Wealth inequality is a huge problem in society, yet we rarely pause to ask: how much inequality can be justified? Reflecting on this question, Ingrid Robeyns calls for placing limits on how much personal wealth any one individual can have. Offering four arguments for this approach – “limitarianism” – she then explores what the political and ethical implications of such a move would be.

Wealth inequality is a serious problem with many facets, as authors from several disciplines have been arguing. We need proposals for how to curb growing wealth inequalities in the short run and tackle its unjust effects. But we also need to ask the more fundamental question: “how much inequality can be justified?” – independently of whether there are, in the present political constellation, the means to eliminate all unjustified inequalities. Having an answer to that question is important even if it cannot be implemented, since it provides us with a regulative ideal to strive towards.

As an answer to this fundamental moral question, I argue that we cannot tackle inequality only by focussing our efforts on reducing poverty and destitution. We also must do something about the other end of the wealth distribution. More concretely, we should be working towards a world without extreme wealth. That view is called limitarianism – a moral and political upper limit to how much personal wealth any one individual can have.

What are the reasons for this view? In my book Limitarianism: The Case against Extreme Wealth, I unpack some of these reasons in detail, and back up the normative arguments with reference to empirical studies from a range of scientific disciplines. Here, I want to summarize the main gist of those arguments.

Four arguments for placing a cap on personal wealth

The first reason is that excess wealth is directly related to poverty, but not in the way we are usually told. The mainstream view is that the rich create jobs and thereby help the poor to escape poverty. Yet this presents only a very small part of what is going on in the economy and the wider political system that it is set within. We need to ask: what alternatives are possible, when it comes to how the fruits of economic production are divided? Research shows that the lion’s share of economic gains go to those who already have the most, while only a tiny fraction goes to those who have least. This is the case when we look at the gains of international trade, as well as within countries, where policies disproportionately favour the economic elite. For example, tax deductions disproportionately benefit the rich, whose tax contributions could have supported the poor.

Second, excess wealth undermines democracy. Extreme wealth allows the super-rich to spend fortunes on lobbying, or to donate huge sums to support political candidates and parties, which gives them a bigger voice in political decisions. Increasingly, there are also worries that those with access to significant financial means have the ability to influence elections via social media.

Third, the rich and super-rich are disproportionately responsible for climate change. Their lifestyles and their investments are responsible for many more greenhouse gas emissions than the average person’s, and are incompatible with the goal of ecological sustainability. In an ecologically just world, they would never have become so rich: if they would have paid the proper taxes for the environmental harms that their activities cause, their profits and thus their subsequent personal wealth would be significantly lower. The excess money of the super-rich, which has been enabled by society at large, should instead be used to avert a planetary disaster, given that the climate crisis is in essence an existential crisis for humanity (as well as for other species).

The fourth reason to limit wealth is the most philosophically fundamental of all: no-one can say that they deserve their fortune. Many believe that what we can reap in the market is what we morally deserve. But this is a mistake. Wealth is, to a large extent, the result of various factors that we can in no way take credit for. We should acknowledge the huge influence of good or bad luck in our lives, including: the “natural lottery” ticket that we were given when we were born; the family we were born into; the parents and teachers who influenced us deeply; and so on. The vast inheritance that many rich people received is also pure luck, and thus undeserved. Meanwhile, much of today’s economic success has been facilitated by the work and investments from previous generations, and none of us can take credit for those achievements. The late Nobel prize winning economist, Herbert Simon, estimated that 90 per cent of economic welfare can be attributed to what previous generations left for us. More recently, Tom Malleson has estimated that 97 per cent of the income of a median worker and 99.9 per cent of the income of the top one percent is due to this “collective inheritance” that is passed down from previous generations.

For all of these reasons, excess wealth concentration could do much more good if it were invested in infrastructure and public goods that, in many countries, have been neglected for decades. If we want to limit wealth so that we can tackle poverty, protect democracy, reverse ecological degradation, pay for the nation’s healthcare and eliminate undeserved riches, then where should we draw the line?

The political and ethical limits on personal wealth

There are two limits to wealth that we should consider: a political limit and an ethical limit. These are set at different levels. The political level is democratically decided and embedded in law and institutions; the ethical level is a voluntary, personal decision, where we can take our personal context into account.

The political limit should be set at such a level that the negative effects of excess wealth on society are minimized. Each society has to ask: What is the level of wealth at which a rich person can significantly undermine democracy? What is the level of wealth at which the rich person’s corresponding lifestyles harm the environment? What limit would be high enough so that it would keep incentivising people to innovate and contribute to the economy? What is the upper limit above which personal wealth starts to turn into wasteful spending? We need to estimate the answers to these questions, and then strike a balance. This gives us the political limit.

For a country similar to the Netherlands, where I live, as a ballpark figure my rough estimate would be that this limit should be around 10 million euros. But then Dutch residents have a properly funded universal health care system and an unconditional basic pension which is around the level of the poverty line. Countries that do not have those features, or where the housing market is under more strain, might need a higher upper limit. But surely it should not be £100 million.

To determine the second limit, the ethical limit, we need to answer the question: How much money do I need to lead a very good life, and meet any special obligations I might have, such as to family members who cannot provide for themselves? This limit will depend on our particular circumstances as well as the public and collective provisions that we can count on. The answer will vary between individuals, but that doesn’t mean that “anything goes”.

Many nations that have been under the spell of neoliberal capitalism are in crisis. Citizens need to ask the question: what kind of society do we want? My suggestion is that when answering that question, we take serious the proposal to limit how much personal wealth a person can hold, since limitarianism will make our societies fairer and more sustainable, and offer all of us better lives.

All articles posted on this blog give the views of the author(s). They do not represent the position of LSE Inequalities, nor of the London School of Economics and Political Science. 

Prof Robeyn’s book, Limitarianism: The Case Against Extreme Wealth, is published by Penguin.

Image credits: imging and Juice Flair via Shutterstock. Photo of Professor Robeyns © Keke Keukelaar.