When people think of wealth, they often imagine a pile of gold coins sitting in a vault, much like Scrooge McDuck’s infamous hoard. However, in reality, money—especially in the modern era—is far more complex than this simplistic image. Wealth is rarely held as cash or physical currency; instead, it is tied to ownership and control of resources, represented by stocks, assets, and equity.
Capital as an Organizational Tool
Capital transcends the notion of mere wealth; it is a mechanism for mobilizing and managing resources. When we refer to someone like Elon Musk or Bill Gates as being “worth billions,” we are not just quantifying how much money they have in a bank account. Instead, we are recognizing their ability through commercial methods (e.g. control of a company) to orchestrate vast resources. This includes managing sprawling warehouses, coordinating the efforts of thousands of employees, deploying fleets of vehicles, leveraging server infrastructures, and developing technologies.
For example, Elon Musk’s capital has enabled the development of products such as Tesla’s electric vehicles and SpaceX’s reusable rockets. Through his ownership of companies, Musk can bring together specialized teams, procure rare materials, and execute complex logistics. Similarly, Bill Gates used his capital to grow Microsoft into one of the most influential companies in the world, developing software like Windows and Office that has become the backbone of modern computing. The networth of these individuals is an expression of the organizational power of the companies that they have a stake in.
It should be noted while capital within the commercial system is central to many forms of organization, it is not the only avenue for mobilizing people or resources. Communities, families, and institutions often come together in ways that exist outside the commercial system, relying on shared values, volunteerism, and mutual support. For example, the grassroots organization of protest movements like the Civil Rights Movement in the United States depended heavily on non-commercial forms of collaboration. Churches, unions, and community groups provided spaces for strategizing and mobilizing millions, often without significant financial backing.
So when someone is “worth billions” it simply means that an individual has a very high ability to organize the word around him within the commercial system (but not necessarily outside of it).
Taxes, Capital, and the Liquidity Challenge
While capital enables feats of organization, its utility often depends on its form. Much of the wealth held by individuals like Musk or Gates is not in liquid cash but in ownership stakes—equity in companies that represents their influence over the resources and operations of those organizations. The value of these stakes often lies in who specifically owns the stakes and their competency with controlling the company, not in the stakes immediate convertibility to cash. Yet taxes—whether capital gains, property, or estate taxes—must be paid in liquid currency, creating a disconnect that can undermine the organizational potential of capital.
If Musk or Gates needs to pay a substantial tax bill, they may be forced to sell shares in their companies to generate the necessary liquidity. This would dilute their control over the business possibility leading to the company functioning differently due to the influence of new stakeholders. The value of a stock is not independent of the person who holds it and so when the stock changes hands the company can change value.
This requirement to pay taxes in liquid currency while wealth is held in illiquid assets can lead to inefficiencies and the destruction of value. Consider a business founder who has built a company over decades, reinvesting profits to grow operations and increase productivity. A sudden need to liquidate shares to pay taxes could derail years of planning due to the influx of new stakeholders into the company that want to run things differently. These challenges highlight the tension between taxation systems and the reality that a stake in a company is not a liquid asset.
The Balance Between Capital’s Potential and Tax Policy
Capital’s true power lies in its ability to organize and create value. When the tax systems fail to account for the liquidity constraints of wealth, they risk undermining this potential. Policymakers face the challenge of designing tax systems that ensure fair contributions to public revenue without inadvertently eroding the organizational capacity of capital holders.
Possible solutions include allowing deferred taxation on unrealized gains, implementing structured payment plans for large tax obligations, or introducing exemptions for productive assets like company shares or long-term investments. These approaches could preserve the ability of individuals and organizations to leverage their capital effectively while ensuring that wealth contributes to societal needs.
By understanding capital as more than a measure of wealth—as a dynamic tool for organizing resources—societies can strike a balance between fostering innovation and maintaining tax policies. In doing so, they can enable individuals and organizations to realize their full potential while contributing to the common good.
📜Articles