Credit is due to Todd Seavey for drawing my attention to the paradox of blackmail, and how the world might be better off if blackmail were legalized. Walter Block made the philosophical argument for decriminalizing blackmail here, but failed to deal sufficiently with the question of whether blackmail can be considered a type of "coercion". Indeed, the question of whether ladies and gentleman can have rights in their reputations is an interesting one, but not one that makes the case for consequentialist defenses of decriminalizing blackmail.
In fact, it seems the utilitarian case for blackmail is a no-go from the start, as blackmail clearly causes harm to some (a man who fails to pay a blackmail and then is reported to the courts as a child molester suffers irreperable damage to his reputation that not even the court system, or a verdict of innocence, could clear) and rare happiness to most. In fact, the benefits of legalizing blackmail from the perspective of the Greatest Happiness Principle are practically nonexistent. The consequentialist argument suffers many of the weaknesses attributed to the libertarian one. From a practical perspective, I'm not sure decriminalizing blackmail would result is fewer people being imprisoned for blackmail, so the "less nonviolent criminals in our prisons" position treads water. On the other hand, the incidence of blackmail would indubitably increase, and I am not as sanguine about the lack of social costs for such a change. On some level, I do believe blackmail is a kind of coercion, but I fear my structuralist explanations for this view would be deeply upsetting to the average libertarian Joe, so I will keep my dirty little Foucault-inspired secrets to myself.
Returning to the literature on the topic. Though Eric Mack wrote the seminal paper arguing for decriminalization of blackmail, Walter Block has done a fair bit of writing on the subject. Robert McGee joins Walter Block to contend that blackmail is a victimless crime in a paper replying to Scott Altman. Here, they argue that since gossiping is legal, it should not be illegal to threaten to gossip unless paid off not to do so. In a reply to Russell Hardin, Block argues that blackmail leads to mutual good. Meanwhile, the blackmail debate rages on in small esoteric circles and basement apartments.
