Chapter ǴǷ: Mises and His Critics on Ethics, Rights, and Law ȃȂȄparties. Tough luck, Rothbard says in effect; the aggrieved party should
have drawn up the contract more warily in the first place. Ļe law can-
not properly require the defaulter to keep his promise or pay compensa-
tion. Ļe reason is that the default does not constitute stealing property
(remember, no money has been paid); the defaulter has violated no prop-
erty right. If, however, the contract had read in such a way that default
did count as taking property by force or fraud, then Rothbard’s judgment
would be different.
A utilitarian must wonder. Why, especially with “subjectivist” Aus-
trian economists, should so great a difference hinge on the relatively mate-
rialistic issue of whether and when property had actually changed hands?
Ļe opportunity for people to make enforceable contracts in which prom-
ises serve as consideration for each other serves social cooperation, just as
it undermines it to urge peculiar axioms as reasons for tolerating default
on such contracts.
Rothbard condemns bankruptcy laws. Ļey “compel the discharge of
a debtor’s voluntarily contracted debts, and thereby invade the property
rights of creditors. Ļe debtor who refuses to pay his debt has stolen
the property of his creditor.” Fraudulent concealment of assets makes the
offense even worse. “But even if the defaulting debtor is not able to pay,
he hasstillstolen the property of the creditor.” Bankruptcy laws “virtually
confer a license to steal upon the debtor.” Instead, the legal system should
enforce payment through, for example, attachment of the debtor’s future
income (ȀȈȇȁ, p.Ȁȃȁ).
Of course default is regrettable. So is resort to bankruptcy; so is the
poor planning or bad luck that results in its appearing necessary. But
regrettable things do happen. Instead of just condemning them with sim-
plistic axioms, the utilitarian considers how best to forestall them and how
best to deal with them if they do happen anyway. He asks how the world
would work and how social cooperation would flourish or would suffer if
no legal means were available for distributing the assets of a hopelessly
indebted debtor in an orderly way and for clearing away obstacles to his
future productive activity.
řśŞōŘ੻ ōŚŐ Řōţ
Murray Rothbard and Walter Block try to ward off outrage over their posi-
tions on crime and blackmail and other issues by distinguishing between
rights and the morality of exercising them and between law and morality