Should we be setting limits on wealth?
An economist and philosopher, Ingrid Robeyns is an ethicist before all else. All her work revolves around values. As part of the Fair Limits Project, Prof. Ingrid Robeyns explored the moral justifications for setting limits on the amount of valuable and scarce goods, such as money and ecological resources, any individual may use or own. She also assessed the potential for imposing such limits in practice.
Political philosophers have a role to play in fuelling social debate
The world's 10 richest people (men) collectively own six times more wealth than the poorest 3.1 billion, according to a statement by Oxfam Novib in early 2020. Even here in the relatively egalitarian Netherlands, ten percent of the population owned over 60 percent of total private wealth in 2020, according to Statistics Netherlands. The situation is much the same when it comes to the distribution of ecological resources. Almost half of global emissions are caused by the world's wealthiest 10 percent.
We are all familiar with the idea of a poverty line. We agree that everyone should be able to meet their basic needs. So isn't it time to set some limits on wealth? Prof. Ingrid Robeyns explored this question as part of the Fair Limits Project.
We examined two types of resources: money, in the form of income and wealth, and our atmosphere's capacity to absorb carbon dioxide – the global carbon budget. Both resources are scarce.
On a philosophical level, my research team and I wanted to explore whether the notion of limitations should be approached from a purely moral perspective, or requires actual regulation at a governmental level. Once you approach things that way, it tends to open up political divides. You might agree on the ideal outcome, but completely disagree on how to get there.
We are stealing from our grandchildren and great grandchildren and harming people in vulnerable areas
In the case of the climate, it's quite easy to make the case for a cap on individual consumption. After all, we're talking about a common resource – the atmosphere. As a matter of principle, every global citizen should be entitled to an equal share". Since our planet's resources are finite and climate change is urgent, we need to reduce our consumption. The main question is how?
When it comes to the climate, injustice is a big factor. The richer people and countries are, the higher their emissions. The ultra-wealthy might even emit as much as two hundred tonnes a year. Now contrast that with the global average of about four and a half tonnes per person per year.
In other words, the primary source of injustice is the inequality between rich and poor people, and rich and poor countries. Countries from the global south, with low living standards and low CO2 emissions are basically being punished twice: the global carbon budget is running out, impeding their economic development AND they are suffering the greatest damage from climate change.
The second injustice in terms of the carbon budget is a generational one.
When it comes to the environment, we've been living beyond our means for decades here in the West, but we don't want to acknowledge that. We're borrowing, or rather stealing, from our grandchildren and great-grandchildren's future. We won't be able to go on two holidays a year by plane in future until we can operate low-emission flights. The injustice is pretty obvious in this case, and Robeyns believes there's no question as to whether an individual cap on the consumption of ecological resources is morally justifiable.
So how do we overcome this unequal distribution of natural resources? Do you opt for voluntary measures and appeal to people's sense of morality or do you actually legislate? Do you focus on individuals or other entities such as companies or societal structures? And which instruments do you use? As far as the latter is concerned, Robeyns suggests the following options:
- Voluntary rationing, in other words making a moral appeal and urging people to cut down their consumption. A case in point would be the appeal on consumers to stop using plastic bags.
Unfortunately, we know from behavioural research that 'preaching' isn't a very effective tool on its own.
- Rationing, or curbing consumption, but in a regulated way. A case in point would be the concept of an individual carbon budget.
- Banning, through laws and regulations. This instrument was previously used to ban CFCs. Today, we might consider banning gas or cars running on fossil fuel. You can also leave it all up to the market. For example, market players could develop a technology that allows us to extract CO2 from the air and store it in an affordable way.
- Finally, you can also incentivise desired behaviour. This could take the form of subsidies for solar panels or the elimination of VAT on low-emission food.
Time to focus on extreme economic wealth. Here too, Robeyns believes there are definitely moral justifications for imposing a cap. "However, the reasoning is more complicated in this case. Unlike natural resources, financial wealth – if we discount oil and diamonds – is something that individuals accumulate. As a result, people feel they are entitled to it."
However, that doesn't negate the moral concerns. "Extreme wealth undermines democracy because it gives extremely wealthy companies or individuals access to political power." Money allows you to lobby, buy policies through donations, fund universities, set up think tanks or media outlets and influence public opinion. Those options aren't open to people without money. "That leads to power imbalances. Some companies have more money than the entire Dutch or Italian economy. That's obviously pretty worrying in terms of the balance of power."
When it comes to the environment, we've been living beyond our means for decades
Robeyns offers another argument.
Wealth tends to be unearned. Why do we find it morally acceptable that privileges are passed from generation to generation while inheritance taxes are so low? After all, you can't claim any credit for your parents' or grandparents' achievements. That's a prime example of inequality. As Robeyns sees it, the extent to which you can attribute all of a company's success to the individual merits of a handful of people at the top is also highly questionable.
That view is shared by a growing number of wealthy people. In the words of McKenzie Scott, Jeff Bezos' ex-wife: "Any wealth is a product of a collective effort. The social structures that inflate wealth also present obstacles. And despite those obstacles, they are providing solutions that benefit us all. In line with her beliefs, she donates at least half of her assets to charities.
There are also groups like The Patriotic Millionaires and Millionaires For Humanity who advocate for measures such as a fairer tax system that would impose much higher taxes on their own wealth.
Besides, Robeyns argues, the current system – whereby a few individuals have extreme amounts of wealth – is a form of waste.
Distributing that wealth more equally will create greater prosperity for more people around the world. Mind you, prosperity isn't limited to money and includes aspects such as good health, security, education, technology and rights.
We need to make sure new policy proposals are also based on values
The relationship between wealth and climate offers another argument for a wealth cap.
Wealth creation tends to harm the environment, which is also negatively impacted by almost every form of consumption. Why should the extremely wealthy have more of a moral right to use natural resources than others? So what can we do to curtail extreme wealth? Ingrid Robeyns distinguishes between three types of measure:
- A fairer distribution of wealth upfront ('pre-distribution'). Raise the minimum wage or open the debate on the vast disparity between public and private sector wages.
- Wealth redistribution; examples include tax measures and our social security system. For example, we could introduce higher taxes on capital (profit and interest) and reduce those on labour (income and work).
- There's also the ethical aspect, or potential for a moral appeal. Robeyns passionately argues that we should view wealth as a moral as well as an economic issue.
She stresses that her research doesn't provide any recommendations for concrete measures. Those are ultimately political decisions.
You need to broaden your mental horizons. As an ethicist, I feel it's part of my job to speak out about climate injustice and economic inequality. I present my analysis and leave it up to political philosophers to contribute arguments to the social debate.
Some companies have more money than entire national economies – that's obviously worrying
The Fair Limits Project touches on so many issues, including our economic system. Robeyns:
We had a 'mixed economy' back in the 1960s and 1970s. The last few years have seen us move towards the kind of hyper-capitalism common in the US; that inevitably sets back the fight for equal opportunities. Studies show that people in the US enjoy a lower quality of life and have far higher CO2 emissions. I think we need to move to a different form of capitalism where we clearly define which aspects of ownership and production should be controlled by the government, which should be in private hands, and which should be organised around some form of joint ownership by collectives or citizen cooperatives. Ultimately, wealth is always created through collaboration in contexts shaped by lots of different people.
Prof. Ingrid Robeyns, Faculty of Humanities, is professor of Institutional Ethics. The latter term refers to the basic tenets of society, such as services or policy. A philosopher and economist, Robeyns explored the moral grounds for imposing limits on the distribution of scarce, valuable economic and environmental resources as part of the Fair Limits Project. Her upcoming book Limitarianism. The case against extreme wealth will be published in late 2023 and translated into Dutch, German, Italian, Spanish, Russian, Korean and Japanese. She recently received a VICI grant for new research (see box at end of page).
As an ethicist, I feel it's part of my job to speak out about injustice
Researching economic visions for the future
Our current socio-economic system is creating some major problems: it is not ecologically sustainable, is purely focused on economic growth rather than well-being and perpetuates several unjust structures such as inequality. Citizens and scientists have been criticising this state of affairs for years, both locally and globally. A wide range of thinkers have proposed alternative visions for the future such as donut economics, common good economics, wellbeing economics, and the universal basic income society. So how can we compare and evaluate these visions for the future? Ingrid Robeyns was recently awarded a VICI grant from the NWO in support of her work in this area.
We'll be developing a framework that allows us to compare those visions in a structured and integrated way. That will help us to identify their strengths and weaknesses and do a kind of audit on them. The outcomes will help citizens and politicians make more informed decisions about the economic visions they want to embrace. Robeyns and her research team will also be exploring hybrid approaches and entirely new visions.
Attend the 2023 edition of the Utrecht Day of Philosophy
2018, Ingrid Robeyns launched the Utrecht Day of Philosophy, a day filled with philosophical lectures and talks for a broad audience. The event is currently organised by fellow philosopher Naomi van Steenbergen in conjunction with Studium Generale. The next edition is set to take place on Saturday 22 April 2023. Come to TivoliVredenburg, immerse yourself in philosophical thought experiments, listen to interviews and join philosophers in contemplating the big issues of our time. Admission is free and everyone is welcome to attend.
Book your free ticket from 1 April onwards at the following website
So what does the term extreme wealth really mean?
Ingrid Robeyns uses the concept in her work on the Fair Limits Project. The question is: when does wealth qualify as 'extreme'? Robeys conducted a survey among the Dutch population with her colleagues from Sociology in 2018. The study's primary aim was to determine whether people believe in a distinction between the 'wealthy' and 'ultra-wealthy'. A whopping 96.5 percent of respondents felt that we can actually make such a distinction. The study's secondary objective was to find out where people would actually draw that line. According to the outcomes, respondents estimated that a family's quality of life would not be further improved if their family assets exceed €2.3 million. Respondents disagreed as to whether government measures were needed to ensure more equal distribution.