Friday, March 03, 2006

Voluntary Transactions in a Free Market

When we speak of market transactions as being voluntary in a free market we are saying that the use, or threatened use, of physical force is not being applied to either of the two participants in the transaction in order to make them enter into that transaction. Unfortunate or unpleasant circumstances may leave a person with little or no choice as to whether or not to enter into the transaction but this is not the same as one of the participants or his/her agents threatening force to complete the transaction.

For instance, going to the dentist to have a cavity in one of my teeth filled is not something that I look forward to having done and it is certainly not something for which I enjoy spending my money. In fact I take steps to try to prevent cavities so as not to have to enter into such transactions. When I do get a cavity I have the choice of either paying to have it treated or living with the pain and knowledge that I will eventually lose the tooth or worse. So I go to the dentist and part with my money knowing that paying for the treatment is the better of two unpleasant and unwanted choices. Even though I view my choice as being the lesser of two evils I still freely choose to pay to have the cavity filled.

This is different from the dentist deciding that, because cavities are not healthy, people must be made to have them filled. To do this the dentist forces his/her patients at gunpoint to come in and pay to have their cavities treated. Whether the dentist personally confronts the patients or has an agent do the threatening, the use, or threat, of force by the other party to the transaction means that this is no longer a voluntary decision on the part of the other party to the transaction. The same would be true if the dentist, rather than personally threatening the patients or hiring others to do the threatening got the government to make it illegal for people not to have their cavities treated and used the police to force people obtain treatment. (While it may seem like a no brainer to have one's cavities treated, a person could choose to live with the discomfort of a bad tooth if treating the tooth meant using money that was needed for something more important to them such as to purchase life saving medication for a loved one.)

The above example would be the same if it was the patient that threatened or used force against the dentist to fill a cavity at a price lower than what the dentist wanted to charge. Getting laws passed to limit what a dentist could charge to fill a cavity (and enforcing it with fines or prison if they insisted on charging a higher fee) would also be an example of force to make one party in the transaction participate unwillingly.

Circumstances are not always good and many economic decisions are made on the basis of choosing the lesser of two undesirable choices. But so long as we are free of man-made force and allowed to make the choice on the basis of the environmental obstacles alone, the choice is voluntary.

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