Extreme wealth evokes images of both deserving entrepreneurs and fat cats. This paper explores whether the meritocracy argument stands up as a defence of extreme wealth. It uses an analytical framework – ‘the ladder of demerit’ – to look at several sources of extreme wealth ranging from crime and cronyism, to inheritance, monopoly, globalization and technology. The higher rungs are clearly not meritocratic. The lower ones reward talented people multiple times what can be justified based on merit.

Data drawn largely from Forbes’ list of billionaires provides a tentative indication of the relative importance of each rung.

The paper concludes that fifty percent of the world’s billionaire wealth is non-meritocratic owing to either inheritance or a high presumption of cronyism. Another 15 percent is not meritocratic owing to presumption of monopoly. All of it is non-meritocratic owing to globalization. By contrast, crime and technology are found to be negligible sources of extreme wealth.

This discussion paper is intended as a contribution to debate and does not necessarily represent Oxfam policy positions; the views expressed are those of the author