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examine the part which unlimited inheritance plays in distribution. The right of inheritance is unassailable except in communities based upon pure communism, and for my purpose they need not be considered. We are living in a time either too far off from the beginning of things, or not near enough to the perfection of the end of things, for us to consider the practical politics of the communist state. Inheritance allows continuity; it is a corollary of individual possession; so long as individual accumulation is necessary to provide the capital required for production, it is essential ; it is an important expression of the very proper feelings of care which parents have for their children after their own deaths. Some of these things will disappear under different economic conditions. When production is organized so as to provide its own capital, that reason for individual saving will be gone; as parents become freed from the follies which beset so many of them, they will see that to set up their children in ways of useless living may be anything but “good" fortune, and instead of helping may deprive them of those saner and deeper delights which are generally denied to all except to those living lives of honesty and simplicity. There is certainly a better way for the intelligent parent to show his affection and his care for his children than by leaving them so much wealth that they can live off other people all the days of their lives and exist as useless members of the community. We need not, however, consider the matter from the point of view of individual right, or moralize upon it from the point of view of individual wisdom. The State, by its Death and Succession duties, has already settled that in the practical working of things
political, property passing from owner to heir shall leave a residue in the hands of the Treasury. It is true that this has been done with no thought as to how it influences the general working of the machinery of national distribution, but only as an expedient for finding State revenue to balance State expenditure. It does recognize, however, that the right of succession is limited and not absolute. The social effect of unlimited inheritance or of inheritance unregulated for social ends, is the stereotyping of social classes on a property basis. It secures that except in most special circumstances a man's position depends not so much on what he is or does but on what he has, and thus from it spring not the virtues of care and cautious use of possessions, but the evils of snobbishness and false standards of appreciation. Economy may be the mother of inheritance, but inheritance itself produces progeny of a different family. On its economic side the real nature of accumulation and inheritance is but little considered because it seems to be so securely founded on expediency, sound morality and justice. Capital in use is constantly wasting and deteriorating and must be as constantly renewed by new production set aside for that purpose. If the capital required for industry is held in private possession so that it can be withheld, there need be no hesitation in admitting that under such circumstances a payment for its use— called interest—must be made and the return of the original capital provided for. The capitalist system arranges for this most effectually by transferring to the capital-holding classes all those surpluses from which the renewal of capital comes. By this differentiation of function it creates a class with a social
status and prestige which perpetuates itself more by inheritance than by service. It is the class that commands the reservoirs of wealth from which capital is supplied, and the economic mechanism of Society works in such a way that the surplus streams of pro
duction flow into these reservoirs and keep them
replenished. An inheritance that is practically unlimited has a decisive influence in wealth distribution.* In so far as this secures a training in managerial skill, e.g. in so far as the capitalist is brought up to work his own industrial capital, it has its advantages though the community pays dearly for them. Little can be said, however, for a hereditary system of capital owners, for a pure capitalist class, or for the placing of a hierarchy of wealth inheritors over a staff of managers who have been technically trained and who have risen by selection from their fellows owing to capacity. There should be no place in Society for honorary managers placed over practical managers. When these points are considered we begin to see that, from the social point of view, the powers of inheritance might with advantage be strictly limited if industrial capital can be provided otherwise. Widows, children, dependents—all who have legitimate claims and expectations—should have enjoyment to the full, less the revenue claims that the State for purely income purposes has to make on estates. That I take it is a corollary from the moral right of possession by virtue of service. An individual must be allowed to fulfil his natural obligations and these may run after his death. There should be no possibility, however, of “founding families" on exploitation, and a system of taxation could, if desired, be devised by which inherited wealth * For a further development of this argument see pp. 201 el seq.
could be steadily deteriorated, and its powers of continued exploitation diminished. There should be no perpetual pensions either from the political or the economic State. Hence some Socialists propose a direct attack upon inheritance.* It is argued that it would not be difficult to our Revenue authorities to keep track of inherited wealth. Supposing a person dies leaving to his family in various shares an accumulation which he himself has made of £500,000. This would be subject to the appropriate revenue taxation, and records could be made of its distribution and of the beneficiaries. In due course, one of these beneficiaries, who had received, say, £100,000, dies in turn leaving an estate of £150,000. It would be assumed that the sum he received by inheritance, say £90,000 net, is in that total unless proved otherwise. Upon £60,000 revenue taxation would then be imposed, and the £90,000 would have to bear a special inheritance taxation of perhaps as much as 50 per cent. This follows the scheme proposed by an Italian economist, Professor Rignano.t. By diminishing the numbers living upon income from capital and rent, the labour, brains and skill pool of Society would in this way be constantly augmented, and the amount of production increased. I do not place very much importance upon this, however, though no Socialist Government could neglect the problems of unlimited inheritance and its effect upon distribution of wealth and labour. The best way to supplant a bad system is to begin a good one, and to attack the problem of inheritance as Professor Rignano does, is to destroy without replacing. The evils of inheritance will automatically disappear when its services are provided for otherwise, and if a Socialist Government were in existence it would take steps not primarily to destroy, but to supply in its own proper ways the social services which Capitalism in its proper ways renders to Society. These are mainly two—the provision of management and the supply of capital for substitution and industrial expansion.
* For an exhaustive statement of the case for this policy, see Mr. Hugh Dalton’s “The. Inequality of Incomes.”
+ “The right of free bequest should be complete as regards property accumulated by saving and personal exertion, it should be considerably restricted as regards property received by inheritance, and it should be progressively restricted until it is completely annulled as regards property which has been transmitted a certain number of times from the dead to the living.”
Management, as a matter of fact, will present no great difficulty. Indeed, this problem is already solved, for in very many cases the official capitalist directors and owners do little but what their hired management advise, and are successful as they are figureheads and do not interfere at all. Management is already supplied by the special technical training of men who have no capitalist interests but who are salaried officials, and from promotion from below. A study of the “Directory of Directors” or similar publications, makes it perfectly clear that a large percentage of the people holding positions as directors are there not because of their knowledge of the business for which they are legally responsible, but for some other reason. When education is more widely spread and scientific and technical skill better nurtured, and when industry presents an open road to ability, the supply of managers will be more