Limits on wealth are good for freedom

Professor Elizabeth Anderson is a MacArthur Fellow, a Fellow of the American Academy of Arts and Sciences, a Fellow of the British Academy, and a member of the American Philosophical Society. She designed and was the first Director of the Program in Philosophy, Politics, and Economics at University of Michigan.

Vlad Bunea: In a recent talk you mentioned several reasons why we should have limits on wealth, which were: (1) the very rich are legally unaccountable, (2) the rich exercise private government in their control over firms, (3) great wealth alienates and blinds people to others, and (4) billionaires support autocracy. How much should that limit be or how should we go about calculating that limit?

Elizabeth Anderson: I think we would need to do empirical research to see at what point the negative effects of extreme wealth emerge. In addition to the four effects I list, we must also take into account the negative effects discussed by Ingrid Robeyns, whose wonderful book, Limitarianism (2024), put wealth limits on the political economy agenda. In addition to democracy erosion, Robeyns focuses on the ways extreme wealth concentration increases poverty and aggravates climate change. Because more empirical research needs to be done, I am reluctant to state a number in U.S. dollar terms. Robeyns suggests $20 million, although she thinks even that may be too high. Perhaps that is a reasonable place to start experimenting.

The quickest way to dramatically deconcentrate wealth would be through a cap on inheritance. John Stuart Mill (Principles of Political Economy, vol. I, Bk.II, Ch. 2, §4) proposed that an individual’s maximum inheritance should be limited to the amount of wealth that would be needed to live comfortably but not lavishly without having to work. In a single generation, billionaires and centimillionaires would thereby be eliminated. Residual wealth not left to heirs would be taxed away. I suggest that it could be used to finance state provision of public goods and services, more generous social insurance, and perhaps universal stakeholder grants for young adults. One would still have to take measures against the accumulation of excess wealth in a single person’s lifetime, and more importantly, the concentration of wealth and therefore power in private firms.

There is another way to think about the question, which is predistributive: it’s about changing the rules of the market game so that vastly unequal wealth cannot be accumulated in the first place. Robeyns argues that much of the wealth concentrated a few hands was acquired illicitly. Besides illegality, it is important to recognize how much huge fortunes have been accumulated through zero-sum or even negative-sum business strategies—strategies that don’t contribute on net to human welfare, but simply exploit other people, shift risks to the vulnerable, unnecessarily degrade the environment, and so forth. Here are some major ones:

(1) Monopolies. Especially in the U.S., the concentration of industries has accelerated since the de facto dismantling of antitrust enforcement in the 1980s, largely due to plutocratic corruption of federal courts. We need to return to vigorous antitrust enforcement.

(2) Vulture private equity. You may wonder how private equity firms are able to make businesses in diverse sectors of the economy vastly more profitable, even though private equity managers know nothing about the operational requirements of the firms they are acquiring. They can do this because most of the profits are generated not by getting acquired firms to make better products or deliver better services, but by playing financial games that increase profits at the expense of all of the acquired firms’ counterparties—customers, workers, suppliers, vendors, local governments, and the community at large. Some of these financial games are played even at the acquired firms’ expense, by way of strategic bankruptcy. The entire bag of zero- and negative-sum tricks private equity uses to redistribute value from everyone else to the private equity investors should be banned.

(3) Bogus finance. The vast majority of profits in finance come from speculation on patented, financially engineered assets—derivatives, SPACs, crypto, and so forth—that contribute nothing to the real economy of goods and services while destabilizing the financial system. Financial engineering enables the issuers of such bogus assets to make enormous profits, often by facilitating illegal activity such as money laundering, while pushing enormous risks of financial instability on everyone else. The entire range of financial activities that don’t directly serve the real economy should be banned or severely curtailed. Patents on financial products should no longer be issued.

(4) Outsourcing of public services provision, which is properly a state or private nonprofit function, to for-profit corporations. The evidence from the UK and other countries shows that for-profit corporations deliver worse public services at vastly inflated costs compared to the civil services of democratic states, that they suppress wages and degrade state capacity. No one gains from this except for a small number of corporate elites and large shareholders. This also comes at great cost to democracy itself. The effects are particularly disastrous for educational and health care services. In Hijacked: How Neoliberalism Turned the Work Ethic agains Workers and How Workers Can Take It Back (2023), I explain some purely economic criteria that indicate when direct government provision is better than outsourcing. There are also democratic values at stake, particularly in educational services, that argue for direct government provision. Chiara Cordelli’s The Privatized State (2020) is an important contribution to this literature.

(5) Fossil fuels. While fossil fuels are a mixed case, because they were needed to achieve prosperity and we still depend on them, their immense negative externalities for human health, climate catastrophe, and environmental devastation, along with the relative cheapness and rapid deployability of alternative green energy plus storage, argues for the most rapid technically feasible replacement of fossil fuel energy with wind, solar, geothermal, and possibly nuclear power, along with the electification of practically everything. Proper management of the energy transition could also deconcentrate wealth, by, for example, facilitating the growth of municipally owned green utilities, which would eventually replace the current U.S. utility structure, which is dominated by very weakly regulated for-profit monopolies.

Vlad Bunea: Recently, the World Inequality Lab has published yet another groundbreaking report in which they show that the top 10% of the global population’s income-earners earn more than the remaining 90%, and that around 1% of global GDP (approximately three times as much as development aid) flows from poorer to richer nations through net foreign income transfers. These are moral crimes in addition to covering many other types of crimes! Yet some may think that limits on wealth are an affront to freedom. How can we build a moral argument for making limitarianism compatible with the idea of freedom writ large?

Elizabeth Anderson: I agree with you that the current system of wealth extraction from poor countries is grossly unjust. The global trading system was designed by and for the interests of powerful corporations and the very wealthy. It effectively prohibits poor countries from improving labor conditions, pay, or benefits for workers employed by firms with foreign investors, or imposing environmental standards on such firms. It is rigged to keep the global poor in a permanent state of poverty and precarity, and to deprive their countries of returns on capital, which are essential for economic development. Although China now uses the same colonialist tactics on less developed countries that have long been used by Western colonial powers, much can be learned from its shrewd management of foreign investment in its own rapid industrialization, starting in the 1990s. China wisely insisted on majority control of firms receiving foreign investments, and on the transfer of intellectual property used by such firms, so that it would be able to “move up the value chain” and invest profits in its own development. That model should be the norm for all foreign investment.

On the normative question, I have previously argued that, even if we restrict our argument to considerations of freedom alone, many forms of taxation and regulation of property (i.e., wealth) are justified. The libertarian argument for a nearly absolute right to private property, and hence of unlimited wealth accumulation, wrongly attributed to John Locke, assumes that negative liberty—freedom from external interference—is the sole kind of freedom entitled to protection. Yet this is an incoherent basis for justifying private property rights, since recognizing such rights interferes with the negative liberty of vastly more people than it protects. From a pure negative liberty standpoint, the establishment of private property is a gigantic net loss of liberty.

Rather, the justification of private property rests on its ability to vastly expand the positive liberty (real opportunities) of people—not just of owners, but of everyone. The sacrifice of negative liberty of non-owners entailed by the protection of one person’s claim to some property needs to be justified to the non-owners in positive liberty terms. So we need a normative framework for thinking through the rules of property so that it takes everyone’s interests, and not just the purported natural rights of the individual who lays claim to some property, into account. The best way to do this, I think, combines a social contract framework with pragmatist experimentation that tests how different property regimes actually work out for everyone. As Rawls has argued, such a framework supports a broadly egalitarian system, since gains for the wealthier need to be justified as necessary for producing gains to the less well off. In reality, as Robeyns argues, we are far past the point at which that would be true. Rather, under neoliberal capitalism, as I have argued in Hijacked, huge fortunes are being made at the expense of everyone else.

The justification of private property also depends on its consistency with maintaining everyone’s republican liberty (freedom from domination) over time. Republican liberty is inconsistent with extreme concentrations of wealth. The problem is not just that, as republican theorists have long argued, the extremely wealthy will capture the democratic political process and effectively turn formal democracies into de facto oligarchies. We are seeing this happen these days in the U.S., India, Hungary, and other countries suffering from democratic backsliding. The problem is also that when wealth is concentrated in a few corporations, they are able to use their private power to dramatically reshape the way the whole economy operates without state mediation and without needing the consent of the people whose lives they are altering—often, to their ruin. The top 8 U.S. tech companies accounted for 36% of the value of the S&P 500 in 2025. Most of their recent growth is due to their investment in AI. What do these tech companies plan to do with their AI? According to Bill Gates, AI will eliminate the need for most human workers, even teachers and doctors. According to Marc Andreessen, there is no justification for anyone trying to stop the tech bros from implementing their visions. He thinks they are entitled to do so regardless of impacts on other people or the sustainability of human life on earth. Given their immense economic power under current U.S. laws, and the fact that other corporations buy technology exclusively for the interests of shareholders and corporate elites, whose interest lies in minimizing labor costs, the tech bros are able to impose their vision on everyone else without the vast majority of people having a say about it. This is what domination is: the extinction of republican freedom for anyone who isn’t among a small group of decisionmakers who get to impose their vision on everyone else.

In fact, I don’t think Gates’s dystopic vision will become a reality. But the sheer arrogance of Gates and Andreessen, which shared by many other tech bros, combined with their immense power, points to a future of mass disruption forced on everyone else—at least until the pitchforks come for them. Arrogance and vainglory, too, are products of vast wealth and the unaccountable power over others that this wealth brings in its wake.

It is far past time that limits were placed on extreme wealth.

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