Mises Wire

Lysander Spooner’s Flawed War on Poverty

Portrait of Lysander Spooner

One of the most legendary figures in the history of the liberty movement was Lysander Spooner (180887), a Massachusetts-based lawyer, writer, and political theorist. He is particularly well known for his abolitionism, rejection of social contract theory, and belief in natural law. Unfortunately neglected, however, are his economic writings, including among them Poverty: Its Illegal Causes and Legal Cure and Universal Wealth Shown to Be Easily Attainable. While these works contain some serious issues from the Austrian perspective, they are filled with valuable insights which remain relevant for the present day.

Both works deal primarily with the conditions necessary for raising the living standards of the general public, particularly the poor, and reducing artificial, state-supported income inequality. Spooner’s primary suggestions are, of course, the correct ones—namely, a completely free market and the elimination of government privilege. In Poverty, one of his chief targets is the state monopoly on banking (an animosity which was later shared by Murray Rothbard). Spooner explains that such a monopoly is by nature corrupt and impoverishing:

If free banking were allowed, the loanable credit could not be monopolized by a few borrowers, as the loanable money now is. The materials for banking credit are so immense, so nearly illimitable indeed, and exist in such a variety of shapes, and are distributed among so many proprietors, that it would be impossible to concentrate them, as money is now concentrated, in the hands, or bring them under the control of a few corporations, or confine the loans based upon them to a few favorite individuals.

(It is interesting to note that Spooner himself would have firsthand experience with the injustice of monopoly; his own American Letter Mail Company, which provided cheap and reliable postage to much of the United States, was forcibly shut down by the federal government in 1851.) He also focuses on the abolition of usury laws which, contrary to popular perception, only serve to prevent the poor from acquiring capital. While these laws are established to prevent the charging of so-called predatory interest rates, they in fact disincentivize lenders from dealing with riskier, poorer clients, thereby locking them into their desperate situation. This argument is similar to the free-market objection to minimum wage laws; while intended to boost wages, they in fact cut off employment for lower-productivity workers and hinder their future opportunities by preventing them from acquiring important experience and skills.

Universal Wealth, on the other hand, stresses the importance of entrepreneurship and innovation for the attainment of prosperity. It is the continual development of those processes that have enabled the vast increase in the amount and variety of goods available, and it follows that every government impediment blocking further innovations should be removed to enable the societies of the future to attain further wealth and abundance. Similarly, free trade is needed to allow the exchange of said goods.

Spooner’s analysis in these pieces is far from fully sound, however. For example, Poverty seems to have a muddled understanding of the division of labor. While he recognizes the importance of trade, he also seems to indicate that laborers under his system will be self-employed and producing primarily for their own subsistence. A charitable reading suggests that, by producing desirable goods and services and contributing to the wealth of society, workers will in turn be able to support themselves through their earnings and other goods available, in addition to what they produce. Unfortunately, the lack of clarity could lend support to a kind of personal autarky. Such misunderstandings undercut the immense economic and societal benefits that the division of labor and specialization provide. As Ludwig von Mises explains in Human Action,The fundamental social phenomenon is the division of labor and its counterpart human cooperation. Experience teaches man that cooperative action is more efficient and productive than isolated action of self-sufficient individuals.” Universal Wealth also drops the ball on money. While far from advocating for central banking, Spooner promotes the necessity for an indefinite increase of money as being required for development. Yet in The Mystery of Banking, Rothbard shows how, in a free-market money and banking system such as the kind Spooner favors, sound currencies and financial institutions tend to outcompete inflationary ones through consumer dissatisfaction and the threat of bank runs.

Despite these and other flaws, Spooner’s aforementioned economic writings remain valuable. He fully understood that government intrusion into the voluntary private sector was both unjust and impoverishing. Heeding his advice, with refinements from the insights of fellow titans like Mises and Rothbard, will enable the generation of greater prosperity for all.

Image Source: Wiki Commons
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