It is probable that we habitually overestimate the extent to which inequality of incomes is mainly caused by income derived from property, and therefore the extent to which the major inequalities would be abolished by abolishing income from property. What little information we have about the distribution of incomes in Soviet Russia does not suggest that the inequalities are substantially smaller there than in a capitalistic society. Max Eastman in The End of Socialism in Russia …. gives some information from official Russian sources which suggests that the difference between the highest and lowest salaries paid in Russia is of the same order (about 50 to 1) as in the United States; and Leon Trotsky…. estimated as late as 1939 that the “upper 11 or 12 per cent of the Soviet population now receives approximately 50 per cent of the national income. This differentiation is sharper than in the United States, where the upper 10 per cent of the population receives approximately 35% of the national income.”
HKO comment:
This footnote in Hayek’s The Road to Serfdom, published in 1944, reminds us that socialism is just the substitution of political self interest for economic self interest and does nothing to truly address inequalities of wealth. Higher wealth today is more likely to come from better education, intellectual capital, working longer hours, and taking more risk. This is even more true today when fortunes are made on ideas such as Apple, Facebook, and Microsoft than on real property such as real estate and natural resources. In fact the real estate collapse has even widened that gap. The bigger threat is that the motive to equalize wealth will squelch the risk capital that has funded our huge successes.
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