Limitarianism: could we put a cap on extreme wealth?

How much personal wealth should one person have? Should anyone have more than £10 million in wealth? Or is £1 million too much?

Those are some of the questions put forward by Dutch economist and philosopher Ingrid Robeyns in her new book "Limitarianism: The Case Against Extreme Wealth". In it, she calls for governments to cap the amount of wealth any one individual can own.

Robeyns argues that there is a strong moral case for capping the wealth of individuals. Not only do extreme wealth gaps further entrench inequality but huge riches are often acquired by questionable means, whether that be through exploitative business practices or outright criminality. Even well-intentioned philanthropists can't make up for the damage that the excessive wealth of just a few thousand people can do to the rest of society, Robeyns said. 

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Developed countries with adequate social safety nets, such as her native Netherlands, should impose a limit of €10 million (£8.5 million) on individual personal wealth, according to Robeyns. Individuals should also apply a voluntary moral code on wealth. She said an "ethical limit [on wealth] will be around 1 million pounds, dollars or euros per person."

'Far from utopian'

"Thinkers have been making the case for this 'limitarianism' and the capping of business rewards for centuries", albeit in slightly different forms, said Stewart Lansley, visiting fellow at the University of Bristol, in a review of Robeyns' book for the London School of Economics.

Classical Greek philosopher Plato, for example, argued that the richest should own no more property than four times that of the poorest. Similarly, J.P. Morgan, the famous American financier, believed that executives should earn no more than 20 times the pay of the lowest-paid worker.

Despite many critics dismissing the concept as "either unfeasible or undesirable", recent history suggests that the idea is "far from utopian", said Lansley. Limits on wealth operated "pretty effectively among nations – including the UK and the US – in the post-war decades and became an important instrument in the move towards greater equality".

"Limitarianism, like veganism, isn't about to become mainstream any time soon," said The Times' financial editor Patrick Hosking, "but some of the economic trends of the past few decades that have encouraged the limitarian ideology also explain growing unease about inequality in much of the world, including Britain."

In some cases, it is clear that "the very forces that have lifted the wealth of some are condemning the financial chances of others". For example, in the UK, "the shortage of new homes that has pushed up house prices for so long is the very thing that is propelling rents higher and keeping tenants too poor to accumulate a mortgage deposit", he said.

'What would we strive for?'

Any limit on personal wealth would be "difficult to enforce without significant changes to our tax and governance frameworks", said Christine Emba in The Atlantic. Critics argue that such a policy is impossible to put into practice, and that a cap on wealth would stifle innovation. 

It throws up other troubling questions too: "Can governments use the money as efficiently as we might want? Do we really trust our fellow citizens to make good decisions?" The idea of a wealth cap would also contradict deeply held cultural beliefs in countries such as the US and the UK: "If extreme wealth is no longer aspirational, what else should we strive for? Will we lose all ambition if the prospect of material gain goes away?"

If limitarian ideas are to gain traction, then much of the impetus will have to come from millionaires and billionaires themselves, Robeyns told The Observer. And in a small way, this has already started to happen – 250 millionaires and billionaires signed an open letter to world leaders at this year's World Economic Forum in Davos demanding a wealth tax.

"I may be unduly optimistic about this," Robeyns told the paper, "but I think sometimes these people have this moment in their life which triggers those thoughts."