Thomas Piketty, on page 572 of Capital in the 21st Century, worries that an excessive tax on capital income would “risk killing the motor of accumulation.” He means entrepreneurship.
So what if it did? Profit-driven innovation is not innovation for human need. It prefers idle whim, if backed by cash, to the most urgent necessity without. If inequality is extreme, this disfigurement of priorities is demonstrably exacerbated. We have people watching TV on iPhones, while others go hungry and homeless.
I begin to suspect that the entrepreneur, as conventionally conceived, is as useless as the capitalist – and I am convinced that the capitalist, qua capitalist, has no social value whatsoever.
If all capital were socialized, if all decisions about how to allocate material resources were made by some democratically accountable process – David Schweickart’s model of “Economic Democracy” shows one way this could be done* – if no one, ever again, would ever be paid just for already owning stuff, do we really think that all innovation, all creativity, all progress would stop? And suppose it did, or even just slowed dramatically, couldn’t that just be because people no longer saw any need for it? And wouldn’t that be a good thing? It would mean people thought things were good enough, and no more change was necessary.
I don’t think that’s likely. People are curious, creative, inventive – even just for the sake of those qualities, in themselves, but especially if they see need. People like to do good work. They like to be productive. They like to help. They like to make a difference. If someone saw a need, and the need was real, in a truly democratic world, they would convince others to go along, and resources would be made available, both material and in the form of people’s time and creative energy.
Desire for personal wealth is one possible human motivation. The theory of the invisible hand shows that, in some cases, this motive may suffice for a greater social good. The theory does not prove that it will always so suffice, nor that it is the only motivation that can do so. And the theory certainly does not show that greed is the motivator best-suited to curing humanity’s ills.*David Schweickart explains the system he calls “Economic Democracy” in his books Against Capitalism, and After Capitalism.