by Rutger Claassen and Ingrid Robeyns
Let’s establish an upper limit on the personal wealth any individual can possess. This is the core principle behind ‘limitarianism’. Limitarianism represents one of the more radical proposals in the debate on wealth inequality. Over the past few years, one of us has developed the philosophy of limitarianism (first in the academic realm, and then more recently also in the public sphere, as regular readers of this blog know). The proposal has since been endorsed, and in some cases further developed, by other scholars and writers, including Thomas Piketty and the Dutch journalist Sander Heijne.
Of course, not everyone likes the idea. One of the most important critiques on limitarianism is that it is unclear whether company owners can continue to hold on to their flourishing businesses in a limitarian world. Or no longer being able to receive exceptionally high pay for running these companies. Think, for example of the $46 billion compensation package Elon Musk received for serving as Tesla’s CEO.
Annemarie van Gaal, described as one of the most well-known businesswomen in the Netherlands and columnist for the influential Dutch newspaper De Telegraaf, claims that with a wealth cap, there will no longer be any business activity:
“But anyone who is willing to take significant risks, endure immense stress, and sacrifice sleepless nights to apply their talent and perseverance in order to reach the top, should be given free reign. These people are the ones who create jobs and ensure that our country remains among the wealthiest in the world. (…). Would top entrepreneurs still be willing to sacrifice years of their lives, take countless risks, and endure hardship if they knew in advance that there’s a limit to their success? No. We will never become a happy society if we allow this.”
But is this correct? Can business owners remain owners of their business under limitarianism? And can their businesses thrive? This is an important question. Because even if there are strong moral arguments for limitarianism, they are not worth much if limitarianism destroys the economy.
First, let’s look at those moral arguments. The most fundamental argument for limitarianism is that very large fortunes cannot be said to be morally deserved. The successes that successful people achieve in their lives are, in fact, dependent on three factors that are entirely beyond their control: their innate talents and abilities, the influence of their parents and social class, as well as the institutions and infrastructures in the communities in which they grow up. Everyone is dependent on a ‘lottery’ in which some are born with more talents and find themselves in a more privileged position, while others are less fortunate. This means that the rewards people gain from their talents are largely the result of factors other than their own efforts. And for this reason, we cannot say that these successes are morally deserved.
Another ground for limitarianism are the bad and harmful effects of wealth concentration. Limitarians have pointed out that wealth concentration undermines democracy and in particular the principle of political equality, as the very rich have ample resources to engage in lobbying, the funding of political candidates, and spending financial resources on influencing the election outcomes. In the worst situations, democracies become prone to influence from the corporate world (‘corporate capture’) – a phenomenon in which political decision-making is controlled by the owners of large corporations.
In addition, it is argued that the lifestyles of the superrich are not compatible with the principle of ecological sustainability. Lucas Chancel estimated that, whereas the average global carbon footprint is 6 tons per person per year, the 1 percent richest have carbon footprints of 101 tons. Estimates of the carbon footprints of billionaires easily surpass 2,000 metric tons, and go all the way up to 31.000 tons. And those estimates do not take the carbon impact of their investments into account; they only look at the polluting effects of their mansions, private jets, and their yachts. For comparison: the average carbon footprint of most Africans is around 1 ton, and we all need to move in the direction of zero.
Lastly, the legal and economic structures of the economy that allow extreme wealth concentration, are the same structures that deprive the government from sufficient public wealth to meet unmet needs of the population. In his ground-breaking work on wealth inequality, Thomas Piketty showed that over the last decades private wealth has grown at the expense of public wealth – hence, at the expense of the government to relieve poverty and provide proper investments in public goods. In addition, there are many policies that benefit the richest (and their companies), but that do not benefit the worst off, such as the abolishment of inheritance and estate taxation, or the consistently lower taxes on income from investments compared to income from labour. And things will only get worse, because we are standing at the eve of the largest intergenerational transfer ever.
Because of these harmful or bad effect of wealth concentration, limitarianism proposes to cap the amount of personal wealth each person can have. This raises the question: where should that cap on wealth be drawn? A precise limit depends on countless factors, but for the sake of this discussion, we will adopt the proposal to set the wealth cap at around 10 million (pounds, euros or dollars). Yet note that nothing in what follows depends on that number: if we were to democratically decide to set the limit at 25 or 100 million, we would still give the same answer to the question of whether businesses can thrive in a limitarian world.
Now, let’s consider businesses. What would be the implications for running a business in a world where no one is allowed to own more than 10 million?
What does ‘running a business’ mean? Any business of a certain size is incorporated, as the ‘Inc’ behind the company’s name indicates. In a corporation, shareholders hold shares, which normally come with two rights. First, shareholders have control rights. Their shares offer them the right to vote in the company’s Annual General Meeting. Through these voting rights, they can control nominations for the board of directors, and the general strategy of the company. Second, shareholders have profit rights. They are entitled to a share of the dividends and hence benefit financially when the company makes profits. The board of the company has the power to decide whether profits should be reinvested in the business or handed out as dividends or share buybacks. But in most countries, shareholders through their control rights and the threat to exit can enforce shareholder-friendly business decisions.
In current practice, profit rights and control rights are typically bundled: whoever has one right also has the other, as the shares entitle the holder to both. This bundling may seem to make it impossible for any one person to hold control of a company whose value exceeds 10 million euros. Imagine a company whose shares are worth 50 million euros. As soon as the founder would have to sell 40 million euros of shares, they would only be left with 20% of the control rights. They would be outvoted on any major policy change by the persons who hold the other 80% of the shares. Limitarianism would then seem to kill off the dream of any founder who wants to retain control. And if, like Annemarie van Gaal, we believe that such founders are brilliant entrepreneurs who should be empowered to rule over their companies with absolute authority, then limitarianism presents an insurmountable problem.
Fortunately, there are other options. The ‘one share, one vote’ principle is only one way to organize a company. For control rights and profit rights can be unbundled. Indeed, this already happens frequently in the heartland of capitalism, with dual-class share structures. Every company can create different share classes: some shares then come only with voting rights, others come only with profit rights. Take Meta. Mark Zuckerberg’s personal package of shares has only 13% of the profit rights, while it represents 61% of the voting power in Meta.
By unbundling voting and profit rights, any founder of a company could, as soon as the company’s value exceeds 10 million euros, change the share structure. Progressively, as the company grows, the shares that only give financial benefits could go to others, while the founder retains control through shares holding voting rights. What are the options for how this transfer could be done?
One option would be that, as soon as the 10 million threshold is surpassed, the tax authorities would tax the founder in kind. The profit shares would be transferred to a collective fund, i.e. a Sovereign Wealth Fund. Out of this fund, dividends could be paid to all citizens, as the Alaska Permanent Fund Corporation does, which holds the shares of its major oil operating company. In this way, the above-limits wealth would directly benefit all citizens.
There are other options. A company founder could also pre-empt in-kind taxation by the state, by donating the above-limit shares. Yves Chouinard, Patagonia’s founder, upon his retirement donated the shares to a trust. Foundation-owned companies are a well-known phenomenon in Denmark, and, to a lesser extent, Germany. Large foundation-owned enterprises in Denmark are stock-listed (such as Carlsberg or NovoNordisk) but a majority of control rights lie with the foundation. A founder would lose direct control over the company, but their vision for the company could remain the leading principle – the ‘purpose’ – anchored in the charter of the foundation, protected by the foundation board’s control. Moreover, the founder or their family could themselves sit on this foundation board.
Finally, above-limit profit shares could also be donated to workers through Employee Stock Ownership Plans (ESOP), so as to benefit workers specifically. Here too voting shares could remain with the founding entrepreneur. In the US, it is estimated that around 6500 ESOP’s help 14 million employees to 2.1 trillion in assets; by no means a small feat. A limitarian policy could boost this phenomenon even further.
Would this also address the worry that family companies as we know them will no longer be possible in a limitarian world? Family companies, so the argument goes, are a special type of company, whereby it is important that the company culture and traditions can be safeguarded. Yet as long as the control rights remain fully within the family, there is no reason to worry that the specific character of family firms would be threatened by limitarianism. The family could choose for any of the above strategies to transfer the profit rights above the limitarian threshold – yet the control will fully remain in the family.
No lack of options, then. Whatever option the founder chooses, control would remain with them. This much is enough to show that limitarianism is compatible with business freedom as-we-know-it, allowing entrepreneurs to fulfill their personal dreams with their company, while parting with the profit rights.
There is a long-standing belief that voting rights and profit rights should go hand in hand – that anyone with a “skin in the game” should also have a proportional say in decisions. In a provocative analysis, the Financial Times called Meta’s dual-class share structure a ‘dictatorship’, since it deprives investors of their voting rights. This critique assumes that those who bear financial risk by holding profit rights should also have a say in governance. Yet Meta continues to attract investors without offering them voting power, as do the publicly traded steward-owned companies in Denmark mentioned earlier.
Taking this advice to heart, one could wonder – once profit rights have been transferred, why might a founder still wish to retain control? If the profits go to citizens (through a Sovereign Wealth Fund), workers (through an ESOP), or a foundation, then why not also give the control rights to these parties? Critics of shareholder capitalism have since long argued that shareholders, empowered by their right to vote and incentivized by their right to reap the profits, have steered companies in short-termist directions, riding rough over the interests and rights of other stakeholders, such as workers, consumers, and – through environmental carelessness – future generations. From this perspective, control rights could also be given to a set of (company-relevant) stakeholders, so that their interests are protected.
This taps into proposals to make Sovereign Wealth funds more democratic, to use foundation-control for societal purposes (this is called ‘steward-ownership’), or increase workers’ voice in companies. Only then would companies be run ‘in the interests of all-affected’, which is a standard principle of democracy. As we saw, capping wealth is itself motivated by the corrupting effect of large wealth on democratic principles. While limitarianism is compatible with continuing entrepreneurial control, we think that extending democratic principles to the design of companies, would bring an even deeper realization of the good society that limitarianism aims for.
You may think that heavy political interventions would be needed for these new company forms to take root. However, this is not necessarily the case. Limitarianism is first and foremost a moral idea. Even if governments don’t act on it and cap wealth, entrepreneurs – especially retiring ones – face moral choices of their own. Instead of selling their company to the highest bidder, they can also convert it into a steward-owned one, or set up an ESOP. In light of the large number of retiring entrepreneurs in the years to come, we would move closer to the realisation of limitarianism by a generation of successful entrepreneurs who leave a more-than-decent inheritance to their own children but repurpose their excess wealth to society.
NB: a Dutch version of this blogpost is forthcoming in the Dutch magazine Vrij Nederland.
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MM 11.24.24 at 6:31 pm
I agree that a lot of the factors behind wealth are outside the wealthy person’s control, so a moral case exists for redistributing that wealth.
However, why stop at wealth? A lot of factors behind good health, good looks, artistic creativity, a positive outlook, a convivial or gregariousness nature, and so on, are also outside the control of the persons blessed with them. What are your thoughts on how to redistribute these?
Mike Huben 11.24.24 at 6:31 pm
Unbundling profit rights and control rights does not solve the bad and harmful effects of wealth concentration: it puts them directly in the hands of whoever controls the corporation. The corporation can then contribute to influence government however it wants. Mark Zuckerberg is a case study in this. And you seem to be assuming that control rights have no value (correct me if I haven’t read you clearly enough.)
Nor does the unbundling solve the “structures that deprive the government from sufficient public wealth to meet unmet needs of the population” problem.
And finally, this does NOT address the problem of enormous wealth of actors outside a limitarian environment, who can financially demolish our corporations and influence our government as we see with Trump.
I’m actually sort of surprised that you haven’t demolished the incentives argument by pointing out that CEOs and founders used to have MUCH smaller incomes.
MM 11.24.24 at 6:35 pm
Putting a limit on the economic stake they have in the business, and especially one as as low as 10 million, while letting them maintain control, turns entrepreneurs into (entrenched and unfire-able) managers. That is not a system that has a high likelihood of producing economic dynamism and growth.
Ingrid Robeyns 11.24.24 at 7:09 pm
Mike @2 – and before anyone else says something similar: this pieces is addressing just one question, namely whether companies that are held in private hands, are compatible with limitarianism. The question of this piece is not how to address all problems entailed in wealth concentration. It even doesn’t address all aspects of the incentives problem – but if you want to see that demolished, I can refer you to a scholarly paper that I co-wrote with Huub Brouwer: https://pure.uvt.nl/ws/portalfiles/portal/106057075/Final_-_Brouwer_and_Robeyns_-_The_Empirical_Premises_of_Economic_Limitarianism_-_with_graph_for_repositories.pdf
Ingrid Robeyns 11.24.24 at 7:11 pm
MM @3 – why would what you write be the case? I don’t see how that is obvious.
oldster 11.24.24 at 7:56 pm
“…anyone who is willing to take significant risks, endure immense stress, and sacrifice sleepless nights to apply their talent and perseverance in order to reach the top, should be given free reign…..”
The narcissistic myopia of the wealthy always amazes me. Do they not realize that risks, stress, and sleepless nights are common to all kinds of occupations, up and down the income scale? Do they not realize that owners of corner shops, concert pianists, college professors, small business owners, all take significant risks, all endure immense stress, and all endure sleepless nights, for trivial salaries and trivial rewards?
They think they deserve their billions for doing entirely common things. They deserve entirely common compensation.
engels 11.24.24 at 8:38 pm
While understand its motivation I think the first paragraph on the “moral arguments” presupposes a rather idealised view of how “success” comes about in contemporary capitalism and its consequences for the rest of us (the following paragraphs seem more realistic). It seems like a functionalist, meritocratic picture that de-emphasises inherited wealth, the exclusion of large numbers of capable people from high-paying careers for all kinds of terrible reasons, the unethical/destructive/larcenous nature of what many “talented” people do (I’m sure you’re aware of these problems so I’m really just commenting on how this “lottery of talents” argument can come across in 2024.)
CP Norris 11.24.24 at 8:42 pm
One problem I see here is that the “value” of a business is up to the imagination of investors. If r/WallStreetBets gets excited about your stupid business overnight, and pumps up its value, do you have to divest it all of a sudden? When they get bored and the value drops back down, the damage is done.
Alex SL 11.24.24 at 9:04 pm
Questions of fairness and concentration of power in one person aside, the idea that literally infinite reward is the only way to motivate people to achieve things is both completely absurd from base principles and immediately refuted by interacting with any human being who isn’t a billionaire. People regularly take on “significant risks, endure immense stress, and sacrifice sleepless nights” to have children or even only get a PhD in their field of interest. She cannot seriously claim not to know that, so she must be dishonest.
Also, perhaps we could organise society to minimise risk, stress, and sacrifice at any rate, for example by having a strong social safety net that those taking a risk can fall back onto if they fail? That should create a lot of innovation, as people would be more willing to take risks.
engels 11.24.24 at 9:10 pm
Btw as a rule of thumb I think David Graeber’s principle that the less socially useful an occupation is the more it is paid has a lot going for it.
MM 11.24.24 at 9:37 pm
Ingrid @5: I feel it is a self-evident claim about human nature? Say you set up a business – maybe a restaurant that has a crowd-pleaser of a menu, great service, prices which provide excellent value. The restaurant does well, you open a 2nd branch and a 3rd, the value of your stake hits 10M. What incentive do you have to keep expanding? Why would you not coast? One might say, what is the big deal, there are enough restaurants. But all the potential customers of that 4th and 5th and 500th restaurant are left without the great food and service you might have brought them.
Knowing that the people who control the business don’t really have any incentive to maximize or even increase its value, why would I buy any shares – that provide me with an economic interest but no control – in such a business?
You are arguing from where we are – it is perfectly fine if we take away 99.9% of the wealth of Bezos and Musk and Zuckerberg – it will make for a fairer society. Perhaps so. But then how do we build the next set of great businesses, and progress beyond where we are right now?
If you feel that the accumulation of wealth is a problem, targeting inheritance seems like a much more societally optimal way to go. As someone I read suggested, something like a “7 and 70” rule would work well – everyone inherits up to 7M tax free, then pays 70% tax on everything above that.
Kevin A. Carson 11.24.24 at 9:53 pm
My main issue with limitarianism is it gets things precisely backward. It assumes the endless growth and concentration of wealth are natural phenomena that will spontaneously occur if the state doesn’t actively intervene to stop them — when they are, in fact, the result of economic rent extraction that depends on a whole host of subsidies, artificial scarcities, and artificial property rights enforced by the state.
It would be far better to eliminate the structural causes of such large incomes ex ante, by building them into the property rights and institutional rules — predistribution — rather than ex post through taxation and redistribution.
Incorporate all land and resources into community land trusts or Ostromite commons management bodies, make all enterprises either the property of their work force or stakeholder cooperatives, eliminate the monopoly on credit by owners of accumulated wealth, and abolish intellectual property. Then the question will be moot.
MisterMr 11.24.24 at 9:53 pm
There is basically zero evidence that CEOs are supercool and the success of a company depends on them.
If we could really evaluate how important is the CEO’s particular skill for the success of a company is, we could also evaluate if/when/to what degree a limit on income for the CEOs would damage the economy in general, but since there isn’t we can’t really calculate how much, say, the success of Apple was due to Steve Jobs, and how much Homer Simpson would have done the same in his place.
In a very simplified economic view, incomes automagically represent the economic contribution of people, but they can also be rents, and in case of wealthowners they are quite likely to be mostly rents IMHO.
That said, how do you avoid that CEOs, capitalists etc., just relocate in another country and flaunt the cap?
If you have to put in place really strict economic controls that lead to “autarky”, this becomes quite soviet like, that I suppose is not what you want.
GG 11.24.24 at 11:32 pm
Ingrid –
I think that the moral argument proves too much. Can you demonstrate that any amount of wealth is deserved?
JimV 11.25.24 at 12:06 am
According to what I hear on “Shark Tank”, when a business gets big enough to control a large share of a market, and an entrepreneur comes up with an improvement relative to that market, the big business will “crush it like a cockroach”, so there is no point in investing any money in such developments, and a lot of creativity is thereby stifled.
The issue of huge rewards being an unique incentive for thriving economies has been well countered above, but I would like to pile on. Take Jack Welch for example. If you needed to talk to him on a weekday afternoon, you had to be able to play golf; and his lasting contribution was to run GE into the ground, and through his proteges, other companies such as Boeing. Giving him insufficient monetary incentive to become a CEO would have been a good thing. Such positions tend to attract sociopaths like Trump rather than people who want to improve society by providing useful products.
Charles Bakker 11.25.24 at 12:16 am
I really like this notion of limitations to wealth accrual/concentration. I wonder though, instead of setting a hard cap, what if we sent a relative cap. So say we have a company with a minimum wage, or a country with guaranteed income, and say the value of this is X. If we then capped maximum wages, or maximum income before 100% taxation at 25(X), then there would still be an incentive for everyone, both poor and wealthy, to work together to raise the value of X.
John Q 11.25.24 at 12:22 am
Most of these issues arise with a steeply progressive income tax, such as was common in mid-C20. It didn’t have any apparent ill effects then – economic growth stronger than under neoliberalism, and, necessarily, a more equal distribution of income after taxes and transfers. Admittedly, there was a fair bit of avoidance/evasion but that’s also going to arise with a cap
IMO, the most plausible path to limitarianism is a return to progressive income taxes with the top rate set at or near 100 per cent.
John Q 11.25.24 at 12:22 am
Adding that rates of company tax were much higher also.
J-D 11.25.24 at 1:18 am
Recently I was reading about the Share Our Wealth Society founded by then Senator Huey Long and it just now occurred to me that it could be of interest to limitarians. But perhaps you’ve never heard of Huey Long or Share Our Wealth? There’s no reason why you should have.
Gareth 11.25.24 at 1:25 am
Following up on GG’s comment, does anyone reading this support a cap on personal wealth that’s below their own wealth? Having more when there’s no cap isn’t necessarily hypocritical – maybe you need it for retirement in the grim, no-wealth-cap future.
Bob 11.25.24 at 2:57 am
Couldn’t you avoid all of the problems with the potential impact on incentives, while at the same time preventing the problems that arise from high concentrations of wealth, if you just had a 100% tax on inherititance? There is no argument at all that the “self-made sons” of the rich have earned their inheritnace.
Alex SL 11.25.24 at 4:41 am
I am as puzzled by the comments from MM as I am by the arguments of van Gaal. Do they really, seriously claim not to know ANYBODY who achieves, takes risks, sacrifices, and builds who isn’t a decamillionaire? I am a scientist at a research agency. Neither I nor any of my colleagues will ever get a ten million dollar bonus for the work we are doing. But none of us are just moping around, flaccid with disappointment at not being able to become absurdly rich. We solve problems, make unexpected observations, support biosecurity or conservation, build software tools, publish data, and train the next generation of researchers in exchange for a regular salary, the satisfaction of our intellectual curiosity, knowing that we do useful work, and the respect of our peers.
Frankly, somebody who refuses to do anything productive and useful unless it gives them a chance at having tens of millions of dollars is a sociopath. People who think like that are a danger to everybody around them, not least because of how the apparent delusion that everybody else must be motivated in the same way makes them reshape society for the worse.
KT2 11.25.24 at 8:44 am
Here is a wealthy person who hasn’t had control or run his wealth generating biz since 2000. Yet controls wealth and invests in passion projects with rapacious capitalists.
Annemarie van Gaal is full of absolutist crap… “We will never become a happy society if we allow this.”. Nor like this….
I applaud Craig “Newmark, who stepped down from the company [Craig’s List] in 2000 but kept a position answering customer complaints, has foregone reaping financial rewards in semi-retirement.”
RC/ IR say “Even if governments don’t act on it and cap wealth, entrepreneurs – especially retiring ones – face moral choices of their own. Instead of selling their company to the highest bidder, they can also convert it into”… a trust they control. Patagonia may be a great example. Personal philanthropic vehicles just limit the tax and unlimit the control. Even if “the founder would have to sell 40 million euros of shares, they would only be left with 20% of the control rights’,” the philanthropic vehicle may be still unhindered. Give to the poor? Or may intervene in policy failure. Which I see as a slippery toward dystopia. Think Terel Corp, but a philanthropy. Give Annemarie van Gaal a mirror… “We will never become a happy society if we allow this.”IF we allow “in order to reach the top, should be given free reign.”. Reign is the peroigative of kings. Another limit needed.
At Self Made Speakers Summit, Annemarie van Gaal bells her cat… “This is a woman who will accelerate your personal and professional growth in the blink of an eye. How? …
“Annemarie: “I was lucky enough to end up in a country at a young age (25)”…”These are the insights I want to share at The Self-Made Summit. I revel in making business models that don’t work, work. How? That’s what I’m looking forward to revealing.”. Potentially a sociopath. At best a workaholic. Like my Dad. He would work if he had to pay you Ingrid. She has an addiction.
Philanthropists don’t run the biz, nor potentially even profit or control. Yet are still placing themselves in a position of fixing failures of governance, externalities and unintended consequences.
And Craig for example has spent “$100 million to form a Cyber Civil Defense network of groups”…. “The core of Cyber Civil Defense includes groups like Aspen Digital, Global Cyber Alliance,”. Good intentions Craig!
No wonder Aspen Digital is onboard with cybersecurity…
“Your Partner, in Crypto
“Tailored for private wealth, Aspen Digital provides an independent platform enabling clients to leverage our sector expertise, exclusive global access and best in class technology to build bespoke digital asset portfolios. With our client first approach we educate and advise on allocation strategies across venture capital, hedge funds and trading.
…”Founders. Aspen Digital was co-founded in 2021 by Everest Ventures Group and TTB Partners, and is backed by notable investors such as the Rothschild Family (through RIT Capital), Liberty City Ventures and a number of other prominent Asian funds, single and multi-family offices.
“Everest Ventures Group
“Backed by prominent families and investors in Asia, Everest Ventures Group is a global team of 300 serial entrepreneurs, engineers and product managers in their 20s & 30s, with venture partners and sister companies on both sides of the Pacific.”
https://intl.aspendigital.co
Aspen Digital needs not to be our cyber security sheriff. Government needs to be cybersecurity sheriff.
So the unlimited wealth has been ‘limited’, yet still in private hands and control. Plus “300 serial entrepreneurs, engineers and product managers in their 20s & 30s, with venture partners and sister companies” will be using “craig newmark philanthropies” “Cyber Civil Defense” to cyberwash “Tailored for private wealth, Aspen Digital”. The 20 somethings will feel like SWJ’s
###
“Craigslist founder is giving away $200 million to prevent cybercrimes against the US
“Craig Newmark, the 71-year-old founder and former CEO of classifieds site Craigslist, is alarmed about potential cybersecurity risks in the US.
“Newmark, who stepped down from the company in 2000 but kept a position answering customer complaints, has foregone reaping financial rewards in semi-retirement.
“Instead, he started Craig Newmark Philanthropies to primarily invest in projects to protect critical American infrastructure from cyberattacks. He told Sozzi he is now spending $200 million more to address the issue, on top of an initial $100 million pledge revealed in September of this year.
“He encouraged other wealthy people to join him in the fight against cyberattacks.
“I tell people, ‘Hey, the people who protect us could use some help. The amounts of money comparatively are small, so why not help out,’” he said.
…
https://finance.yahoo.com/news/craigslist-founder-is-giving-away-200-million-to-prevent-cybercrimes-against-the-us-141308596.html
(2.) “craig newmark philanthropies” says;
… “He’s committed $100 million to form a Cyber Civil Defense network of groups who are starting to protect the country from cyber threats. Attacks on our power grids, our cyber infrastructure and even the internet-connected gadgets and appliances in our homes are real. If people think that’s alarmist, tell them to “Blame Craig.”
“The core of Cyber Civil Defense includes groups like Aspen Digital, Global Cyber Alliance, and Consumer Reports, focusing on citizen cyber education and literacy, cyber tool development, and cybersecurity workforce programs aimed at diversifying the growing field. ”
https://craignewmarkphilanthropies.org/about-us/cybersecurity/
MM 11.25.24 at 9:41 am
Alex SL @22:
Kudos to you, and it is absolutely the case that many highly productive people are doing extremely useful things for society, by participating in systems where financial reward is not the key metric of success or appreciation. It is yet to be proven that entrepreneurship and business formation is one of those areas. Maybe it will be the case that businesspeople will be considered successful, and get appreciation for, paying lots and lots of taxes, instead of being very wealthy. At the moment that doesn’t seem to be the case. I am not anywhere close to Zuckerberg-class, but I am a successful professional in a well-paid profession, and I pay lots of taxes. No one ever gave me a pat on the back for it – all I get is resentment for not paying more – “50% is not enough, you should be taxed 70%, or 90%, or 100%”.
To borrow from someone else’s example, Craig Newmark basically retired once he had no more financial incentive in the business, and CraigsList withered away as a useful enterprise once he was gone.
There is also the other point: why is the luck behind wealth bad and needs to be equalized, while the luck behind all the other good things in life not something we need to even talk about?
Mike Huben 11.25.24 at 11:47 am
Ingrid Robeyns @4: “this piece is addressing just one question, namely whether companies that are held in private hands, are compatible with limitarianism.”
I think the obvious answer is no, depending on your definition of “private hands” and for large companies. Let’s look at your proposals.
(1) Separating profit rights and control rights still keeps companies in private hands. Especially the control rights, which allow the vast resources of the company to be privately directed. And you are ignoring the very real value of the transferrable control rights.
(2) Sovereign Wealth Funds and ESOPS for the profit rights do not solve that problem of control rights.
“Whatever option the founder chooses, control would remain with them. This much is enough to show that limitarianism is compatible with business freedom as-we-know-it, allowing entrepreneurs to fulfill their personal dreams with their company, while parting with the profit rights.”
And if their personal dreams include influencing politics (as we have seen with many billionaires such as the Kochs, the Scaifes, the Gates, the Musks, etc.) they can still use the company resources to do so.
“We think that extending democratic principles to the design of companies, would bring an even deeper realization of the good society that limitarianism aims for.”
Why, yes. That’s exactly what Kevin A. Carson @12 was pointing out. Rather than adding limitarian epicycles to an already ridiculously complex system designed for the wealthy, build them into the legal and property infrastructure at the beginning, using limitarian principles. Unless you bite that bullet, I don’t think you will be able to find coherent limitarian solutions.
Tim Worstall 11.25.24 at 11:58 am
“turns entrepreneurs into (entrenched and unfire-able) managers. That is not a system that has a high likelihood of producing economic dynamism and growth.”
“MM @3 – why would what you write be the case? I don’t see how that is obvious.”
We already have something largely like that, managers in bureaucracies – public or state – are notoriously entrenched and hard to fire. Is bureaucracy one of those little known synonyms for economic dynamism and growth?
TF79 11.25.24 at 2:41 pm
Given the standard economic assumption of declining marginal utility of consumption, it would seem the economic costs would be minimal, but contra the OP I think it would depend on where the line was drawn (since that influences just how small those costs would be). Also, if the marginal utility of consumption is effectively zero at high enough levels, then the current drive to accumulate must be driven by OTHER aspects that enter the utility function – and those other aspects probably aren’t great from a social welfare standpoint. Pretty sure the first fundamental welfare theorem breaks down if “I want to be king” is one of the arguments of the utility function.
David Mitchell 11.25.24 at 5:48 pm
Let me start with the last question: why talk about equalization of wealth and not other factors such as intelligence, looks and talent which are influenced by luck? First the question is inaccurate. Limiting the maximum wealth is not the same as an equal distribution. Why only limit wealth? Because of the massive power that wealth provides. Without wealth the influence of fame, intelligence and looks are very limited. It is the super and hyper wealthy who seem intent on driving industrial civilization (IC) toward ecological collapse.
Second let me address that statements that only by providing enormous financial awards can technology be advanced. My response is the life of Admiral Rickover who was key to the development of the nuclear navy. He was responsible for more technology development than Elon Musk. He was noted for his work ethic and sober personal behavior. He was at best upper middle class in terms of wealth.
In summary the evidence that hyper wealth is needed to benefit civilization is limited and I believe that excessive wealth concentration is likely to cause systemic collapse.
Tm 11.25.24 at 8:55 pm
Have fun debating absurd propositions.
Alex SL 11.25.24 at 9:50 pm
MM,
I think there is some confusion here. The claim is not that very rich people should be happy without being patted on the back for paying their taxes (although of course I’d say, yes, quite so, one cannot expect to be praised merely for doing the bare minimum of what is right – what is next, expecting praise for not running a red light?). The claim is that there should be no very rich people. I hold that most of us are motivated enough to do a good job, even go above and beyond, by having merely a secure and comfortable life plus the respect of others, so it will suffice to put somebody like that in charge of a company, and the company will innovate exactly as much as if a sociopathic billionaire was in charge who is motivated by exploiting and dominating others and enriching themselves. Outcomes are likely to be more beneficial, even, under a non-sociopath, as decisions would then be less oriented towards short-term gains at the expense of the rest of society.
engels 11.25.24 at 10:03 pm
why is the luck behind wealth bad and needs to be equalized, while the luck behind all the other good things in life not something we need to even talk about?
The other things already have maxima, either naturally (length of life) or by convention (number of marriage partners).
J-D 11.25.24 at 10:36 pm
Yes, instead they might have to eat at the other possibly equally good or even better restaurant which you would have crowded out of the market if the limitarians hadn’t stopped you.
Gareth 11.26.24 at 12:54 am
David Mitchell @28, your best example of progress in technology without a profit motive is extremely expensive American warships? John Q, do you want to take this one?
J-D 11.26.24 at 10:20 pm
How about Tim Berners-Lee and the Worldwide Web?
JOhn Q 11.27.24 at 12:43 am
Gareth @33 Since we are doing this discussion on the Internet, the answer seems pretty obvious. The Internet was developed without a profit motive, then opened to commerce, after which it has been relentless scamified (notably in the dotcom boom) and enshittified. by Musk, Google etc. Wikipedia stands out as a shining exception, still free and better than ever as an information source (despite the fact that actually participating involves all sorts of messy interactions that wouldn’t be tolerated in a for-profit business).
PS I’m approving the comments in moderation now, and I see that J-D has beaten me to the punch.
somebody who drives down the street 11.28.24 at 1:43 am
it seems like the most significant piece of evidence in favor of the proposition that businesses can flourish with a $10M personal wealth cap (however measured) is the flourishing of businesses that never produce anything like that level of personal wealth. i propose that once you leave the top 5 or so american cities you can count the number of businesses that work like that without taking off your shoes.
Restaurants are a particularly hilarious example to try to point to as a counterexample here when they overwhelmingly don’t make any money at all and, quite famously, fall on their face all the time, yet people still open them because they love to cook, serve food, and organize people to do the same. the best donut shop (in my non-top-10 american city) has no branches and four employees but everyone’s paid well, everyone’s happy, the expenses are paid, and the donuts are fantastic. there is zero chance that 10 million dollars will end up in anyone’s pocket at the end of any year no matter how you analyze it. yet only in the crawling, grasping mind of the stunted and greedy is this business not “flourishing”. they don’t even have a delivery option, other than the dozen that they donate to the local church-for-the-homeless organization every sunday, driven there by the owner’s wife. the main threat is of course that they will all be denaturalized and dumped out of the back of a humvee into the sonoran desert, the owner being originally from Laos and their teenaged kids having the 6-3 endangered species of citizenship, “birthright”.
any scenario in which this donut shop is not considered flourishing and x, the everything app, having melted its owners mind and permanently estranged the owner and, seemingly, most influential people on it from their kids, marriage, community and their own life and happiness is considered flourishing says more about the whimpering, contemptuous demon that has clawed out a piece of many people’s soul than it does about actual benefit, profit, happiness or “flourishing”. the love of it is indeed the root of all evil, both dangerous and pathetic
reason 11.28.24 at 2:12 pm
I actually don’t like the idea of the founder maintaining full control of a huge company. One of the biggest problems of concentrated wealth is that it means concentrated power, and not just concentrated power, but concentrated unaccountable power. Beyond about 10 million Euros (everybody is comfortably set for life and doesn’t need any more (I would have gone for 50 million Euros but still), but people still crave power. That power should be earned, not just hoarded. If it becomes too great, it SHOULD be subject to transparent review.
eg 11.28.24 at 2:16 pm
MM poses the rhetorical question in this thread (twice no less) regarding other unequal distributions.
Am I to take seriously the proposition that we are incapable of recognizing what things are, and are not, distributable?
reason 11.28.24 at 2:27 pm
CP Norris @8
Yes, I agree this is an issue. It is why I think it is in general better to tax income (including realised capital gains) than the transient and difficult and expensive to measure wealth. IP reform (shortening patents or forcing licencing of competitors), anti-trust with teeth and higher company taxes might offset this to some extent. But I’m inclined to think evaluation of wealth for taxes should not be an every year thing. But absurd payments like the one to Musk mentioned should definitely be heavily taxed.
Carla 11.28.24 at 3:48 pm
@oldster: “The narcissistic myopia of the wealthy always amazes me… Do they not realize that owners of corner shops, concert pianists, college professors, small business owners, all take significant risks, all endure immense stress, and all endure sleepless nights, for trivial salaries and trivial rewards?” I agree. But what amazes me even MORE is the invisibility to our entire society, particularly the middle class people you mention, of the almost insurmountable difficulties, risks, stresses and sleeplessness endured by the working poor, the unemployed and the homeless people all around us just to get through each day.
Richard H Caldwell 11.28.24 at 6:08 pm
There are plenty of individual-owned productive businesses where it would be very easy to implement the policy of an individual income/wealth cap. The difficulties start to come in when trying to apply it to trusts, partnerships, and corporate entities.
Why? Concentrated economic power invariably and inevitably leads to concentrated political power. This concentration of political power is what’s critical to prevent.
Even if you limit the direct wealth of any individual owner/partner, you still need to deal with the fact that a small number of people can still end up wielding disproportionate political power by virtue of holding corporate officer and/or board positions.
reason 11.28.24 at 8:37 pm
MM “Putting a limit on the economic stake they have in the business, and especially one as as low as 10 million, while letting them maintain control, turns entrepreneurs into (entrenched and unfire-able) managers. That is not a system that has a high likelihood of producing economic dynamism and growth.”
There is a clear fallacy here. The business can be undercut by competitors and can go bankrupt. Why is this a worse way of maintaining dynamism, than having wealthy owners decide what happens in monopoly businesses?
KW 11.28.24 at 9:11 pm
I agree with others here who point out that it is really POWER that needs to be more equal, and that therefore allowing an individual to control an enterprise with a value above the set wealth limit would miss the mark.
engels 11.28.24 at 10:29 pm
But what amazes me even MORE is the invisibility to our entire society, particularly the middle class people you mention, of the almost insurmountable difficulties, risks, stresses and sleeplessness endured by the working poor, the unemployed and the homeless people all around us just to get through each day.
Yes, it’s a mass delusion. A related phenomenon in UK right now is the incesssant media yammering about how hard farmers (who are even more romanticised in UK than cops are in US) work “in all weathers” (and therefore, by some mysterious logic, why they shouldn’t have pay inheritance tax at the same rates as everyone else). Try getting the same people to give a shit about benefits claimants who can’t afford to turn the heating on or homeless people sleeping out in subzero temperatures…
bobbyp 11.29.24 at 3:54 pm
Kevin Carson above gets to the nub of it. Rather than trying to limit personal wealth after it has been accumulated, it seems better to devise social rules that limit such accummulation to begin with. We don’t need to go all “expropirate the expropriators”, but we could come up with policies to deal with extreme property rights soverignty, taxing all types of income similarly, and reform intellectual property rights that now are enforceable to the end of Time, etc.
Economist Dean Baker at CEPR has a short list of quite reasonable public policies along these lines (which he repeats repeatededly….but I digress).
bobbyp 11.29.24 at 3:57 pm
A question for MM: Is it not the case that under the pure (open, competititve) free market theory of the firm that profits are competed away? Why do we not observe this?
Anonymous 11.29.24 at 4:53 pm
This is a fantasy. Who will enforce these caps? Any attempt at implementing such a silly idea would merely further obscure wealth and power and drive it into even less deserving hands.
Ingrid Robeyns 12.01.24 at 8:44 am
Sorry for the late response, friends – I was caught up in my day job as well as organizing a massive demonstration + lobbying against some measures our far-right government is trying to implement. I thought that after the demonstration on Monday (which attracted 20.000-25.000 people) our organizing group would be done, but these proposed budget cuts are still not passed through parliament so we’re spending a lot of time trying to keep the pressure on the oppostion parties (who have a majority in the senate!) to not accept these cuts. Anyway.
A number of the comments I’ve addressed in the book – so I will not repeat myself completely here. But one important thing:
This post was not asking “is limitarianism a good idea?” (on which: see the book), but rather, “is it possible to have corporations in a limitarian world?”. The reason to zoom in on the latter is because the opponent of limitarianism who are engaged in the first debate answer “no” to the second question, and see that as a reason to also answer “no” to the first. Rutger and I have argued in our post that the answer to the second question is “yes”, but of course there might be other reasons why one believes the answer to the first should still be “no”.
Perhaps the most important thing to stress to those critiquing limitarianism is not a policy proposal in itself. It is what philosophers call ‘a regulative ideal’ – an ideal for which we have [I believe!] strong moral reasons, even if we know the odds are small we might ever reaching that ideal. That means that all the policy proposals that those who advocate a less unequal economic structure (pre-distributive measures) and all the fiscal policies that would make taxation genuinely progressive (and not almost like a flat rate, and even regressive at the very top, as it is now in several countries), would move us into the right direction. There is at present not sufficient democratic support for limitarianism, and given that we have not tamed international capital mobility, there are also objective feasibility constraints, for why it cannot be implemented right now (and perhaps never). But that doesn’t take away that we can move into the direction, as well as shift the terms of the debate (“the Overton Window”) by engaging with the arguments for limitarianism (which I have not addressed in this post; as said, we have parked that in this post, since we asked another question).
Ingrid Robeyns 12.01.24 at 8:53 am
J-D @19 – thanks for the reference to Senator Huey Long. I did not know him while writing the book, but I’ve had readers point me to a range of historical figures who argued for a version of limitarianism, including Senator Huey Long. But he was assassinated while campaigning as presidential candidate, so not sure that is a good prospect! :)
Ingrid Robeyns 12.01.24 at 9:04 am
On inheritance: yes, the suggestions by MM@7 and Bob @21 are important when one is interested in reducing wealth inequality, since about half of the large fortunes have their origins in large inheritances. Again, since this post was on the specific question whether limitarainism is compatible with running a private company and being able to keep it under your control as founder when it becomes too rich for the limitarian threshold, I didn’t address this. But I’ve written a long (12K words) academic paper in which I defend a limitarian, and thus somewhat more radical, version of what Thomas Piketty and Tony Atkinson have defended on inheritance – namely, impose a cap on what you can inherite (but much lower then 7 million!) and hypothecate the tax revenues for an citizen’s stake for all your people. Available open access here: https://journals.sagepub.com/doi/10.1177/1470594X241277959
On this proposal, there are also some unsolved feasibility hurdles right now, most importantly international mobility of capital, and lack of democratic support. But my role as a political philosopher is to take the argument where it leads me, even if there is no majority in favor. There are enough examples in human history which we now think are wrong, and for which once upon a time a majority did not care (slavery, denying women the vote, etc.).
Ingrid Robeyns 12.01.24 at 9:18 am
one final response, to those of you who argue that we should focus on redistributing power, and hence we have to do things predistributively, in the economy. I agree. There is nothing in the post that says that the only policy towards limitarianism is fiscal measures; and in the last chapter of the book, in which I discuss a range of things we need to do to move in the direction of reducing wealth inequality, most are not fiscal. In fact, an important thing we need to do is to challenge and changes neoliberal assumptions that we have come to take for granted and that many here rightly attack, such as the idea that people will only be motivated to contribute to the economy if the potential gains are as high as the sky.
Limitarianism sits uncomfortably between being the consequence of a bad economic system that needs to change, and being the cause of a range of risks and bad effects that we need to avoid. The book I wrote is about the second part. The reason I focus on this is because there are plenty of people in the world who do not agree, or who are utterly uninformed about the degree of wealth inequality, and its consequences. But the deeper question is how to reform the political economy in such a way that it will be more democratic (hence massively reduced power inequality), ecologically sustainable, focussing on human flourishing, not harming people living far away or living in the future, letting other species flourish too, and do all of that in a way that protects basic liberties and is organized efficiently. My view is that having a limitarian distribution of economic resources is one property of such an ideal society, but obviously not the only one.
reason 12.03.24 at 9:38 am
anonymous @47
What a strange comment. Those of us my age once lived in such a world. And in many ways it was much more transparent than the world is today. It can’t have escaped your notion that the rich and powerful hate transparency, at least when it comes to their own affairs. We are currently heading in the wrong direction (back to the 1890s it seems). If you are in a hole, stop digging.
Whitters 12.03.24 at 3:35 pm
I like the article but these discussions often have an underlying assumption in common with Atlas shrugged that the very wealthy are wealth creators and limiting their earnings will reduce future growth. To my knowledge that is very seldom true. It IS difficult to create jobs, wealth and growth. Which is why so few very “successful” persons actually do so. It is MUCH easier to get wealthy the Private Equity way by looting existing companies, destroying jobs, wealth and growth or the Hedge fund way of gambling with other peoples money and passing on any consequences to investors (often pension funds) or government. The most common way to become wealthy is inheritance. But if it is much easier to become wealthy “destructively”, perhaps more people do so than those who become wealthy “constructively”? Then if 9 out of 10 of the “new” wealthy become so through actively harmful activities then maybe a limit on personal wealth would actually improve the future economy by limiting the motivation for this kind of parasitic behaviour?
engels 12.03.24 at 6:35 pm
#52 Someone needs to write an alternative version of Atlas Shrugged where all the management consultants pack up and go home—and nothing happens.
Ingrid Robeyns 12.04.24 at 9:22 pm
by the way, I should also have mentioned the book ‘Against Inequality’ by Tom Malleson – which spends the first couple of chapters going through all the empirical evidence on whether reducing inequality massively is possible or not. Malleson’s conclusion is that reducing economic (income and wealth) inequality is very much possible; they also embrace limitarianism as a moral ideal in their last chapter. https://global.oup.com/academic/product/against-inequality-9780197670408?cc=us&lang=en&
Ingrid Robeyns 12.04.24 at 9:28 pm
GG @14 – In my book I argue that some degree of inequality can be morally justified, since I do not think all our success is reducible to factors beyond our control. for example (a real life case) – I chose to reduce my contract from full time to 80%. My gross salary got reduced with 20%. Since this was a choice not prompted by disability, illness, or other factors beyond my control, I think it is justified that previous-me earned more than current-me. And similarly, two person who are roughly identical with respect to their capacities and circumstances with which they started their adult lives can make different choices that justify wage, and possibly later wealth inequality. But it can only justify some limited degrees, e.g. the differences in how much we can safe by living frugally rather than spending all of it.
Tom Malleson takes a more radical position on the question of desert than I do – I need to do some additional reading but hope to write up a separate post about this before too long.
engels 12.04.24 at 9:59 pm
some degree of inequality can be morally justified, since I do not think all our success is reducible to factors beyond our control. for example (a real life case) – I chose to reduce my contract from full time to 80%. My gross salary got reduced with 20%. Since this was a choice not prompted by disability, illness, or other factors beyond my control, I think it is justified that previous-me earned more than current-me
Continuing my point above (which is similar to Whitters) it seems question-begging to equate high or even good pay with “success” and to assume that it is in any way socially beneficial. Some well-paid jobs (“bullshit jobs”) add nothing to the world and it’s hard to see how working less time at those merits a lower income. Others, clearly, are actively destructive: perhaps their holders should be paid more the less time they spend at “work”? (I, ofc, have no opinion on how many of the highest paid and most prestigious occupations fall into the latter category.) If no such assumption is being made and all of this is hypothetical then I think it’s politically important to make that clear whenever this kind of argument is mentioned.
J-D 12.05.24 at 1:01 am
Here’s a fictional perspective on what people deserve, from Ursula Le Guin’s novel The Dispossessed: An Ambiguous Utopia
Hidari 12.05.24 at 11:30 am
@54
Someone already wrote it: it’s called the Hitchhiker’s Guide to the Galaxy, remember the story of Golgafrincham?
https://hitchhikers.fandom.com/wiki/Golgafrincham
Nowadays, of course, the ‘B’ Ark of utterly worthless, useless people would consist of Instagram influencers, Youtubers, PR people, ‘pet psychics’, most people involved in (e.g.) corporate law and advertising, and so on.
Of course if you read on in the Guide, it turns out that the entire human race is entirely descended from these worthless parasites from Golgafrincham, which explains a lot.
noone1 12.05.24 at 11:36 am
Western culture is obsessed with money. In a healthy culture, people who want money should have money, and others should have what they want (I dunno: quiet family life? to write songs? to watch birds? whatever). If too many people want money, then something is wrong with your culture.
MisterMr 12.05.24 at 11:55 am
My two cents: “deserve” is not something objective.
Rather, if we want to live in a society that does X, we will reward people who do X and punish people who do anti-X.
So for example if we want to live in a rich society, it makes sense to reward people who create this affluence, though less than the affluence they create.
The problem is that, while in theory a free market capitalist system is supposed to work like that, in practice there are a lot of “rents” of various sorts, so that it seems very likely that a large part of the difference in income is due to rents.
When I say “is supposed to work like that”, I mean that that mainstream economic theory just takes that as an axiom, and introduces rents later if we are lucky, but there is really no proof that a capitalist economy even tends to reduce said rents.
If we speak of redistributing “intelligence”, “beauty” or “health”, first of all these things are not based on rents, and second to the degree that they are social products (e.g. intelligence and education) generally leftish politics tends to try to “redistribute” them too (e.g. education for everyone, public healthcare et similar).
The problem is that here we are speaking of “equality of opportunity”, however to reach a resonable level of “equality of opportunity” a minor but significant level of “equality of outcome” must also be enforced, because the outcomes of today influence the opportunities of tomorrow.
In this sense, having people who are mega-rich perhaps pushes them to work harder, but then logically pushes others to work less because they don’t have the opportunity to make it big.
There is also the reality that for many (most) people the system doesn’t work by promising a reward if you work harder, but by dealing out punishments (in the form of e.g. unemployment) if you are not willing to work hard, at times superhard, and at times at random too; this is not the point of limitarianism but if you see high incomes as largely rents, as I do, one should also see from where said rents come.
J-D 12.06.24 at 11:18 pm
Another literary reflection on deserving, from a less obscure author:
J-D 12.07.24 at 9:56 am
Quoting from a less literary work (Illuminatus!, by Robert Shea and Robert Anton Wilson):
engels 12.07.24 at 10:51 am
I was going to give examples of some very well-paid (and presumably demanding) jobs that make other people’s lives worse but the pages seem to have been taken down.
https://fortune.com/2024/12/06/unitedhealthcare-major-insurance-companies-pull-company-board-leadership-bios-elevance-anthem-blue-shield-cross/
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