The Journal of Libertarian Studies

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Bankruptcy as an Economic Intervention

The Journal of Libertarian Studies

Tags Money and BanksCapital and Interest TheoryMoney and Banking

07/30/2014Lawrence H. White

Bankruptcy law is a system of interventionary legislation which interferes with the ability of individuals freely to establish the terms of loan contracts. It benefits the less prudent and less scrupulous borrowers -indeed may encourage their conduct -while making loans costlier for the honest and conscientious. Bankruptcy is defined as "that system of laws by which an insolvent debtor surrenders his property to a court which distributes the proceeds proportionately among his creditors and usually declares the debts discharged". It is a system which provides, in other words, for the coercive elimination of contractual obligations.

Volume 1, Number 4 (1977)


Lawrence H. White

White is a professor of economics at George Mason University in Fairfax, Virginia.

Cite This Article

White, Lawrence H. "Bankruptcy as an Economic Intervention." Journal of Libertarian Studies 1, No.4 (1977): 281-288.