If wealth is only created and not distributed, it does not exist. Someone must receive and use the wealth or it remains wealth only in potential. Nobody owns wealth the instant it is created; society must divide it up according to the rules society has created for that purpose, and apply title deeds, before anyone owns it, and so before it can truly be wealth, properly so called. If the economy fails to distribute the wealth it produces, it breaks down in phenomena such as the Great Depression, wherein wealth piles up in warehouses and cannot be owned or used by anyone, and as a result of that failure in distribution production also slows or ceases.

Distribution of wealth is every bit as important as creation of wealth. In fact, one might argue that it is more important, because creation of wealth is easy, whereas because of the rules that we have applied to distribution of wealth in service to private greed, that distribution is often difficult and subject to failure in many ways.

The way our economy works gives rise to several logical fallacies. One is that a person "rightly" owns what the rules of our society say he owns. Nature does not come with title deeds. Who owns what is society's decision, not so much directly and in person as indirectly by setting the rules that govern acquisition, and there is no objective "right" way to make that division. Another is that wages paid for work represent the contribution of the worker towards the production of wealth. They represent nothing of the sort; rather, they serve two functions in the economy, and those two functions often conflict. One function tends to keep wages low, but the other depends on keeping them high.

One function is to motivate the worker to work. Because capital property -- meaning the property necessary to produce wealth, originally land but now expanded to include other things as well, including machines, organizations, and even ideas -- is privately owned in our society, and because that ownership is very poorly distributed and (by design) falls into a very few hands, most people are denied the opportunity to produce wealth on their own initiative. Instead, they must serve someone else, some untitled baron or duke, some owner of capital property, providing the labor necessary to produce wealth from that property in exchange for a share of the wealth -- but as small a share as the property's owner can pay and still acquire the labor. The worker would not do the work literally for nothing, although if kept desperate enough he will do it for something approaching nothing, and so the pay (against that background of personal impotence) serves to motivate him. This is the way our economy achieves the first half of its function, to create wealth.

The other function is to distribute the wealth produced. Wages allow workers to consume a (small) share of the wealth collectively produced by themselves and other workers from the capital property that society assigns to the ownership of individuals and corporations. This distributes the wealth produced among the people, and is the way our economy achieves the second half of its function, to distribute wealth. As long as we have full employment at high wages, it sort of works, not ideally but acceptably. When wages fall, or fall behind inflation, or even fall behind increases in productivity, it fails, and we have a credit-driven economy which eventually collapses into recession.

When wealth is concentrated into too few hands, the economy as a whole suffers, and so of course do the individuals who are consigned to poverty. (And there will always be such individuals given a set of rules that require it; it is meaningless to point out that any given individual can better his lot by educating himself and being industrious and self-disciplined. Given sufficient native ability this is true, but it only means that someone else, rather than him, will occupy the mandated poverty slot, which is always occupied by the least gifted, least industrious, least ruthless, and least lucky X percent of society -- the value of X being set by the rules of wealth distribution. If everyone in society has a college education and nobody suffers from mental illness or drug dependency, but nothing changes about the rules of wealth distribution, the only result will be that all poor people will have college degrees and be mentally healthy and drug-free.)

I am pointing out all this to say that to call even the most ham-fisted and heavy-handed scheme of wealth distribution a violation of people's rights is preposterous. However, when we get down to how wealth should be distributed, or redistributed, the method does make a difference. My opinion is that it is much better to redistribute wealth before the fact, by changing the rules according to which wealth is distributed, than to redistribute it after the fact by taxing one group of people and directly giving that wealth to another group. Not that I think there is anything morally wrong with the latter approach, it's just that the former way works better. So -- actions by the state that serve to drive wages up, and keep them high relative to productivity, are the best method of redistribution. Other ways can perhaps be used to catch those that slip through the cracks, but the less we have to turn to them, the better.

All of this is fairly moderate and can be achieved through reasonable business regulation and labor-friendly trade and immigration policy, leaving the core system of private capital property ownership intact. This does not mean, however, that we should not consider (carefully and cautiously) the possibility of some more radical change. There is nothing sacred about private capital property ownership; human beings did without it for roughly ten times as long as we have lived under it. In precivilized societies, capital property (all of it land in those days) was owned collectively by the band or tribe, not privately. We cannot return to that system today, but it illustrates that something radically different from today's system might work. For example, suppose the rules of ownership stated that land could not be owned, only leased from the state; suppose, further, that it could be leased corporately, and that by law all employees of a corporation were members of it entitled to a share of the wealth it produced in addition to their wages? (There could be other terms of lease for such things as private dwellings, but that would cover business ventures.)

I'm not suggesting this as a full-blown alternative, merely painting a broad-brush picture to help people think outside the box. So far, we have tried only three ways to run a modern economy: laissez-faire capitalism, centrally-planned socialism, and a managed-market economy that is a mix of the two. Of those three, the third by far worked best. But it seems to me that the biggest problem with socialist economies was the central planning and control, that did not allow enough in the way of decentralized decision-making. Could an (essentially) socialist system that avoided that flaw be designed? Worth thinking about, I suggest.