Wealth Redistribution is a Hidden Property Right Infringement
In The Theory of Political Spectrum, I presented three critical factors that influence the polarization of political ideologies: attitudes toward private property rights, the state of consciousness, and the degree of wealth redistribution. The article demonstrates that an assault on private property, the collectivization of consciousness, or widespread and involuntary wealth redistribution—either individually or collectively—are methods of making society more oriented to socialism. The last factor, wealth redistribution, has a close relationship with private property rights but is often ignored by mainstream academics and policy analysts. They have become so accustomed to extensive social programs and progressive taxation as normal conditions of a modern state that they fail to recognize the underlying economic and moral flaws. Neglecting this factor overlooks the central role it played in the gradual adoption of evolutionary socialism in the United States.
The Significance of Wealth Redistribution
For decades, the U.S. fought against the global expansion of communism, positioning itself as the defender of capitalist ideals and individual freedoms. Yet, during this global struggle, evolutionary socialism quietly took root at home. Unlike revolutionary socialism, which seeks to overthrow the existing order through radical means, evolutionary socialism advances gradually, using legal and institutional mechanisms. One of the most effective tools in this process is wealth redistribution.
Through taxation and social programs, evolutionary socialism embedded itself in American society without attracting much attention. The U.S. was vigilant against external threats but failed to recognize how wealth redistribution was being used as a subtle tactic to undermine private property rights and promote socialist ideals within the country. Wealth redistribution shifted resources from private individuals to the state, creating the foundation for a more collectivist approach to economic and social governance.
Therefore, wealth redistribution is an extremely important factor. It is not just a policy of economic adjustment, but a tool that gradually shifts the power dynamics in society, eroding individual property rights and enabling the expansion of state control. Ignoring this factor allows evolutionary socialism to grow in the background, weakening the foundations of private enterprise and individual freedom.
The Origin of Evolutionary Socialism
Evolutionary socialism advocates for gradual and legal reforms to bring about socialist changes within a capitalist society. Its roots trace back to key figures and movements in the late 19th and early 20th centuries, most notably Eduard Bernstein and the Fabian Society in Britain.
Eduard Bernstein, a German Marxist and political theorist, argued that socialism was attainable through gradual, democratic reforms instead of violent revolution. His ideas, expressed in Evolutionary Socialism (1899), emphasized the potential for adaptation and evolution within capitalism. Therefore, socialism could be integrated into existing political systems through reforms like extending suffrage, labor rights, and social welfare. Bernstein’s ideas laid the foundation for what would later be known as democratic socialism or social democracy.
At the same time, the Fabian Society in Britain pursued a similar approach. Members of the Fabian Society and Bernstein likely influenced each other. Founded in 1884, the Fabian Society sought to implement socialism progressively through education, political activism, and legislative reforms. Rejecting revolution, the Fabians believed in working within existing institutions to transform society deliberately. Their emblem, a wolf in sheep’s clothing, symbolized their strategy of subtle infiltration. They used established systems to introduce socialist reforms without direct confrontation. The Fabian Society had a strong influence on British politics, particularly in shaping the Labour Party’s platform, and had a significant, albeit less pronounced, impact on progressive thought in the United States.
Today, the Democratic Party has openly endorsed the principles of evolutionary socialism. It would be more accurate to call them the Social-Democratic Party, as many of their European counterparts have done. Unfortunately, the Republican Party has not only failed to counteract the collectivist reforms pushed by the Democrats over the years, but it has also started embracing left-leaning ideas. This drift has taken the party further from the rightist position of economic and individual freedom. Both parties now view the state as a major economic player and rely more on government solutions than on market forces.
Progressive Taxation and Property Rights
What follows is a simplified numerical exploration of how progressive taxation, a central mechanism of wealth redistribution, constantly infringes upon private property rights, leading to the slow erosion of financial returns on privately owned property.
Consider the example of a private enterprise that owns 10 units of equipment, each costing $1,000. These units of equipment are used to produce commodities that generate a total profit of $100,000 after all expenses. Under a 10% tax rate, the business would pay $10,000 in taxes, leaving a net profit of $90,000.
Each of the 10 units of equipment contributes equally to the total profit, meaning each unit accounts for $9,000 of the net profit. Now, suppose the government implements a progressive tax structure that increases the rate to 20% for profits at or above $100,000. Under this new system, the business would be taxed $20,000, leaving a net profit of only $80,000.
In this scenario, ceteris paribus, each unit of equipment now contributes only $8,000 to the net profit. The progressive tax effectively reduces the profit generated by each unit by $1,000. Prior to the tax increase, it was possible to attain the same $80,000 net profit by utilizing only 9 units of equipment (since $80,000 / $9,000 = ~9 units), with each unit contributing $9,000 under the original 10% tax rate. The additional tax renders one unit of the businessman’s equipment economically redundant. Even though the proprietor still possesses and maintains all 10 units, the government has silently confiscated the value created by one of them through elevated taxation. This gradual and hidden assault on private property means that while the businessman maintains his equipment, the income it generates is partially appropriated by the state. Progressive taxation undermines the fundamental principle of private property by eroding the financial returns that property is meant to produce.
Faced with this situation, the businessman may resort to certain measures to protect his property and profit. Rather than allowing the government to seize a portion of the value produced by his equipment, he may choose to sell one unit outright, reducing his total production capacity. For instance, if the businessman sells one unit of equipment for $1,000, leaving him with 9 units, he can limit his production to keep total profits below $100,000. This keeps him in the 10% tax bracket, maintaining a higher after-tax profit. This strategy demonstrates how progressive taxation incentivizes business owners to limit their productive capacity in order to protect their property.
This scenario illustrates how progressive taxation undermines private property rights, not through direct confiscation, but by diminishing the value that property can generate. Over time, this creates a gradual erosion of the businessman’s wealth and economic power. As each tax increase forces him to either accept reduced profits or downsize his operations to avoid further losses, the result is a steady transfer of wealth and productive capacity from private individuals to the state, undermining the very foundation of private enterprise and property ownership.
The Immorality of Wealth Redistribution
Of course, contemporary humane society does not want its members to experience hardship or lead a miserable existence. There are indeed categories of people, such as the disabled or elderly, who genuinely need assistance. Ideally, such help would come from voluntary donations by individuals and private organizations, which would not only provide for those in need but also demonstrate the true compassion and generosity of a society. Voluntary charity reflects a community’s collective empathy and moral values, showing that people are willing to uplift others without coercion or the force of law.
While some level of state involvement in providing a safety net is not entirely rejected, it should remain limited and targeted. Government intervention in assisting the most vulnerable can play a role, especially in areas where private charity may fall short. However, mandatory wealth redistribution through extensive taxation is both economically and morally flawed. When the primary goal of such redistribution is to eliminate so-called inequality, it punishes success and discourages initiative. Those who work hard, take risks, and create value are penalized, while an underclass is created for whom “poverty” becomes a profitable lifestyle. This system disincentivizes personal responsibility and ambition, rewarding reliance on state benefits rather than encouraging self-sufficiency and economic mobility.
Moreover, when wealth redistribution is framed as a solution to economic inequality, it perpetuates a narrative of entitlement and resentment. The focus shifts from creating opportunities for growth and innovation to redistributing the achievements of others. Rather than fostering a society where people are motivated to strive for success, such policies breed stagnation, where personal effort is devalued, and the rewards of hard work are forcibly taken to subsidize those who may lack the same drive. In the long run, this undermines the moral fabric of a free and productive society, fostering a culture where dependence on government aid becomes normalized, and individual liberty is eroded.
