Feudalism and capitalism

Anyone who seriously declared themselves a supporter of feudalism would rightly be laughed out of whatever room they were in. The idea that people should obtain a higher or lower position in society solely because of their parents is horrendous. It does not treat people properly, let alone equally. Furthermore, it does not give foster equal opportunity and is an inefficient way to use talent and resources.

However, while capitalism is contrasted with feudalism as an economic model it seems that some of the problematic aspects of feudalism lived on. A recent journal article, summarised in a guardian article, has shown that most wealth gets passed on, along with other types of privilege that go with it.

Perhaps (ignorant historical conjecture klaxon) as part of the bargain in the slow transition from one type of economy to the next the fact that capitalism allowed the transfer of wealth and resources through generations. This meant that those who were wealthy could continue to pass on their wealth.

So there is a certain similarity be`tween free-market capitalism and feudalism where people are free to pass on privilege. The libertarian ideal of even less regulation and taxation does not seem likely to interfere with the passing on of wealth – it actively allows it even more than current societies. So what are the alternatives?

Anti-capitalist egalitarians might want to make it impossible for some to have more than others, and support the removal of the market economy in order to achieve this.

Supporters of meritocracy might want to remove the opportunity for people to obtain anything unless they have earned in (what they consider to be) the appropriate manner. Markets would be highly important for the purpose of determining what people should obtain, but they should not be able to pass on that wealth.

What the two views above often share is a distaste for the passing on of wealth. Those who wish to pass on their wealth are violating the ideals of either social equality or just deserts.

These views are far too extreme, however. Wanting to live in a fair society should not mean you should not desire to help those you love and care about. Whatever the source of this motivation, it does not seem to be a bad thing to want to help another person, even though it is often a very partial and economically inefficient position to take.

The liberal egalitarian approach that I take steers the right course through all these waters. As well as allowing people to act on their legitimate desire to give to others

Nevertheless it is right to tax resource transfers which are gifts between private individuals at highly progressive rates. Those who benefit the most from such transfers should pay a lot of tax on such transfers. The main reason is that this is a very good form of tax revenue—it does not stop people from working and investing if they are taxed on unearned wealth. Indeed, you would expect people to work and invest more if they are less confident of getting hold of significant familial support. Plus the people who benefit from large unearned transfers are (by definition) very fortunate people who can and should pay a lot more in tax than those less fortunate than them.

As a further advantage, taxing all such gifts would make the positions in society open more on the basis of talent and effort rather than family support.

The main point I wish to make in this blog is that while I argue for my CLIPH-rate tax proposal from a liberal egalitarian basis it actually mimics a lot of the features of the meritocratic one. By taxing all income including gifts and inheritances, and taxing unearned income at a higher rate than earned income, it should generate a highly meritocratic society.

I also believe it would generate an egalitarian society where everyone interacts as equals, though again this desire is not my own primary motivation for supporting the proposal.

The CLIPH-rate tax is therefore a form of capitalism that would truly break away from the vestiges of the old order and its hierarchies.