If there were a limit as Mohammed ask him, the generalized public opinion is that the neoliberalism has been the extrem inequality model. The Davos Economic Forum so have it considered. Extreme inequlity diminish the economic growth, reduce human development oportunities and eliminates the competividad of micro y median enterprises; then inequality is a very important economic and social problem which public economic and social policy must struggle against it. Mario 

There are many types of extreme inequalities. Inequality is high in the USA compared to any western nations, yet Americans are not destabilizing their government every now and then. Sometimes inequality is made tolerable by creating some economic opportunities for the population as a whole. Contrast the pattern of inequalities in the USA with that Africa, where many people cannot afford to eat three meals a day. Or think about India, where millions of people don't have access to toilets whereas there are millions too who live in luxury. I don't think policy makers can fix a ceilings but they certainly do in terms of floors, especially when it comes to extreme poverty. A governments can tax wealthier more if it wants to redirect some of the individual wealth to social benefit programs, but a government cannot set a wealth limit, Marxists talk about equality, it seems we don't like the idea of being equal. 

From my perspective (Biophysical Economics) wealth comes basically from resource exploitation (of course other factors as well).  Thus if you are talking about unequal distribution of wealth you are actually talking about unequal distribution of resource use.  What is the logic that allows some people to use a greatly disproportionate use of our mutual  "gift" of resources?  In the old days the few garnered resources  disproportionally by taking  it through military means (Read Plutarch's lives) with the support or at least the acquiescence of many.   Today we do the same through relatively unfettered free markets.  Many think that the wealthy justify their disproportional wealth by "contributing to economic activity".   But this means that they are disproportionally "using up" the Earth's finite resources too (as well as adding to  the pollutional load).  I have no resolution to this problem, but think it useful to think of all aspects of economics in terms of its impacts on resources and environment as well as just money.

Rather than thinking in terms of floors and/or limits, one might ask about principles which ought to guide the production and investment decisions if a society is to be egalitarian. I suggest: Determine what is needed to provide a minimally just and satisfying life for all, i.e., what  are the necessities of a good life, given available resoirces. One thinks of housing, universal access to health care, education, et al. Then: produce no luxury (beyond what belongs under the previous category) until everyone has been provided with the necessities. In a rich country with the ability to issue its own currency (e.g. USA, Canada, but not Euro countries which have no control over monetary policy), the State can provide these free.

The limits for inequality are the same limits of capital acumulation, biological limits of the life

I think that the problem with free markets is that they turn society with initially equal distribution of wealth into more unequal. There were social experiments. In Russia after the revolution of 1917 the land was divided equally among peasants. However just in 10 years inequality of people with the same initial endowment of land have grown substantially. Some peasants had 4 horses, some had  none. Why had this happened? There was different labor endowment in families, there was different level of effort, there were random shocks (weather, initial capital, etc), there was different access to market to sell their goods. Although this inequality was modest by modern standards, many richer peasants (only few of them have exploited workers, even by Marxist standards) have been sent to Siberia for exile in 1930.

In 1992, after liberal reforms in Russia, there was no distribution into equal endowment. Contrary to that, due to hyperinflation above 90% of people have lost their savings (only those who had them in dollars did not lose, but dollar was too expensive for the majority at that time), while less than 10% had a possibility to privatize former public property virtually for free. Just in 1 year income inequality index (the ratio of income of top10 % to bottom 10%) grew from 3.5 (I got this number  in the book of Atkinson and Micklewright, 1992*) up to 15 (I got this in newspapers). Just for comparison: in 1970s this index in Western Europe was only 4, in US - 6, in Latin America above 10.

There are 2 messages. First, some market regulation and redistribution is needed to maintain equality within socially acceptable standards. Markets have a natural tendency to increase inequality due to self-reinforcing nonlinear effects (rich become richer, poor become poorer). Second, even Marxist ideology (reduction of inequality by force) can sometimes be applied as an extreme (for modest inequality in 1930) and sometimes not applied at all (when inequality was growing to socially non-acceptable levels in Russia after 1992).

Of course, the instruments of social choice in democratic societies (parliaments, etc) can influence inequality. But there is no unique standard of limits. I personally think that index of income polarization above 10 should not be tolerated. Moreover, it can be socially inefficient. But there are more or less tolerant societies.

* Atkinson, Anthony B., and Micklewright, John, Economic Transformation in Eastern Europe and the Distribution of Income. Cambridge, UK: Cambridge University Press, 1992.

Thank you, Mohammad, for articulating  one of the most important questions directed toward the survival of humanity.  From your question, I'm assuming you already have an inkling of the answer and are looking for others similarly inclined.  And thank you, all thoughtful responders to this crucial question.  To all, welcome to the semi-silent but destined to be successful club.

May I offer a brief synopsis of my 40 years of work on the matter.  And may we all join in the necessary work to realize the peace, satisfaction and happiness of all passengers on our potentially pleasant Spaceship Earth.

Socioeconomic Democracy is here offered as a peaceful, effective and democratic resolution to humanity's present and needless systemic problems and sufferings. Socioeconomic Democracy will further be found to satisfy the increasingly acknowledged need for a "Next System Project", advocated by, among many others, Gar Alperovitz.

The crucial question is whether humanity has yet evolved sufficiently to understand and peacefully resolve the utterly unnecessary obstacles to further healthy development and evolution.

It is here respectfully suggested that all of humanity seriously confront the multitude of needless problems created by the growing and unjust distributions of monetary income and far more importantly monetary wealth, within and among every country on this planet.

Fortunately, this appears relatively easily accomplished by simply recalling and reconsidering just a few insights and observations of writers and thinkers down through the decades, centuries and millennia, starting, somewhat arbitrarily, to be sure, in ancient Greece.

Plato, in his last and most mature Laws, preferred equality of personal property but realized that was difficult, if not impossible, to precisely define. He therefore thoughtfully suggested limits on both poverty and affluence. Plato's attentive student, Aristotle, suggested, with admirable specificity, that "No one should have more than five times the wealth of the poorest person." Prior to Plato, Thales of Miletus provided a reasonable assessment of the situation: "If there is neither excessive wealth nor immoderate poverty in a nation, then justice may be said to prevail".

Reluctantly neglecting all too many other important contributors to the increasing understanding and advancement of an economically and psychologically healthy humanity, may it briefly be mentioned that a powerful sequence of thoughtful humans, down thru the ages, considered and contributed to the discussion.

A valuable list of some of these people is available at "A Brief History of Basic Income" (see below). Of course, the rapidly increasing popularity of some form and amount of universally guaranteed income for all (by itself) leaves in question just how it is to be financed.

Nevertheless, this writer cannot constrain himself from explicitly mentioning two of the many contributors to this crucial conversation. First, the world-changing work and dedication of that Societal Engineer, Thomas Paine, who, in a later work following Common Sense entitled Agrarian Justice, proposed and discussed the virtues of a guaranteed income for all.

Then there was Henry George who, not unlike Paine, did time in a print shop to get his writings printed. One of Henry's major contributions was to link financial assistance for the poor with a suggested tax or limit on personal wealth, then mostly being land property.

Over forth years ago this writer, and would-be Societal Engineer, was given the specific ideas of Socioeconomic Democracy. A history of the development and presentation of these ideas is available in our Bibliography (see below).

Socioeconomic Democracy (SeD) is a theoretically consistent and peacefully implementable psycho-politico-socio-economic system wherein there exist both some form and amount of locally appropriate Universally Guaranteed Personal Income (UGI) and some form and amount of locally appropriate Maximum Allowable Personal Wealth (MAW), with both the lower bound on guarantee personal income and the upper bound on personal material wealth set and adjusted periodically and democratically by all participants of a democratic society.

Socioeconomic Democracy is easily implemented with elementary Public Choice Theory. The median values of society's preference distributions regarding these two crucial societal parameters peacefully, democratically and unambiguously resolve the matter.

Whether society realizes some appropriate form of Socioeconomic Democracy is a cogent question. Clearly, public dissemination and discussion of the suggestions presented here and by others will prove determinative. An alternative to Socioeconomic Democracy as defined above would be where the two economic boundaries discussed here were considered and established by, say, the legislative branch of a "Representative" Democracy.

This planet's trivially eliminated or significantly reduced societal problems, by realizing Socioeconomic Democracy, include but are by no means limited to, those familiar ones associated with Automation, computerization and robotics; Budget deficits and debts at the personal, national, regional and global levels; Contempt for much presently practiced politics; Costly crimes and costly prisons, both governmental and corporate profit-motivated; Corporate profit-motivated as well as general publicly expensive exogenous pollution; Inadequate public education for all ages, "races", and both sexes of humanity; Oversights and confusions of some, but certainly not quite all, Economists and Politicians; Ignoring the elderly, to whom we all owe our very existence; International costly conflicts; national costly conflicts; Involuntary employment; Involuntary unemployment; Lack of access to necessary physical and psychological healthcare, causing unnecessary harm to the individuals themselves, their "close" relatives, and any "innocent bystanders"; Pay injustices to both sexes, all ages and all "races" of our human family; Corporately profitable yet publicly costly "Planned Obsolescence"; Political non-participation, carefully planned, designed, legislated and realized by some, but not all, power-intoxicated politicians; Population explosions; Post Traumatic Stress Disorder (PTSD) traceably caused by "patriotic" and/or pathetic human-killing wars, as well as all the PTSD created by all the other unnecessary societal problems; Voting district gerrymandering; Needless and obscene poverty, racism, sexism, and everything else that effectively opposes, neglects or negates the General Welfare.

Break Time: Consider and enjoy "Rapids of Change" at

http://www.centersds.com/rapids.htm

Responses to this communication are welcome and sought.

"A Brief History of Basic Income Ideas"

http://basicincome-europe.org/ubie/brief-history-basic-income-ideas/

You may enroll for a daily mailing of BI Newsletter at http://basicincome-europe.org/ubie/

A Bibliography of Socioeconomic Democracy is available at http://www.centersds.com/biblio.htm

Robley E. George, Founder and Director

Center for the Study of Democratic Societies

http://www.centersds.com

[email protected]

If you are looking for a more academic answer, there was a strand of literature related to revolution led by Ted Gurr who talked about "relative deprivation as a source of social unrest.  In other words, even in rich societies inequality can reach a threshold considered unacceptable.  Implicitly, then part of the secret to effective functioning of Western institutions is the foundation of social mobility aka the American dream, the idea that anyone can make it through hard work.  This is starting to break down. Though the rapid increases of wealth in China gave a lot of mobility and poverty reduction, there was no real social compact given the ongoing corruption of officials.  On the other hand, the idea of equality is also impossible, as I discuss in my new book, The Book of Rules.  Thus we are forever oscillating between the desire for equality and the reality of competition and built in advantage.  Contrary to many of my colleagues, I don't think this is unique to capitalism, even Marx recognised the historical patterns of pre-Kst societies.  It is more innate to human nature and promotes a continuation of oscillation, reaching ever wider spheres and depth through the unique features of capitalism to use finance for production.

Yes, there should be floors and ceilings on social and economic inequality

Floors are taken into account in rights language and to some extent within SDGs

However there is less emphasis on 'ceilings' and where they exist they are not implemented. In fact SDGs cannot be achieved without ceilings. 

Some ceilings- to vary with country to country:

- amount and quality of land

- number of houses and rooms; location

- amount of gold

- amount of livestock

- number and kind of vehicles

- number and value of shares 

There is a limit to what capitalist growth can acheive, and unless ceilings are put, poverty will be eliminated through  elimination of poor

Further, the developed countries should have minimum people per unit of land. Migration should be allowed from developing ones till this is achieved

Thanks for the BEST question asked

Ranjani

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