the founding father of capitalism

Professor Adam Smith, considered to be the founding father of capitalism and the free market had very strict views on inheritance and was acutely aware of the ill effects this could have in the system of economics that he was building and promoting.

The learned professor knew full well that with the passage of time, in a capitalistic economy there would be extreme polarization of wealth and opportunity that would start the irreversible breakup of the delicate social fabric of society. In fact, Adam Smith taught the students who attended his jurisprudential lectures that “there is no point more difficult to account for than the right we conceive men to have to dispose of their goods after death.”1 He thought inheritance was clearly justified only when it was necessary to provide for dependent children. It is “the most absurd of all suppositions,” said Smith, “…every successive generation of men have not an equal right to the earth.”1

John Miller the historian shared Adam Smith’s views on inheritance and thought that the law governing inheritance ought to be changed.

Franklin Roosevelt took up the same crusade, striking out at great fortunes, again for moral as well as economic reasons. “The transmission from generation to generation of vast fortunes by will, inheritance or gift,” declared F.D.R., “is not consistent with the ideals and sentiments of the American people. Inherited economic power,” he continued, “is as inconsistent with the ideals of this generation as inherited political power was inconsistent with the ideals of the generation which established our Government.”1

One of the central principles of capitalistic society is that social privilege is to be earned and ought to be a reward for contribution to society and not simply handed down from one generation to the next within rich families. Therefore unbridled inheritance is against the principles of capitalistic society.

In present time, Bill Gates and Warren Buffet have pledged to donate their wealth after death. The Gates-Buffet initiative aims to convince very rich individuals across the globe to donate their wealth after their death.

Today polarization of wealth and opportunity is an acute symptom in many societies that have ‘easy’ inheritance laws. Some small groups in such societies, driven by greed, further accelerate the pathological polarization of wealth and opportunity. Such groups and individuals would think nothing of law and culture in the pursuit of their aims of amassing vast fortunes, with the sole purpose of passing it on to the next generation.

In fact, when, the compounding factor of inheritance is removed form the capitalistic system, what emerges is a form of socialistic system.

The ill effects of ‘surplus value’ become truly evident only when the wealth and position acquired by one generation is passed on to the next through unbridled inheritance.

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