By Roland Watson

In the first article in this series, I mentioned inheritance. I discussed how early nomadic families found fruitful environments, established claims to them, and then passed them on from generation to generation. This reflects the widely sanctioned social principle that it is acceptable to inherit economic power, meaning money and other types of assets.

I also described the inheritance of social roles, including leaders passing on their positions to their children, largely their sons, and which has given us such things as lords and kings. This is a manifestation of the social principle that it is acceptable to inherit political power.

Now, with the ongoing transition to democracy, which is based on the principle of equality, the idea of inheriting political power is no longer considered valid. In the real world, though, it still holds in many different places, starting with political dictatorships, where power is very carefully distributed from one generation of dictators to the next.

Surprisingly, political power is also inherited in democracies as well, although this is through an indirect mechanism. People with great economic power - the wealthy - buy political influence, if not actual political office, and, since their wealth is protected by its own inheritance principle, their children are able to do the same.

Controls on economic power

This fact has been recognized, and there have been a variety of attempts to limit economic inheritance, and its corruption of the political system.

The first of these is progressive income taxation. Society has goals which it delegates to the government, and the government therefore must be funded. The decision has been taken, in many countries, that the wealthy, with their greater resources, should contribute more.

This reflects an underlying feeling, which is based on the principle of equality, that society should be fair. The wealthy have very favorable lives. It is right that they should make an outsized contribution, to help those, which in many societies constitutes the majority of the population, who do not.

Secondly, many societies also have estate taxes, which provide a more direct limit on the ability of extremely wealthy families to pass their assets from one generation to the next. This in turn reflects both the thinking of progressive taxation, that it is a form of socially-imposed fairness, but also another idea as well.

Estate taxes further result from the belief that much great wealth is accumulated through crime and other unethical acts: that it does not all result from merit and hard work. This is particularly the case in a society's early stages of development, starting with its dictatorial periods. Estate taxes enforce the view that stolen wealth should not be inheritable.

Finally, there are measures to limit the ability of economic power to corrupt political power. The most effective of these are present in the societies that have publicly funded election campaigns, which limit the ability of economic interests to promote their candidates heavily, to the disadvantage of other candidates who do not have such backing.

In societies that do not have publicly funded election campaigns, limits on campaign finance donations have been tried. The notable event here was in the United States, where the Supreme Court ruled though the Citizens United case that such limits were not constitutional.

This in turn has led many people to conclude that elections in the U.S., and the subsequent governance of elected officials, are now fundamentally corrupted. Political power is being inherited through economic power, but not from father to son. Instead, it resides with those entities that now have the greatest economic power of all, business corporations.

The rise of markets

With all of this as background, I want to consider another factor that affects inheritance, which is actually the deepest issue of all, but which at present is ignored. To consider it, I want to return to the one of the first stages of economic development in traditional societies, the establishment of markets.

I described how social development led to institutional development, including economic changes and the rise of different types of economic institutions. The most important of these are markets, and money.

Markets allowed people to sell any excess goods that they produced, although before the invention of money this was only through barter. With money, people could sell their goods outright, and receive a portable store of value in return.

The first markets occurred in a common area - a field, or by a trail or road - and this continues to be the case with many markets around the world today. People gathered - they gather - in these locations (for farm products this is at dawn), and lay out their wares for sale, and shop.

Such markets are open air, meaning that they may not even be held if the weather is bad. This in turn led some people - they are among our very first entrepreneurs - to build structures to shelter the markets. They would then charge rent to the merchants who used the markets, to pay for their costs of building the structures.

This simple change has been one of the most profound of all, affecting our social development. Ideally, what would have happened is that all the merchants using the market would have contributed to build the structure, and then shared in its ownership, meaning that they would not have had to pay rent. Any new merchants that asked to use the structure would also be asked to contribute to its construction and upkeep, but not as a renter - as an owner.

For a variety of reasons, this didn't happen. The markets became private, and private markets in turn became the primary method through which wealth, economic power, became concentrated. Then, from this, economic inequality took hold.

Now, centuries later, we have families such as the Walmart clan who have such great control over markets that they have fundamentally altered the structure of local communities, driving store after store out of business. Also, as individuals, they have personal wealth equivalent to hundreds of thousands of ordinary people.

Of course, the development of markets wasn't all bad. Larger markets increased the efficiency of goods distribution, which encouraged the production of more goods. But allowing these markets to be closely controlled definitely had negative social consequences. Indeed, in many countries today leading politicians come from the families that control the marketplaces.

This pattern of wealth concentration predates the rise of technology and the industrial revolution. Its only peer was the accumulation of wealth through conquest. Essentially, this is armed robbery, which some cultures perpetrated against their neighbors, and which conquest and theft, ironically, many people to this day still glorify.

Also ironically, the other economic institution that I mentioned, the creation of money, arose from conquest, as these groups needed a mechanism to manage their huge quantities of stolen wealth.

The privatization of "commons"

Returning to the transformation of local markets, what happened here, and which few people have recognized, is that a "commons" was privatized. It was taken over by an individual, a family, or a small group of families.

The idea of a commons is ancient. Nowadays, we tend to think of them only in the case of parks, where everyone can go to enjoy themselves, including to see other species of life in the last areas of their natural environment that we have not transformed.

A commons, though, is much more than this. Originally, it applied to natural environments where everyone could go to hunt and fish. No one was allowed to control these environments, and this type of commons continues to survive around the world in many different forms today.

The reason I have described this process is that it was the privatization of market commons that triggered the modern development of great wealth inequality. Even more, this process is continuing today, with new types of "commons," which most of us do not even realize are commons, and which I contend should retain public ownership.

Moreover, the privatization of these new commons is accelerating wealth inequalities to levels beyond even those of the Pharaohs of ancient Egypt, and which will make our society even more unfair and unbalanced.

In the next article, I will examine the existence of modern commons.

© Roland Watson 2014