The Middle Ground Between Slavery and Default
Gary North today defends limited liability with this core claim: "you cannot logically deny the legitimacy of enslavement for debt without becoming a defender of limited liability". I disagree.There is a middle ground between these two extremes: liquidation of assets of the debtor and partial payment, with the recognition of further debt due.
As I have written regarding the modern scandal of bankruptcy laws, there is no reasonable case against, or any modern problems accruing to, the practice of keeping debts "on the books" for those who are not currently in a position to pay back those debts. People fall out of and into good fortune, and what is a bad debt today may become payable in the future. All of this is not to assault North's fundamental point, with which I agree — limited liability corporations are compatible with a free market, and indeed are part of the story of How the West Grew Rich.