UF (20) — Compelling Consequences versus Naked Coercion

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On UF.

Consequences versus Coercion

Market transactions evince compelling consequences. However, this is not the same as coercion. The latter is being applied precisely because a transaction that the affected parties voluntarily engage in cannot be brought about. By contrast, the compelling consequences of market transactions are the result of a game played by the participants of their own accord and in adherence to the same rules for all.

Victory or defeat in chess is the compelling consequence of rule-based action, but not the result of coercion. If victory or defeat is effected by serious threats or even violence we are no longer dealing with a game of chess.

If the demand for cheese increases dramatically so that producers of cheese buy up a large part of milk production, driving up the price of milk and derivatively that of yoghurt and ice cream and reducing demand for these products as well as income from selling them, again what we are observing here are compelling consequences but not coercion.

There is no arbitrary action involved; rules applicable to all are being heeded. Every participant is free to act within the protected realm of personal freedom granted to everyone. Nobody has violated the personal freedom of another person. He who is so inclined may endeavour to earn money by selling this or that product; of course, under the strict condition that nobody may be forced to purchase the product on offer.

The prevailing rules ensure that neither the production nor the offering or the purchase or non-purchase of the product is precipitated by any form of coercion, i.e. by acts in violation of the rights implied by personal freedom. The seller might just as well ask the buyer whether he fancies a game of chess. No one is being wronged if the proposal is rejected or if upon playing the game one party or the other is defeated.

There is no injustice involved when a seller A suffers bankruptcy owing to the fact that competitor B has been able to redirect client interest away from A toward B’s better and cheaper product. Competitor B has a right to come up with a better and cheaper product; the consumer has a right to make or not to make a purchase as he sees fit.

However, injustice would indeed prevail, if the competitor or the consumer had been subjected to serious threats of violence or manifest coercion, so as to restrain them from acting according to their own legitimate volition and to exempt a certain party from the generally applicable rules, thus granting that party the privilege of being insulated from the compelling consequences of his participation in the market.

Written in July 2013.

German twin post.