If, then, Smith has the absolute right to disseminate knowledge about Jones (we are still assuming that the knowledge is correct) and has the corollary right to keep silent about that knowledge, then, a fortiori, surely he also has the right to go to Jones and receive payment in exchange for not disseminating such information. In short, Smith has the right to “blackmail” Jones. As in all voluntary exchanges, both parties benefit from such an exchange: Smith receives money, and Jones obtains the service of Smith’s not disseminating information about him which Jones does not wish to see others possess. The right to blackmail is deducible from the general property right in one’s person and knowledge and the right to disseminate or not disseminate that knowledge. How can the right to blackmail be denied? *Murrey Rothbard
Furthermore, as Professor Walter Block has trenchantly pointed out, on utilitarian grounds the consequence of outlawing blackmail—e.g., of preventing Smith from offering to sell his silence to Jones—will be to encourage Smith to disseminate his information, since he is coercively blocked from selling his silence. The result will be an increased dissemination of derogatory information, so that Jones will be worse off from the outlawry of blackmail than he would have been if blackmail had been permitted.
Thus Block writes:What, exactly is blackmail? Blackmail is the offer of a trade; it is the offer to trade something, usually silence, for some other good, usually money. If the offer of the blackmail trade is accepted, then the blackmailer maintains his silence and the blackmailee pays the agreed amount of money. If the blackmail offer is rejected, then the blackmailer may exercise his right of free speech, and perhaps announce and publicize the secret. . . .
The only difference between a gossip and blabbermouth and the blackmailer is that the blackmailer will refrain from speaking—for a price. In a sense, the gossip or the blabbermouth is much worse than the blackmailer, for the blackmailer at least gives you a chance to shut him up. The blabbermouth and gossip just up and spill the beans. A person with a secret he wants kept will be much better off if a blackmailer rather than a gossip or blabbermouth gets hold of it. With the blabbermouth or gossip, as we have said, all is lost. With the blackmailer, one can only gain, or at worst, be no worse off. If the price required by the blackmailer for his silence is worth less than the secret, the secret-holder will pay off, and accept the lesser of the two evils. He will gain the difference to him between the value of the secret and the price of the blackmailer. It is only in the case that the blackmailer demands more than the secret is worth that the information gets publicized. But in this case the secret-keeper is no worse off with the blackmailer than with the inveterate gossip. . . . It is indeed difficult, then, to account for the vilification suffered by the blackmailer, at least compared to the gossip who is usually dismissed with merely slight contempt.
There are other, and less important problems, with the outlawry of a blackmail contract. Suppose that, in the above case, instead of Smith going to Jones with an offer of silence, Jones had heard of Smith’s knowledge and his intent to print it, and went to Smith to offer to purchase the latter’s silence? Should that contract be illegal? And if so, why? But if Jones’s offer should be legal while Smith’s is illegal, should it be illegal for Smith to turndown Jones’s offer, and then ask for more money as the price of his silence? And, furthermore, should it be illegal for Smith to subtly let Jones know that Smith has the information and intends to publish, and then allow Jones to make the actual offer? But how could this simple letting Jones know in advance be considered as illegal? Could it not be rather construed as a simple act of courtesy to Jones? The shoals get muddier and muddier, and the support for outlawry of blackmail contracts—especially by libertarians who believe in property rights—becomes ever more flimsy.
Of course, if Smith and Jones make a blackmail contract, and then Smith violates it by printing the information anyway, then Smith has stolen Jones’s property (his money), and can be prosecuted as in the case of any other thief who has aggressed against property rights by violating a contract. But there is nothing unique about blackmail contracts in this regard.
In contemplating the law of a free society, therefore, the libertarian must look at people as acting within a general framework of absolute property rights and of the conditions of the world around them at any given time. In any exchange, any contract, that they make, they believe that they will be better off from making the exchange. Hence all of these contracts are “productive” in making them, at least prospectively, better off. And, of course, all of these voluntary contracts are legitimate and licit in the free society.
We have therefore affirmed the legitimacy (the right) of Smith’s either disseminating knowledge about Jones, keeping silent about the knowledge, or engaging in a contract with Jones to sell his silence.
*I was met with a storm of abuse by critics who apparently believed that I was advocating the morality of blackmail. Again—a failure to make the crucial distinction between the legitimacy of a right and the morality or esthetics of exercising that right.