By 
Professor Adam Smith, considered the founding father of capitalism and the free market, had very strict views on inheritance and was well aware of the deleterious effects this could have on the economic system he was building and promoting.
The learned professor knew very well that over time, in a capitalist economy, there would be an extreme polarization of wealth and opportunities that would initiate the irreversible rupture of the delicate social fabric of society. In fact, Adam Smith taught the students who attended his lectures on jurisprudence that “there is no point more difficult to explain than the right we conceive of men to dispose of property after death.” He 1 he Thought that inheritance was clearly justified only when it was necessary to provide for dependent children. It is “the most absurd of all assumptions,” said Smith, “…every successive generation of men has not the same right to the land.”1
John Miller, the historian, shared Adam Smith’s views on inheritance and thought that the law governing inheritance should be changed.
Franklin Roosevelt undertook the same crusade, amassing vast fortunes, again for both moral and economic reasons. “The passing down of vast fortunes from generation to generation by will, inheritance, or gift,” FDR declared, “is not consistent with the ideals and sentiments of the American people. Inherited economic power”, he continued, “is as inconsistent with the ideals of this generation as inherited political power was inconsistent with the ideals of the generation that established our Government.”1
One of the central tenets of capitalist society is that social privilege must be earned and must be a reward for contribution to society and not simply passed down from one generation to the next within wealthy families. Therefore, unbridled inheritance goes against the principles of capitalist society.
Currently, Bill Gates and Warren Buffet have pledged to donate their wealth after death. The Gates-Buffet initiative aims to convince very wealthy people around the world to donate their wealth after they die.
Today, the polarization of wealth and opportunity is an acute symptom in many societies that have ‘easy’ inheritance laws. Some small groups in such societies, driven by greed, further accelerate the pathological polarization of wealth and opportunity. Such groups and individuals would not think of law and culture in pursuit of their goals of amassing great fortunes, for the sole purpose of passing them on to the next generation.
In fact, when the compounding factor of inheritance from the capitalist system is removed, what emerges is a form of socialist system.
The ill effects of ‘surplus value’ become truly apparent only when the wealth and position acquired by one generation is passed on to the next through unbridled inheritance.
The situation in Pakistan
Pakistan is an unfortunate country where the pathological effects of unbridled inheritance in a feudal society have become very clear. The polarization of wealth and opportunity is stark and is tearing at the social fabric of society.
The recent example of the Swat Valley highlights what awaits those societies that do not stop this polarization. We all know that the Swat Valley in Pakistan was taken. The fact is:
The entire Swat Valley was previously controlled by just 4 dozen owners. Owners and elected leaders were mostly the same people, protected by an unmotivated and underpaid police force.2
(Polarization of Wealth and Opportunity by Rampant Inheritance)
It took the full might of the US-assisted Pakistan Army to regain control of this valley.
The situation in India
We have a law of inheritance that allows great fortunes to be passed on to the next generation. This for the Asian culture works like a sweet poison. An individual in our society is programmed to accumulate wealth for the next generation and behaves like a ‘dynastic slave’.
Of all the laws in our constitution, the law of inheritance is the one closest to the heart-mind of any Indian. This is the law whose true spirit is totally absorbed by our culture and we uphold it as a frightened right. This is one law, among many, that is engraved in the collective psyche and transcends all caste, creed, religion and social stature.
However, inheritance is a concession that a civilized society grants to its members, just like intellectual property, and at no time should society allow a concession to tear apart the very source from which it springs.
In our country today we see the pathological effects of heredity. It is the root cause of each and every corruption that aims to accumulate wealth, because the corrupt know that the wealth will pass to the next generation, who will benefit immensely from its compound value, and who will, in turn, add to the loot. and make it worse and worse.
The role of legislators
The law makers in any society modify the laws and bring in new legislation to nurture the tree of liberty. It is imperative, for your part, to locate the true focus of this evil and make changes, so that future generations are spared the harmful effects of unbridled inheritance.
The role of political parties and their manifesto
The situation is fair in mentioning in the manifesto of the political parties that the party recognizes the harmful effects of unbridled inheritance and commits to act to change the law in a way that is more suitable for the general good of society.
This act alone can give a clear and distinctive advantage to a political party that wishes to benefit from the elections, being the first to request a change in the succession law.
Our constitution has been amended a record number of times, so it may seem that a change in inheritance laws would be easy, but modern ‘dynastic slaves’ would resist more strongly, perhaps violently.
in other parts of the world
There are many countries in the world, where inheritance laws are strict to a certain extent, that the heir often chooses to give up his inheritance rather than pay the taxes associated with it.
In such countries, a large store of wealth is made available for the general good. The law is drafted in such a way that it is an antidote to the evil of wealth accumulation. Not surprisingly, these nations have the highest standard of living; the Scandinavian countries are an example.
Below is a comparison of inheritance tax in some countries:3
Country Inheritance Tax Exemption Limit
India ZERO Not applicable
England 40% $470,000
France 40% $182,000
Germany 19% to 50% $367,000
Norway 20% $38,000
Denmark 25% $302,000
Greece 40% $7,000
Spain 7.65% to 34% NIL
way to go
India is a nation with the highest proportion of young people both in number and percentage. Society must attend to and evolve a dream that gives hope to the people who will move the country forward.
A change in the laws of inheritance will bring so much wealth for the general good that our young society will be strengthened with such hope and energy that the foundations of a truly great nation will have been laid.
Currently, a change in inheritance laws is not a priority for any political party, although the party that introduces this first will get the most benefit.
The task seems arduous but I have the hope that nothing is stronger than an idea whose time has come.
Adess Singh.
References:
1. Adam Smith’s views and quotes from former presidents: jeffweintrub. blogspot.com
2. Swat Valley homeowners: ‘The New York Times’ and reproduced by ‘The Hindustan Times’, April 18, 2009.
3. Inheritance tax in various countries: Globalpropertyguide.com