Matt links to without fully endorsing Kerry Howley's feminist-libertarian argument for legalizing prostitution. I'm inclined to agree with her bottom line, but I do find the argument in this form a little problematic. The key is this line: "Even decriminalization, which treats Johns as outlaws and sex workers as victims, assumes that all sex workers are damaged, that no woman would ever love sex enough to make a career out of it." There is a certain power to this argument. But then, there was a certain power to the justly discredited majority opinion in Lochner v. New York striking down maximum hours laws: "There is no contention that bakers as a class are not equal in intelligence and capacity to men in other trades or manual occupations, or that they are able to assert their rights and care for themselves without the protecting arm of the State." In practice, though, the problem is not that bakers don't understand their own interests but rather that structural realities put them in a position of much less bargaining power than their employers. Similarly, while I don't think most feminist critics of prostitution would deny that some women may choose to become prostitutes because they really "love sex," the reality of a majority of women who are prostitutes and why they end up in the job makes this a rather implausible motivating factor unless poor women, women with drug problems, etc. are especially predisposed to "loving sex."
The way I would make Howley's point is to say that the real problem with criminalization is a "compared to what?" issue. Sex work tends to be (although not necessarily in every case) grossly exploitative, but it's unclear to me that it's more exploitative than cleaning toilets, working odd hours at Wal-Mart with no benefits, etc. In this sense, outright bans in the practice do tend to smuggle in reactionary assumptions about sex through the back door even if they're intended to protect the worker; there's good reason to be wary about the assumption that women need to be uniquely protected from engaging in sexual activity as opposed to other potentially degrading work. So I don't think bans are generally appropriate, but I do think that sex work can be regulated like other forms of commericial activity, and it's perfectly reasonable for such regulations to take into account how sex work tends to function in practice, even if the general trends don't apply in every single case. (An independently wealthy person who wants to serve as a Wal-Mart greeter to kill time doesn't need the protection of labor regulations, but that's not a good reason to get rid of them.)
Finally, it should be noted that there is one way in which prostitution is different from many other forms of exploitative labor: the widespread presence of trafficking. This doesn't clinch the case for me because bans don't seem to be an especially effective way of stopping it, and by denying sex worked police protection also creates lots of negative externalities (vulnerability to sexual assault and blackmail from police, pimps, etc.) , which to me is crucial. But if evidence emerged that decriminalization led consistently to an increase in trafficking, the issue would become a lot more difficult.
--Scott Lemieux