Hayek on labor unions and restraint of trade

Friedrich A. Hayek thoroughly criticizes labor unions in Sect. 18 of The Constitution of Liberty published in 1960 and insists in the same section that closed-shop contracts should be illegal. He also views yellow-dog contracts, which were designed as countermeasures against the labor unions, as illegal. However, it has been pointed out that, according to Hayek’s social philosophy, neither the closed-shop contract nor the yellow-dog contract should be seen as legal issues, as they are based on free will between the parties and have no compulsory elements. The key to solving this dilemma is in understanding how Hayek views the core concepts of the U.S. Antitrust Law, namely, restraint of trade and monopoly. The aim of this article is to examine the theoretical structure of Hayek’s arguments on those types of contracts, freedom and coercion, the ‘restraint of trade’ doctrine, and the rule of law. It addresses the important common law issues of freedom, coercion, monopoly, restraint of trade, and the rule of law.