Originally published: 1952
91 pages
Chapter 28

THE ETHICS OF REDISTRIBUTION

Bertrand de Jouvenel

Fundamental comprehensions develop as people navigate the millions of words and tens of thousands of books, essays, speeches, and studies on the subject of self-governance. This doesn't guarantee that such knowledge will be uniformly applied, or perhaps applied at all, but one hopes it will continue to be part of honest, ongoing conversations.
     By way of example, less than a decade after the Second World War ended, as the long-term economic and social consequences of the growing welfare state became plain, significant political and economic discussions ensued. Many treatises on this subject were written then, and during the next quarter century. Bertrand de Jouvenel's short study of the effects of economic redistribution on both society and the individuals of which it is comprised is an elegant and valuable contribution to this discourse.
     Redistribution encompasses the welfare state in its greater form, but stops short of fully embracing socialism or communism. The redistributionists seek to achieve socialism's goals using capitalism's wealth. The progression is as follows: First, in the early stages of capitalism, free-market gains allow private enterprise and private charity to support those who cannot help themselves (the eighteenth century). Second, as an economy becomes more successful and means are found to tax that success, government programs come into being, and those who cannot see to their own care are supported by the state through a social safety net. This is a political act, as benign as it may initially appear (the nineteenth century). Third, as the social safety net expands,

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incrementally, into the welfare state-where public assistance grows beyond essential levels, primarily for political reasons-a culture of dependency is fostered, unintentionally at first, but eventually callously. As well, the welfare state drives private charitable efforts away thus opening the window even further for increased state beneficence (the twentieth century). Fourth, as the welfare state reaches its final stages, equalitarian goals are seen as possible, and redistribution becomes a barren political tool. The realities of fiscal, psychological, and overall social costs are pushed to the back and political meliorism becomes the only measure of value (the twenty-first century).
     Extreme welfarism, termed redistribution, embraces high rates of taxation, leveled directly on the entrepreneurial class for the purpose of redistribution of profits to the less well-off. However, it achieves goals that are the antithesis of its intentions. It kills the geese laying the golden eggs (entrepreneurs creating profits that can be taxed) and destroys the character of the society it attempts to make better. Governmental redistribution of a free-enterprise economy's products is one of the particular cases where human folly is almost perfectly camouflaged as human compassion and ingenuity.
     De Jouvenel does not attempt to support his criticism of redistributionist programs with a mass of graphs or charts. His point is not just that redistribution doesn't achieve its stated economic goal or its unstated emotional objective, but that it does something more significant-it changes society and its free-market underpinnings in an unseemly and ultimately untenable manner, through attempts to alter or even defy human nature.
     De Jouvenel discusses the morality of redistribution not just as it relates to individual incentive or self-reliance-this had been done by many authors-but as it affects human society and culture by distorting macroeconomic realities.
     Since the Great Depression, government has gravitated toward a central role in the remission of poverty thanks to liberal political activity. This has often pushed out community-based, private efforts. De Jouvenel observes that over the same period liberals have disguised as an intellectual precept their quasi-religious judgment that economic inequality is "intolerably unjust." It should be noted, however, that contrary to the liberal assertion of capitalism's putative injustice, the free-enterprise system (when joined with an open society and the rule of law) actually generates a higher standard of living at its base than has any totalitarian, centrally-planned, or even redistributionist economy operating at its highest potential. And, although the living

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standard measure is certainly one of the pillars of a "just" society-it is not the only one. In other words, there is more proof of the folly of the redistributionists. There is the issue of a nation's character, the impetus of the people toward charity and assistance that is in effect until government efforts push such actions aside and trivialize them.
     While a free system of economic interaction necessarily results in inequalities (as does any collectivist or other centrally directed system-and a redistributionist system must, by definition, be centrally directed), almost all of them are positive and beneficial as is demonstrated by the far higher level of social and economic advancement achieved by the free economies. These inequalities are a matter of degree and are based on intrinsic differences between human beings-in other words, they are the result of normal human interaction. Most important of all, these differences are accepted, even embraced, by society as individuals see opportunity for themselves, or especially their children; the variations are not judged to be destructive or demeaning. (For additional discussions of inequality itself-a heavily freighted and oft-abused term-see Friedrich von Hayek's The Road to Serfdom [Chapter 13], Milton Friedman's Capitalism and Freedom [Chapter 25] and in particular, Richard Weaver's Ideas Have Consequences [Chapter 35].)
     De Jouvenel comments on those who would tax the wealthiest citizens, siphoning off their "excess" income in an essentially confiscatory fashion for redistribution to the less well off. These theorists assume that the "surplus" dollars in the hands of the affluent would bring little additional joy, comfort, or substance to their lives, but would substantially improve the existence of the less fortunate. In essence, they believe that skimming from the top of the economic scale to shore up the bottom would result in a more balanced distribution of essential comforts. However, giving to some what has not been earned by them is an effort fraught with far more bad consequences than good-as has been seen in Frederick Bastiat's The Law (Chapter 7). There is also in such distributions an inconvenient punitive reality for society's more productive members. As redistributionist efforts gained traction the discussion of this aspect of their plans was to be set aside for substantive consideration at another time-a time that has yet to arrive in liberal circles.
     The problem with the liberal's equation, as de Jouvenel succinctly explains, is that redistributing the "excess" income of the rich would not begin to substantially improve the economic circumstances of the economically less well off, much less society as a whole. The

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mathematical reality is that while the wealthy have excess resources, as a group even they do not have a level of income that matches the designs of the redistributionists. The economic fact is that 97% of all U.S. income taxes (2005) are already paid by those in the middle and upper class (those who earn at or
above the median income). Those who earn below the median income-50% of all earners-pay only 3% of all income taxes. In order to make the lower half of income earners equal to the upper half virtually all income of the upper half would have to be redistributed.
     De Jouvenel directly observes the point to be made-the redistributionists do not stop when they've helped those who cannot help themselves, they intend to level the fundamental economic circumstances of society en masse. Here redistribution diverges from the social safety net and expands broad-based welfarism beyond what is economically tenable. The reason for such expansive redistribution is simple-it is how the demagogues expect to get public approval for their plans and reelection for themselves in the bargain-by including everyone on the gravy train who isn't deemed "rich."
     In the determination of the redistributionists, society's "excess" wealth is essentially all wealth above the average. Thus, the amount of money that would have to be collected to achieve this goal would mean increasing taxes all the way down the economic ladder to the heart of the middle class, a move that would change that group's lives in an ultimately unpopular manner. De Jouvenel comments,

               The idea that sums which pass out of the State's hands come from
               above is true as regards only a very minor fraction; and it serves to
               obscure the fact that for the most part the buying power which is
               redistributed comes out of the same social layers as receive it.

     Aside from the fact that redistributionist math doesn't work, and neither the U.S. Treasury's calculations nor those of the most liberal Marxist accountant can change it, the lives of all members of a society-rich, poor, or middle class-are altered when economic equality is attempted through redistribution. De Jouvenel offers basic observations to explain these changes.
     The first and most obvious effect is that when high incomes are substantially reduced through taxation, culture, the arts, education, public service and public charity essentially disappear as personal

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initiatives because there remains little or no discretionary income left to support them. The second and more important change is in regard to the depletion of capital needed for investment, or public improvements, or any other purpose. Capital and its resultant profit are what drive any economy. The third, and most profound effect on both the economy and the citizenry, is the destruction of incentive. If there is no incentive (no matter what level of society is being considered) there is-nothing.
     If accumulated (or "excess") profit is taxed away and redistributed, the only alternative to replace private funding for entrepreneurial and cultural objectives-efforts that will not be given up easily by the public-is the government. But governmental intervention in either the market or cultural initiatives invites dire consequences. Without offering extended examples of what would eventuate in those circumstances one has only to consider the inefficiencies and intellectual corruption and incompetence of political/bureaucratic oversight already extant in our own federal and state governments to know what would eventuate if more power vis--vis the economy was turned over to public and/or political control.
     Unfortunately, after tax rates had been raised to actually allow equalization of (lower) living standards, more and larger regulatory agencies would need to be established to manage the redistributionist mandates. This would require government budget increases, so taxes would almost
immediately need to be increased again across all but the lowest income levels. This would even further stifle incentive, or the ability to act on opportunity because the capital that used to be created through private activity (largely from the savings of the roughly eighty percent of Americans who are the members of the middle class) would have disappeared, so additional taxes would be needed to create capital for investment. The capital pool, however, would be directed and controlled by bureaucrats, and the judgment, much less the competence, of government employees with so much power would justifiably be questionable.
     The problem in any redistribution scheme is that extreme taxation suffocates initiative and entrepreneurial activity. When prospective gains from productive efforts face confiscation and redistribution, the entrepreneur's incentive is eliminated. Economic activity eventually comes to a standstill, for a time, and then it begins to reverse. We ultimately arrive at a terminal condition that is not just predictable, but inevitable: equality at the bottom. Real-world examples of this

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scenario were seen in the Soviet Union until it collapsed under fiscal burdens it could not support, are currently in evidence in North Korea (where the population has been reduced to mass starvation) and Cuba, and are equally observed in China, where a cultural battle (between a government that professes a belief in de-incentivized equalitarianism and a populace that does not) may eventually break into a civil conflagration.
     De Jouvenel notes that governmental schemes for wealth redistribution maim and then subvert the sense of social responsibility and even the human connectedness that constitutes the social bond. As personal involvement in our own lives is degraded through governmental direction and control, our personal sense of worth is undermined, as is each person's sense of his unique value to society. The standard of living gets lower and lower because there is less and less income to tax so a greater percentage of income must be taken just to keep even. As de Jouvenel comments, not only do we not eliminate poverty through redistribution, we actually institutionalize it, and then expand it. Supervision of wealth's redistribution demands continued interference with individual freedom, with negative consequences too broad to enumerate-and the povertization of all aspects of life: economic, cultural, educational, social.
     De Jouvenel comments regarding why redistribution retains any credibility in the face of hundreds of years of free-market economics and thousands of years of experience in the machinations of human nature. He notes that all of those who consider that income redistribution will work assume two facts: First, everyone will agree on the method and level of redistribution and the level and degree of taxation. Second, the level of productivity in society will not be affected by such redistribution. On its face, neither assumption is valid. And if neither is valid, the results obtained will be individually unjust in the first instance and calamitous to society's standard of living in the second.
     At the outset of his discussion, de Jouvenel summarizes both the history of equalitarian economic methods and the goals of liberal thinking. He notes that redistribution is not exactly the stepchild of socialism for redistributionists do not want to dismantle capitalism or the free market; they do, however, want to achieve socialism's objectives. Their ambition is to take the profits from those who produce goods and services-and who presumably spend them frivolously-and give those profits instead to those who have not fared as well. This approach 

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represents a purely emotional response to the inevitable inequalities of an economy based on free human activity-a response that attempts to make liberals feel better about some of the unavoidable, and valuable, differences among people in terms of talent, intelligence, and ambition, but succeeds only in making everyone feel worse about the results.
     Perhaps more importantly, redistribution also denies the dignity of labor-all labor. It concentrates on fiscal results, not on the content of any individual's life. It fails to recognize, much less comprehend, that inherent differences in ability and gifts are the foundation of life-and that those differences are not "unfair." Even if they could be termed such, bureaucratically compensating for differences in every individual's life would involve judgment, not math. In that circumstance dissatisfaction with public intuition as to what is fair would be more certain than the existing presumed dissatisfaction with life as it is.
     On the other side of the equalitarian coin, human beings are perfectly aware of the benefits, to themselves and to society in general, of the inequalities among people (otherwise why would they pay to hear someone other than their mother-in-law sing, or build them a car, or perform their open-heart surgery?). What the redistributionists forget is how we will feel when the desirable differences of society and culture are eliminated and economic opportunity overall diminishes simply for lack of fuel; as Wilhelm Ropke observed, the fuel of any economy is profit. When profit is debased through extreme taxation, it descends the path leading to its extinction. The end result is an ignoble existence for all of society.
     A point should be noted as one travels through the "inequalities" of an open society: often, modern demagogic disquisitions on income variations focus on the "rich" and the "poor," and emphasize the gulf between them. These speakers, for political purposes, talk only in terms of black and white. What they intentionally ignore is that the vast majority of the developed world's population lives in society's economic middle ground, not at the extremes.
     The intent of the social revisionists is to convince the middle class of two things-that they are poor, because they are not "rich," and that this circumstance is the "fault" of the wealthy. These tactics are mostly not well received by the largely educated middle class in America, but they can bear fruit among the less educated elsewhere. Class warfare, so often attempted as a tactic in U.S. politics, has never fared well because of overwhelming evidence that economic status is not static. In fact, there is unrestricted social and economic mobility, and the American

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standard of living belies any portrayal of most citizens as being poor. Finally, and perhaps most importantly, the American ethic of earning one's place, one's bread, and one's success is ingrained in our cultural experience and not easily dislodged by promises of equalitarianism.
     De Jouvenel observes that redistribution can appear superficially attractive, in part, because of the media's distorted focus regarding the lifestyle of the wealthy. This small but now highly visible cadre of moneyed persons (allegedly given to cavorting in remote resorts, driving outrageously expensive automobiles or jet airplanes, and conspicuously consuming high-priced items in myriad variety) is the perfect foil for the demagogues. All of this, of course, is simply the media feasting on frivolity.
     The focus on admittedly ostentatious displays of wealth conveniently ignores what the very well-off do with the vast majority of their income. The portion that they cannot spend, they invest. (And let us not forget, the spending and consumption by the wealthy has its own positive multiplier effect on the economy.) Whether in new companies or new ideas or in pools of capital that others may use to create more opportunity, the "excess" income of the wealthy is invariably put to work improving one thing or another. It also goes toward private funding of the cultural, public-service, and educational initiatives previously mentioned. This money does not sit idle inside some mattress. If this wealth, transformed to capital, is taxed away through redistributionist schemes, the reserve of assets available to the economy is less. At that point the economy simply produces less, and that changes everything-not just the comfort level of one group or another.
     Apropos of the supposed case against the wealthy, de Jouvenel observes:

               It is well known that "the people" are less critical of the high-living
               than [are the intellectuals]. . . . [W]hile it still seems right to give [to
               the less well-off], the rightness of taking away [from the economically
               successful] is far less obvious.

     When contemplating the media's exploitation of the superficial entertainment value of the whimsical minority of the affluent, it is seen simultaneously that the so-called intellectual elite experience a judgmental abhorrence of conspicuous consumption (other than their own). The basis for this is found in envy, or righteousness; the latter is sometimes even obliquely or inadvertently admitted by those

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intellectuals engaged in judging. The public does not often share the intellectuals' distaste, as de Jouvenel notes.
     As was observed earlier, class warfare has never been a successful political tactic in America because parents in each generation expect their children to be more successful than they were, or at the very least, to have more opportunity. Therefore, to advocate eliminating the ability to move up in the world (through the roadblock of redistributive taxation) or even to imply that each generation cannot be more self-sustaining, more successful, and more secure, is antithetical to parental goals for their offspring. It is essentially an insult to parents and children alike-and is also contrary to the economic and social history of free-market economies the world over.
     De Jouvenel's point that redistribution is not socialistic in means but is in terms of ends, merits emphasis. Redistribution's guiding light is meliorism. Under socialism ownership of private property is essentially to be eliminated, the good will of all people toward one another is expected, and eventually we are all to get along so well that the state becomes unnecessary and withers away. These were the premises of the 1789 French Revolution. But, under redistributionist schemes, the state has never withered away. It not only hasn't withered away, it has become more obtrusive (even though its intention was to become less necessary) in the private and public sectors as it strives to regulate the distribution of assets, presumably without the voluntary consent of all parties. The emotional foundation of the impulse to achieve equalitarian results, as de Jouvenel intones, rests on a simple theoretical precept:

               The rich would feel their loss less than the poor would appreciate their gain.

     As long as the argument is presented in personal terms (that is, as long as we consider specific individuals whom some think have too much money, and some who do not have enough) this contention's immediate logic and appeal can appear obvious and to some individually arguable. But when the discussion moves to a larger forum, to the society itself, then as de Jouvenel points out, income redistribution proves to be immoral, for in practice it would erode the quality of life across all economic and social strata. The resulting government structure, essentially totalitarian in nature, would ultimately collapse of its own burdens for the simple reason that it is irreconcilable with

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human nature. At the point of collapse, we would start all over again, man versus man, for as de Jouvenel notes:

               democracy is a regime of well-regulated strife where force is made to
               prevail without violence.

But when democracy fails, because people no longer accept its redistributed fruits as a rational manner of governance or economics, then violence resumes, as it inevitably must whenever social life goes backward too far. Intellectual violence occurs initially, with something more serious following eventually. (For a discussion of governmental power in a democracy and how that power increases in the name of the people as participation in the electoral system becomes near universal, see de Jouvenel's On Power [Chapter 15].)
     Interestingly, de Jouvenel initially acknowledges only in a footnote that what occurs first in the transfer of wealth is the redistribution of authority, not just resources, from the individual to the state; yet this is the essence of his intellectual calculations. If the state takes from some and gives to others, the state will have to arbitrarily make fifty economic, social, and political decisions with regard to what it (not the individual) now controls. The resulting fifty determinations will generate five hundred more questions, ad infinitum, all to be settled by bureaucrats who have no stake in their answers. These public servants work their hours, return home, and think (if they are arrogant) or hope (if they are humble) that they've made the right decisions. They won't know they've got things terribly wrong until they stand on the gallows in a social upheaval. They will suffer, not because they taxed away people's resources, but because they stole everyone's freedom.
     What we witnessed over the course of the twentieth century, as de Jouvenel observes, was the corruption of political institutions by means of legislation that discriminated among citizens. When it is understood that redistribution will not work to effect the desired result, that it not only doesn't make life better, but makes it much worse, it will also be understood that

               [t]he error must then lie in the original assumption that incomes are to
               be regarded solely as means to consumer-enjoyment . . . . [and] the
               ideal of income equality is, then, seen to fail by the two standards: justice
               as between individuals, and social utility.

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     Income obviously has purposes other than for consumption, and to use it as the exclusive means to address raising the standard of living for some people-whose reason for being "disadvantaged" may or may not relate to their economic circumstances-seems a poor bargain. This is especially germane considering that simply giving people money has historically proven to have more negative (personal and social) consequences than positive. Income redistribution creates contradictory effects and costs that are incalculable except in hindsight. To ignore these results while aiming at emotional or even righteous satisfaction is why, for example, America's War on Poverty has failed to change virtually anything for society as a whole or the conditions of the social stratum at which it is aimed. It has only made government bigger-certainly not better.
     De Jouvenel recognized that living is a social process, and that feeding, clothing, and housing oneself are merely support mechanisms. When the benefits of and the opportunities to engage in the social process are limited, the social life and the individual's vitality are diminished. The greater the economic opportunity, the greater is the social life, but that life is rife with inequality. This is a fact of
existence, the reality of which we have accepted for millennia. To try to eliminate inequality through political maneuvering is to beg the law of unintended consequences to become the basis of social interaction. What we must continually recall is that most of life's inequalities are far more beneficial than derogatory of mankind's existence.
     Perhaps de Jouvenel's most optimistic observation comes toward the end of his dissection of income redistribution schemes. While discussing the history of taxation and the typical insistence of rulers that they "know best the common interest, which the individual, sunk in his selfish pursuits, cannot perceive," he notes the silver lining in such arrogance:

               Indeed, the subject's dislike of taxation has been the means of turning
               him into a citizen.

     Reflecting one of the themes of First Principles, de Jouvenel also warns that "[a] society of sheep must in time beget a government of wolves." We do, indeed, need far more citizens than subjects to ensure that the state, and the political class (by means of their own miscalculations or misunderstandings) do not destroy a social and economic structure that is the best chance for providing the highest standard

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of living for all of its citizens. In The Roots of American Order Russell Kirk succinctly states, "economic leveling is not economic progress." As the state becomes stronger, individuals become weaker, not only in relation to the state, but in real terms as human beings. This is because, as Kirk further observes, we no longer have those "habits of mind and action that self-responsibility teaches and which make us individuals;" we only react to the state.
     De Jouvenel's dire forecasts of redistribution's endgame are not probable in societies where citizens remain vigilant, but they are certainly possible. Is de Jouvenel crying "wolf" too loudly? A quick look at Europe's continuing fiscal crises (founded in their social excesses and declining populations; see Fewer, by Ben Wattenberg [Chapter 43]), the economic mayhem practiced in Third World countries, and the U.S.'s looming insolvency based in the insupportable Social Security, Medicare and Medicaid programs, make a strong case that redistribution is alive and well-and not just in academic or political theory.

About the Author
Bertrand de Jouvenel has been termed "the least famous of the great political thinkers of the twentieth century," but his fame, or lack of it, may be inversely proportional to the value of his insights. He was raised in a prosperous literary family who were intensely political and of ancient French aristocratic lineage on his paternal side. His father was the French ambassador to the League of Nations after World War I and was elected to the French senate; his mother presided over an important salon with a particular interest in France's relations with Czechoslovakia. Born in 1903 in France, de Jouvenel was strongly affected by the rise of Adolf Hitler's National Socialist Party, the Nazis, and the world war that followed as a result thereof.
     Although de Jouvenel graduated from the Sorbonne in law and mathematics his career soon gravitated toward economic and political commentary. His interest in the United States led him to write La Crise du Capitalisme Americain (1933) [The Crisis of American Capitalism], one of the first interpretations of the Great Depression. At the time he favored a strong role for the state in economic matters.
     De Jouvenel worked as a journalist specializing in international affairs for much of the 1930s. He gained worldwide renown for his 1935 interview with Adolf Hitler. After the outbreak of World War II de Jouvenel joined the French resistance but was forced to take refuge in

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Switzerland.  There he prepared his most famous work, Du Pouvoir: Histoire Naturelle de sa Croissance (1945) [On Power: The Natural History of Its Growth], a harsh critique of the modern state's authority. De Jouvenel built upon this historically oriented and profoundly philosophical treatise with several other books over the succeeding decades.
     De Jouvenel taught at the University of Paris and was a frequent visiting professor at British and American universities. He worked tirelessly to acquaint the French elite with Anglo-American economic thought and practices; he was the author of scores of scholarly articles and books on these subjects. De Jouvenel died in 1987.

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