Wednesday, May 9, 2018

The Fraud of "Renting Labor."

Some currently "legal" tropes are in-fact logically unjust. With things like exploiting labor, "renting" labor, and binding laborers to abusive contracts, most folks recognize their innate injustice. Unfortunately, as displayed in the corrupt SCOTUS decision announced just 12 days after I first drafted this post (5/21/2018), stealing wages is perfectly legal under the sophist arguments of "right to contract" having primacy over a right to own oneself, the fraud of "renting labor" is a perfectly legal fraud.

See:Supreme Court upholds Employers Right to Require Arbitration

David Ellerman and related historians and economists offers better arguments than the raw emotional ones offered by many activists. His arguments, founded in the arguments of the enlightenment and the abolitionist movement apply the logic of inalienable human rights. Listening to them could drive a paradigm shift in understanding the legal rights and wrongs of our system; and a framework for righting them. But of course only if we can upend the corruption in our electoral and legal system.

This post is intended to be a follow on to the post: “Justice, Injustice And "Legal Fictions" = Fraud Ellerman explains why the "rental of labor" is a legal fraud and a tool for wage slavery and inequality.

Those advocating Inequality claimed it was Consensual

Ellerman notes that:

"Historically, the sophisticated arguments for slavery and autocratic government were consent-based in terms of implicit or explicit contracts. And the legalized oppression of married women was based on the coverture marriage contract."

Modern Liberalism fought:

“sophisticated arguments for slavery and for non-democratic forms of government based on consent. The advances in anti-slavery arguments and democratic arguments based on the inalienable rights arguments of the Reformation and Enlightenment were made against those liberal defenses of slavery and autocracy based on consent.”

Historians misrepresent the difficulty of advancing rights for all people when they downplay this.

Inalienable Rights Versus Oppressive Consent

David explains that:

“the critiques developed in the abolitionist, democratic, and feminist movements were not simply arguments for consent as opposed to coercion, but arguments against certain voluntary contracts, e.g., in the form of inalienable rights arguments.”

These inalienable rights arguments focused on the fact that labor cannot be divorced from either personhood or capital. The abolitionists argued successfully that labor cannot be alienated from personhood but is inseparable from it. Thus Alienating a persons labor from his personhood degrades the person and is oppression, infringing on the very basic rights of the persons enslaved. Moreover, this is true even if the person agreed to the sale.

Legal Fiction of Consent = Fraud

Unfortunately:

“under the intellectual hegemony of classical liberalism, the historical arguments tend to be simplified”

The doctrine of the inalienability of a person and his labor was replaced with the “legal fiction” of selling (or renting) labor, replacing the rights argument with the patently fraudulent argument that a voluntary sale of a persons labor to the master, is a voluntary "sale" with "consent. Reducing the rights argument to an argument about:

“consent versus coercion.”

This argument, being slippery justifies alienating labor from capital and labor from personhood. Just so long as a contract exist and the infringing party ("the employer") has a contract that presumably is voluntary. The result is that:

“The older arguments against certain contracts, even if perfectly voluntary, have been largely overlooked, ignored, or lost—perhaps for an obvious reason. When these older arguments are recovered and restated in terms of the underlying norms of ordinary jurisprudence, then the arguments clearly apply against the human rental or employment contract that is the basis for our present economic system.”

Historical Illustration

The history of abolition and post abolition forms of wage slavery, company store oppression, share-cropping and virtual slavery of wage laborers illustrates that the "legal fiction" of renting labor is a fraud.

Owned Slaves Versus Rented Slaves

David Ellerman in a presentation he gave in Munich explained how our current employer-employee relationship derives from the previous slave system:

“The employer-employee relationship is usually described by various euphemisms such as hiring, employing, giving a job to, place-holding etc.. But from the economic viewpoint, it is the renting of a person similar to renting a car (called ‘hire-cars’ in the UK) or an apartment, i.e., buying the flows of services of an entity instead of buying the entity itself. ” [Ellerman]

They can legally claim to own a man's labor by claiming that they rent that labor. In the United States, owning the person, even if by his/her concent is technically illegal. But renting? Paul Samuelson described the "employer-employee as a collection of euphemisms:

such as hiring, employing, giving a job to, place-holding etc.. But from the economic viewpoint, it is the renting of a person similar to renting a car (called ‘hire-cars’ in the UK) or an apartment, i.e., buying the flows of services of an entity instead of buying the entity itself.” [Samuelson]

The Fraud of Renting Labor

Unfortunately for working people, this idea of "renting labor" is a legal fraud. The abolition of slavery forced employers to use the "legal fiction," of "renting labor" so they could continue living off the rent of the difference between what they paid "their workers" and what they charged for the product of that labor. Combine wage arbitrage with rents on everything else landless and capital-less workers buy from their wages and they are still enslaved or worse. So like the abolition of the system of nobility which led to previous neo-royals converting their royal rights to simple alloidial property and enabling previously limited landlords to evict the people who were suddenly worthless after being 'emancipated' from rights to what had been their own property. The abolition of slavery led to workers being even more "alienated' from their work. Which in a human rights scheme is simply oppressive, dysfunctional and an infringement of rights, but under both Marx and "Capitalism" was because they were valued as commodities once again under this fraudulent formula.

“Strictly speaking, the hourly wage is the rental payment that firms pay to hire an hour of labour. There is no asset price for the durable physical asset called a ’worker’ because modern societies do not allow slavery, the institution by which firms actually own workers. [Begg, Fischer, & Dornbusch. Economics (5th Ed.), 1997]”

Labor cannot be alienated from the laborer

But honestly speaking, the hourly wage is the compensation of that labor, alienated from the person providing it. Denying a natural right leads to oppression and misery, but it denies something that "should be" so it denies facts as well:

“The facts are that all the people who work in an enterprise, employees and working employers, are jointly de facto responsible for using up the other inputs and producing the products.” [Ellerman]

Like Galileo legendarily being forced to deny his theory that the Earth Rotates around the Sun, denying a fundamental truth only establishes a lie or an abusive relationship. The Earth still rotates around the Sun even if the Inquisition was able to force Galileo to repudiate his own theory.

But Labor can be appropriated

The fraud of "renting labor" excuses business people to deny participation in their own workplaces. To the extent that humans are seen as less useful than machines. Ellerman explains:

“But due to the human rental contract, which operates as if that human responsibility can be alienated and transferred, allows the employer to appropriate 100% of the positive and negative product, the assets and liabilities created in production.” [Ellerman]

Abusive Contracts And Alienation

Two economists won the Nobel Prize a few years ago talking about Abusive and idealized contracts. But because this fraud of "renting labor" never got properly challenged outside of Scandinavia the legal fraud of the Corporate person has just amplified the denial of basic rights to employees and transferred personhood to employers and senior management. With the result that some businesses are seeking to cut labor completely out of the equation, seeking to automate Trucking, automating factory work. This doctrine dehumanized labor, with some contribution from Karl Marx. For a long time "employers" could rationalize automation by claiming that the evicted workers would find work elsewhere, although that was rarely the case for older or worn out workers. Now they would discard 90% of us.

Labor Comes before Capital

But the truth is that most capital is the product of "labor mixed with treasure" and "labor comes before Capital" [Lincoln], more importantly capital is produced as people transform raw materials into machinery, tools, save seed and improve their property so it can be put back into production. So labor has a natural right to all of its products, including capital. Using contract power, raw power and abusive laws to force people to deny their stake in their own product, including labor, is abusive. Marx described this alienation of labor, but he failed to see that it was the result of inalienability. Like prison illustrates the natural right to freedom. The modern capitalist system illustrates the continuance of slavery under euphemisms and legal frauds.

so these oligarchic capitalists would be nowhere without the input of workers, designers, inventors and all the people that make the machine of any enterprise function. And we'd be better off if they had a right to ownership in their own labor. Maybe the billionaires would be but millionaires, but everyone would be happier. Because the right to own one's own self is inalienable. That was the real basis for ending slavery in the 1860s. And it is the real basis for labor of all kinds getting the rights it deserves. We are owed a stake in the businesses we work for. It's not something they should pretend to offer us. It is a right.

The Inalienable Right to Conscience

Ellerman mentions but doesn't deliver the antecedent of the inalienability of labor and capital in the inalienability of conscience. But he quotes from the Reformation:

“Since this is the 500th anniversary of the Protestant Reformation, by the doctrine of the inalienability of conscience (“one person cannot believe for another”), just a persons cannot in fact alienate the decision about what to believe to another, so they cannot alienate the decision to do this or that to produce a widget.” [Ellerman]

Even slaves, as mentioned in the earlier installment of this series, have a conscience. And the antebellum law treated them as persons on that as as a premise when dealing with slaves who break the law. They were non-persons until it came to dealing with the magistrate.

See previous article

People who are inextricably responsible for Results should have a say in the decision making

Similarly, the modern corporation treats workers as "non-persons" when dealing with the corporation, until they don't. Then suddenly they are persons again. this creates the two kinds of error of corporations taking responsibility for criminality only to escape any punishment, and workers being held responsible for things they have no control over. As someone said about Corporate personhood "When Texas executes a corporation I'll take corporate personhood seriously." But the converse is that corporations treat workers as non-persons except to "rent their labor." yet the reality of responsibility is that even if one is not legally responsible for work or allowed to benefit from it:

“All people can do voluntarily is to, say, follow another’s orders to do this or that, which means they are inextricably co-responsible for the results.” [Ellerman]

Responsible Agency

“The factual inalienability of a person’s responsible agency is non-controversial and perfectly well recognized by the Law when the person commits a crime–even as a slave or an employee.”[Ellerman]

"Fumi Okiji made the same point.

“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, William. 1853]

Yet the Legal Fiction (fraud) changes

"A standard British law-book on the employer-employee relation notes:

“It is the response of the Law that changes. No crime has been committed so no need to hold a trial to assign the legal responsibility in accordance with the factual responsibility.”

The Result is that Employers treat Criminality as a Cost of Doing Business

The tradeoff of the corporate form is that agents aren't always held personally liable for criminality. But at the same time wages, compensation and say in decision making aren't theirs either.

“The employer pays off the input liabilities and thus has 100% claim on the produced outputs, and the employees thus have 0% of the negative and positive fruits of their labor.[Ellerman]

Legal Fraud

Hence Ellerman has made the case that this is fraudulent on it's face:

“Since there is no actual transfer of responsible human agency from the labor-seller to the labor-buyer, the whole contract to buy-and-sell labor, i.e., to rent persons, is a legalized fraud on an institutional scale, and thus should be abolished along with the self-sale contract and coverture marriage contract.

Recent news shows that racism, sexism, sex bondage, are alive and well. Protected by abusive contract vehicles such as Non Disclosure Agreements, and the Corporate form both in its governing version or it's private form.

Ernst Wigforce and the Right to Own Oneself

He notes how “Ernst Wigforss, one of the founders of Swedish social democracy, argued for the invalidity of the human rental contract.” quoting;

“There has not been any dearth of attempts to squeeze the labor contract entirely into the shape of an ordinary purchase-and-sale agreement. The worker sells his or her labor power and the employer pays an agreed price. . . .”

You can't chop off a person's labor anymore than you can chop off his hand and use it to chop liver.

“But, above all, from a labor perspective the invalidity of the particular contract structure lies in its blindness to the fact that the labor power that the worker sells cannot like other commodities be separated from the living worker.

... Here we perhaps meet the core of the whole modern labor question,... .

The Inalienability of Labor and its product

[Wigforss, Ernst. 1923. Den Industriella Demokratiens Problem 1. Stockholm, p. 28]
“Wigforss is making an inalienable rights argument that the labor "that the worker sells cannot like other commodities be separated from the living worker.”

The modern political theorist, Carole Pateman, makes the same point in her 1988 book “The Sexual Contract”:

“The answer to the question of how property in the person can be contracted out is that no such procedure is possible. Labour power, capacities or services, cannot be separated from the person of the worker like pieces of property. [p. 150] Responsible human action, i.e., "labor," cannot be separated from the person–unlike the services of any thing that is rented out, e.g., a mule, truck, or apartment.”

Therefore the idea that workers can be "rented" is as much a fraud as slavery was.

Conclusion and Further reading

Ellerman also explains how Marxism contributed to the demise of labor by ignoring this rights case and thus setting it up so that later Marxists gave workers a choice between being wage slaves to private persons or wage slaves to the Government. Which is no choice at all. That you can read at:

http://holtesthoughts.blogspot.com/2018/05/that-muddle-head-marx-david-ellerman.html

Further Reading

To Read Professor David Ellerman's draft paper:

http://www.ellerman.org/wp-content/uploads/2017/12/case-based-on-ordinary-norms.pdf
https://cosmosandtaxis.files.wordpress.com/2018/03/ellerman_ct_vol5_iss3_4.pdf
Neoabolitionism: http://www.ellerman.org/neo-abolitionism-and-marxism/

Note this is still a draft. I have to publish it with two other posts and then link them together. So bear with me if you are following me. I'm going to update it til I'm happy with it or have divided the topic up further.

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