- Scientific article link: https://www.centroeinaudi.it/images/abook_file/BDL_2022_01_Icardi.pdf
Setting a limit on individual wealth. A provocative proposal for some, but the only way forward in truly democratic societies for others. This is what the philosophical theory of "limitarianism" suggests, with not a few drawbacks and just as many reasons for it.
The exponential increase in certain individuals’ wealth in recent years has certainly not gone unnoticed. Consider Elon Musk: according to the renowned Forbes magazine, in 2022 he accumulated 219 billion dollars, 68 billion more than the fortune he already had in 2021. The disproportionate growth of the fortunes of a few corresponds to widespread discontent with democracies among the majority. Those who do not belong to the economic elite often have the impression that their opinion counts very little compared to that of their multi-billionaire fellow citizens.
On the other hand, the idea of setting a limit on individual wealth encounters some resistance. Generally accepted indeed is the conviction that the wealthiest have earned their wealth by taking part in a market game open to everyone; a game which merely rewards the most deserving. Moreover, against a limit on individual wealth, there is also the belief that limiting it would have undesirable effects on overall wealth. The rich would be disincentivized from producing further wealth – who would be willing to work extra hours for zero gain or to return all the compensation received in taxes? – thus, the number of available resources would also decrease.
Not more than what is needed for full human flourishing
Against this common feeling, limitarianism has come to the fore. Limitarianism is a recent theory, introduced by Ingrid Robeyns, which argues in favour of setting a limit on individual wealth, for example, by implementing a top marginal tax rate of 100% above a certain threshold. In a democratic society, wherein everyone should have equal opportunities to influence politics, it is unacceptable that some individuals enjoy significantly greater opportunities than others due to their wealth. If we want to preserve the democratic ideal of equality, no citizen should position themselves above a certain threshold of wealth. According to Robeyns, this threshold should be set where individuals achieve their full flourishing. In other words, it should be set where the community believes that individuals possess enough resources to fully realize themselves; and all they might want more is something they could give up without sacrificing part of their personal fulfillment. Not being able to afford a private jet, for instance, would not compromise an individual's ability to flourish as a person. Therefore, the resources necessary to buy such a jet would be considered a surplus that one could live without and hence could be heavily taxed.
This surplus should be taxed not so much because individual wealth above a certain threshold is itself wrong, but because it threatens other values, such as the democratic value of equality. Surpassing a certain threshold of wealth should not be prevented because it is immoral but rather because excess wealth confers advantages that undermine the democratic process, creating unsustainable power asymmetries among citizens behind the illusory veil of formal equality.
A threshold, but which one?
At this point, two possible objections arise.
Firstly, in a pluralistic society like the one we are used to – i.e., one in which individuals pursue different (often irreconcilable) ideals of personal fulfillment – it is difficult to determine what is meant by human full flourishing and, consequently, to distinguish between resources necessary for achieving it and excess resources. Some people might be content with any car, while others might not feel fulfilled without being able to afford a luxury car.
One initial response to this objection is that we are talking about limiting the wealth of the super-rich, those individuals who could afford dozens of luxury cars. People like Amazon's owner Jeff Bezos or Meta's CEO Mark Zuckerberg can not only buy a private jet but also regularly use it to fly to their estates in Hawaii. Thus, the line between resources necessary for human full flourishing and surplus resources appears easier to set up.
Moreover, we are not discussing an objective and unchanging threshold, but rather one established by the community. Just as collectively we can agree that owning less than a certain amount of resources means not having enough, we could also agree that having more than a certain amount of wealth means having too much.
However, this solution opens the door to a second objection. Even if we could agree on the point at which individual wealth is considered a surplus, setting the threshold where individuals possess enough wealth to achieve their full flourishing could prove ineffective in preserving the democratic ideal of equality. For some individuals, influencing politics might be more important than fully flourishing. Others might even consider political power to be part of this flourishing and decide to invest their money (even below the threshold) to get it. In other words, nothing below the threshold would prevent the wealthiest from "financing" the political process. This leads to an impasse: a limit on individual wealth should be set to preserve democracy; but formulated in this way, the limit may not fulfil its purpose because below the threshold, the richest individuals would still enjoy greater opportunities to influence political decisions thanks to their wealth.
A possible solution: no more than n times the median wealth
To address this second objection, the threshold design itself has to be modified.
Instead of being set where individuals achieve their full flourishing, the limit should be put where individual wealth actually threatens the democratic ideal of equality. The threshold could then be calculated in relation to median wealth,i.e., the wealth line below which 50% of individuals in a society fall. What threatens the democratic ideal of equality, indeed, is not so much that some people possess more resources than what they need for fully flourishing, but rather that few people own much more wealth than their fellow citizens, and this allows them to unfairly influence politics. As an example, in a well-functioning democracy, one could limit individual wealth to a maximum of 100 times the median wealth.
In Italy, where the median wealth in 2016 was €132,266, this would mean setting the threshold at around €13 million. Considering that millionaires accounted for around 3% of the Italian population in 2020, the top marginal tax rate of 100% on wealth would apply to a small percentage of individuals. However, this is not a limitation for this version of limitarianism since the goal is to prevent an elite from possessing so many resources that it can play a decisive role in the democratic process.