[Ellerman fails to see that rights are a figment of the imagination. Nonetheless, he gives reasoning against those that like to alienate.]
Many political theorists have taken natural rights to be alienable. The last chapter sketched an intellectual history of the non-democratic alienist liberal tradition which emphasized the transferability of natural rights. That pervasive tradition has tried to reinterpret and appropriate the phrase “inalienable rights” to mean rights which cannot be taken without the consent of the owner.
If rights were viewed as property, then inalienability might mean only that a man must consent to what is done with them. [Lynd 1968, p. 45]
Thus theorists professing “inalienable natural rights” could actually be laying the groundwork for slavery and autocracy.
And as Rousseau shrewdly observed, Pufendorf had argued that a man might alienate his liberty just as he transferred his property by contract; and Grotius had said that since individuals could alienate their liberty by becoming slaves, a whole people could do the same, and become the subjects of a king. Here, then, was the fatal flaw in the traditional theories of natural rights. [Davis 1966, 413]
In our own time, Robert Nozick’s opening proclamation,
Individuals have rights, and there are things no person or group may do to them (without violating their rights) [Nozick 1974, ix]
is often taken as a declaration of inalienable natural rights. But the significance is just the opposite as Nozick goes on to condone both voluntary slavery  and voluntarily alienating the right of self-determination to a nondemocratic “dominant protective association” [e.g., 15]. Nozick has no notion of rights that are inalienable in spite of consent.
A right which requires consent to be alienated is not an “inalienable right”; it is a right as opposed to a privilege. Any legal capacity which could be taken away without the consent of the bearer would hardly qualify as a “right” at all; it would only be a privilege granted and removable by others.
In what follows, “inalienable rights” will, unless otherwise indicated, always mean rights which may not be alienated even with the consent of the holder of the rights.
The Case of the Criminous Slave: An Example of Inalienability
The theory of inalienability presented here will be illustrated with several intuitive examples of inalienability. Examples that illustrate a point in an intuitive and paradigmatic fashion are called “intuition pumps.” When analyzing the employment system, analogies with slavery can provide powerful intuition pumps. We have not been socialized into accepting slavery as part of the furniture of the social universe so we should be able to see it dispassionately and objectively.
A legal system of chattel slavery is but one example of a legal system of a system that legally treated persons as nonpersons or things. The ethical condemnation of the system should be based not on utilitarian considerations about how well or poorly the slaves were treated but on that fundamental contradiction or mismatch between the slave’s legal role as a thing and the underlying fact of the slave’s personhood.
Did the legal system really believe that slaves were in fact not persons, or was it an official pretense or fiction? The fraudulent nature of the legal system was openly realized when the slaves committed criminal wrongs. For instance, an antebellum Alabama court asserted that slaves
are rational beings, they are capable of committing crimes; and in reference to acts which are crimes, are regarded as persons. Because they are slaves, they are … incapable of performing civil acts, and, in reference to all such, they are things, not persons. [Catterall 1926, 247]
The pretense of the slave’s thinghood was the basis for the economic system of slavery. But that pretense served no purpose when slaves stepped outside the appointed role and committed crimes.
The slave, who is but ‘a chattel’ on all other occasions, with not one solitary attribute of personality accorded to him, becomes ‘a person’ whenever he is to be punished! [Goodell 1853, 309]
The “talking instrument” in work becomes the person in crime.
There are two contradictions here which should not be confused:
(1) the formal “inconsistency” in a legal system that treats the same individual legally as a thing in normal work and legally as a person when committing a crime (in the diagram, the formal inconsistency is trying to fit the same peg in both a round hole and a square hole), and
(2) the substantive contradiction in a legal system that accepts a de facto person as fulfilling the de jure role of a thing (in the diagram, the substantive contradiction of trying to fit the square peg in the round hole).
The merely formal inconsistency could be resolved by always legally treating a slave as a thing, e.g., by treating a criminous slave like an errant beast of burden that caused an injury.
The problem of the two contrasting legal roles for the self-same slave is different from the substantive inconsistency between the legal role of the non-criminous slave and the factual status of the slave as a person. The legal-role/legal-role contrast is highlighted not to register any moral complaint but to point out the system’s selfincriminating testimony about the factual-status/legal-rolemismatch for the non-criminous slave. In a court of law, testimony against one’s own interests will tend to have the most credibility. In the case of the criminous slave, the legal system of slavery revealed the bankruptcy of its own juridical foundations; it acknowledged that the slave was in fact a responsible person in spite of the slave’s usual legal role as a thing.
Sir Henry Maine asserts that “the movement of the progressive societies has hitherto been a movement from Status to Contract.” [1861, reprinted 1972, p. 100], so let us progress to the case where the slave’s legal role resulted from a self-enslavement or self-sale contract. That would not change the essentials of the case. The voluntary contractual slave, like the involuntary slave, would still be legally treated as a person when charged with a crime, and would still embody the fundamental contradiction between the legal role of the non-criminous (contractual) slave and the slave’s factual status as a person.
Outline of the Theory of Inalienability
Here is the core of the theory of inalienability. A person cannot in fact by consent transform himself or herself into a thing, so any contract to that legal effect is juridically invalid—even though it might be “validated” by a system of positive law (e.g., the antebellum South). A right is inalienable (even with consent) if the contract to alienate the right is inherently invalid. The self-enslavement or self-sale contract is an old example of such a contract, while the self-rental or employment contract is a current example.
In general, any contract to take on the legal role of a thing or non-person is inherently invalid because a person cannot in fact voluntarily give up and alienate his or her factual status as a person. I can in fact give up and transfer my use of this pen (or computer) to another person, but I cannot do the same with my own human actions—not for a lifetime and not for eight hours a day. The “square peg” can consent to fit into the “round hole” but it nevertheless does not fit. Yet a legal system can “validate” a contract treating human activity as an alienable commodity, and the system can also pretend that obedient co-operating workers “fulfill” the contract—until the revealing moment of unlawful activity. That is, the legal system can pretend that the “square peg” fits into the “round hole.” This argument is called the de facto inalienability argument since it is based on the factual inalienability of essential human characteristic such as responsibility and decision-making.
The Case of the Tortious Servant
When an employee or servant commits a tort out of negligence, the employer or master can be held liable. The controversy in the field of agency law surrounding this “vicarious liability” of the employer affords us another illuminating example of the peculiarities of the employer-employee relationship.
Justice Oliver Wendell Holmes Jr. outlined the usual norm of imputing or assigning legal responsibility to the de facto responsible party—a norm which emerges as the labor theory of property when applied to property appropriation.
I assume that common-sense is opposed to making one man pay for another man’s wrong, unless he actually has brought the wrong to pass according to the ordinary canons of legal responsibility,—unless, that is to say, he has induced the immediate wrong-doer to do acts of which the wrong, or, at least, wrong, was the natural consequence under the circumstances known to the defendant. [1952, 101]
But in the doctrine of respondeat superior, the master may be held liable for the negligence of a servant even if the wrongful act was not commanded by the master and the master exercised due caution in hiring and instructing the servant. The servant’s act is manifestly not the master’s act, so the master is not de facto responsible for the act. The assignment of legal responsibility to the master does not follow the usual canon of legal responsibility so it is called “vicarious liability” or “strict liability.” The controversy over vicarious liability is not as live today as in the past due to workers’ compensation insurance. But there are several points of interest both in what is said and in what is not said by the jurists commenting on vicarious liability.
We begin by reviewing the legal responsibility of the employer and the employee in normal lawful work. Employees bear no legal responsibility for the positive and negative results of their actions within the scope of their employment. The employer bears all the responsibility. Employees are “employed” as if they were instruments which serve as “perfect conductors” transmitting the responsibility back to the employer. When the employer is a corporation, the natural persons who legally fill the employer’s role are the members or owners of the company, the shareholders. Absentee shareholders, particularly in a corporation with publicly traded shares, have only a notional connection with the productive process in the corporation. Yet the shareholders are the final residual claimants in the corporation; they have the ultimate legal responsibility for the positive and negative results of the lawful actions of the hired hands and heads of the people (managers and workers) working in the firm.
What happens when an employee commits a negligent tort? As one would expect from the case of the criminous slave, the tortious servant emerges from the cocoon of non-responsibility metamorphosed into a responsible human agent.
That is to say, although it is contrary to theory to allow a servant to be sued for conduct in his capacity as such, he cannot rid himself of his responsibility as a freeman, and may be sued as a free wrong-doer. This, of course, is the law to-day. [Holmes 1952, 79]
An employee may be sued for a tort or civil wrong and “being an employee” is not a defense or shield against legal responsibility for wrongful actions.
The law also allows the victim to sue the employer or master, although the plaintiff cannot collect damages twice. If the employer is found legally liable, then it is only liability in a “strict” legal sense since the master was presumed not to be de facto responsible. Justice Holmes attacked strict liability—”I therefore assume that common sense is opposed to the fundamental theory of agency” [1952, 102]—because it violated the usual juridical principle of assigning legal liability in accordance with de facto liability, a liability established strongly by intentional action or weakly by negligent behavior. Others supported vicarious liability because the employer has a “deeper pocket” and because liability for employee negligence should be part of the costs of modern business enterprise [e.g., “The Basis of Vicarious Liability” in Laski 1921].
There has been such a focus on the employer’s liability that one is apt to forget the employee’s liability.
We have noticed that students sometimes slip into the fallacious assumption that because the employer is liable, the employee is not. This idea is wholly false. The law of agency, which makes employers liable, does not repeal the law of torts, which makes negligent individuals liable. [Conrad, et. al. 1972, 168]
The employee, after all, is the de facto responsible person.
Perhaps the most astonishing aspect of the vicarious liability debate is the complete failure to apply the “ordinary canons of legal responsibility” to the normal employment relation. Jurists are perturbed when legal liability is assigned to the employers who have no de facto responsibility. But there is not a word about the fact that the employees are jointly de facto responsible, together with a working employer, for the results of normal lawful work, and yet the employees have zero legal responsibility for the results of those actions. The employer has all the legal responsibility for the positive and negative results of the employees’ actions within the scope of lawful employment.
No one in the debate notices that the employment relation seems to “repeal” the ordinary canons of legal responsibility.
No deep analysis of the sociology of knowledge is required to fathom this blind spot in legal analysis. The basic social institutions structure the horizons of thought. The application of the ordinary canon of legal responsibility would reveal an inherent flaw in the employment relation—a result clearly beyond the pale of responsible jurisprudential analysis in an economic civilization based on that relationship.
Employees Versus Independent Contractors
Normative principles such as the ordinary canon of legal responsibility (a.k.a. the labor theory of property) and the principle of democratic self-determination all converge to attack the institution of renting human beings, viz. the employer-employee relationship. The alternative to employment is (individual or joint) self-employment. That is, the alternative to the private or public enterprise employment firm is the democratic business enterprise where working in the firm qualifies one for membership in the firm.
The smallest examples of democratic businesses are independent business-people operating without the benefit of hired labor. If those independent operators produce and/or sell a tangible appropriable product, there is no possibility of considering them as employees of their customers. When one buys a pumpkin from a farmer, there is no possibility of taking the farmer as one’s employee.
When the product, however, is not a separate, tangible, and appropriable commodity, then the possibility does arise of confusing the independent contractor with the employee. The two legal roles are fundamentally different in theory even though some grey-area cases can arise in practice. It will be useful to review the distinction which is particularly important in agency law since the customer is not vicariously liable for the negligent torts of an independent contractor.
The legal role of the independent contractor does not violate democratic principles or the labor theory of property. The independent contractor self-governs his or her work. Indeed, the “control test” (testing non-self-government) is one of the most important legal tests used to distinguish employees from independent contractors. Ronald Coase quotes from a legal reference book in his classic article on the nature of the (employment) firm.
The master must have the right to control the servant’s work, either personally or by another servant or agent. It is this right of control or interference, of being entitled to tell the servant when to work (within the hours of service) and when not to work, and what work to do and how to do it (within the terms of such service) which is the dominant characteristic in this relation and marks off the servant from an independent contractor, or from one employed merely to give to his employer the fruits of his labour. In the latter case, the contractor or performer is not under the employer’s control in doing the work or effecting the service; he has to shape and manage his work so as to
give the result he has contracted to effect. [Batt 1929, 6]
The individual independent contractor is self-managing so that legal role does not violate the principle of democratic self-determination.
The independent contractor does not alienate or transfer control over his or her actions. The employee sells his capacity to work during a certain time period, or, in Marxian terms, his labor power; the employer controls the execution of the services. An independent contractor is not rented by the customer; only a certain service or effect is sold. This is particularly confusing because the word “hired” is sometimes applied to independent contractors as well as to employees. When someone “hires” a lawyer in independent practice, that lawyer is an independent contractor. If a corporation hires a lawyer onto its legal staff, that lawyer is an employee of the corporation.
The independence of the role of independent contractors means that they legally appropriate the positive and negative fruits of their labor. They appropriate and sell the positive fruits, typically an intangible service or effect (e.g., repairing a faucet or painting a house). They also directly bear their costs (appropriate the negative fruits of their labor) even though the costs are passed on to the customers as part of the price of the product. For instance, an independent house painter might present the home owner with a bill itemizing so many hours of labor and so many gallons of paint. But the homeowner has not purchased the painter’s labor as an employer; the painter has simply itemized the labor and paint to “justify” the price of the entire paint job.
The Identity Fiction
The case of the tortious servant also gives us the occasion to examine some of the legal fictions surrounding the employer-employee relationship. We saw in the case of slavery how jurists could be quite explicit in describing the slave as having the legal role of a thing (for lawful activities). Such candor is the exception. There are more subtle ways to legally treat a person as a non-person.
One legal strategy to deny an individual’s legal personality is to “identify” the individual with another person. The baron-feme relationship established by the coverture marriage contract exemplified the identity fiction in past domestic law. A female was to pass from the cover of her father to the cover of her husband; always a “feme covert” instead of the anomalous “feme sole.” The identity fiction for the baron-feme relation was that “the husband and wife are one person in law” with the implicit or explicit rider, “and that one person is the husband.” A wife could own property and make contracts, but only in the name of her husband.
For the employment relation, the identity fiction states that “the master and servant are considered as one person” or “the act of the servant is the act of the master.” The identity fiction expresses an older mode of legal thought about the employment relation; it is not needed to understand or explain the employment relation in modern terms. But it does catch the sense of the employee’s instrumentality. Within the scope of lawful employment, an employee does not have the legal role of a responsible person. The employer has all the legal responsibility for the results of the acts of the employees so “the acts of the servants are the acts of the master.”
A variation on the identity fiction is given by the phrase: Qui facit per alium facit per se (that which is done through another is done oneself). This also captures the instrumental role of the employee. The employer “acts through” the employees.
For the sake of legal clarity, it is unfortunate that the identity fiction is also applied to situations where no fiction is appropriate and it is quite unnecessary. The master-servant relation is usually defined to be a subset of the principalagent relation (hence the name “agency law”) so that a blue-collar production worker is technically an “agent.” But an independent contractor, such as a lawyer in private practice, can also be an agent. When a lawyer acts as a properly authorized agent to negotiate a contract, the principal is also said to “act through” the agent.
A principal, however, “acts through” an independent lawyer in quite a different sense than an employer acts through, say, a production worker. The lawyer conveys information and can perform symbolic legal acts (e.g., signing a contract) for the principal. The direct physical act of an independent contractor would, however, never count as the direct physical act of the principal. As Justice Holmes observed, “the precise point of the fiction is that the direct act of one is treated as if it were the direct act of another” [1952, 111-112]. Therefore the identification fiction is not required to account for the relationship between a principal and an independent contractor as agent—even though sloppy habits of legal thought might apply identification language to that case.
The identity fiction only has a role when the legal personality of an individual (e.g., an employee or a feme covert) is “subsumed” under the legal personality of an alien legal party (“alien” in the sense that the individual is not included in the legal party). What is the alternative to the employment contract or to any other contract to alienate and transfer control over certain of one’s activities such as the now-abolished self-enslavement contract or the coverture marriage contract? The alternative is membership—so the individual is not alien to the redefined broader legal party. For instance, the alternative to coverture is marriage as a type of domestic partnership. Each spouse is an equal partner and can make contracts for the partnership. The alternative to the employment contract is the democratic firm (also a type of generic “partnership”) where work gives membership. In a democratic firm, there is identification without fiction; the worker/member is a part of the firm.
The case of the tortious servant has given us the opportunity to make a number of points. It allowed us to introduce the distinction between employees and independent contractors. It also showed how the identity fiction was used in the legal conceptualization of relationships which depersonalized certain individuals by identifying them with another individual or an alien legal party (of which they are not a part). Historical examples include the master-slave, baronfeme, and employer-employee relationships.
The overall theme of this chapter is inalienability. The employee contracts into a legal role where some other alien party has all the legal responsibility for the results of the employee’s lawful actions. The ordinary canon of assigning legal responsibility in accordance with de facto responsibility is violated. But when the employee commits an unlawful act such as a tort or civil wrong, the law sees no point to insulating the employee from that responsibility. The employee is said to have stepped outside the employee’s role. Then the usual legal canon applies and the employee may be sued for the tort. In de facto terms, the employee is, if anything, more responsible for the fruits of the perfectly deliberate and intentional actions of lawful work than for an unintentional but negligent tort. That capacity for de facto responsibility is in fact inalienable. The law pretends it has been alienated. The law pretends the act of the servant is the act of the master so long as the pretense is not abused by unlawful actions.
The Case of the Criminous Employee
The unique property of labor, namely responsible agency, is not factually transferable. The case of the criminous employee is another parable or “intuition pump” which illustrates that key idea in the theory of inalienability. Suppose that an entrepreneur hired an employee for general services (no intimations of criminal intent). The entrepreneur similarly hired a van, and the owner of the van was not otherwise involved in the entrepreneur’s activities. Eventually the entrepreneur decided to use the factor services he had purchased (man-hours and vanhours) to rob a bank. After being caught, the entrepreneur and the employee were charged with the crime. In court, the worker argued that he was just as innocent as the van owner. Both had sold the services of factors they owned to the entrepreneur. “Labor Service is a Commodity” [Alchian and Allen 1969, 469], as one can learn from economics texts. The use the entrepreneur makes of these commodities is “his own business.”
The judge would, no doubt, be unmoved by these arguments. The judge would point out it was plausible that the van owner was not responsible. He had given up and transferred the use of his van to the entrepreneur, so unless the van owner was otherwise personally involved, his absentee ownership of the factor would not give him any responsibility for the results of the enterprise. Absentee ownership of a factor is not a source of responsibility (a point which should not be forgotten in our later discussion of marginal productivity theory in economics). The judge would point out, however, that the worker could not help but be personally involved in the robbery (unless he, per imp ossible, was totally unaware of what he was doing, or rather as an economist might say, of what was being done with his man-hours). Man-hours are a peculiar commodity in comparison with van-hours. The worker cannot “give up and transfer” the use of his own person, as the van owner can the van. Employment contract or not, the worker remained a fully responsible agent knowingly co-operating with the entrepreneur. The employee and the employer share the de facto responsibility for the results of their joint activity, and the law will impute legal responsibility accordingly.
All who participate in a crime with a guilty intent are liable to punishment. A master and servant who so participate in a crime are liable criminally, not because they are master and servant, but because they jointly carried out a criminal venture and are both criminous. [Batt 1967, 612]
It should be particularly noted that the worker is not de facto responsible for the crime because an employment contract which involves a crime is null and void. Quite the opposite. The employee is de facto responsible because the employee, together with the employer, committed the crime (not because of the legal status of the contract). It was his de facto responsibility for the crime which invalidated the contract, not the contractual invalidity which made him de facto responsible. The commission of a crime using a rented van does not automatically invalidate the van rental contract. The legality or illegality of a contract cannot somehow create de facto responsibility that would not otherwise exist.
Defenders of the Received Truth about the employment system will have much difficulty understanding this argument. They might take the legal superstructure as the reality, and thus they would lose sight of the underlying factual situation. It is as if one identifies guilt and innocence with what is decided in a court of law (i.e., with legal guilt or innocence). Such a “legalistic” viewpoint ignores the factual question of whether the defendant was de facto responsible for the accused act. It is a miscarriage of justice when there is a mismatch between legal and factual responsibility, i.e., when an innocent person is found legally guilty or when a guilty person is found legally innocent.
A similar neglect of the underlying factual reality is involved in the standard argument that “responsibility” is determined by the employment contract (when only legal responsibility is so determined).
Employees voluntarily give up their responsibility for the products of their labor in the employment contract. There is no inconsistency involved in holding the “criminous employee” responsible because he is not really an employee. A contract involving the commission of a crime is null and void, so he stepped outside of the employment contract when he committed the crime. In the democratic firm, the workers don’t give up their responsibility to an employer; they are jointly selfemployed. Thus it is quite proper in that case for them to have the ownership of the product, but
not in the case of a normal capitalist firm.
That argument stays at the legal level of responsibility and does not touch the question of the underlying factual responsibility. The point is that de facto responsibility is not transferable; the non-criminous employee in a normal firm is just as de facto responsible as the criminal.
It might be helpful to (roughly) translate the above argument into pegs-and-holes language.
Square pegs consent to fit into round holes in the employment contract. There is no inconsistency involved in holding the criminous peg responsible (i.e., being in the square hole) since he was not really in the round hole. By committing the crime, he stepped outside the round hole and thus fit in the square hole. In the democratic arrangement, the square pegs do not agree to fit in the round holes, so it is quite proper in that case for them to be in the square holes—but not in the normal capitalist arrangement (where they have agreed to be in round holes and have not stepped outside
by committing crimes).
“Consent” does not improve the fit of the square peg in the round hole. The point is that the square peg does not fit into the round hole regardless of whether it is legally agreed to or not.
It is again helpful not to confuse
(1) the formal “inconsistency” in a legal system that treated the same individual legally as a thing (e.g., in normal work) and legally as a person when committing a crime, and
(2) the substantive contradiction in a legal system that accepts a de facto person as fulfilling the de jure role of a thing (e.g., the employee in normal work).
By rendering the criminous employment contract null and void, the law escapes the formal “inconsistency” of having an individual simultaneously in the legal role of a responsible person and in the legal role of an employed instrument. That keeps the bookkeeping straight at the legalistic level.
The problem is not with the imputation of legal responsibility to the criminous employee. That is a correct assignment since the worker was de facto responsible together with the entrepreneur for the results of their joint activity. The problem is with normal work when the employment contract is treated as being “valid.” When the “venture” being “jointly carried out” is non-criminal, the employee does not suddenly become an instrument like the van. The worker is still jointly de facto responsible, but then the employer gets all the legal responsibility. The problem is that substantive contradiction in the normal employment relation wherein a de facto responsible person has the legal role of a “non-responsible” instrumentality being “employed” by the employer.
Those who place great stock in the voluntariness of the labor contract should heed these examples of inalienability. The criminous employee would most certainly voluntarily alienate his responsibility for the fruits of his labor, i.e., for robbing the bank. He would love, for once, to be legally treated as just an instrument employed by the employer. But the law says no. The law would not validate such a contract, and yet, with no hint of personal involvement, there is no reason to invalidate the van owner’s contract. Why the difference? Does the law arbitrarily decide to validate some contracts and to invalidate others? No, the difference is quite clear. The van owner can in fact give up and alienate the use of his van; the worker cannot do the same with his person. It is that factual inalienability and nontransferability of the responsible agency of human action (a.k.a. labor services) that is the foundation of the de facto theory of inalienable rights.
The Case of the Part-time Robot
The example of a person who functioned as a part-time robot is another intuition pump to illustrate the de facto inalienability argument. Since the argument is based on the facts about human nature, we might assume that science fiction technology can modify human nature enough to defeat the argument.
Suppose that it were possible to electronically implant a small computer in a person’s brain so that by flipping a switch the individual was “taken over” and “driven” by the computer under the control of an external user or employer. When in the robot mode, the individual would have no ability to deliberately terminate or even influence his or her “actions” (or rather behaviors). When the computer was externally switched off, the individual would regain conscious control and be able to act in the usual deliberate and responsible manner. One could vary the example by imagining some drugs that would temporarily turn a person into a part-time zombie, but we will stick to the high-tech imagery of a computer-driven part-time robot.
The part-time robotization would change human nature to make it safe for the employment system. The person as a part-time robot would not be de facto responsible for the positive or negative fruits of “its” services. The person as a part-time robot would not have decision-making direct control over “its” services. Those labor-services would be de facto transferable like the services of a van—so the legal validation of the employment contract for the transfer of those robot services would not be an institutionalized fraud.
The examp le of the part-time robot is illuminating from another viewpoint. Since the employment contract fits the part-time robot without involving any fraud, that means the employment contract applied to ordinary persons treats them as if they were such part-time robots within the scope of their employment. That is, the employment contract imputes zero legal responsibility to the employees for the positive or negative fruits of their labor as if they were part time robots employed by an employer. In short, renting people treats them as if they were things.
The Inalienability of Decision-Making
The inalienability of de facto responsibility is central to the labor theory of property and to the analysis of the employment contract as it affects the property relations of the firm. But the labor theory of property is only one leg of the analysis of the employer-employee system and of the alternative of democratic worker ownership or universal self-employment. The other leg is democratic theory. It analyzes the employment firm and the democratic or self-employment firm as governance systems, and it views the employment contract in the employment firm as an instrument of governance.
The general point of the de facto inalienability analysis is that a person’s factual status as a person is unchanged by consent or contract. Hence any legal contract to take on the legal role of a non-person or thing cannot be fulfilled and is inherently null and void. The law can only pretend that certain appropriate behavior “fulfills” the contract— and that pretense is dropped when the person commits a crime.
The intuition pumps of the criminous slave, the tortious servant, the criminous employee, and the part-time robot have illustrated the argument by focusing on responsibility, the central theme in the labor theory of property. The inalienability argument can also be illustrated by focusing on decision-making, the central theme in democratic theory.
The employment contract does not “short-circuit” or bypass an individual’s decision-making capacity just as it does not bypass the person’s responsible agency. The employee is inexorably a co-decision-maker just as he or she is inexorably co-responsible for the results of voluntary joint activity with the employer. For instance in the bank robbery example, the entrepreneur may well have taken the initiative to rob the bank. But the employee participates in the robbery as a (by assumption) conscious voluntary human activity. Thus the employee must have also made the decision to participate in that activity. “Taking orders” to do X is only another way of deciding to do X.
The van owner, by way of contrast, can in fact alienate the decisions about the specific uses of the van. In the example of the part-time robot, the person qua person has the role of the van-owner, and the part-time robot has the role of the van. The entrepreneur makes the decision to use the van to rob a bank rather than, say, to move furniture, and the van owner is not involved in that decision. Both the employee and the van owner alienate the legal control rights over the specific uses of their man-hours and van-hours (within certain limits) in their respective rental contracts. The difference is at the factual level, not the legal level. The van owner can in fact give up any involvement in those specific use decisions; the employee cannot. The legal relationship of hiring an entity (i.e., buying the entity’s services) may be applied without any inherent fraud to the hiring of a van (or part-time robot); it cannot be similarly applied to hiring a responsible human being.
In a joint or social human activity such as most production processes, individual responsibility may be difficult or impossible to determine, and individual decision-making may be equally infeasible. Responsibility is joint, and decision-making needs to be coordinated, often around a unified center.
How then should a joint human activity be organized recognizing that all human participants are de facto coresponsible and de facto co-decision-makers? There needs to be a unified legal party to be legally responsible for the results of the joint activity and to be the locus of unified decision-making authority. The employment firm provides a unified legal entity for the joint human activity of production, but it legally denies the employees’ co-responsibility and their co-decision-making (for lawful activities). It is not “their business.”
The alternative to employment is membership in a jointly self-employed group or team. The alternative to the nonresponsible instrumental role of the employee is not individual legal responsibility (since it is a joint activity) but membership in the unified legal party that is legally responsible for the results of the joint activity. Thus the analysis focusing on responsibility leads to the notion of the democratic worker-owned firm, a firm where the members are the people working in the firm.
The analysis of decision-making leads to the same conclusion. The employment contract legally alienates decision making just as it legally alienates responsibility—even though both are factually inalienable. The alternative to alienating (“translatio”) decision-making is the delegation (“concessio”) of decision-making authority to a unified center such as the management in a democratic firm. Then the decisions are made for and in the name of those who are managed. Thus the alternative to non-democratic management in the employment firm is not the chaos of individual decision-making but democratic management which unifies and coordinates decision-making using authority delegated from those who are managed. By delegating that authority and ultimately accepting and ratifying the decisions in action, the workers are jointly (not individually) self-governing their activities in a democratic firm.