By Martin Butler. (From 3 Quarks Daily; reprinted with permission.)

In the UK and USA the gap between the richest and poorest ten percent continues to grow. Few would argue that inequality resulting from racism, sexism, disablism or any other sort of prejudice is morally acceptable. Wealth inequality, however, being a matter of degree, is far less straightforward. The familiar nightmare vision of totalitarian ‘communism’ hangs over the idea that everyone should have exactly the same level of wealth.  Most accept that some level of wealth inequality is a positive good, in that it incentivises effort and excellence. But if we agree that wealth inequality pe se is not necessarily wrong, at what point does it become unacceptable? And why would going beyond this point be unacceptable?[1]

Many would argue that equal opportunities are what matter. We can imagine a society with excellent equal opportunities that nevertheless has significant levels of wealth inequality. And we assume here that all wealth is acquired legally though legitimate means. A society with excellent equal opportunities would be one where the basics – education, healthcare, housing, a living wage and so on – were readily available right across the board so that the young of the poorest in society would start life not necessarily on a level playing field, but at least on one that was not hopelessly skewed against them. Of course family influences are crucial but these are always going to vary, so perfect equal opportunities – like perfect anything – is for the birds. Once off the starting blocks, those from the poorest background in such a society would have a similar (or at least not too dissimilar) chance to succeed as those from higher wealth groups. No matter what their background, those who failed to take the opportunities on offer, or chose not to take them, would be likely to fall into the lower wealth brackets. There would still be significant wealth inequality but this would result from individual effort and talent or the lack of it, which would mean high levels of upward and downward social mobility. Implicit in the vision of modern liberal democracies is the ideal of meritocracy, allowing for wealth inequality due to differences in talent and effort but finding inequality based on prejudice and discrimination morally abhorrent.

What’s wrong with this vision? One problem is the fact that in most liberal democracies, though upward mobility is not unusual – despite the fact that in recent years it has declined considerably – downward mobility is far less common. This is in terms of wealth rather than income, and the reason for this is inheritance. Societies, despite the move towards individualism, are in the main composed of families. Every individual has a mother and a father who will usually pass on any accumulated wealth to their offspring. This exposes one of the contradictions in the values of the liberal world view. On the one hand we fully endorse equal opportunities, but on the other we regard it as natural that we have a right to hand on accumulated wealth to our offspring. Inheritance taxes are unpopular because they seem to undermine this right. But a society where inherited wealth plays an increasing role in wealth inequality is a society where opportunities are less equal. Inherited wealth – or simply having well-off parents – increases an individual’s opportunities in all sorts of obvious ways that are unrelated to the merits of the offspring who receive these benefits. Inheritance works directly against meritocracy.[2]

Another problem is that, in modern societies at least, wealth inequality is not static. Even if we accept that some level (perhaps even a high level) of wealth inequality is acceptable, there will still be a natural tendency for this inequality to go on increasing. And it’s not clear where this ends. There are at least two mechanisms whereby this occurs, both centring on the fact that wealth in modern societies is about the ownership of assets (property, shares, precious metals etc) rather than money in the bank. First, if asset prices increase at a faster pace than wages, which has been the case over the last decade at least, owning becomes a better bet than working. The more assets you own the greater your increase in wealth relative to those who own few or no assets. Second, those who own many assets earn large passive incomes in the form of dividends, rents, or profits, much of which may well be above what is required for ordinary living, or even for a luxurious life style. What happens to this passive income? It is used to buy further assets which will increase the passive income of the wealthy still further.[3] This in turn buys more assets and on and on, the knock-on effect of which increases the price of these assets, effectively putting them well out of the reach of so many. This is what’s happened with housing, certainly in the UK. If you’re on the property ladder you will inevitably pull ahead. If not, good luck even getting your toe on the bottom rung.

Perhaps we can still accept the consequences of inheritance and the mechanisms whereby wealth inequality continues to widen, provided we stick to the key premise of our hypothetical meritocratic equal opportunities society. That is, that those at the bottom have ‘the basics’ and can still live a minimally acceptable life according to the norms of society.  Does it then really matter if some eat caviar and spend their time on expensive yachts? Poverty in any useful sense of the word must be understood in relation to the culture of a society. A rich person in medieval England lacked running water, a flushing toilet, etc., any meaningful notion of poverty is necessarily relative. So provided those at the bottom are not in poverty in terms of their own cultural expectations, what’s the problem?

There’s a political problem here that cannot be ignored. The continual accumulation of assets brings power, which can take control of large portfolios of property, shares, or the ownership of media interests – a particular problem we face today. Widely distributed ownership seems in keeping with the values that liberal democracies at least purport to espouse – the Adam Smith vision of small capitalists trading with each other to their mutual advantage. Anti-democratic monopoly power, however, seems to develop quickly, and governments struggle to keep this tendency at bay, particularly when ownership brings political influence. Unrestricted wealth inequality presents an almost irresistible tendency towards oligarchy.

Another major problem stems from the number of ways in which extreme wealth inequality can threaten the coherence of society. Without mechanisms to counter the continually widening gap (such as a serious wealth tax), a number of negative consequences follow, the most obvious one being that the rest of society becomes poorer. You might argue against this that wealth is not a zero-sum concept. In other words, just because one group is getting richer its doesn’t necessarily mean that the rest of society is getting poorer. If the size of the cake increases it may well be the case that everyone gets a larger slice. Economic growth is the perennial solution that governments obsessively adopt to solve the problem of wealth flowing upwards. Continual economic growth, however, is not a given (or even desirable), and when it stalls or is weak, as has recently been the case in the UK, it’s those at the bottom who suffer.

This point connects to a more general one. As their affluence continues to increase, those at the top of the tree become more disconnected from the rest of society. Even though wealth can only be produced within a society, with its laws, institutions, education system and so on, enormous quantities of wealth accumulated at the top float free from the jurisdiction of any particular society, often avoiding any serious taxation – through tax heavens for example – which in turn impoverishes governments. This in turn means that the basics can no longer be adequately provided. Those at the bottom find it more of a struggle to maintain the minimally acceptable norm, particularly if governments do nothing to counteract the upward flow of wealth.

There’s a social dimension to this disconnect too. It’s not enough for members of a society to formally belong in the sense that they have the appropriate passport. There has to be a deeper sense of belonging, otherwise society is simply a collection of individuals who happen to live on the same patch of land. This belonging is enhanced by day-to-day connection with other members of society. If the super-rich go to different schools, use different healthcare facilities, shop in different shops and so on, they become a group apart. The idea that they ought to contribute to the society from which their wealth emanates begins to dissolve, and the rest of us, including governments, can easily go along with this illusion. We come to think of the wealthy and their wealth as having no ties or obligations to any particular society. Part of the problem here is the pre-eminence of the concept of ‘rights’ within our moral vocabulary. Ownership rights come to be seen as unconditional and quite separate from the social group from which they originate. The very notion of tax assumes a sense of belonging to a society to which obligations are owed, but if ownership rights are seen as unconditional paying tax becomes almost optional, as in fact is often the case. But this is misguided. As Simone Weil points out: “The notion of obligations comes before that of rights, which is subordinate and relative to the former.”[4] The tendency towards cultural atomism that has developed in many areas of modern life, facilitated by the language of rights, leads to the illusion that belonging to society is an option we can choose to forgo. This very much plays into the hands of the super-rich.

Far too often success is measured in terms of wealth acquisition. Even when we think of equal opportunities, we have in the back of our mind the opportunity to acquire wealth. Indeed, this can become almost an addiction – the wealthy don’t seem to lose the desire to acquire even more. We shouldn’t be too judgmental about this, since in a society where wealth means security and a degree of freedom it’s completely understandable. That’s why I think the way out of this is to de-commodify at least those aspects of life that allow for a basic but secure existence. A life that meets at least ‘minimally acceptable’ standards should not be such a financial struggle to maintain, particularly in supposedly rich industrial countries. To ‘de-commodify’ something does not necessarily mean removing effort and commitment, it just means removing it from the realm of money and exchange, allowing a culture to develop where wealth acquisition is not central to everything we do. It would produce a stronger sense of belonging, essential to any sustainable society. Such a society cannot realistically be one where wealth inequality is completely unchecked.

***

[1] Many ideas here were taken from: Piketty, T., & Sandel, M., 2025, Equality: What It Means and Why it Matters, Polity Press, Cambridge.

[2] In the UK 60% of private wealth is inherited. Way more than in many other western countries. https://blogs.lse.ac.uk/politicsandpolicy/to-tackle-wealth-inequality-reform-inheritance-tax/#:~:text=The%20share%20of%20inherited%20wealth,such%20as%20France%20or%20Germany

[3] 93% of all U.S. stocks are held by the wealthiest 10% of Americans, with the top 1% controlling 50% of stock market wealth. The bottom half of the country hold just 1% of the market.

[4] Weil, S. 2023 (first pub. 1252) The Need for Roots, Penguin Classics, London, p3.

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