Contract › Confusions

Mivart, George. 1879. “The Government of Life,” The Nineteenth Century 5(26): 690-713.

[698] As before said, in addition to ‘liberty,’ the same love of justice and of our fellow-men must cause ‘equality’ and ‘fraternity’ to be no less objects of benevolent desire, and the natural form of government in a community of men who understand and act up to their duties must be a government of express or tacit reciprocal surrender and harmonious cooperation—must, in fact, be virtually a ‘social contract.’

[699] The doctrine of the government by social contract, which is but another word for constitutional government, is then the political doctrine of free states now and of the civilised world hereafter…

Green, Thomas Hill. [1881] 1888. “Liberal Legislation and Freedom of Contract” in Works of Thomas Hill Green, Vol. III, edited by Richard Lewis Nettleship. Longmans, Green, and Co.: London.

[373] No contract is valid in which human persons, willingly or unwillingly, are dealt with as commodities, because such contracts of necessity defeat the end for which alone society enforces contracts at all. Are there no other contracts which, less obviously perhaps but really, are open to the same objection? In the first place, let us consider contracts affecting labour. Labour, the economist tells us, is a commodity exchangeable like other commodities. This is in a certain sense true, but it is a commodity which attaches in a peculiar manner to the person of man. Hence restrictions may need to be placed on the sale of this commodity which would be unnecessary in other cases, in order to prevent labour from being sold under conditions which make it impossible for the person selling it ever to become a free contributor to social good in any form. This is most plainly the case when a man bargains to work under conditions fatal to health, e.g. in an unventilated factory. Every injury to the health of the individual is, so far as it goes, a public injury. It is an impediment to the general freedom; so much deduction from our power, as members of society, to make the best of ourselves. Society is, therefore, plainly within its right when it limits freedom of contract for the sale of labour, so far as is done by our laws for the sanitary regulations of factories, workshops, and mines. It is equally within its right in prohibiting the labour of women and young persons beyond certain hours. If they work beyond those hours, the result is demonstrably physical deterioration; which, as demonstrably, carries with it a lowering of the moral forces of society. For the sake of that general freedom of its members to make the best of themselves, which it is the object of civil society to secure, a prohibition should be put by law, which is the deliberate voice of society, on all such contracts of service as in a general way yield such a result. The purchase or hire of unwholesome dwellings is properly forbidden on the same principle. Its application to compulsory education may not be quite so obvious, but it will appear on a little reflection.

[374] Our modern legislation then with reference to labour, and education, and health, involving as it does manifold interference with freedom of contract, is justified on the ground that it is the business of the state, not indeed directly to promote moral goodness, for that, from the very nature of moral goodness, it cannot do, but to maintain the conditions without which a free exercise of the human faculties is impossible. It does not indeed follow that it is advisable for the state to do all which it is justified in doing.

Anonymous. 1883. “Home and Foreign Affairs,” The Fortnightly Review 32 N.S. (193): 144-152.

[145] ...the change which is coming over English politics. The old cries are dead, and the old interests have been satisfied. The new electorate is finding its feet, and its voice, at first indistinct, is gradually becoming articulate. We are in face of new demands. The old suspicion of government has ceased now that the people feel that they are governing themselves, and the claim is for more legislative interference, not for less. The Liverpool election is, in fact, an answer to the ‘Rights of Property Defence Association,’ and to all that school of economists and politicians who have made a fetish of what they call ‘freedom of contract,’ or, in other words, the freedom of the rich and strong to extort from the poor and weak all that their necessities compel them to concede. The incident, in fact, appears to point to a speedy fulfilment of Mr. Chamberlain's prediction, that we are on the eve of great political changes. The ‘nouvelles couches sociales’ are clearly of a mind that the government in which in future they mean to have their part shall actively consult the interests and welfare of the many, and not merely content itself with passively registering and enforcing arrangements which, nominally free, are really dictated by the unequal conditions of the struggle for existence.

Janet, Paul. 1883. The Theory of Morals. Charles Scribner’s Sons: New York.

[352] We must reverse the order which the eighteenth century established: what was then placed in the past, we must set before us in the future. The social contract was not the law of primitive societies, but it is the ideal law of future societies.

Bellamy, Charles Joseph. 1884. The Way Out — Suggestions for Social Reform. G. P. Putnam’s Sons: New York.

 [102] It is the privilege and the duty of government to provide by law for the rights of the weaker party, wherever money seeks for a return by the assistance of labor. All the profits of labor, that is all the increase of wealth which it has caused, after the payment of wages and capital's interest, should be divided among the labor which has produced it, by act of law. In other words, such being the sort of contract each workman would make if he could, and owes it to himself and the world to make, when he goes to work with other men to produce a certain thing with tools which one of them provides, the law, which is nothing more than recorded public opinion, should make the contract for him. Any other system of employment is not free labor, but slavery, and as the law prohibits slavery, it should prohibit such unrighteous contracts.

Alden, Joseph. 1886. The Science of Government, new ed. Sheldon and Company: New York.

[14] The relation of individuals in the State to the sovereign power may be illustrated by a joint-stock company. An insurance company has power to make contracts for insurance. Suppose there are ten members. They, or a majority of them acting as a company, can make a contract, or authorize their agents to do so; but one of their number cannot make one-tenth part of a contract. The whole power of the company belongs to the ten members (not of necessity equally), but the whole power cannot be divided into ten parts, each part being wielded separately by individuals. Such a course of proceeding would defeat the end for which the company was formed. In like manner, the whole power of the State belongs to the members of the State—the individuals composing the State; but this power is not divisible among those individuals, to be wielded separately by each. Such a course of proceeding, were it possible, would defeat the ends for which the State exists.

Gunton, George. 1891. Principles of Social Economics. G. P. Putnam’s Sons: New York.

[421-422] Individual contracts therefore, regarding wages, hours of labor, or other working conditions, are absolutely out of the question under the factory system. Indeed, no practical business man would ever seriously entertain such an idea. As a matter of fact, no such freedom on the part of the laborer to make an individual contract for himself, different from that under which his fellow-workman in the same shop or industry is working, is ever intended by the much-heralded phrase ‘freedom of contract.’ All that is really meant by this phrase is that the employer should have the freedom to take the laborers singly in order to make them jointly accept his terms. It simply means that in making a contract, the laborer shall not have the same right to be represented by the most competent of his class or craft that capital has; but that each one, however ill-informed or in competent to present his own case, shall be dealt with simply by the representative of corporate capital. Every time a laborer is induced, through ignorance or otherwise to accept inferior conditions, it increases the power of the employer to enforce similar terms upon others.

Ely, Richard T. 1903. Studies in the Evolution of Industrial Society. The Macmillan Co.: New York.

[409] The problem of liberty includes the problem of suitable control over the relations which exist among men; for these relations determine the conditions of our social existence. These relations may be considered individually and socially, and the social action may be either of private or public character. The action of a trade-union in its endeavor to secure favorable relations is private social action; a statute determining the length of the working day is public social action; and both alike aim, successfully or unsuccessfully as the case may be, to promote liberty. All action which endeavors to remove ignorance and superstition and to strengthen the individual, mentally, morally, and physically, is action which endeavors to promote liberty. Necessarily, social action which determines or regulates in any way the relations of men among themselves must restrict freedom of movement at some point, but where it is wise it increases it more than correspondingly at other points. ... The employer may not hire the services of little children, and his liberty to do so is restricted; but the liberty of the children is increased. They are freed from toil, and when provision is made for their wise education and upbringing, their powers are increased, and they have many fold the liberty to employ themselves in the service of their fellows for their own benefit.

We thus have a vast body of legislation in and through which society seeks liberty. This legislation modifies and qualifies nominally free contract, because nominally free contract may mean servitude of various kinds and various degrees. The aim is the increase of liberty in the positive sense.

Hobhouse, Leonard T. 1905. Democracy and Reaction. G.P. Putnam’s Sons: New York.

[210-214] That the work of the old Liberalism was done…was a too hasty assumption…. Against the South African War…as in the defense of Free Trade, the socialist leaders and the most notable spiritual descendants of Cobden and Mill stood on the same platform. Was this alliance…the logical working out of principles in political practice? … [Even Cobden] favored free education and the prohibition of the employment of children under thirteen in factories. … Cobden held by freedom of contract on the ground that as a rule the adult sane man is best judge of his own interests and that when each party to the bargain is free to take it or leave it, the bare fact that it is concluded is sufficient evidence that it is for the advantage of both…[and] if these conditions do not hold, the principle of non-intervention does not apply. If either party…is not perfectly free to choose or reject, if he has not full knowledge of the circumstance, if he is not capable of forming a judgment, if he is so circumscribed that refusal is not really within his option, or is within his option only on pain of incurring penalties much heavier that those which would fall on the other party, then the contract is no longer free and equal…true freedom does not apply…. [This admits] that apparent freedom of contract was not necessarily real freedom…[and] that the State has an interest in, and a responsibility for conditions, which, operating upon a large scale, determine the health and welfare of its own members. These two principles…[are] much of what is called ‘socialistic’ legislation…directed to the redressing of inequality in bargaining.

Bax, Ernest Belfort. 1906. Essays in Socialism New and Old. E. Grant Richards: London.

[145-146] Hence the Socialist is not taken in as the bourgeois Individualist appears to be by mere external appearances. He does not believe for instance in the liberty of a man to deprive himself of liberty. The liberty he aspires to is not a formal liberty that exists in name merely, but a real liberty that exists in fact. To take a typical instance of this. Freedom of contract, as it is called, appears to be the acme of individual liberty. On the other hand regulation of the conditions of the contract by the State appears contrary to liberty. This case is the one most commonly adduced of the tyrannical action of modern Socialist tendencies. Capitalist advocates can see nothing fairer than that the workman should be able to sell his labour without let or hindrance in the open market. The Socialist sees that the contract in this case, despite its specious form, gives no freedom at all to one of the contracting parties, but involves on the contrary the grossest kind of coercion. The Voluntarist professes to take umbrage at the form of coercion involved in the regulation of this coercive contract because it is direct and exercised by the community. The Socialist objects to the real, though indirect, coercion exercised on the workman by the capitalist owing to his monopoly of the means of production. But, says the Voluntarist, the workman is not obliged to enter on the contract without he desires it. He has the option of not doing so and—starvation or the workhouse!! But no! the Voluntarist would abolish the poor law and hence the workhouse, so that starvation remains as the only alternative. If the Voluntarist were really consistent he would on the same grounds object to the forcible suppression of highway robbery as it was practised by the gentlemen of the road in the eighteenth century. … The Capitalist nowadays offers the workman the alternative of his labour or his life.

Schaffner, Margaret Anna. 1907. “The Labor Contract from Individual to Collective Bargaining,” Bulletin of the University of Wisconsin, Economics and Political Science Series 2(1): 1-182.

[10] Contracting away the right of contract. The right of contract is a necessary part of freedom but unless it is limited and regulated by the state freedom of contract may nullify itself. Ancient times afford illustrations of slavery arising from free contract and at the present day conditions attached to the labor contract frequently render the contractual relation one of virtual slavery. Where the strength of the contracting parties is so unequal that the will of the stronger may be imposed upon the weaker, not only to the detriment of the individual but of the general public, it becomes the duty of the state to enact legislation which will prevent the individual citizen laboring under the goad of economic necessity from contracting away his inherited rights and liberties.

Ward, Harry Frederick. 1910. Social Ministry. Eaton and Mains: New York.

[155-156] What are some of the questions to be answered by an inquiring people that cares by legislation to protect the health and morals of its working women and children? The state must note whether these women are the better or worse nervously at the end of the work day. What is the effect of fatigue upon their morals? Is there a tendency toward recklessness that follows weariness? What it means to a girl’s or a child’s morals just to be tired out! … These questions must be answered by the state that wishes to protect its future life. The human resources are more important than any other of the natural resources of the state and nation, and yet we allow such a waste of them and then call it ‘liberty of contract’ and ‘freedom of the individual.’

Baillie, J. B. 1911. “The Moral and Legal Aspects of Labour,” The Philosophic Review 20(3): 219-264

[263] The only question regarding [the rights of contract] is the limits within which they can be asserted. Now these limits are determined simply by reference to (1) the well-being of the whole community, and (2) the share of the individual workman in the general good. It is not in the interests of the community to sanction contracts for labour which are made under any compulsion, for the essence of a contract implies freedom of personality in the forming of the contract. Compelled labour is slave labour in all but the name; and such forms of labour stand condemned by the very purposes of the community. It is again not in the interests of a community to sanction contracts for labour which is carried on under conditions which imperil the life and safety of those engaged in the labour, for that is subordinating the person to the contract instead of the contract to the person. Hence, e. g., ‘sweated’ labour, which is carried on at the expense of the well- being of the toiler, must be suppressed in the interests of the community. The same is true of labour under dangerous conditions; hence the origin of protective legislation for labour. Further, the well-being of a community can only be secured by the fullest and freest development of the power of the labouring individuals composing the community. An absolutely essential condition for this is an efficient provision of the very means of subsistence. There can be no good life without life itself. To be unable to secure this absolute minimum for subsistence is therefore hostile to the very well-being of the community. From this it follows as a direct corollary that a minimum living wage ought to be fixed and recognized by the State as resolutely as it is insisted on by labourers themselves. Once more, since freedom is of the essence of contract, and the end of contract is the furtherance of the good of the community, any attempt to check or suppress the free exercise of this right is hostile not merely to the interests of the workman but to the community as well.

Ely, Richard T. 1914. Property and Contract in Their Relations to the Distribution of Wealth, Vol. II. The Macmillan Company: New York.

[650] There can be little doubt as to the facts concerning the impairment of liberty under individualistic contract. Preceding chapters have made this clear. It is said we must not deprive the workman of his liberty to work in factories on Sunday. But that is not liberty. No workmen desire long hours and payment in kind: the claim that they desire this is either sophistry or claptrap. It is said that their liberty is impaired because they cannot contract to work thirty-six hours in succession nor to take payment in goods over the quality and price of which they have no adequate control; but they do not desire these evils if the evils can be obviated; and in collective action we find at least a partial remedy.

[653-654] Take again the plea that we sometimes see in the decisions of the courts, that regulation of contract deprives persons of the opportunity to work. … It is said that to deprive working people of the right to work deprives them of their property, because labour is their property and contract is one of the incidents of property. But the effect is to increase property, as we have just seen. In the case of an anti-truck law, a West Virginia judge thought that ‘The right to contract in respect of property, including contracts for labor, is property, protected by the Constitution.’ A full grown citizen has a right voluntarily to contract to receive groceries instead of money. We cannot, the court maintained, interfere with that right.

In opposition to the view of the court we can say, first, then, that property itself is subject to regulation for public good, that is, health, morals, etc.; and second, that the object of the anti-truck law is to protect wage-earners’ property against a system involving a poor use of it. We must take exception to the words ‘voluntary contracts’. It must be recognised that there is a coercion of economic forces. We have here again the problem of the twentieth man, —one man yielding and forcing the others to yield, so that the only way the nineteen men can be protected is to compel the twentieth man.

Pound, Roscoe. 1916. “Static Assumptions of Contractual Freedom” in Current Economic Problems edited by Walton Hale Hamilton. University of Chicago Press: Chicago.

[675] There is no doubt that the theory of ‘natural rights’ is at the basis of modern conceptions of freedom of contract. This began as a doctrine of political economy, as a phase of Adam Smith's doctrine which we commonly call laissez faire. It was propounded as a utilitarian principle of politics and legislation by Mill. Spencer derived it from his formula of justice. In this way it became a chief article in the creed of those who sought to minimize the functions of the state, to insist that the most important of its functions was to enforce by law the obligations created by contract. This theory has shown itself present in both legislation and judicial decisions. As a consequence the doctrine of liberty of contract is bound up in the decisions of our courts with a narrow view as to what constitutes special or class legislation, that greatly limits effective law making. For one thing there is the doctrine that apart from constitutional restrictions there are individual rights resting on a natural basis, to which the courts must give effect, beyond the control of the State.

Ross, Edward Alsworth. 1917. “Class and Caste: Equalization,” American Journal of Sociology 23(1): 67-82.

[71] Gradually it was found necessary to recognize in the normal individual certain powers essential to self-effectuation, of which he cannot divest himself, i.e., ‘inalienable rights.’ Hence modern law gives no force to a contract which without due equivalent cripples one’s future freedom to act or to contract, e.g., to live in a certain place or outside a certain place, to marry or not to marry a certain person, not to carry on one's trade or business, not to exercise the right of franchise or to exercise it in a certain way, or to forego [sic] one's legal rights as, e.g., the passenger's right to damages for injury through the fault of a common carrier.

Society will not permit the surrender of rights essential to the public welfare. Thus in some of our states the debtor cannot waive the statutory exemptions in his favor or the mortgager his equity of redemption. Legal standard insurance policies have virtually removed insurance from the domain of contract. Personal safety is not to be contracted away; one cannot legally bind himself to engage in dangerous work or to remain in a dangerous place. Statutes clothing the worker with the right to be paid his wages in cash and the right to indemnity for injuries received in the course of his work will not allow him to contract himself out of these rights. An agreement to assign to one’s employer the patents of all one's future inventions is invalid unless restricted to inventions of a particular character.

[71-72] In all these cases, what at first glance appears a fetter on the worker's freedom to contract is really an enlargement of his freedom, since it prevents the stronger from snatching out of the passing distress or dependence of the weaker a lasting advantage over him.

Carver, Thomas Nixon. 1919. Principles of Political Economy. Ginn and Company: Boston.

[550-551] One of the most democratic things in the world is freedom of contract, — freedom on the part of the individual to pursue his own interests so long as they happen to coincide with those of the public.

Cohen, Morris R. 1933. “The Basis of Contract,” Harvard Law Review 46(4): 553-592.

[591] Nowhere is this warning more necessary than against the absolute separation of freedom of contract from government regulation, the former conceived as purely negative and the latter purely arbitrary. In actual life real freedom to do anything, in art as in politics, depends upon acceptance of the rules of our enterprise. … Real or positive freedom depends upon opportunities supplied by institutions that involve legal regulation. Our legislative forces may be narrowly partisan and the rules may be poor ones. But this can be remedied not by the abrogation of all rules but by the institution of better ones. For this reason the notion that government rests on contract…contains a partial truth that should not be utterly disregarded because of some poor arguments in its behalf.

Keister, Albert S. 1936. “Are Government and Business Separate Entities?” Southern Economic Journal 2(3): 3-12.

[3] In fact the government (as an agency of the state) permeates the economic system from its very foundations, in such institutions as private property and contract rights, on through to income and excess profits taxes when the books are closed. Government is present and active at all stages of the economic process.

Lippmann, Walter. 1937. The Good Society. Little, Brown and Company: Boston.

[189] All of this is by way of illustrating the point that the latter-day liberals were deeply confused when they set out to define the limits of the jurisdiction of the state. The whole regime of private property and contract, the whole system of enterprise by individuals, partners, and corporations, exists in a legal contract, and is inconceivable apart from that context. … [Latter-day] liberals came to think of these traditional laws of property and contract as prevailing in a realm of freedom, and when statutes they did not like were enacted to amend the traditional law, they thought of them as interferences by the state.

Belloc, Hilaire. 1938. “The End is Slavery,” Social Justice 1A(13): 4.

[4] If most men were economically free and possessed enough reserves of livelihood, housing, food, clothing and cash, that contract would be what it still pretends to be, a genuine free bargain. But as the mass of men became destitute through the action of competition their power to contract freely disappeared. There is no true contract between the man without anything and the man with capital behind him. … In order to preserve social peace there was instituted the device of ‘social relief.’ It was called all sorts of names…but the true name of this new series of arrangements for making capitalism work is ‘State Socialism.’

Ezekiel, Mordecai. 1939. Jobs for All. Alfred A. Knopf: New York.

[279-280] Private contracts have value only when there are laws to recognize and regulate than, and courts to enforce their performance. …The freedom to contract was not fair as between workers with only their individual labor to sell, and employees with thousands of workers to pick from. Workers gradually won the right to form unions and bargain collectively, creating a more even contract between the employer and the whole group of employees.

Lewis, H. D. 1940. “Is There a Social Contract? I,” Philosophy 15(57): 64-79.

[71] And it is the undertaking to co-operate in this way that makes it meaningful, in the first instance, to speak of the authority of the State. … It implies nothing beyond the acceptance by all of the will of a few as a condition of co-operation. … Is it not obvious that the agreement of members of society as a whole, which I have described, is what the doctrine of the social contract in its various forms embodies?