Book Cover

Capitalism,  The Way to a World of Peace and Plenty

Inequality of wealth

Inequality of wealth is getting great attention with the publication of Thomas Piketty's Capital. The book includes lengthy Jane Austen quotes but no examination of Adam Smith, particularly his warning to beware of the speculators, Prodigals and Projectors as he called them, who would deflect capital away from the job-growth economy. The deflection is almost total with Wall Street trading 99% and investment in economic growth 1%. 

The following are quotes from wise people over the years on the subject of inequality:

In my studies, I learned that society has been warned throughout history about the harm to economic growth and social cohesion from concentrated wealth. Confucius understood the necessity for diffused economic power two and one-half millennia ago:

The centralization of wealth is the way to scatter the people, and letting it be scattered among them is the way to collect the people. They produce wealth, but do not keep it for their own gratification. Disliking idleness, they labor but not alone with a view to their own advantage. In this way, selfish schemes are repressed and find no way to arise; robbers, filchers, and rebellious traitors do not exist. 

The 18th-century European Enlightenment added their wisdom to that of Confucius. Claude Adrien Helvétius (1715-1771), a wealthy man, wrote with special authority on the persistent impediment of concentrated wealth and its negative effect on social cohesion:

The almost universal unhappiness of men and nations arises from the imperfections of their laws, and the too unequal partition of their riches. There are in most kingdoms only two classes of citizens, one of which wants necessaries, while the other riots in superfluities. If the corruption of the people in power is never more manifest than in the ages of the greatest luxury, it is because in those ages the riches of a nation are collected into the smallest number of hands. 

Benjamin Franklin (1706-1790), that Enlightenment man of America, actually proposed legal limits to concentrated wealth:

That an enormous Proportion of Property vested in a few Individuals is dangerous to the Rights, and destructive of the Common Happiness, of Mankind; and therefore every free State hath a Right by its Laws to discourage the Possession of such Property. 

Condorcet denounced special privileges from the government to the few as the root cause of the concentration of wealth: 

Wealth has a natural tendency to equality if the administration of the country did not afford some men ways of making their fortune that were closed to other citizens. We shall reveal other methods of ensuring equality, either by seeing that credit is no longer the exclusive privilege of great wealth or by making industrial progress and commercial activity more independent of the existence of great capitalists. 

Condorcet correctly identified non-democratic privileges lobbied by, and given to, the few as the source of concentrated wealth, but his vision of broad wealth distribution was only a utopian ideal in the eighteenth century. The U.S. economy at the beginning of the twenty-first century, however, had begun to fulfill Condorcet’s prophecy: Wage earners had supplanted the “great capitalists” as a source of investment money. Unfortunately, this watershed event has yet to change the pattern of government privileges for the few to make more money on money. While the source of capital has been democratized, the rewards from capitalism have not yet been democratized.

Ray CareyRay Carey

Ray Carey learned through managing companies for 33 years how to change the work culture to provide employees with their best opportunities to develop and contribute. This experience began as a 28 year old plant manager and later president of an electric motor company, and concluded with eighteen years as president , chairman, and CEO of ADT, Inc.

See Carey's autobiography of his work career in chapter two of his first book,

Democratic Capitalism, The Way to a World of Peace and Plenty.

For more information about Ray Carey and his advocacy of democratic capitalism, visit the pages of this website.