Annie Rent Your Gun
April 16, 2009
I have, in the past, referred to Theodore Burczak’s article “A Critique of Kirzner’s Finders-Keepers Defense of Proﬁt” because of its mention of David Ellerman’s labor theory of property (not to be confused with the much-maligned labor theory of value). I recently read Kirzner’s response from the same journal issue (The Review of Austrian Economics, 15:1, 2002) and I would like to address his comments. The original article had two lines of criticism but here I’m only concerned with the first line that directly refers to Ellerman’s ideas, since this has been a popular topic on my blog. My goal is not to defend Ellerman here but to demonstrate that Kirzner doesn’t appear to understand the ultimate point of the theory he is rejecting.
However, I ﬁnd it difﬁcult to resist pointing out…that…one has in one’s hand (if one chooses to use it) an insight which might defend the legitimacy of the wage-for-labor-time exchange, in spite of one’s accepting (as in fact I do certainly accept) that a worker never does lose ultimate moral responsibility for any actions he takes as an employee. Consider an owner of a gun who is asked to rent it for a day to a person whom he does not know to be a would-be bank robber. The owner may tell the would-be renter: “I am prepared to rent the gun to you for a day. However, since I do not know you, and fear you may use the gun for criminal purposes (for which I am not prepared to rent it to you), I propose the following: Let me retain the gun on my person for the entire day, except that I will accompany you wherever you wish to go during this day, and will gladly turn over the gun to you (whenever you wish to use it, for purposes which you will select), provided that your proposed use does not violate my moral code.” Let us suspend our disbelief concerning the plausibility of any such bizarre proposal. Clearly if such a proposal were made and accepted, we would have a case here the owner of the rented gun (a “thing” for sure) has retained moral and juridical responsibility for its use throughout its period of rental.
I see no reason not to understand the laborer’s position in an employment contract to be exactly that of my gun-owner; and the laborer’s rented time, to be exactly similar to the gun. There is nothing in such a contract which appears to be illegitimate, unjust, or fraudulent.
The problem is that Kirzner misunderstands the full thrust of Ellerman’s labor theory of property, namely the property part. He seems to think that the only point of contention is the (lack of) acknowledgement or recognition given to the worker’s responsibility. His example here demonstrates that in fact the worker can be seen to have responsibility even if he follows the lead of the entrepreneur. Well, fine but the story doesn’t end there; this is just the first step and it sets up the final thrust: the ramifications identifying responsible parties has for identifying firm membership and thus those eligible for sharing profit. It’s not merely a psychological issue about getting one’s due recognition but also about the legal ramifications with regard to property right imputation.
The outcome of assigning responsibility to the gun owner in Kirzner’s example is not simply to place a label on the owner but to also make him partly liable for the crime. When applying this analogy to employment however, Kirzner stops short of the implication that the employee would then be a “partner-in-crime”, which is the vital aspect that leads Ellerman to conclude that the employee then cannot be consistently excluded from the residual claim that falls to all responsible firm members. Kirzner believes he has solved what is only an aesthetic complaint when it is in fact one of imputation of real property.
Furthermore, he never acknowledges the obvious difference in a gun and labor: a gun can be physically used by another and labor cannot. To claim that renting labor is like renting a gun is forget that you cannot actually “gladly turn over” labor. You can gladly perform an action but you can’t gladly turn it over. All Kirzner does is repackage the same rent-and-transfer analogy of labor where the worker possesses her labor up until some finite point, where thereafter it is used by the employer like a rented gun.
But, all of that aside, the fact remains that Kirzner concedes responsibilty if he adopts this analogy. Therefore, he does nothing more than arrive at the same place Ellerman does when he begins to discuss property imputation, even if by a different path. If his goal was to defend the exclusion of labor from the residual claim on Ellerman’s terms, he stopped well short of what would be necessary.