I asked the following question on a discussion list:
In one of Tom Palmer’s flames of Stephan Kinsella, Palmer accused Hoppe of being an “embarassment to Austrian economists” because he believed that in the unhampered free market, all unemployment would be voluntary (Hoppe’s statement here). Kinsella cited a passage from Mises showing that this is what Mises thought (“unemployment in the unhampered market is always voluntary”), and hence, such a view could not possibly be an embarassment to Austrians.I’m interested in what people think about that statement itself, that in the unhampered free market, all unemployment is voluntary.
I’m not so sure about this statement. What about the severely mentally retarded? Who’s going to employ them? Or those in the terminal stages of Alzheimer’s? The argument is that people can lower their wages until someone will hire them. But these kinds of people are liabilities — so they’d actually have to pay the company for the inconvenience of having them befuddle things (and I don’t think we can construe employment to mean an anti-productive person compensating the company he “works for” for his daily detraction from profits).
Likewise, when a Stephan Hawking (tragically) loses all of his muscle-control, he would be unemployable, even in an unhampered free market (unless someone finds a way to interface a computer to his mind).
So, am I just misinterpretting Mises here, or is there something wrong with my reasoning, or is it that Mises just wasn’t considering these extreme cases?
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John Egger of Towson State offered the following point of clarification:
Everything hinges on how one defines “voluntary,” and the fact that we use special terminology when we’re discussing the buying and selling of human labor doesn’t help. (Either Henry Hazlitt or Thomas Sowell suggested that our thinking would be much improved if we replaced “hiring an employee” with “buying some labor,” “getting a job” with “selling some labor,” etc.)
The crux of the matter is that employment is a voluntary exchange… and that requires the voluntary participation of BOTH the potential buyer and the potential seller. If the potential seller is willing but the potential buyer is not, it’s tempting to conclude that the potential seller “involuntarily” fails to sell; after all, HE wants to. But the potential buyer clearly “voluntarily” doesn’t buy. So what is it… voluntary or involuntary?
My conclusion is that the failure to exchange is, indeed, “voluntary,” because a voluntary exchange requires that BOTH parties agree. If both OR EITHER do not, the failure to exchange (which the potential seller of labor will call “unemployment”) is, indeed, voluntary.
This does not imply that the potential worker scans over a wide range of employment opportunities and consciously chooses not to sell his labor, as classical-inspired interpretations might suggest.