“10% of GDP”: the Hidden Benefits of Engineering Capitalism

In recent weeks, my series on re-engineering capitalism has been delving into the problems necessarily faced within our current economic system (including when it will necessarily fail), as well as what a better system would look like.

However, in this engineered form of capitalism, there are hidden benefits that free up huge amounts of resources and these are worth exploring. These areas highlight a hidden deluge of economic waste which an engineered capitalism would help alleviate:

Tackling Corruption

When a small group controls disproportionate wealth, they gain outsized influence over political and legal systems. This fosters environments where bribery, fraud, and favoritism flourish. By capping wealth and redistributing excess, we reduce the power imbalance that fuels corruption and make institutions more accountable and transparent.

Globally, corruption drains approximately $2.6 trillion each year through lost revenue, inefficient public spending, and market distortions.

Addressing Mental Health

Extreme economic disparities fuel anxiety, insecurity, and chronic stress. Financial instability and social comparison are powerful drivers of mental illness. By capping wealth and ensuring greater economic fairness, we reduce social pressure, increase economic security, and allow for expanded investment in preventative mental health care.

According to a joint report by the World Health Organization and World Bank, mental health conditions are expected to cost the global economy $6 trillion annually by 2030, largely due to reduced productivity and increased healthcare costs.

Combating Homelessness

Housing scarcity and rising real estate prices are often driven by speculative investment from the wealthy. By capping personal fortunes and income, we discourage luxury real estate hoarding and redirect funds to affordable housing solutions. Imagine big cities like London and New York, but where houses aren’t the 5^th or 6^th houses in the portfolio of a wealthy businessman, but lived in by locals?

Governments could more easily fund interventions to prevent homelessness and stabilize communities when these elite properties and locations become affordable and available again.

As well as being a moral blight, globally, homelessness costs are immense. In the U.S., it’s around $8.6 billion annually just in emergency housing. In Canada it’s an estimated $10 billion CAD hit to the economy. The UK spends £2.3 billion. Adding European and Asian estimates brings global homelessness-related costs to well over $25–30 billion annually.

Reforming Lobbying Practices

Ultra-wealthy individuals and corporations often dominate political discourse through lobbying and campaign funding. A capped-wealth model would erode the financial incentives and means to do so, leading to more democratic and equitable policymaking driven by the public interest.

In 2024, lobbying expenditures in the U.S. alone totalled $4.44 billion. Globally, eve if the rest of the world combined only doubles the US level, we are at almost $9 billion. Much of it skewing policy in favour of corporate elites.

Lowering Incarceration Costs

Societies with extreme inequality tend to suffer higher crime rates and incarceration. Poverty and marginalization increase the risk of criminal behavior, while wealth inequality erodes social trust and stability. Capping wealth would help reduce these disparities, leading to safer communities and reduced reliance on punitive systems.

The U.S. spends over $80 billion annually on incarceration. Globally, prison spending is estimated to exceed $400 billion per year, given 11.5 millions people are incarcerated. Much of it driven by socioeconomic factors that could be alleviated through better distribution of resources.

Enhancing Public Services

When public services are underfunded, private alternatives fill the gap, but with duplicated infrastructure, inflated costs, and uneven access. A massive 29% of the UK’s public service spending is accounted for in this category (about £407 billion) By reclaiming excess private wealth, governments can centralise and streamline service delivery, improving efficiency and equity.

Though harder to quantify globally, reducing duplication and improving coordination would see improved economies of scale, particularly in healthcare, education, and transport. The amount would conservatively be in the trillions, given the UK figure.

Promoting Long-Term Investment

Short-term profit motives incentivise corner-cutting, job slashing, and environmental harm as companies act based on quarterly figures and driving yearly profits. A wealth-cap model reduces pressure for excess quarterly profits and allows both public and private actors to invest in sustainable, long-term infrastructure and innovation.

Redirecting wealth toward long-range societal goals could unlock trillions in economic value, particularly through green energy, public transit, and resilience infrastructure.

Efficient Philanthropy and Charity

In today’s model, charities often compete aggressively for donations, diverting funds toward marketing, branding, street-selling and fundraising campaigns. In fact, a good sign of an economy failing to raise enough for public investment is one where cures for deadly diseases and welfare of animals is largely outsourced to charitable donations. These are things which are public interest, yet governments seldom have the money to use.

When excess wealth is redistributed centrally, funding can be rationally allocated based on impact, not donor whims or fundraising spend. This makes philanthropy much more efficient and more equitable.

In America alone, charitable donations equal around $557 billion. Even scaling that to a couple of trillion globally, with the average of 26.3% being spent on fundraising itself, that amounts to estimates of $500 billion annual savings.

Enhanced Social Mobility and Associated Benefits

Wealth caps would diminish dynastic wealth accumulation, levelling the playing field for future generations. This leads to a much more merit-based society where positions of power and innovation are more likely to be filled by the best candidates, not merely the best-connected.

Greater social mobility is linked to higher GDP growth, lower crime, better public health, and increased innovation. Studies suggest lack of mobility costs developed economies hundreds of billions in unrealized potential every year. (OECD)

A Path to Shared Prosperity

Implementing an engineered capitalism is vital for purely practical reasons. The benefits are numerous. Yet it's also an economic strategy with the potential to save trillions globally from associated benefits, as discussed above. By redirecting surplus wealth into public investments, we can address systemic issues like corruption, mental health, homelessness, charity waste, short-termism and inequality. The result is a more equitable, efficient, and prosperous world. One that becomes a no-brainer.

When we step back and look at the global picture, it's clear that modern capitalism carries an enormous price tag in the form of its failures. Although not all the areas we have analysed in this article can be estimated exactly, the exploration estimates that these hidden costs of capitalism likely consume well over 10% of global GDP. These are resources that could be better directed toward human flourishing, innovation, and resilience.