What is a mutually beneficial transaction really?

Imagine you are going on a nature walk on an extremely cold day. You are ten miles from your home or any other shelter. I come along, point a gun at your head, and steal all of your clothes, but leave you your wallet. I then offer to sell you the bundle of clothes I now possess for $5. You do so and I give you the bundle of clothes. Focusing narrowly on just that transaction — ignoring what happened just prior to it — is that a mutually beneficial transaction?

The answer must be yes. You could get extremely ill or even die trying to get back to your house naked in extremely cold weather. At minimum, it would be extraordinarily uncomfortable. More than that, you clearly made the utility calculation that having those clothes and the warmth they provide is worth more than the $5 you gave up to have it. I made a similar calculation that having $5 would be worth more to me than the bundle of clothes. So, we had a mutually beneficial transaction.

Does the fact that we had a mutually beneficial transaction mean that the resulting distribution is just? Presumably, most people — importing their knowledge of what happened just prior to the transaction — would say no. For the transaction to be just, the background conditions that established our relative bargaining positions must also be just. So what must those background conditions be?

The focus on mutually beneficial transactions is a procedural one that roots justice in the processes an economy follows. So individuals partial to that theory would object to the sale described above because the background conditions that established our bargaining positions involved unjust processes, i.e. violent, coercive theft. The problem of course is that all present bargaining positions are the result of unjust processes.

As I argued recently, not only is it historically true that present bargaining positions do not result from anything resembling an unbroken chain of mutually beneficial transactions, but it is even theoretically impossible for bargaining positions to ever be the result of such transactions given the reality of scarcity. The only way exclusive ownership — a prerequisite for mutually beneficial transactions — can come into existence is through unilateral acts of non-consensual, coercive, aggressive violence, i.e. initial appropriation.

These indispensable (for ownership) unjust processes set the stage for every bargain that subsequently occurs, and are no less problematic than the armed robbery described above. So we wind up in a fork. If we say that mutually beneficial transactions are only justice-tracking when the background conditions that establish each party’s bargaining position are just, then we must conclude all mutually beneficial transactions do not track justice. If we reject the necessity of justly arrived at bargaining positions, then all mutually beneficial transactions are just including the sale of the coat described above.

What this discussion gets at ultimately is the same dreaded baseline problems that plague so many other right-wing ideas about economic justice. To determine whether a transaction is mutually beneficial, we have to ask: beneficial relative to what baseline? As it’s usually presented, we are asked to judge the beneficence of a transaction by comparing it to the no-transaction baseline. But even the coat transaction above is mutually beneficial against the no-transaction baseline. To avoid that problem, we have to concoct some sort of no-transaction-plus-just-bargaining-positions baseline instead. And no transaction can be called mutually beneficial using that baseline because no bargaining positions escape antecedent procedural injustice.