Wealth Distribution Theory

Similar to all of us, John Stuart Mill was a product of his times. Mill witnessed social upheaval and much criticism of classical economic theory. Mill was a philosopher in addition to brilliant economist. Mill sought social reforms in the humanistic vein such as greater economic equality (Ekelund & Hébert, 1997).

One way to level the playing field for all and to achieve the goal of social reform was to limit the amount of funds passed to individuals through gifts and inheritance. Mill strongly favored the proposition that individuals should be allowed to profit from their own labor, however, the over-accumulation of wealth resulted in a class of individuals who were benefiting from someone else’s labor rather than their own. Mill sought to redistribute accumulated wealth but not self-generated income.

A graduated inheritance tax is a means to redistribute wealth to the government that could have then used it to promote equality of opportunity for all individuals. Mill felt this was a way to ensure that each individual had maximum opportunity from the start.

Reference

Ekelund, R. B., Jr., & Hébert, R. F. (1997). A history of economic theory and method (4th ed.). New York: McGraw Hill.