I have some questions about the nature of debt in a free society. I would like your opinions on this issue.
In a free (“libertarian”) society, does a creditor have the right to use force to collect debt from his debtors?
In a free society, would debts incurred by parents be inherited by their children?
Yes, reasonable force via a free market court system.
If the children decide to accept their parents’ assets, then they would most likely also have to accept their debts. If the children decide to not accept their parents’ assets/debts, then the assets would most likely be divided among creditors.
To the first, I would say yes, but there are a considerable amount of libertarians who would argue the opposite. It largely comes down to your view on the enforcability of contracts.
I think that contracts are binding and enforcable, therefore, I think that debtors may be compelled to pay their debts, even if they don’t have the money (namely, debtors’ prison is legitimate). It’s my understanding that Walter Block holds a similar view.
Others, such as Stephan Kinsella, argue that contracts are not truly enforcable in the sense that is described above, but, rather, the debtor is only required to pay back his loans if he has the money to do so. Thus, debtors’ prison is not considered legitimate.
As to your second question, I think that the creditors can’t necessarily go after the children, since the children owe them nothing, but have first crack at any estate left by the deceased parents. So, if the children (or any heirs, really) don’t want the estate liquidated, they will have to incur the debts to keep it.
I very much doubt you’d see many debtors prisons in a libertarian world. Biggest reason of all, if youre in prison, you wont be doing anything productive to pay your debt.
But there is of course perhaps you’re ‘working’ off your debt to your creditor through some kind of contractual slave labor.
This is my libertarian scheme to stock my future harem.
You cannot use force to collect debt as that makes no sense. However, a loan contract should stipulate proper collateral in case of default, and force can be used if the debtor does not give up the collateral (that would be theft).
The very point of debtors’ prison is to work off the debt…
sicsempertyrannis:
I very much doubt you’d see many debtors prisons in a libertarian world. Biggest reason of all, if youre in prison, you wont be doing anything productive to pay your debt.
But there is of course perhaps you’re ‘working’ off your debt to your creditor through some kind of contractual slave labor.
This is my libertarian scheme to stock my future harem."
Haha nice. Using your private bank, give out credit cards with 40% interest rates to poor, desperate, yet attractive women. Should keep you well stocked.
Morty, if one looks at the history of debtors prisons, they were also used arbitrarly as mere punishment. I also doubt you’d be able to do much in a prison to work off a debt, unless you owe a debt to some kind of hard labor service firm.
I recognize that in history debtors’ prisons have not been used purely for the task of repaying debts through labor, but that does not preclude them from being used in such a manner in a libertarian society (and it seems that would be the only reason to use them).
As to the working, it could very well be that the prison is not even owned by the creditor, but you are merely sent there and the owners of the prison pay the creditors for your labor. Or, if it is owned by the creditors, perhaps they will sell contracts with businesses that need labor services, in order to collect.
In an advanced division of labor economy, prison work won’t pay back the enormous debts that people can run up.
Why would creditors pay to run a prison that won’t make anything of value?
It’s an option, I’m not claiming it would be popular (I lack omniscient capabilities). All my claim is that it is legitimate, not that it is necessarily practical.
Well economics is about what is economic. Prisons aren’t, and so the only way that they are employed is because their cost is externalized on someone else.
What’s economic to you may not be economic to someone else and vice versa. Don’t forget subjective value.
But, regardless, we aren’t talking about economics, which is a value-free discipline, we are talking about the normative aspect of debt. And, when speaking about what is legitimate, we needn’t appeal to what is economic.
It is neither.
I’m sorry I thought this was posted in the Economics Questions forum. Obviously economic problems are irrelevant to an economic question, only immaterial moral debates are.
It was clearly placed in the wrong forum. If you’ll notice, the questions posed by the OP are strictly normative:
There is not a single economic question to be found in the whole of this post. If it makes you feel better, I’ll move the topic to the appropriate forum, but it seems rather obvious that the poster is referring to the libertarian position on debt.
I think #2 is a fairly straightforward “NO!” In fact, I can’t imagine a libertarian interpretation of contract resolution that would make a debt obligation (or any contract, for that matter) binding upon a third party. Debts can certainly be bound to the estate of the deceased, in which case his heirs cannot enrich themselves until the debts are fulfilled, but if the estate is insufficient to satisfy the debtors, they have no right to pursue his heirs for collections.
I hate having to keep reminding people of this, but they always say that ostracism/etc. won’t work. So, I’ll remind them anyways:
In “Libertopia” all land is presumably owned by someone. These someones have PDAs/Insurance/protection/ Agencies and agreements between them and between themselves and other individuals. Most (all?) of these arrangements would probably prohibit offering safe harbor to fugitives, aiding/abetting fugitives, etc. Also, since many people are afraid of fugitives, it stands to reason that they’d be more than happy to assist in their apprehension. This could easily be accomplished by laying siege to the fugitive if he didn’t want to submit to arbitration/dispute resolution. Fine: he can suffer house arrest in perpetuity. This is easy to facilitate, because land is not public, and those people who live on adjacent lands will likely be unwilling to give him free passage. They, or their agents, will be happy to apprehend him coming or going, or to prevent people from giving the fugitive aid and comfort.
So, the longish-short answer is that it may not be necessary to use “force” as it is contemporarily conceived, i.e., masked men break down the door in the middle of the night, handcuff/hogtie the accused, and drag him off against his will to prison where he’ll be tried by 12 men who were too stupid to get out of jury duty, etc.
They could simply wait for him to arrive upon another’s property, and take him then. Any escalation of force (e.g., “self defense”) by the fugitive is not a proper use of force since he is in-the-act of criminal trespass. Or, they could simply make sure he stays locked in his own house. Most people probably couldn’t survive locked inside their own house for more than a week. Sooner or later, most people would submit to arbitration.