Locke and the Environment of Business

Locke identifies the power of punishment in Chapter II, sections 7 – 11. Why should this be important for business? As I see it, the main reason is that Locke here is stipulating what may morally be done to those who violate the natural law by harming others in the ways listed in section 6. By violating those rights the criminal “declares himself to live by another rule (sec. 8). By doing this the criminal becomes dangerous to humankind and therefore anyone in the state of nature may punish him. In sec 11 we see briefly that what the magistrate does is, by agreement, exercise that authority for others.

This actually begins to lay the foundation for business. There are two important aspects of this foundation. First, that a person has property rights means that she can legitimately defend her property, even with the help of others, against those who would take it. This is an important authority to have since without it there is no justified self-defense in business transactions. This is why it is one of the obligations of a government to protect your property: For various reasons they are exercising this right for you. This is the argument people focus on when they say things like “I have a right that ought to be protected.”

There is, however, a second moral consideration often overlooked in such debates. It is only by violating these rights that others may punish me. After these rights are suitably clarified, I may do anything I see fit so long as it does not violate these rights. This is a concept of liberty and it is essential for business activity.

There are a myriad of actions that constitute business activity. Imagine having to seek permission from the ruler for each and every action one needs to do for conducting business. The more permissions required, the harder it is to conduct business. On the other hand, in a Lockean system, no permissions are necessary as long as actions do not violate the rights of others. Here it is incredibly easy to conduct business. Perhaps there are other costs, and we will come back to this point, but if I am free to act it does mean that you have no right to punish me by taking what is mine. The promise is that if I do not violate the rights of others I get to keep the produce of my efforts. It is not any disparity in wealth that these rights protect, it is only wealth gained through actions in accordance with the natural law. If this law is kept, you get to keep your profits. Violate this law and they may justifiably be confiscated.

Notice now that it is the confluence of having to ask permission and liberty that creates the milieu in which business acts. This atmosphere will determine how business is done, just as surely as supply and demand.

BK