Hobbes and Business

Chapter XV talks about enforcing contracts. It is here that I think Hobbes makes an argument that does currently, and historically, divide those who think about such issues.

At the time of signing, contracts are invalid if there is fear of nonperformance by either party. In “Hobbes and Contracts” I pointed out property is a necessary part of contracts. In XV Hobbes points out that property also rests on contract, that contract is necessary for property. That a piece of property is mine means both that I have a right to it AND that you give up, renounce, your right to it. The form of the contract is: I give up the right to take that; you give up the right to take this.

HOWEVER, in a state of nature there is no assurance you, or I, will abide by the agreement. In fact, according to Hobbes, we have plenty of incentives not to keep our agreement. This means we must each fear nonperformance of the other party. We know this when we “sign”, from the beginning, and therefore there is no such contract and no such thing as property.

According to this argument, then, property and contract only exist where there is a state. “... the validity of covenants begins not but with the constitution of a civil power, sufficient to compel men to keep them: and then it is also that propriety begins.” (By “propriety” Hobbes means property.)

This is important for our purposes because business does not exist without property and contract. If Hobbes is right, it means that business cannot exist without the state. Business owes its very existence to the commonwealth. I believe this has significant moral and policy implications about the relationship between business and government. We shall return to this point .... in time.

BK

PS. Make sure to read the post(s) below as well.