would call it "Drudgery" rather than slavery. Like Hobbes, Locke also construed the practice of enslaving the captives in a "Just War" as a quid pro quo exchange based on the on-going consent of the captive.

Locke seems to have justified slavery in the American Colonies by interpreting the raids into Africa as just wars and the slaves as the "captives" [viz. Laslett 1960, notes on §24, pp. 325-326].

William Blackstone's codification of common law in his Commentaries (1765) was quite important in the development of English and American jurisprudence. Like Locke, Blackstone rules out a slavery where "an absolute and unlimited power is given to the master over the life and fortune of the slave." Such a slave would be free "the instant he lands in England."

Another interesting case study in liberal intellectual history is the treatment of the American proslavery writers. The proslavery position is presented as being based on illiberal racist or feudal paternalistic arguments. Considerable attention is lavished on illiberal writers such as George Fitzhugh [e.g., Genovese 1971; Wish 1960; Fitzhugh 1960], while liberal defenders of slavery are passed over in silence. For example, Rev. Samuel Seabury [1969, orig. 1861] gave a sophisticated liberal defense of ante-bellum slavery in the Grotius-Hobbes-Pufendorf-Locke tradition of alienist natural rights theory.

Seabury easily anticipated the retort to his classical tacit-contract argument.

This puts an alienist liberal in the sensitive position of disagreeing with Seabury only on factual grounds. Without a theory of inalienability, an alienist is reduced to arguing on empirical grounds that the implied social contract has "genuine tacit consent," but that the implied slavery contract does not. It is no surprise that most liberal thinkers have preferred to simply ignore these liberal contractual slavery arguments, and to present the issues in simplistic coercion-or-contract terms, involuntary slave labor or free hired labor.

With the success of the political democratic revolutions, this long and venerable non-democratic tradition of liberal thought did not die; it retreated to the private economic sector. There it has thrived ever since as liberal capitalist thought which condones the limited pactum subjectionis of the workplace, the employment contract.

The liberal tradition of allowing non-democratic forms of government based on the consent of the governed is brought up to date in the alienist libertarianism of Robert Nozick. The contract of subjection re-emerges from its economic habitat to enter the political sphere in Nozick's work since his ultra-capitalist approach to political theory is the marketplace writ large. Unlike Hobbes, Nozick does not espouse alienating the right of self-government to an absolute sovereign—but only that it should be permitted. Nozick's point is that the basic "framework should be fixed as voluntary" [Nozick 1974, p. 331]. An individual should be free to sell himself into slavery or to forswear such contracts. People should be free to contract away the right of self-government to an authoritarian dominant protective association or to enter into democratic protective associations.

Capitalist liberalism is alienist so that it can vouchsafe the employment contract. But most capitalist liberals do not want to follow Nozick and the whole alienist liberal tradition (outlined above) by permitting a pactum subjectionis or a lifetime-labor contract. They want to put their economic foot in the non-democratic alienist camp but put their political foot in the democratic inalienist camp. The Friedmans and Hayeks want to push the free market rhetoric to the hilt when discussing markets for "labor services" and other commodities. But they quickly forget the rhetoric when discussing political democracy so they do not propose free markets in political votes or voluntary contracts of subjugation (individual or collective)—in spite of the obvious free market efficiency arguments for such innovations. That is the quandary of capitalist liberalism. How can this economic-political schizophrenia be made intellectually respectable?

The first strategy is always to ignore the problem. As long as Marxism conveniently acts as the dancing-bear bogeyman, the debate can be kept at the fairly simplistic coercion-or-contract level [viz. Friedman 1962] without admitting to any internal contradictions in capitalist liberalism. After all, no one (Nozick?) really argues that contracts of subjugation or self-sale contracts should now be revalidated, so why try to develop arguments against those contracts?

The second strategy is to develop principled arguments against the contracts of subjugation and self-enslavement. The danger in this approach is that if the arguments (e.g., Hegel's) are drawn from the inalienist natural rights tradition, they may also apply to the self-rental or employment contract. How can one argue that a contract to buy all of a person's labor is an inherent violation of human rights, but that a contract to rent the person for a few years at a time is an ordinary free market contract? The upshot is that capitalist liberals have not used serious inalienable rights arguments. Instead they have employed an array of ad hoc arguments designed to rule out the subjugation and lifetime-labor contracts, but to permit the self-rental contract. And since hardly anyone really advocates revalidating the subjugation contracts, the ad hoc arguments don't have to be very sophisticated. Most any trumped-up argument against voluntary slavery will win a quick nod of approval from capitalist liberals.

Only recently has attention turned to these liberal capitalist arguments against contracts of subjugation and self-enslavement—partly as a result of Nozick's consistent alienist libertarianism. Philmore [1982] and Callahan [1985] have examined a wide range of alienist liberal arguments against these contracts, and they have adequately demonstrated the weaknesses of the arguments. Some of Philmore's analysis will be outlined here.

John Locke only argued against an extreme form of the self-sale contract which give the master the power of life and death over the slave (as in Rome). The argument was that a man didn't have the right over his own life so he could not sell it to another. Once the master's rights were limited, Locke renamed it "Drudgery" and condoned the contract.

Modern abolitionist thought dates from Montesquieu, but he gave a rather superficial treatment of the self-sale contract.

Antebellum liberals such as Reverend Samuel Seabury could easily answer the argument.

A more recent argument against the lifetime-labor contract is based on the doctrine of specific performance in jurisprudence. Courts enforce material damages rather than specific performance (except in rare cases) when a contract has been broken. But this doesn't mean a lifetime-labor contract is "unenforceable." It means that if the "warrantee" wants to renege on the contract, the legal authorities would only enforce repayment of an appropriate portion of the purchase price (just as the law enforces alimony payments).

There is nothing inherently wrong with a lifetime contract as evidenced by the till-death-do-us-part marriage contract. The self-sale contract is even more "free market" than the marriage contract since the self-sale contract could be annulled at any time by the mutual consent of the parties.

Another argument is that the lifetime-labor contract should be voided on grounds of paternalism. The proslavery writers enjoyed themselves ridiculing the paternalistic argument against slavery. Why is it "paternalistic" to force the risk adverse owner of human capital to be a hireling selling their labor day by day, never knowing if their livelihood will be eliminated tomorrow, when they could have the security of lifetime employment under "warranteeism"?

Philmore concludes that liberal capitalism offers no serious arguments against the lifetime-labor contract or political contracts of subjugation. The reason is clear.

That is correct—perhaps ironically. We shall see that a decisive critique of the contracts of subjugation and self-enslavement is provided by the inalienable natural rights tradition which descends from the Enlightenment, and that the critique also applies to the employment contract.