I have already argued that private enterprise in a so-called advanced society derives very large benefits from the infrastructure – both visible and invisible – which such a society has built up through public expenditure. But the public hand, although it defrays a considerable part of the cost of private enterprise, does not directly participate in its profits; all these profits are initially privately appropriated, and the public hand then has to try to cover its own financial requirements by extracting a part of these profits from private pockets. The modern businessman never tires of claiming and complaining that, to a large extent, he ‘works for the state’, that the state is his partner, inasmuch as profit taxes absorb a substantial part of what he believes to be really due to him alone, or to his shareholders. This suggests that the public share of private profits – in other words, the company profits taxes – might just as well be converted into a public share of the equity of private business – in any case as far as large-scale enterprises are concerned.

Excerpted from pages 868-870 of ‘Small is Beautiful’ by EF Schumacher