Labor Economics in Slavery

By Martin Bammes

Introduction Not all bonded labor markets are created equally noxious. Some contractual labor agreements maintain the infrastructure of micro economies though a lack of free will on the part of the laborer, even though they are supported and defined as noxious markets under Debra Satz’s argument in, Why Some Things Should Not Be for Sale.1 This phenomenon can be clearly seen in the separation between micro and macroeconomics. For example, the diamond market of England and the US benefit greatly, while the economy of Sierra Leon suffers the effects of noxiousness. This is known as an externality. Although if this market is obviously destructive to the homeostasis of humanity, and the elimination of said market would close the wage gap of the two countries; other markets remain less transparent. The US military is by Satz’s definition, a noxious market. In her report, she dismisses the military as a hierarchical society,2 but in this report, I intend to demonstrate how it is an extremely noxious and how the market would experience failure without it. My argument is as follows: P1. All markets are potentially noxious, P2. Some noxious markets maintain the infrastructure of the market place’s existence, P3. The market place must exist for economic growth to occur, P4. If a market is regulated to the confines of culturally acceptable parameters to where understandable inequality is met, the market becomes less noxious, C. If the market place must exist and some noxious markets maintain its existence, those noxious markets must be allowed to operate within the confines of culturally acceptable sacrifices. Disclosure Normatively, slavery is a horrible practice. It disenfranchises entire communities and perpetuates its own eventual market failure. This report does not aim to justify these practices, nor does it seek to encourage the cultural deviation required to engage in systematic inequality of individuals. It simply seeks to refute the fact that noxious bonded labor markets should be abolished. Instead, potentially noxious markets should be regulated to the standard of noxiousness, acceptable to cultures and customs within their own microeconomic systems. The Satz Argument Debra Satz holds the position that bonded labor markets are particulary noxious for two basic reasons that I agree with: first, the libertarian philosophy does not fully account for ideal vs. non-ideal circumstances; second, welfare economists do not account for paredo optimization in the case of mass market failure particularly when it comes to child labor.3 In the case for libertarian economics, Satz explains that most bonded labor situations cannot fulfill a conscious contractual agreement. This problem only multiplies when drawn out to multigenerational status as the younger generation has increased educational issues due to the poverty involved with bonded labor. Along with educational issues, the states’ ability to enforce criteria on labor agreements does not typically operate on a level necessary to prevent non-ideal labor circumstances prior to contractual bondage. The problem Satz has with the welfare economists is that paredo improvement is seemingly impossible for more than one family unit at a time. This is

Satz, Debra, “Why Some Things Should Not be For Sale, The Moral Limits of Markets,” Oxford Political Philosophy, 2010, accessed on April 22, 2013. 2 Ibid, P.232 #52 3 Ibid, P.179

important because paredo improvements are essential to the temporary closing of diseconomies of scale that I will explain later in this report. The entirety of Satz’s argument against bondage labor is that it exploits three of four criteria that make the market noxious. The first one is that bondage labor takes advantage of the vulnerability of financial status of the bonded, in turn, perpetuating the lifespan of the original contract.4 The second met criterion is the weak agency afflicted on the participants of bonded labor.5 This can take the form of a workers unpredictable outcome based on illiteracy and the lack of life decision making caused by the nature of the contractual agreement. The third criterion is extreme individual harm.6 According to Satz, “Although poor peasants retain some formal control over their bodies and their labor, in bonded labor arrangements they most often lack any meaningful substantive control. Like the worker in the company town, the bonded laborer lives in complete dependence on his employer, vulnerable to the employer’s whims and abuse.”7 In short, bonded labor markets are noxious to society, meaning that entire sub-sections of society suffer prolonged inequality resulting in human rights violations and lost income potential. This is why Debra Satz believes that bonded labor markets should be prohibited. The Rebuttal The first notion I would like to express is that Perado Optimal (everybody wins) situations in economics, as a whole, do not exist. In the science of trading finite resources, somebody must lose. It is the responsibility for society to establish the minimum standard of life to which human beings have the right to exist, and by doing so, establish what percentage of society will those rights be violated, for the homeostasis of said economy. My argument is supported by Pato’s, Republic, Karl Marx’s, Selected Texts, on Economics, History and Social Science, and Adam Smith’s, Wealth of Nations. Bonded labor markets should be regulated to standard to which they cause minimal degradation to economies, because if they are not regulated, they will perpetuate to the systematic commodification of individuals and in turn destroy the market place. These markets should be regulated instead of abolished because all markets have the potential to become catastrophically noxious to fit Debra Satz’s criteria, and some bonded labor markets that do fit her criteria are mandatory for the market place to exist. To understand this premise, one must understand the origins of markets explained be Plato, and their end, explained by Marx. In the Platonic sense of a market, there are two willing parties that exchange goods on the basis of mutual benefit. This is the foundation and beginning of what would be Plato’s Republic. In the Republic, an entire civilization is constructed to illustrate the various dimensions of human nature and labor economics; however, in doing so, the human race discovered that, by its nature, a market requires a maintained and enforced infrastructure. Without the regulatory infrastructure, the market would collapse. This is how currency, governing bodies, and militaries were created. Plato argues that in this world people would work in the profession best suited for them with deciding factors like birth right and general skill.8 In doing so he sectioned off a portion of

Satz, Debra, “Why Some Things Should Not be For Sale, The Moral Limits of Markets,” (cited fully erlier in this report) P.182. 5 Ibid, P. 183. 6 Ibid, P. 184. 7 Ibid, P. 184. 8 Plato, “The Republic,”, 2002, originally published 380 BC, accessed on April 24, 2013.

society whose sole purpose would be to defend the infrastructure of the expanding market, and in its end-state, to acquire resources by force from other nations to maintain growth. This segregation of duties in the newly formed republic was the first philosophical rationale of contract slavery. Since then, many philosophers have successfully refuted Plato on his basis of occupation and selection, but the market remains the same triangle like structure: the market, the market place, and the means of defending that market. This is important because in Satz’s argument against contractual bondage, she illustrates exactly how a system of contractual bondage degrades society. She points out how the newly formed, separated classes of people perpetuate a gap in inequality by seemingly permanent servitude, and at an exponential rate due to procreation. She eloquently describes why this market is noxious and she is right. However, the very nature of an expanding microeconomic structure, such as the United States, requires some noxious markets that do degrade society slower than its expansion. One of those markets is the contractual bondage of the United States military. Why the Military is a Noxious Market When a person signs a US military contract, they sacrifice all constitutional freedoms in lieu of the Uniform Code of Military Justice (UCMJ) that governs all military personnel. The UCMJ does not provide: the freedom of speech, the freedom to personal property, the due process of law, freedom to quit, and most importantly, does not provide the right to live and grants the authority of senior officers to end that life if justified by the mission. At the end of the military contract, economic findings prove that veterans experience a 30% unemployment rate due to the lack in education created by the loss in time in crucial cognitive development stages of service members, thus fitting Satz’s definition of a noxious market and contract bondage. Vulnerability Military service contracts are typically recruited from undereducated, low income areas of the United States. The service contract lasts four to six years at intervals that can last up to thirty years, the majority of the working lifetime of the individual. Upon termination of the contract, the individual enters the, Inactive Ready Reserve (IRR), which is what replaced the draft after the Vietnam War and can be involuntarily extended up to twenty one years, according to the UCMJ article 31.9 This situation fits Satz’s definition of extreme vulnerability because of the young, undereducated nature of the recruit. This practice is also extended through multiple generations because of the veteran who will eventually retire with little to no transferable skills to civilian life, thus, grooming his/her offspring for military service as well. Weak Agency and Extreme Individual Harm As mentioned earlier in the rebuttal, when a service member signs the military contract, they sacrifice all constitutional rights in lieu of the UCMJ. US service members are not allowed to participate in protests or express freedom of speech to the press. They are trained to use command prepared statements for any press interaction and violation of those commands are punishable by article 90 (assaulting or disobeying a direct order from a commanding officer). Violation of this article is punishable by restriction (often involving physical humiliation and


Department of Defense, “Punitive Articles of the UCMJ,”, accessed on April 25, 2013

torture, forfeiture of pay and allowance) up to imprisonment and eventual discharge. This one article guarantees the service member from any freedom of speech. Desertion during a time of war is punishable by death. The United States Military is the only existing developed military with this standing order. As a non-commissioned officer of Marines I am instructed to execute on site, any US friendly combatant attempting to flee a combat situation. This practice has rarely ever happened in modern conflict, but is the order that stands as it is also an officer’s right to order a subordinate into a situation that can end in certain death if the mission deems necessary. Effectively, the US service member does not have control over their own wellbeing. Upon recruitment, the service member surrenders all rights to personal property. Even if married with dependents, the service member may be confined to a barracks with no personal effects other than issued items and without communication to the outside world. This practice is typically used in the first six to twelve months of service and in the event of deployment or restriction. If desired by command, this practice can last the duration of the service member’s contract, but typically does not. After the service member has completed the contract honorably, they have the right to veteran benefits promised to them in their contract, representing Satz’s definition of debt bondage. Unfortunately, like the example of the bonded worker on page 184 of, Why Some Things Should Not Be for Sale, the service member typically does not possess the education or civilian experience required to compete with peers in the labor market. This has resulted in a 20.4% unemployment rate among veterans in the year 2012.10 In her argument, she states simply that in modern bonded labor agreements, it is most common to have a situation of debt bondage where, “A person is tied to a particular creditor as a laborer for an indefinite period until some loan in the past is repaid.” 11 In the case of the military, this takes the form of the GI Bill, which is often the veterans only opportunity for upward mobility. She then goes on to explain how this debt in many situations can last a lifetime. It is also important to express Satz’s position of ideal vs. non-ideal circumstances under which a contracted labor situation arises. The US military exploits the vulnerability, weak agency, and extreme physical harm for hundreds of thousands of people in the last fifty years, a non-ideal situation, and can fit Satz’s definition of a noxious market. Necessity As stated earlier in this report, the military is one of the pillars that allows the existence of the market place. Without it, there would be no institution to enforce and defend the status quo, most modern nations have become accustomed to. Furthermore, the existence of the military promotes the unfair exchange of goods and services provided my even more noxious markets, such as the diamond market or the contracted slaves from India illuminated in Satz’s argument. Nevertheless, the progressed status of the American economies, (plural because there

Tarentino, Tom, “ The Ground Truth on Veterans’ Unemployment,” Time Magazine, March 22, 2013, accessed on April 25, 2013. 11 Satz, Debra, “Why Some Things Should Not be For Sale, The Moral Limits of Markets,” (cited fully erlier in this report) P.171.

are many microeconomic systems), depends on the involuntary sacrifice of other nations explained in Plato’s, Republic. Marx and the Acceptable Limitations My conclusion to noxious markets is that the market place was flawed to begin with. All markets, from the tulip market of 17th century Holland, to fossil fuels and international banking are potentially catastrophic to economic equality if carried out to their profit maximizing end. The only feasible answer is to regulate and balance markets to prevent commodification of labor on one end, and stagnant, unproductive, altruistic, socialism on the other end. This report has illustrated a noxious market that is close to equilibrium but still degrades society. If other bonded labor markets can be regulated to fit the parameters of the less noxious one, society can create more sustainable models for the jobs which would require a labor contract. Karl Marx explained the danger of the industrial type labor cities and other bonded situations. Commodification of labor is the end state of unregulated labor contracts. In such, we must take Adam Smith’s minimum standard of living example from, The Wealth of Nations, which states that a person must have the basics required to live and procreate,12 limit his idea of the separation of duties, and combine Smith with Marx to make sure that a homeostasis of the labor economy minimizes the human rights loss created with a growing noxious economy.


Smith, Adam, “Wealth of nations,” The Philosophy of Economics, 2008, by Daniel M. Hausman, accessed on April 25, 2013.