Is Inheritance Justified?

Is Inheritance Justified?
Author(s): D. W. Haslett
Source: Philosophy & Public Affairs, Vol. 15, No. 2 (Spring, 1986), pp. 122-155
Published by: Wiley
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D. W. HASLETT Is Inheritance
Justified?
Old ways die hard. A social practice may be taken for granted for centuries
before humanity finally comes to realize it cannot be justified. Take, for
example, slavery. Another example is the inheritance of political power.
For many centuries, throughout most of the world, the suggestion that
political power should be determined by democratic vote rather than
heredity would have been met with scorn; today we realize just how
unjustified determining political power by heredity really is.
Although we no longer believe in the inheritance of political power,
most of us still believe in the inheritance of wealth, of economic power.
But might not the inheritance of economic power be equally unjustified?
This is the question to be examined here. Inheritance involves property
rights; so another way of putting this question is: Should property rights
incorporate the practice of inheritance as it exists today?
I shall not address the question of whether individuals may justifiably
continue to take advantage of this practice as long as it exists, by con-
tinuing to bequeath and inherit property. (As far as I am concerned, they
may.) I address only the justifiability of the practice (or institution) itself.
Finally, in asking whether the practice of inheritance is justified, I focus
specifically upon whether it is justified in the United States, today. Any
conclusions I reach, however, will be applicable, no doubt, beyond this
limited frame of reference, one chosen mainly for convenience. And, for
convenience also, I shall be using the word "inheritance" throughout to
refer to any large amount one is given (as opposed to earns, or wins),
whether it be, technically, a bequest, or a gift.
This investigation is divided into three sections. Section I presents some
facts about wealth distribution and inheritance in the United States today,
I wish to thank Edgar Page for many helpful comments on an earlier draft of this article.
123 Is Inheritance
Justified?
facts that provide a useful background for the discussion which follows.
Many people support inheritance because they believe it to be essential
to capitalism. In Section II I try to show that, far from being essential,
inheritance is actually inconsistent with capitalism. Or, to be more exact,
I try to show that it is inconsistent with fundamental values that underlie
capitalism. For those, such as myself, who share these values, its incon-
sistency with them is prima facie reason for abolishing inheritance. But
prima facie reasons for doing something can be overridden if the objec-
tions to doing it are strong enough. So, in Section III, I examine what I
take to be the most important objections to abolishing inheritance. I
conclude that the practice of inheritance, as it exists today, should indeed
be abolished.
I. BACKGROUND INFORMATION
Family income in the United States today is not distributed very evenly.
The top fifth of American families receives 57.3 percent of all family
income, while the bottom fifth receives only 7.2 percent.I
But, for obvious reasons, a family's financial well-being does not depend
upon its income nearly as much as it does upon its wealth, just as the
strength of an army does not depend upon how many people joined it
during the year as much as it does upon how many people are in it
altogether. So if we really want to know how unevenly economic well-
being is distributed in the United States today, we must look at the
distribution not of income, but of wealth.
Although-quite surprisingly-the government does not regularly col-
lect information on the distribution of wealth, it has occasionally done
so. The results are startling. One to two percent of American families
own from around 20 to 30 percent of the (net) family wealth in the United
States; 5 to io percent own from around 40 to 6o percent.2 The top fifth
i. Lester C. Thurow, "Tax Wealth, Not Income," New York Times Magazine, i i April
1976, p. 33. These figures do not represent "income," as defined by the census bureau,
but "income" as defined more broadly so as to include also any income received from wealth.
Somewhat more recent figures are, of course, readily available. I am, however, using the
figures set out by Thurow for two reasons. First, figures representing the distribution of
income (as opposed to the amount of income) have varied little over the past twenty-five
years. Second, these figures are compared by Thurow directly to figures representing the
distribution of wealth in the United States, figures which are set out below.
2. The latest governmental study of the distribution of wealth, carried out in I983,
estimates the amount of net wealth held by the top 2 percent to be 28 percent, and that
124 Philosophy & Public Affairs
owns almost 8o percent of the wealth, while the bottom fifth owns only
0.2 percent.3 So while the top fifth has, as we saw, about eight times the
income of the bottom fifth, it has about 400 times the wealth. Whether
deliberately or not, by regularly gathering monumental amounts of in-
formation on the distribution of income, but not on the distribution of
wealth, the government succeeds in directing attention away from how
enormously unequal the distribution of wealth is, and directing it instead
upon the less unequal distribution of income. But two things are clear:
wealth is distributed far more unequally in the United States today than
is income, and this inequality in the distribution of wealth is enormous.
These are the first two things to keep in mind throughout our discussion
of inheritance.
The next thing to keep in mind is that, although estate and gift taxes
in the United States are supposed to redistribute wealth, and thereby
lessen this inequality, they do not do so. Before I98I estates were taxed,
on an average, at a rate of only o.2 percent-o.8 percent for estates over
$500,ooo-hardly an amount sufficient to cause any significant redistri-
bution of wealth.4 And, incredibly, the Economic Recovery Act of I98I
lowered estate and gift taxes.
held by the top io percent to be 57 percent. R. Avery, G. Elliehausen, G. Canner, and

T. Gustafson, "Survey of Consumer Finances, I983: Second Report," Federal Reserve
Bulletin 70 (December I984): 865. These estimates "account for all financial assets, and
equity in homes and other real property as well as consumer credit and other debts [They]
exclude the value of consumer durables such as automobiles and home furnishings, the
cash value of life insurance, equity in small businesses and farms, and the present value
of expected future benefits from pensions or social security" (p. 86i).
The concentration of wealth among the top few percent may be even greater than these
estimates indicate, since the information gathered from the very rich was far from ex-
haustive (p. 862). Also, an even greater concentration of wealth among the top few percent
than these estimates indicate was reported in a governmental study conducted in i962.
Dorothy S. Projector, "Survey of Financial Characteristics of Consumers," Federal Reserve
Bulletin 50 (March I964), p. 285; also reported in Lester C. Thurow, Generating Inequality
(New York: Basic Books, 1975), p. 14. Between the I962 and I983 studies, the amount of
information on wealth distribution gathered by the government has been relatively small.
An article by James D. Smith and Stephen D. Franklin indicates, however, that the dis-
tribution of wealth in the United States has remained fairly constant since at least 1922.
"The Concentration of Personal Wealth I922-1969," American Economic Review 64 (May
I964).
3. Thurow, "Tax Wealth, Not Income," p. 33.

4. Lester C. Thurow, The Impact of Taxes on the American Economy (New York: Praeger
Publishers, I971), p. 127.
125 Is Inheritance
Justified?
Of course the top rate at which estates and gifts are allegedly taxed is
far greater than the o.2 percent rate, on the average, at which they are
really taxed. Prior to I98I, the top rate was 70 percent, which in 198I
was lowered to 5o percent. Because of this relatively high top rate, the
average person is led to believe that estate and gift taxes succeed in
breaking up the huge financial empires of the very rich, thereby distrib-
uting wealth more evenly. What the average person fails to realize is that
what the government takes with one hand, through high nominal rates,
it gives back with the other hand, through loopholes in the law. Lester
Thurow writes, ". . . it is hard to understand why we go through the
fiction of legislating high nominal rates and then nullifying them with
generous loopholes-unless someone is to be fooled. The most obvious
purpose of high nominal rates and low effective rates is to use the high
nominal rates as a smokescreen to hide the transfer of wealth from gen-
eration to generation."5 I do not know if the government deliberately
intends the law on estate and gift taxation to be deceptive but, due to
the complications, exceptions, and qualifications built into this law, it is
deceptive and, more seriously still, it is ineffective as a means of distrib-
uting wealth more evenly. Indeed, as George Cooper shows, estate and
gift taxes can, with the help of a good attorney, be avoided so easily they
amount to little more than "voluntary" taxes.6 As such, it is not surprising
that, contrary to popular opinion, these taxes do virtually nothing to re-
duce the vast inequality in the distribution of wealth that exists today.
Once we know that estate and gift taxes do virtually nothing to reduce
this vast inequality, what I am about to say next should come as no
surprise. This vast inequality in the distribution of wealth is (according
to the best estimates) due at least as much to inheritance as to any other
factor. Once again, because of the surprising lack of information about
these matters, the extent to which this inequality is due to inheritance
is not known exactly. One estimate, based upon a series of articles ap-
pearing in Fortune magazine, is that 5o percent of the large fortunes in
the United States were derived basically from inheritance.7 But by far
5. Thurow, "Tax Wealth, Not Income," pp. IoO'LIoI.

6. George A. Cooper, A Voluntary Tax? New Perspectives on Sophisticated Estate Tax
Avoidance (Washington, D.C.: Brookings Institution, 1979).
7. Richard A. Smith, "The Fifty-Million Dollar Man," Fortune (November 1957); Arthur
M. Louis, "America's Centimillionaires," Fortune (May I968); and Arthur M. Louis, "The
New Rich of the Seventies," Fortune (September I973).
the most careful and thorough study of this ma

A. Brittain.8 Brittain shows that the estimate based upon the Fortune
articles actually is too low;9 that a more accurate estimate of the amount
contributed by inheritance to the wealth of "ultra-rich" males is 67 per-
cent. '0 In any case, it is clear that, in the United States today, inheritance
plays a large role indeed in perpetuating a vastly unequal distribution of
wealth. This is the final thing to keep in mind throughout the discussion
which follows.
II. INHERITANCE AND CAPITALISM
Capitalism (roughly speaking) is an economic system where (I) what to

produce, and in what quantities, is determined essentially by supply and
demand-that is, by people's "dollar votes"-rather than by central plan-
ning, and (2) capital goods are, for the most part, privately owned. In the
minds of many today, capitalism goes hand in hand with the practice of
inheritance; capitalism without inheritance, they would say, is absurd.
But, if I am right, the exact opposite is closer to the truth. Since, as I
shall try to show in this section, the practice of inheritance is incompatible
with basic values or ideals that underlie capitalism, what is absurd, if
anything, is capitalism with inheritance.
Before proceeding, however, let me say a few brief words about ideals,
or values, in general. Ideals, or values (and I use these terms inter-
changeably here) serve to delineate what is good; what, consequently, is
to be striven for, and to be striven for even though in no way capable of
ever being achieved fully. Take, for example, the ideal of the medical
profession that everyone be in a state of perfect health. Ideals can be
either absolute or prima facie. Absolute ideals admit of no compromise;
they are to be realized as fully as possible no matter what the cost. Prima
facie ideals do admit of compromise; they are to be realized only to the
extent that they do not conflict with, for example, more fundamental
ideals. None of the ideals to be discussed here are absolute; all are merely
prima facie. Finally, political values or ideals such as the ones we shall
be considering, are, in my view, related to political morality, roughly, as
8. John A. Brittain, Inheritance and the Inequality of National Wealth (Washington,

D.C.: Brookings Institution, 1978).
9. Ibid., pp. 14-I6.
io. Ibid., p. 99.
127 Is Inheritance
Justified?
follows. Political morality places an obligation upon a government to do

what is in the general welfare, subject to being constrained by rights that
people have against the government. Values or ideals, delineating, as they
do, what is to be striven for, serve as general guides to what is in the
general welfare. Accordingly, any governmental policy that is contrary to
legitimate ideals is, other things being equal, unjustified. But if the con-
travened ideals are only prima facie, then the policy contrary to them can
be shown to be justified after all, by showing that other things are not
equal; by showing, in other words, that the policy, although contrary to
these ideals, is required for other, more weighty reasons. But if it cannot
be shown that the policy is required for other more weighty reasons, then
we must conclude that the policy is indeed unjustified.
I do not try to show here that the ideals underlying capitalism are
worthy of support; I only try to show that inheritance is contrary to these
ideals. And if it is, then from this it follows that, if these ideals are worthy
of support (as, incidentally, I think they are), then we have prima facie
reason for concluding that inheritance is unjustified. What then are these
ideals? For an answer, we can do no better than turn to one of capitalism's
most eloquent and uncompromising defenders: Milton Friedman.
Distribution according to productivity

The point of any economic system is, of course, to produce goods and
services. But, as Friedman tells us, society cannot very well compel people
to be productive and, even if it could, out of respect for personal freedom,
probably it should not do so. Therefore, he concludes, in order to get
people to be productive, society needs instead to entice them to produce,
and the most effective way of enticing people to produce is to distribute
income and wealth according to productivity. Thus we arrive at the first
ideal underlying capitalism: "To each according to what he and the in-
struments he owns produces."II
Obviously, inheritance contravenes this ideal. For certain purposes,
this ideal would require further interpretation; we would need to know
more about what was meant by "productivity." For our purposes, no
further clarification is necessary. According to any reasonable interpre-
tation of "productivity," the wealth people get through inheritnace has
nothing to do with their productivity. And one need not be an adherent
Ii. Milton Friedman, Capitalism & Freedom (Chicago: University of Chicago Press,
I962), pp. I6I-I62.
I28 Philosophy & Public Affairs
of this ideal of distribution to be moved by the apparent injustice of one

person working eight hours a day all his life at a miserable job, and
accumulating nothing, while another person does little more all his life
than enjoy his parents' wealth, and inherits a fortune.
Equal Opportunity
But for people to be productive it is necessary not just that they be

motivated to be productive, but that they have the opportunity to be
productive. This brings us to the second ideal underlying capitalism:
equal opportunity-that is, equal opportunity for all to pursue, success-
fully, the occupation of their choice.12 According to capitalist ethic, it is
OK if, in the economic game, there are winners and losers, provided
everyone has an "equal start." As Friedman puts it, the ideal of equality
compatible with capitalism is not equality of outcome, which would dis-
courage people from realizing their full productive potential, but equality
of opportunity, which encourages people to do so.'3
Naturally this ideal, like the others we are considering, neither could,
nor should, be realized fully; to do so would require, among other things,
no less than abolishing the family and engaging in extensive genetic
engineering.'4 But the fact that this ideal cannot and should not be re-
alized fully in no way detracts from its importance. Not only is equal
opportunity itself an elementary requirement of justice but, significantly,
progress in realizing this ideal could bring with it progress in at least two
other crucial areas as well: those of productivity and income distribution.
First, the closer we come to equal opportunity for all, the more people
I 2. For a useful analysis of the concept of "equal opportunity," see Douglas Rae, Equalities
(Cambridge, MA: Harvard University Press, I98i), ch. 4. Using Rae's terminology, the
ideal of equal opportunity being discussed here is "means-regarding," rather than "prospect-
regarding."
In spite of the usefulness of Rae's analysis, it is, I think, mistaken in one crucial respect.
According to Rae, means-regarding equal opportunity receives whatever ideological, or
moral, credibility it has only by being confused with prospect-regarding equal opportunity
(pp. 67, 73). If what I say below about the value of (means-regarding) equal opportunity
is correct, this is a serious mistake.
13. Milton & Rose Friedman, Freedom to Choose (New York: Harcourt Brace Jovanovich,
I979), pp. I3I-40. Friedman also talks favorably of another ideal of equality, which he
calls "equality before God." But equality before God turns out to be a restatement of the
ideal of liberty, which is discussed below.
14. See, for example, Bernard Williams, "The Idea of Equality," Philosophy, Politics and
Society, ser. 2, ed. Peter Laslett and W. G. Runciman (Oxford: Basil Blackwell, I962).
129 Is Inheritance
Justified?
there will be who, as a result of increased opportunity, will come to realize

their productive potential. And, of course, the more people there are who
come to realize their productive potential, the greater overall productivity
will be. Second, the closer we come to equal opportunity for all, the more
people there will be with an excellent opportunity to become something
other than an ordinary worker, to become a professional or an entrepre-
neur of sorts. And the more people there are with an excellent opportunity
to become something other than an ordinary worker, the more people
there will be who in fact become something other than an ordinary worker
or, in other words, the less people there will be available for doing ordinary
work. As elementary economic theory tells us, with a decrease in the
supply of something comes an increase in the demand for it, and with
an increase in the demand for it comes an increase in the price paid for
it. An increase in the price paid for it would, in this case, mean an increase
in the income of the ordinary worker vis-a-vis that of the professional and
the entrepreneur, which, surely, would be a step in the direction of income
being distributed more justly.
And here I mean "more justly" even according to the ideals of capitalism
itself. As we have seen, the capitalist ideal of distributive justice is "to
each according to his or her productivity." But, under capitalism, we can
say a person's income from some occupation reflects his or her produc-
tivity only to the extent there are no unnecessary limitations upon people's
opportunity to pursue, successfully, this occupation-and by "unneces-
sary limitations" I mean ones that either cannot or (because doing so
would cause more harm than good) should not be removed. According
to the law of supply and demnand, the more limited the supply of people
in some occupation, then (assuming a healthy demand to begin with)
the higher will be the income of those pursuing the occupation. Now if
the limited supply of people in some high-paying occupation is the con-
sequence of a "natural" scarcity-a scarcity that is not the result of un-
necessary limitations upon opportunity, but is the result instead of few
people having the inborn capacity to pursue this occupation, or of few
people freely choosing to do so-then (it is fair to say) the high pay does
reflect productivity. Willingness or capacity to do what few people are
willing or have the capacity to do is socially valuable, and those who in
fact do it are therefore making an unusually valuable contribution; they
are, in other words, being highly productive. But if, on the other hand,
the limited supply of people in some high-paying occupation is the result
of unnecessary limitations upon people's opportunity to pursue that oc-

cupation, then the scarcity is an "artificial" one, and the high pay can
by no means be said to reflect productivity. The remedy is to remove
these limitations; in other words, to increase equality of opportunity. To
what extent the relative scarcity of professionals and entrepreneurs in
capitalist countries today is due to natural scarcity, and to what extent
to artificial scarcity, no one really knows. I strongly suspect, however,
that a dramatic increase in equality of opportunity will reveal that the
scarcity is far more artificial than most professionals and entrepreneurs
today care to think-far more artificial.
If my suspicions are correct, a dramatic increase in equality of oppor-
tunity not only would be desirable for its own sake (since equal oppor-
tunity is itself an elementary requirement of justice) but would also be
desirable for the sake of greater productivity, a more equal distribution
of income, and fuller realization of the ideal of distribution according to
productivity. Indeed, a dramatic increase in equality of opportunity would,
I suspect, do more to meet the objections that many throughout the world
today have against American capitalism than could anything else.'5
That inheritance violates the (crucial) second ideal of capitalism, equal
opportunity, is, once again, obvious. Wealth is opportunity, and inherit-
ance distijbutes it very unevenly indeed. Wealth is opportunity for real-
izing one's potential, for a career, for success, for income. There are few,
if any, desirable occupations that great wealth does not, in one way or
another, increase-sometimes dramatically-one's chances of being able
to pursue, and to pursue successfully. And to the extent that one's success
is to be measured in terms of one's income, nothing else, neither intel-
ligence, nor education, nor skills, provides a more secure opportunity for
"success" than does wealth. Say one inherits a million dollars. All one
then need do is purchase long-term bonds yielding a guaranteed interest
of ten percent and (presto!) one has a yearly income of $ioo,ooo, an
income far greater than anyone who toils eight hours a day in a factory
will probably ever have. If working in the factory pays, relatively, so little,
15. I say this fully aware of the criticism of equal opportunity, and meritocracy in general,
made by Michael Young in The Rise of Meritocracy (Harmondsworth, England: Penguin
Books, I96I). The problem with these criticisms is that they are based upon taking equal
opportunity (along with productivity) to be, not merely a prima facie value as it should be,
but absolute. Any legitimate prima facie value can easily be reduced to absurdity if it is
wrongly viewed as being absolute.
131 Is Inheritance
Justified?
then why, it might be asked, d

investors themselves? The answ
barred from doing so by a lack
inheritance, are simply handed.
too true: "The rich get richer, a
itance, the vast fortunes in Ame
of economic power, would be br
opportunity, to become distribu
Freedom
But so far I have not mentioned what many, including no doubt Friedman
himself, consider to be the most important ideal underlying capitalism:
that of liberty or, in other words, freedom. This ideal, however, takes
different forms. One form it takes for Friedman is that of being able to
engage in economic transactions free from governmental or other types
of human coercion. The rationale for this conception of freedom-let us
call it freedom in the "narrow" sense-is clear. As Friedman explains it,
assuming only that people are informed about what is good for them, this
form of freedom guarantees that ". .. no exchange will take place unless
both parties benefit from it."17 If at least the parties themselves benefit
from the transaction, and it does not harm anyone, then, it is fair to say,
the transaction has been socially valuable. So people with freedom of
exchange will, in doing what is in their own best interests, generally be
doing what is socially valuable as well. In other words, with this form of
freedom, the fabled "invisible hand" actually works.
All of this is a great oversimplification. For one thing, a transaction
i6. Although abolishing inheritance would, I should think, do more to increase equal
opportunity than any single other (feasible) reform, it is by no means the only reform that
is needed for this purpose. If we are serious about achieving significantly more equality of
opportunity within a capitalistic framework-and I think we certainly should be-we should
combine inheritance reform with, among other things, the following two additional reforms:
a program that guarantees access to higher education for all who are qualified, and a program
to bring about equal access to medical care for all. This latter reform would remove the
financial obstacle preventing children of the very poor from receiving prompt and reliable
medical care; prompt and reliable medical care is, in turn, necessary for preventing their
medical needs from progressing to the point where they have suffered irreversible damage
that could handicap them for the rest of their lives. One way of achieving equal access to
medical care for all is through a program of "socialized" medicine, but this is not the only
way.
17. Friedman, Capitalism & Freedom, p. I3.
that benefits both parties may have side effects, such as pollution, which
harm others and, therefore, the transaction may not be socially valuable
after all. So freedom, in the narrow sense, should certainly not be absolute.
But the fact that freedom, in this sense, should not be absolute does not
prevent it from serving as a useful ideal.
Next, those, such as Friedman, who oppose governmental coercion in
the realm of economic exchanges often oppose governmental coercion
of another sort as well: paternalism. In other words, they oppose govern-
mental coercion designed to force us to do what is, supposedly, in our
own best interests. Examples of governmental paternalism would be a
law prohibiting the drinking of alcoholic beverages, on the grounds that
doing so is unhealthy, or a law requiring everyone to wear seat belts. But,
provided that it does not significantly affect freedom of exchange (that
is, freedom in the narrow sense), paternalism has little to do with capi-
talism; therefore, "antipaternalistic" freedom does not, it seems to me,
deserve to be included among the ideals that underlie capitalism. More
to the point, neither inheritance, nor its abolishment (at least not for the
reasons put forth here), could be correctly viewed as paternalistic anyway.
So we need not give this conception of freedom further consideration
here.
There are others whose conception of freedom is that of not being
subject to any governmental coercion (or other forms of human coercion)
for any purposes whatsoever-a conception sometimes referred to as
"negative" freedom. It is true that governmental (or other) coercion for
purposes of enforcing the abolition of inheritance violates this ideal, but
then, of course, so does any such coercion for purposes of maintaining
inheritance. So this "anticoercion" ideal, just like the antipaternalistic
ideal, neither supports nor opposes the practice of inheritance, and there-
fore this conception of freedom need not concern us further here either.
A very popular variation of the anticoercion conception of freedom is
one where freedom is, once again, the absence of all governmental (or
other human) coercion, except for any coercion necessary for enforcing
our fundamental rights. Prominent among our fundamental rights, most
of those who espouse such a conception of freedom will tell us, is our
right to property. So whether this conception of freedom supports the
practice of inheritance depends entirely upon whether our "right to prop-
erty" should be viewed as incorporating the practice of inheritance. But
whether our right to property should be viewed as incorporating the
I33 Is Inheritance
Justified?
practice of inheritance is just another way of stating the very point at

issue in this investigation (see p. I22 above, and Section III below).
Consequently, this popular conception of freedom cannot be used here
in support of the practice of inheritance without begging the question.
But there is still another conception of freedom espoused by many:
that which we might call freedom in the "broad" sense. According to this
conception of freedom, to be free means to have the ability, or the op-
portunity, to do what one wants. For example, according to this concep-
tion of freedom, rich people are, other things being equal, freer than poor
people, since their wealth provides them with opportunities to do things
that the poor can only dream about.
I think it is clear that when Friedman, and most other conservative
defenders of capitalism, speak about the importance of freedom, they
have something like what I have labelled the "narrow" sense in mind,
along with perhaps one of the senses of freedom we have dismissed as
irrelevant to our investigation. Those who, on the other hand, espouse
freedom in the broad sense are often opponents of capitalism, and they
use the broad sense of freedom to try to show how capitalism, with the
vast inequalities of wealth to which it gives rise, is actually inconsistent
with freedom. But those who espouse the broad sense of freedom need
not be opponents of capitalism since, arguably, capitalism, or some mod-
ified version of it, provides even the less well off with more wealth and
opportunities than does any other system and, accordingly, may be quite
compatible with freedom in the broad sense after all. Indeed, it is, I think,
freedom in the broad sense that is espoused by most liberal defenders of
capitalism, those who, although they believe in the free market, are more
sympathetic to governmental aid for the poor than are conservatives.
Therefore, I include freedom in the broad sense among the ideals that
underlie capitalism even though this ideal is not supported by all de-
fenders of capitalism, and is, in fact, supported by many of its foes.
Let us now see whether inheritance and freedom are inconsistent.
Consider, first, freedom in the narrow sense. Although inheritance may
not be inconsistent with this ideal, neither is the abolishment of inher-
itance. This ideal forbids governmental interference with free exchanges
between people; it does not necessarily forbid governmental interference
with gifts or bequests (which, of course, are not exchanges). Remember,
Friedman's rationale for this ideal is, as we saw, that free exchange
promotes the "invisible hand;" that is, it promotes the healthy functioning
of supply and demand, which is at the very heart of capitalism. Supply

and demand hardly require gifts, as opposed to exchanges, in order to
function well.
If anything, gifts and bequests, and the enormous concentrations of
economic power resulting from them, hinder the healthy functioning of
supply and demand. First of all, gifts and bequests, and the enormous
concentrations of economic power resulting from them, create such great
differences in people's "dollar votes" that the economy's demand curves
do not accurately reflect the needs of the population as a whole, but are
distorted in favor of the "votes" of the rich. And inheritance hinders the
healthy functioning of supply and demand even more, perhaps, by in-
terfering with supply. As we have seen, inheritance (which, as I am using
the term, encompasses large gifts) is responsible for some starting out
in life with a vast advantage over others; it is, in other words, a major
source of unequal opportunity. As we have also seen, the further we are
from equal opportunity, the less people there will be who come to realize
their productive potential. And, of course, the less people there are who
come to realize their productive potential, the less overall productivity
there will be or, in other words, the less healthy will be the economy's
supply curves. So, while inheritance may not be literally inconsistent
with freedom in the narrow sense, it does, by hindering indirectly both
supply and demand, appear to be inconsistent with the "spirit" of this
ideal.
To this it might-be replied that abolishing inheritance would be even
more inconsistent with the "spirit" of this ideal, since inheritance is nec-
essary for promoting savings and investment and thus capital growth, or
for maintaining people's incentives to work hard, things which, for the
healthy functioning of supply and demand, are absolutely essential. We
shall see in Section III, however, that this reply is not convincing.
All conservatives are suspicious of concentrating great economic power
in the hands of government. And if the Soviet Union is any indication,
these suspicions are well founded. Some conservatives are suspicious of
concentrating great economic power in the hands of corporations. On
the whole, these suspicions are well founded also; with the proviso that,
because of economies of scale, certain of these concentrations are a nec-
essary evil. No conservative, as far as I know, is suspicious of concen-
trating great economic power-via private fortunes-in the hands of in-
dividuals. Perhaps it is time for conservative thinking to become more
I35 Is Inheritance
Justified?
consistent: the truth is, I suggest, that all great concentrations of eco-
nomic power are suspicious, whether emanating from government, cor-
porations, or individuals.
So we may conclude that, at best, inheritance receives no support from
freedom in the narrow sense. But it remains for us to consider whether
inheritance receives any support from the other relevant ideal of freedom,
an ideal many, including myself, would consider to be the more funda-
mental of the two: freedom in the broad sense-being able to do, or having
the opportunity to do, what one wants. So we must now ask whether,
everything considered, there is more overall opportunity throughout the
country for people to do what they want with inheritance, or without it.
On the one hand, without inheritance people are no longer free to leave
their fortunes to whomever they want and, of course, those who otherwise
would have received these fortunes are, without them, less free to do
what they want also.
But to offset these losses in freedom are at least the following gains in
freedom. First, as is well known, wealth has, generally speaking, a di-
minishing marginal utility. What this means is that, generally speaking,
the more wealth one already has, the less urgent are the needs which
any given increment of wealth will go to satisfy and, therefore, the less
utility the additional wealth will have for one. This, in turn, means that
the more evenly wealth is distributed, the more overall utility it will have. 8
And since we may assume that, generally speaking, the more utility some
amount of wealth has for someone, the more freedom in the broad sense
it allows that person to enjoy, we may conclude that the more evenly
wealth is distributed, the more overall freedom to which it will give rise.
Now assuming that abolishing inheritance would not lessen overall
wealth (an assumption I shall try to show in Section III to be warranted),
and that it would indeed distribute wealth more evenly, it follows that,
by abolishing inheritance, there would be some gain in freedom in the
broad sense attributable to the diminishing marginal utility of wealth.
Next, abolishing inheritance would also increase freedom by increasing
equality of opportunity. Certainly those who do not start life having in-
herited significant funds (through either gift or bequest) start life, relative
i8. The more evenly wealth is distributed, the more overall utility it will have since any
wealth that "goes" from the rich to the poor, thereby making the distribution more even,
will (given the diminishing marginal utility of wealth) have more utility for these poor than
it would have had for the rich, thus increasing overall utility.
to those who do, with what amounts to a significant handicap. Abolishing

inheritance, and thereby starting everyone at a more equal level, would
obviously leave those who otherwise would have suffered this handicap
(which would be the great majority of people) more free in the broad
sense.
I, for one, believe these gains in freedom-that is, those attributable
to the diminishing marginal utility of wealth and more equality of op-
portunity-would more than offset the loss in freedom resulting from the
inability to give one's fortune to whom one wants. Abolishing inheritance
is, I suggest, analogous to abolishing discrimination against blacks in
restaurants and other commercial establishments. By abolishing discrim-
ination, the owners of these establishments lose the freedom to choose
the skin color of the people they do business with, but the gain in freedom
for blacks is obviously greater and more significant than this loss. Like-
wise, by abolishing inheritance the gain in freedom for the poor is greater
and more significant than the loss in freedom for the rich. So to the list
of ideals that inheritance is inconsistent with, we can, if I am right, add
freedom in the broad sense.
To recapitulate: three ideals that underlie capitalism are "distribution
according to productivity," "equal opportunity," and "freedom," the latter
being, for our purposes, subject to either a narrow or a broad interpre-
tation. I do not claim these are the only ideals that may be said to underlie
capitalism; I do claim, however, that they are among the most important.
Inheritance is inconsistent with both "distribution according to produc-
tivity," and "equal opportunity." Perhaps it is not, strictly speaking, in-
consistent with the ideal of freedom in the narrow sense, but neither is
the abolishment of inheritance. On the other hand, it probably is incon-
sistent with what many would take to be the more fundamental of the
two relevant ideals of freedom: freedom in the broad sense. Since these
are among the most important ideals that underlie capitalism, I conclude
that inheritance not only is not essential to capitalism, but is probably
inconsistent with it.'s
For those who, like myself, are inclined to support these ideals, the
inconsistency of inheritance with them creates a strong presumption that
inheritance is unjustified. But only a presumption, for none of these ideals
are absolute. There may, therefore, be objections to the abolishment of
Ig. Inheritance is, no doubt, equally inconsistent with the ideals that underlie socialism,
but we need not pursue this matter here.
137 Is Inheritance
Justified?
inheritance that are strong enough to override its inconsistency with these
ideals (or to show that my conclusion about its inconsistency with the
ideal of freedom to be premature). So, before we can make any final
judgment about the justifiability of inheritance, we must examine the
most significant of these objections.
III. OBJECTIONS
In order to examine properly the objections to abolishing inheritance, we

should have a definite proposal for abolishing inheritance before us, so
that we know to what, exactly, these objections are meant to apply. I
shall begin, therefore, by setting out a proposal that incorporates the main
features I think any law abolishing inheritance should incorporate.
First, my proposal for abolishing inheritance includes the abolishment
of all large gifts as well-gifts of the sort, that is, which might serve as
alternatives to bequests. Obviously, if such gifts were not abolished as
well, any law abolishing inheritance could be avoided all too easily.
Of course we would not want to abolish along with these large gifts
such harmless gifts as ordinary birthday and Christmas presents. This,
however, raises the problem of where to draw the line. I do not know the
best solution to this problem. The amount that current law allows a person
to give each year tax free ($io,ooo) is too large a figure at which to draw
the line for purposes of a law abolishing inheritance. We might experi-
ment with drawing the line, in part at least, by means of the distinction
between, on the one hand, consumer goods that can be expected to be,
within ten years, either consumed or worth less than half their current
value and, on the other hand, all other goods. We can be more lenient
in allowing gifts of goods falling within the former category since, as they
are consumed or quickly lose their value, they cannot, themselves, be-
come part of a large, uneamed fortune. The same can be said about gifts
of services. But we need not pursue these technicalities further here.
The general point is simply that, so as to avoid an obvious loophole, gifts
(other than ordinary birthday presents, etc.) are to be abolished along
with bequests.
Next, according to my proposal, a person's estate would pass to the
government, to be used for the general welfare. If, however, the govem-
ment were to take over people's property upon their death then, obviously,
after just a few generations the government would own virtually every-
thing-which would certainly not be very compatible with capitalism.

Since this proposal for abolishing inheritance is supposed to be compat-
ible with capitalism, it must therefore include a requirement that the
government sell on the open market, to the highest bidder, any real
property, including any shares in a corporation, that it receives from
anyone's estate, and that it do so within a certain period of time, within,
say, one year from the decedent's death. This requirement is, however,
to be subject to one qualification: any person specified by the decedent
in his will shall be given a chance to buy any property specified by the
decedent in his will before it is put on the market (a qualification designed
to alleviate slightly the family heirloom/business/farm problem discussed
below). The price to be paid by this person shall be whatever the property
is worth (as determined by governmental appraisers, subject to appeal)
and any credit terms shall be rather lenient (perhaps IO percent down,
with the balance, plus interest, due over the next 30 years).
Finally, the abolishment of inheritance proposed here is to be subject
to three important exceptions. First, there shall be no limitations at all
upon the amount a person can leave to his or her spouse. A marriage, it
seems to me, should be viewed as a joint venture in which both members,
whether or not one stays home tending to children while the other earns
money, have an equally important role to play; and neither, therefore,
should be deprived of enjoying fully any of the material rewards of this
venture by having them taken away at the spouse's death. And unlimited
inheritance between spouses eliminates one serious objection to abolish-
ing inheritance: namely, that it is not right for a person suddenly to be
deprived, not only of his or her spouse, but also of most of the wealth
upon which he or she has come to depend-especially in those cases
where the spouse has, for the sake of the marriage, given up, once and
for all, any realistic prospects of a career.
The second exception to be built into this proposal is one for children
who are orphaned, and any other people who have been genuinely de-
pendent upon the decedent, such as any who are mentally incompetent,
or too elderly to have any significant earning power of their own. A person
shall be able to leave funds (perhaps in the form of a trust) sufficient to
take care of such dependents. These funds should be used only for the
dependent's living expenses, which would include any educational or
institutional expenses no matter how much. They should not, of course,
be used to provide children with a "nest egg" of the sort others are
I39 Is Inheritance
Justified?
prohibited from leaving their children. And at a certain age, say twenty-
one (if the child's formal education has been completed), or upon removal
of whatever disability has caused dependency, the funds should cease.
This exception eliminates another objection to abolishing inheritance-
the objection that it would leave orphaned children, and other depend-
ents, without the support they needed.20
The third and final exception to be built into this proposal is one for
charitable organizations-ones created not for purposes of making a
profit, but for charitable, religious, scientific, or educational purposes.
And, in order to prevent these organizations from eventually controlling
the economy, they must, generally, be under the same constraint as is
the government with respect to any real property they are given, such
as an operating factory: they must, generally, sell it on the open market
within a year.
A limit of some sort could be placed upon the amount a person would
be entitled to give to charitable organizations; I am inclined, however, to
oppose any limit. Allowing unlimited contributions would, to be sure,
weaken one of the advantages of abolishing inheritance, that of providing
government with a major, new source of revenue, one that would serve
to lessen the burden of income taxes. For rather than allowing their
estates to pass to the government, most people would probably choose to
leave their estates to charitable organizations. But even if they did, the
advantage of lessening our tax burden would not be lost, for if vast
amounts were given to charitable organizations, these organizations could
be expected to fund much of the welfare, medical research, scholarships
for the poor, aid to education, and so on, that must (or should) now be
funded by the government, thereby lessening our tax burden not by
increasing governmental revenues, but by decreasing governmental ex-
penses. And charitable organizations would become, even more than they
20. Society must not, of course, forget about orphans, and other dependents, of the
relatively poor either; they should be adequately provided for somehow by the state. Yet it
might be prohibitively expensive for the state to care for orphans of the poor at the level
of luxury at which this exception to the abolishment of inheritance would allow orphans
of the rich to be cared for, thus raising a question of fairness. But if we accept the proposition
that (since we do not want to abolish the family) it is justified for the children of the rich
to live in more luxury than those of the poor while their parents are alive, then it is reasonable
for us to allow this higher standard to continue even if these parents happen to die. It is
usually traumatic enough for a child to have to adapt to the death of both parents without,
at the same time, having to adapt to an altogether different standard of living as well.
are today, a healthy counterbalance to the power of government in these

areas.
Among the objections to abolishing inheritance is that it would serve
to dry up charitable giving and, indeed, leave our charitable instincts,
which are among our most noble, with no (monetary) ways of being
expressed. But with the unlimited exception for charitable giving built
into this proposal for abolishing inheritance, charitable giving, far from
drying up, would actually increase, and increase significantly. Thus the
effect of this proposal upon charitable giving, far from providing an ar-
gument against abolishing inheritance, actually provides an argument in
favor of it.
(i) With a specific proposal now before us, let us begin our survey of
objections to abolishing inheritance with the one that is weakest: the
objection that abolishing inheritance would be a violation of property
rights. The trouble with this objection is, quite simply, that it begs the
question. Property rights are not normally viewed as being unqualified,
nor certainly should they be. On the contrary, property rights normally
are, and certainly should be, viewed as having built into them a number
of qualifications or exceptions: an exception for taxes, an exception for
uses which pose a danger of injury to others, an exception for eminent
domain, and so on. As pointed out at the very beginning, the purpose of
our investigation is precisely to determine whether we should recognize
still another exception to property rights-an exception in the form of
abolishing inheritance-or whether, instead, property rights should in-
corporate the practice of inheritance. Obviously we cannot determine this
simply by slamming our fists on the table and insisting that property
rights do allow inheritance, that abolishing inheritance would be a vio-
lation of property rights. The only way to determine whether property
rights should incorporate the practice of inheritance is the way we are
proceeding here, the hard way: by patiently examining, one by one, the
various pros and cons of abolishing inheritance and then, in light of this
examination, making as accurate an overall assessment as we can.
And lest my opponent claim this to be merely an appeal to utilitarian
considerations and hence (in his view) illegitimate, let me hasten to point
out that the "pros and cons" of which I speak need not be limited merely
to utilitarian considerations. Considerations of right (other than the very
one in question), of obligation, of (nonutilitarian) value, or of anything
I4I Is Inheritance
Justified?
else, would all be welcome additions to the debate, as far as I am con-

cerned. The only thing not welcome is a demand that we merely accept
my opponent's view of property rights without question.
(2) Let us turn next to the reason Milton Friedman supports inher-
itance, and does so in spite of the fact that, as we have seen, it is incom-
patible with the values he himself says underlie capitalism.21 And, inci-
dentally, Friedman is not alone in finding this particular objection to
abolishing inheritance convincing; others who do include Robert Nozick,
and F. A. Hayek.22 The argument upon which this objection is based
proceeds somewhat as follows. Inheritance of property ("material" in-
heritance) is not the only source of unequal opportunity. Some people,
for example, gain an unearned advantage over the rest of us by inheriting
from their parents a beautiful singing voice, or keen intelligence, or strik-
ing good looks ("biological" inheritance). If we allow people to enjoy
unearned advantages from biological inheritance, so the argument goes,
it is only fair that we allow people to enjoy unearned advantages from
material inheritance as well. We are told, in effect, that if we continue
to allow one kind of unearned advantage to exist, we are, in all fairness,
committed to allowing all other kinds of unearned advantages to continue
to exist also.
The fallacy in this way of arguing should be apparent. One might just
as well insist that racial discrimination is justified by arguing that, be-
cause we allow unearned advantages resulting from biological inheritance
to continue to exist, we are, in all fairness, therefore committed to allowing
unearned advantages resulting from racial discrimination to continue to
exist also. To be sure, we do "allow" uneamed advantages resulting from
biological inheritance to continue to exist because, first of all, we cannot
eliminate them and, second, even if we could, we would not want to since
the costs of doing so would outweigh the benefits. Unearned advantages
resulting from material inheritance, on the other hand, can be eliminated.
Perhaps the costs of doing so outweigh the benefits here as well. But,
once again, we can determine whether this is so only the hard way: by
2i. Friedman, Capitalism & Freedom, pp. I63-64; and Freedom to Choose, p. 136.
22. Robert Nozick, Anarchy, State, and Utopia (New York: Basic Books, 1974), pp. 237-
38; F. A. Hayek, The Constitution of Liberty (Chicago: University of Chicago Press, 1960),
pp. 9o-91. Cf. John Rawls, A Theory ofJustice (Cambridge, MA: Harvard University Press,
1971), p. 278.
a careful and patient investigation into what the pros and cons actually
are. We must not be dissuaded from this task by the above quick, but
fallacious argument with which Friedman and others tempt us.
(3) Let us turn now to some objections of a more practical nature. The
first of these is that, regardless of whether abolishing inheritance is jus-
tified or not, the simple truth is that Americans are solidly against doing
so; therefore our discussion is a waste of time. The reply, of course, is
that, unless popular opinions are sometimes challenged, how, after all,
can we ever make any progress? What if, for example, just because the
public was against it, no one in the South a century ago had been willing
to consider whether abolishing slavery was justified? If abolishing in-
heritance really is justified, chances are the public will eventually come
to favor it; but the first order of business, clearly, is to decide if it really
is justified.
But we must not dismiss this practical objection too quickly; this ob-
jection is related to still another practical objection, one that does deserve
to be taken seriously: the objection that a ban on inheritance could never
be adequately enforced. Some would argue that, by secret Swiss bank
accounts, bogus exchanges, fake salaries, and simply by passing money
under the table, large gifts could be made at any time in spite of a law
abolishing them. Therefore, it would be concluded, no matter how jus-
tified the abolishment of inheritance might be, any law to that effect
would be a futile gesture; as the sophomore is fond of saying, it might
be good in theory, but would never work in practice.
Yet would a ban on inheritance actually be unenforceable? The pos-
sibility of gain through illegal gifts exists with current American estate
and gift tax law. Nevertheless, governmental investigators do succeed in
uncovering such gifts often enough for successful enforcement. The
reports of courts that handle tax litigation are filled with such cases.
Successful enforcement of this law suggests the government could, sim-
ilarly, enforce a law abolishing inheritance.
But, it may be replied, current estate and gift tax law provides the
wealthy with so many legal means of avoidance that (provided only that
they are willing to hire a clever attorney) illegal means are not even
necessary. A law abolishing inheritance, one not so easily avoided through
legal means, would be an entirely different matter. With it, the "need"
to resort to illegal means would be far greater and, therefore, so would
the difficulties of enforcement.
I43 Is Inheritance
Justified?
There is, no doubt, some truth in this reply. But so far we have over-
looked an important factor: enforcement through informal social pres-
sure, as opposed to fonnal governmental pressure. And by "informal"
social pressure, I mean more than just the pressure that potential social
disapproval and ostracism exert upon us; I mean also the pressure our
early training and social conditioning exert on us, a pressure so great
that most of us would not violate most laws even without any govern-
mental enforcement of them. I doubt if governmental enforcement would
be adequate enforcement for many laws without social pressure to go
along with it. Take, for example, the legal prohibition upon alcoholic
beverages in America which, in spite of intensive governmental enforce-
ment, failed, and did so primarily because of a lack of popular support
or, in other words, a lack of informal social pressure for compliance with
the law. On the other hand, with the help of informal social pressure, I
doubt if there are many laws the government could not enforce ade-
quately, even if the government's role amounted to mere tokenism. Take,
for example, current income tax law; in spite of possibilities for cheating
that rival those of a law abolishing inheritance, this law does, for the most
part, work; and it works because, although few agree with the details of
the law, most believe that, in principle, an income tax is justified. And
if most people believed a law abolishing inheritance was justified then,
through a combination of government pressure and informal social pres-
sure, this law likewise would, I think, work well enough.
This, however, is where the fact that most people currently do not
think such a law would be justified becomes relevant. Since most people
currently do not think such a law would be justified, that such a law
could be adequately enforced at the present time is indeed doubtful. And
if it could not be adequately enforced, I must conclude that, currently,
no such law should be passed. Except where absolutely necessary in
order to protect minority rights, the imposition of extremely unpopular
laws upon an unwilling public has no place in a democracy.
None of this, however, must be allowed to obscure an equally important
point: the strength of a democracy depends upon there being the freedom
and willingness to question the status quo, to constantly seek a better
way. Although currently a law abolishing inheritance appears to have
little public support, if such a law really is justified, except for currently
having little public support, I believe the necessary public support will
eventually come-provided we remain willing to question the status quo.
So in asking here whether or not abolishing inheritance is justified, I am

asking whether or not, aside from current public opinion, it is justified.
(4) We turn next to what is, I suppose, the most common objection
to abolishing inheritance: the objection that, if people were not allowed
to leave their wealth to their children, they would lose their incentive to
continue working hard, and national productivity would therefore fall. In
spite of the popularity of this objection, all the available evidence seems
to indicate the contrary. For example, people who do not intend to have
children, and therefore are obviously not motivated by the desire to leave
their children a fortune, do not seem to work any less hard than anyone
else. And evidence of a more technical nature leads to the same conclu-
sion: people, typically, do not need to be motivated by a desire to leave
their children (or someone else) great wealth in order to be motivated to
work hard.23
Common sense tells us the same thing. The prospect of being able to
leave one's fortune to one's children is, no doubt, for some people one
factor motivating them to be productive. But even for these people, this
is only one factor; there are usually other factors motivating them as well,
and motivating them to such an extent that, even if inheritance were
abolished, their productivity would be unaffected. Take, for example,
professional athletes. If inheritance were abolished, would they try any
less hard to win? I doubt it. For one thing, abolishing inheritance would
not, in any way, affect the amount of money they would be able to earn
for use during their lives. So they would still have the prospect of a large
income to motivate them. But there is something else which motivates
them to do their best that is, I think, even more important, and is not
dependent on money: the desire to win or, in other words, to achieve that
which entitles them to the respect of their colleagues, the general public,
and themselves. Because of the desire to win, amateur athletes compete
just as fiercely as professionals. Abolishing inheritance would in no way
affect this reason for doing one's best either. Athletes would still have
the prospect of winning to motivate them. Businessmen, doctors, lawyers,
engineers, artists, researchers-in general, those who contribute most to
23. See, for example, D. C. McClelland, The Achieving Society (Princeton: Van Nostrand,
I96I), pp. 234-35; and Seymour Fiekowsky, On the Economic Effects of Death Taxation
in the United States (unpublished doctoral dissertation, Harvard University, I959), pp.
370-7I.
145 Is Inheritance
Justified?
society-are not, with respect to

them, really very different fro
ance, these people would still be
income for themselves and, probably even more so, by the prospect of
"winning;" that is, by the prospect of achieving, or continuing to achieve,
that which entitles them to the respect of their colleagues, the general
public, and themselves.
But even if abolishing inheritance did lessen incentive by leaving people
with no motivation to accumulate for their children, it would, in another
respect, increase incentive. This can be illustrated by the often used race
analogy. Consider two different hundred-meter races between Jones and
Smith where, in the first race, Jones is given a fifty-meter head start
while, in the second race, they start even. In which of these races will
each be most likely to run his fastest? The answer, of course, is race two.
In race one, Jones will figure that even if he does not run his fastest, he
will win, while Smith will figure that even if he does run his fastest, he
will lose; so very likely neither will run his fastest. What is true in this
example is probably true in the "game of life" as well: the more equal
people's starting points, the more incentive they will have to try hard.
Since abolishing inheritance would do much to equalize people's starting
points, it should, in this way, increase people's incentives. And this in-
crease, attributable to more equality of opportunity, would, I should think,
more than make up for any decrease in incentive attributable to having
no one to leave one's fortune to-if, indeed, there were any such de-
crease.24
(5) We come now to the most technical and, potentially, the most
serious objection to abolishing inheritance: the objection that this would
24. Gordon Tullock claims that a better way to redistribute income and wealth than
abolishing inheritance would be a direct tax on either income or wealth. See Tullock,
"Inheritance Justified," The Journal of Law and Economics (October I97I). But, if I am
right, abolishing inheritance would not, in general, decrease people's incentive to be pro-
ductive (on the contrary, it would probably increase incentive); whereas the same cannot
be said of Tullock's method of still greater income taxes, or of a substantial tax upon wealth.
In any case, Tullock fails to realize that by no means is redistribution the only, or even the
main, goal of abolishing inheritance; another goal, for example, is greater equality of op-
portunity (i.e., "starting places" that are more equal). Any tax upon income or wealth which
still permitted vast sums to be inherited from various sources would not be as successful
as abolishing inheritance, or as a modest quota (see below), in accomplishing this goal.
cause a substantial decrease in savings and investment, thus causing a

serious reduction in capital which, in turn, would erode our standard of
living.25 Abolishing inheritance, it is said, would reduce savings for two
reasons. First, by breaking up large fortunes, it would reduce the number
of people whose wealth far exceeded their capacity to consume, and who,
therefore, were able to sink vast amounts into savings and investment.
Without these vast amounts going into savings and investment, it is
argued, overall savings and investment, and thus capital, would go down.
Secondly, it is said that, not only would abolishing inheritance reduce
people's capacity to save by breaking up large fortunes, it would also
reduce people's incentive to save. Although, as we have seen, abolishing
inheritance probably would not significantly affect people's incentive to
produce, their incentive to save might well be affected. If people could
not leave their wealth to their children, then rather than leave it to charity,
or to the government, they might well decide to consume it instead. In
short: abolishing inheritance would shift people's consumption-savings
pattern more in the direction of consumption.
These points, although probably well taken, should not be exaggerated.
Abolishing inheritance would distribute wealth more evenly, the relatively
few enormous fortunes of today being replaced, in part, by a larger num-
ber of moderate fortunes. Thus any slack in investment attributable to a
decrease in the size of the fortunes of those with enough to invest sub-
stantial amounts would, to some extent, be taken up by an increase in
the number of people with fortunes large enough for them to invest
substantial amounts. And people's motives to save and invest would cer-
tainly not evaporate altogether with the abolishment of inheritance.26
25. Gordon Tullock says that, for economists, this has been, traditionally, the "principle"
objection to abolishing inheritance (yet it is not an objection Tullock himself makes).
Although it is what he calls the principle objection, he says the point has not been made
as strongly in the literature as one might expect. Ibid., p. 465, n. i. Nevertheless, Tullock
goes on to say, it is discussed in G. E. Hoover, "The Economic Effects of Inheritance Taxes,"
American Economic Review 17 (1927): 38-49; and Alvin H. Johnson, "Public Capitalization
of the Inheritance Tax," Journal of Political Economy 22 (I914): i60-8o.
26. Of the respondents to a study carried out in I964, around 97 percent with incomes
under $io,ooo did not mention bequest as a motive for saving, 8o percent with incomes
over $io,ooo did not mention it, and, even among those with incomes over $300,000, about
50 percent did not mention it. Robin Barlow et al., Economic Behavior of the Affluent
(Washington, D.C.: Brookings Institution, I966), pp. 3I-33. From this study, we see that
most people, even most of those with very high incomes, do indeed have motives for saving
other than that of leaving money to others.
I47 Is Inheritance
Justified?
People would, of course, still want

day." People would still want to sa
knows for how many years one w
would still remain attractive aside
the excitement of a gamble with t
useful. And many people, especiall
to save for charitable purposes; to
versity building named after them
to establish a charitable foundation
they deeply believe. Another point
investment-and corporate investm
investment-is generated by corpo
tween ownership and management
likely that management would be
heritance to reduce the percenta
replacement of capital and new in
became increasingly scarce, fundin
take up some of the slack. In short
how abolishing inheritance would a
effect might turn out to be far les
However the most important repl
even if abolishing inheritance sign
termeasures to increase investmen
are readily available. These count
direct or indirect. Indirect metho
availability of consumer credit, req
and taxing consumption. Direct met
take the form of some sort of dire
But, it should be emphasized, no
cost of any governmental managem
the first step toward socialism. Ind
27. Gordon Tullock, "Inheritance Justifi

the State (Washington, D.C.: American Ent
without inheritance, there would be a rush
case. People may be more reluctant than Tu
of their wealth that these major purchases
large increase in annuity purchases, this it
investment: annuity companies looking for
disposal.
of any governmental selection of investments, something which most

supporters of the free market would find objectionable also. For example,
the government could stimulate investment directly by guaranteeing all
loans to be used for creating new capital, the percent of the loan to be
guaranteed by law to be set at a figure no higher than necessary for
stimulating the amount of investment desired throughout the economy.
And by a requirement that the government not loan any money itself,
just guarantee all and only those loans which entrepreneurs succeeded
in procuring from independent investors and financiers, the government
could be precluded from ever selecting which investments to stimulate.
Another direct method of stimulating investment might take the form of
governmental matching funds where, for any amount an entrepreneur
is able to raise on his own, the government matches it with some addi-
tional sum which would be set by law at whatever would be necessary
for stimulating the desired amount of investment.
At this point one might object that all direct methods, at least, have
one crucial drawback: they would be very expensive. Perhaps so. (It would
depend on how much of a need to support investment, if any, the abol-
ishment of inheritance gave rise to, something which, once again, we
have no way of knowing in advance.) We must remember, however, that,
by abolishing inheritance, the government will experience either a major
new source of revenue (people's estates) or a major reduction in its ex-
penses (attributable to a major increase in private charity). Either way,
the government is likely to end up with enough additional funds so that
these methods for stimulating investment, even if expensive, would not
require any major increase in taxation.
Further discussion of the details and relative merits of different meth-
ods of stimulating, savings and investment is far beyond the scope of our
present investigation. The point is simply that, as Lester Thurow says:
"If more savings are desired, they can be had."28 And, as we have seen,
they can probably be had at relatively little cost, whether the cost be
measured in dollars, or in terms of governmental interference with free-
dom of investment. So, once again, we see that a major objection to
abolishing'inheritance turns out, upon closer examination, to be unwar-
ranted. But it is now time to turn to some objections that are warranted.
The only question is how serious these objections are.
28. Thurow, "Tax Wealth, Not Income," p. 107.
I49 Is Inheritance
Justified?
(6) First, there is the objection ab

in order to prevent the governme
eventually owning virtually everyt
the highest bidder all real property
passed to them from people's estat
be a major and costly burden. Yet
of the property from most estates
put up for sale. But these sales are
the estates, the administrative burd
than falling upon the government
ished, not all of the burden of sellin
fall upon the government either
would, together, shoulder much, i
decedents themselves can be expect
sometime before their death than
lowed. But the government would
of property to dispose of. This adm
additional burden of administering
might become necessary, qualifies
ing inheritance.
(7) Finally, abolishing inheritance might be objected to on the grounds
that it deprives people of property that clearly would have more value for
them than for others. Take, for example, precious family heirlooms. Al-
though their monetary value for those within and outside the family is
the same, for those within the family they have, in addition to their
monetary value, a sentimental value as well. Abolishing inheritance, it
might be argued, would deprive families of these precious heirlooms,
allowing them to pass to others for whom they have far less value. But,
more serious yet, consider the son or daughter who has taken over the
family business or farm, and who has neither the training nor desire to
pursue any other occupation. Again, for such a person the business or
farm can be expected to have value far above the mere monetary value
it has for others; indeed, he or she may have built a whole life around
it. Yet abolishing inheritance would take the business or farm away from
this person and allow it to pass to someone for whom it had far less value.
The family heirloom problem seems less serious than that of the family
business or farm. According to the proposal for abolishing inheritance
we are considering, if the decedent had provided for it in his will, family
members would have a chance to buy any family heirlooms before they
went on the open market and, except for the most expensive heirlooms,
they would normally have the means to do so. If the decedent had provided
for it, a son or daughter would be given the same chance to buy a family
business or farm. But even with the rather liberal credit terms built into
this proposal for sales to those specified by the decedent (io percent
down, and 30 years to pay the rest) probably most sons and daughters
would not be in a strong enough financial position to take advantage of
this opportunity.
Yet it is important to realize that even the family business/farm problem
is, today, rather limited in scope. There was a period in American history
when disrupting occupational continuity from parent to child by abolish-
ing inheritance would have had grave consequences for the nation as a
whole. Higher education, and other occupational training, were not read-
ily available for most people; more often than not, children learned their
occupation from their parents so as to carry on with the family business
or farm after their parents died. To disrupt this continuity by abolishing
inheritance, thereby depriving vast numbers of people of the only job for
which they were adequately prepared, might well have been a national
economic disaster. Inheritance, in those days, might well have been one
of society's main devices for achieving continuity from one generation to
the next in the production of goods and services.
But those days have long since passed-and, incidentally, I see little
reason for trying to resurrect them. Today higher education and other
forms of occupational training are readily available; people are far more
mobile than before; children do not, for the most part, follow in the exact
footsteps of their parents anymore; and continuity from one generation
to the next in the production of goods and services is now achieved instead
largely through the separation of ownership from management that is
found in today's large corporations. Disrupting occupational continuity
from parent to child by abolishing inheritance might have serious con-
sequences for the limited number of children who would like to carry on
from their parents, but the number is indeed limited.
It might be pointed out, however, that the objection to depriving chil-
dren of family businesses or farms goes beyond just the bad consequences
of doing so. This objection, so it might be said, also involves a matter of
justice; after a child has already built his or her life around a family
I51 Is Inheritance
Justified?
business or farm on the understanding that he or she will be able to

inherit it someday, for society then to change its mind, abolish inheritance
and take the business or farm away, would be unjust. I agree. But what
this proves is not that abolishing inheritance is unjust, but that if it is
abolished, its abolishment should not be applicable to those who have
already built their lives upon the understanding that property could be
inherited; rather, its abolishment should be applicable only to those not
yet born, or too young to have been thus misled.29 In sum, although the
potential loss of family heirlooms and, even more so, of family businesses
and farms does seem to be another genuine disadvantage of abolishing
inheritance, this disadvantage does not appear to be overwhelming.
It is time now to take stock of where we stand. In the previous section
we found that inheritance is inconsistent with the ideal of distribution
according to productivity, with the ideal of equal opportunity, and prob-
ably with the ideal of freedom in the broad sense. Thus we began this
section with a presumption against inheritance being justified. But this
was only a presumption; it could be overridden if we succeeded in finding
objections to abolishing inheritance that were strong enough to outweigh
this presumption. In this section we have been examining the most com-
mon and most serious potential objections. Most of them, however, turned
out, upon closer scrutiny, to be unfounded. The two objections that did,
in part at least, survive our scrutiny were the one concerning adminis-
trative costs, and the one concerning family heirlooms, businesses, and
farms. It remains only to ask whether these objections are strong enough
to tip the balance back in favor of inheritance.
It is impossible to determine exactly how great the administrative costs
of abolishing inheritance would be. This, as we saw, depended on the
extent to which government would have to be involved in the sale of
property from estates, and the extent to which it would have to subsidize
investments, two matters that we cannot know in advance. There was
some reason to believe that administrative costs might not be extensive.
But even if they were extensive, they would have to be far more so than
it is reasonable to believe they ever would be to override the presumption
29. The best way would be to abolish inheritance gradually over a number of years so
as to avoid any frantic rush to have children before the "deadline," and so as to avoid the
injustice of one child being able to inherit without restriction, while his younger sibling,
born after the "deadline," can inherit nothing.
against inheritance. For this presumption involves considerations of jus-

tice and freedom against which mere administrative costs should have,
I would think, relatively little weight.
But what about the second objection to abolishing inheritance: that it
would deprive families of family heirlooms and, more seriously, family
businesses and farms? In weighing the importance of this objection we
need to keep in mind the main rationale behind it: by abolishing inher-
itance, we prevent people within the decedent's family from getting what
would have been of far more value to them (for sentimental reasons, etc.)
than to those who do get it.30 No doubt abolishing inheritance would
redistribute wealth so that some of its value would, in this way, be lost.
But to offset this loss would be a very significant gain in the value to
which this wealth, upon being redistributed, would give rise; a gain
attributable, as we saw in Section II, to the diminishing marginal utility
of wealth; to the fact that, other things being equal, the more evenly
wealth is distributed, the greater its overall utility, or value. Indeed, this
gain would, I should think, more than offset any loss attributable to family
businesses and farms going to those to whom they have less value-
especially since, as we saw, any such loss would be far less serious than
it would have been during an earlier period in American history.
So we must conclude, I think, that the family heirloom/business/farm
objection and the administrative cost objection are not, neither by them-
selves nor combined, weighty enough to override our initial presumption
against inheritance. And even these two genuine disadvantages of abol-
ishing inheritance could, to a large extent, be avoided by a certain tempt-
ing compromise proposal according to which gifts and bequests would
not be abolished, or even taxed, but instead a limit would be placed upon
the amount in gifts and bequests any one person could receive in a
lifetime. In other words, this proposal calls for the establishment of a
lifetime accessions quota.3' The key to this proposal would, of course, be
30. In the case of family farms, there is a further rationale: by preventing people from
inheriting them, the farms will, in being sold, be fragmented into a number of small,
inefficient units. The problem of fragmentation, however, does not appear to be very serious;
if significant fragmentation did occur, and did prove to be inefficient, it could easily be
remedied by some sort of legislation requiring that any farms sold by the government in
settling a person's estate be (normally) sold only as a whole, and requiring (perhaps) that
any resale within a period of, say, five years also be only as a whole.
31. A quota would be far superior to a lifetime accessions tax: it is, first of all, simpler-
a not insignificant advantage! -but, even more importantly, a quota would indeed place a
I53 Is Inheritance
Justified?
the figure at which this quota w

due to changes in the value of the dollar, soon become outmoded. So,
rather than some set figure, it might be wiser to choose a figure that,
according to some predetermined formula, would adjust itself automat-
ically to changing conditions over the years. I would tentatively suggest
a figure equivalent in amount to the average dollar value (rounded off to
the nearest ten thousand) of all the estates of all Americans who, at age
twenty-one or over, died during the five years previous to the year in
which the quota is to be applicable. This figure would, I think, make the
quota modest enough so as not to compromise unduly the advantages
that could be achieved by abolishing inheritance altogether (immense
concentrations of economic power would still be broken up, wealth, and
therefore opportunity, would still be distributed more evenly, etc.). Yet,
on the other hand, this quota would be large enough so as to avoid, for
the most part, the administrative costs of abolishing inheritance. Rela-
tively few people would have estates larger than, say, five times the
average, and since most people would know at least five eligible people
to whom they would want to leave their wealth (children, grandchildren,
nephews, nieces, close friends, loyal employees, and the like), relatively
few estates would therefore require any more from the government than
an appraisal of assets, something which the government already does
under current estate and gift tax law anyway. And many people would
have a motive for saving and investment they would not have if inher-
itance were abolished-this motive being that of leaving wealth to these
individuals. Finally, this quota would be large enough to significantly
alleviate the family heirloom/business/farm problem as well.
One final point: if, through either abolishing inheritance altogether or
establishing a modest quota, family members could not inherit or buy a
valuable business or farm upon the owner's death, then it might be
bought, jointly, by the employees of the business or farm instead. A large
number of employees, by splitting the financial burden among them-
selves, could perhaps afford to purchase a valuable business or farm while
a small number of family members could not-especially in view of the
fact that, whatever profits had previously gone to the decedent would, if
the employees purchased his interest, now go to them, thus increasing
ceiling, as a tax would not, upon how much any one person could receive from all sources-
the lack of any definite ceiling being perhaps the most insidious loophole of all.
their salaries to the point where they might well be able to handle the
monthly payments. Furthermore, the government could, and I think
should, encourage joint purchases by employees with "supportive leg-
islation" designed to make such purchases easier by granting emnployees
very favorable purchasing terms. (In return for these favorable terms the
government could require that allfuture, full-time employees be required
to purchase an equal share as well, so that the establishment would then
never have "second class citizens.") As joint owners, workers would have
some control over their own destiny; they would periodically elect man-
agement; they would share in profits and losses; they would, in short,
enjoy what may be referred to as "workers' democracy." This democracy
would not, of course, be a "direct," but rather a "representative" one,
where the elected managers-normaRly highly trained, and highly paid,
professionals-would be in full charge of everyday affairs (just as in a
political democracy), yet answerable, ultimately, to the workers. I am
inclined to think most workers' democracies would be highly desirable.
The potential gains from such arrangements are considerable: they in-
clude a decrease in worker alienation, an increase in the tolerability of
working conditions, and a greater share for workers in the profits from
their own work.32 In general, the gains to be realized in going from a
"totalitarian" business establishment to a workers' democracy parallel
those in going from a totalitarian state to a political democracy. If either
abolishing inheritance altogether or establishing a modest quota, com-
bined with the right kind of supportive legislation, did succeed in creating
a gradual, and voluntary, evolution toward workers' democracies, this
would, I suggest, be a significant bonus.33
Throughout the world today, capitalism is on the defensive. Its many
enemies point to the extreme inequalities of wealth it generates, to the
shameless inequalities of opportunity, and they ask if such a system
32. For more on the potential gains, see David Schweickart, Capitalism or Worker Control?
(New York: Praeger, I980).
33. Ronald Chester believes that any reform in inheritance law that would greatly reduce
the vast inequalities of opportunity attributable to inheritance today might provide yet
another bonus. Chester writes that "numerous observers, including J. B. Mays (who is
British) and Americans such as E. H. Sutherland and Daniel Bell believe that preaching
equal opportunity without its fulfillment has made American social structure powerfully
criminogenic." Chester, Inheritance, Wealth and Society (Bloomington: Indiana University
Press, I982), p. I6I. So greatly reducing these vast inequalities of opportunity may, he
argues, pave the way toward significant reductions in property crime.
155 Is Inheritance
Justified?
deserves to survive. Frankly, I a

virtues as striking as its deficie
it generates important freedom
worth trying to remedy from
changes, not the least of which
outmoded practice of inheritance.
34. On the relationship between capitalism and certain freedoms see, for example, Fried-
man, Capitalism & Freedom, especially chap. i.

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held by the top io percent to be 57 percent. R. Avery, G. Elliehausen, G. Canner, and

3. Thurow, "Tax Wealth, Not Income," p. 33.

5. Thurow, "Tax Wealth, Not Income," pp. IoO'LIoI.

the most careful and thorough study of this ma

II. INHERITANCE AND CAPITALISM

Capitalism (roughly speaking) is an economic system where (I) what to

8. John A. Brittain, Inheritance and the Inequality of National Wealth (Washington,

follows. Political morality places an obligation upon a government to do

Distribution according to productivity

of this ideal of distribution to be moved by the apparent injustice of one

But for people to be productive it is necessary not just that they be

there will be who, as a result of increased opportunity, will come to realize

of unnecessary limitations upon people's opportunity to pursue that oc-

then why, it might be asked, d

practice of inheritance is just another way of stating the very point at

of supply and demand, which is at the very heart of capitalism. Supply

to those who do, with what amounts to a significant handicap. Abolishing

In order to examine properly the objections to abolishing inheritance, we

thing-which would certainly not be very compatible with capitalism.

are today, a healthy counterbalance to the power of government in these

else, would all be welcome additions to the debate, as far as I am con-

So in asking here whether or not abolishing inheritance is justified, I am

society-are not, with respect to

cause a substantial decrease in savings and investment, thus causing a

People would, of course, still want

27. Gordon Tullock, "Inheritance Justifi

of any governmental selection of investments, something which most

28. Thurow, "Tax Wealth, Not Income," p. 107.

(6) First, there is the objection ab

business or farm on the understanding that he or she will be able to

against inheritance. For this presumption involves considerations of jus-

the figure at which this quota w

deserves to survive. Frankly, I a

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