Wealth Inequality Threatens Democracy, Experts Warn G20 Leaders

As world leaders gather for the 2025 G20 Summit, economists and policy experts have sounded a dire warning that the widening gap between the rich and the poor poses a grave threat to global democracy and social stability. They urged G20 nations to prioritise equitable economic policies, wealth redistribution, and stronger social safety nets to prevent the erosion of democratic governance and trust in public institutions.

Speaking ahead of the summit, which is focused on “Inclusive Growth and Sustainable Development,” experts from global think tanks, including the World Inequality Lab, the International Monetary Fund (IMF), and Oxfam International, emphasised that unchecked wealth concentration is destabilising societies, fuelling populism, and undermining citizen confidence in governments.

According to the latest World Inequality Report (2025), the richest 10 percent of the global population now control over 76 percent of total wealth, while the bottom 50 percent hold just 2 percent. The report noted that this imbalance has intensified in both advanced and developing economies due to policies favouring capital accumulation, weak taxation of the wealthy, and declining labour income shares.

Economist Thomas Piketty, co-director of the World Inequality Lab, warned that rising inequality is creating a “democracy deficit” where political power is increasingly concentrated in the hands of economic elites. “Democracy cannot survive when wealth and influence are monopolised by a few. The concentration of capital today rivals levels seen in the early 20th century — just before global upheavals,” Piketty said.

He added that G20 economies must urgently reform tax systems to curb excessive accumulation at the top and reinvest in public goods such as education, healthcare, and green infrastructure. “We need progressive wealth taxes, global cooperation on tax transparency, and mechanisms to prevent profit shifting to tax havens,” he stressed.

Similarly, Oxfam International released a statement ahead of the G20 summit calling on leaders to “tax the ultra-rich to save democracy.” The organisation’s report, titled “Democracy for Sale,” revealed that since the COVID-19 pandemic, billionaires have captured over 60 percent of all new global wealth created, while the poorest half of humanity saw no meaningful income growth.

Oxfam’s Executive Director, Gabriela Bucher, said: “We are witnessing a dangerous cycle where money buys political influence, and political influence protects money. If this continues, democracy will be reduced to a privilege of the wealthy.”

The report also highlighted the role of corporate monopolies and financialisation in deepening inequality. Large multinational corporations, especially in technology and energy sectors, have recorded record-breaking profits, often paying minimal taxes relative to their earnings. Meanwhile, rising costs of living, stagnant wages, and limited access to credit have pushed millions into poverty.

In developing countries, the effects of inequality are even more pronounced. Experts at the African Development Bank (AfDB) and the United Nations Development Programme (UNDP) noted that economic disparities in the Global South threaten not only democracy but also peace and security.

“High inequality fuels resentment and weakens social cohesion. We are seeing growing disillusionment among young people who feel excluded from economic opportunities,” said Dr. Akinwumi Adesina, President of the AfDB. “Inclusive growth is not a moral option — it is an economic necessity.”

Data from the IMF shows that countries with high inequality levels are more prone to political instability, corruption, and low voter turnout. The Fund urged G20 governments to focus on social spending, wage equity, and financial inclusion as tools to sustain democracy.

In her remarks, IMF Managing Director Kristalina Georgieva said: “When inequality widens beyond a certain point, it erodes trust in governments and institutions. Economic growth must work for everyone — not just the few at the top.” She also proposed that G20 countries adopt a “global social compact” to ensure fair taxation and shared prosperity.

Civil society groups participating in the summit have also called for stricter regulation of political campaign financing, arguing that the growing influence of wealthy donors distorts democratic processes. According to Transparency International, corporate lobbying expenditures in G20 countries have more than doubled in the past decade, raising concerns about policy capture by powerful interests.

Experts also highlighted the technological divide as a new driver of inequality. Artificial intelligence (AI) and automation, while boosting productivity, risk concentrating wealth among corporations that control digital infrastructure and data. Without policies for equitable access to digital skills and jobs, millions could be left behind in the evolving global economy.

Joseph Stiglitz, Nobel laureate in economics, emphasised that reversing the trend requires “bold political will.” He stated: “The G20 must act as a collective conscience for the world. It’s time to move beyond rhetoric and implement progressive taxation, universal basic services, and fair wages. Democracies cannot thrive when citizens feel abandoned.”

As G20 leaders deliberate in Tokyo, the message from experts is clear — inequality is not just an economic issue but a democratic crisis. Without decisive action, they warn, growing disparities could fuel political extremism, weaken governance, and threaten global peace.

A joint communiqué from several G20 civil society organisations (CSOs) urged governments to adopt a “Global Inequality Pact,” committing to wealth redistribution policies, transparent governance, and inclusive economic reforms. “The credibility of democracy depends on fairness. It’s time for G20 nations to lead by example,” the statement concluded.

With wealth concentration at historic highs and trust in institutions at historic lows, the 2025 G20 summit is being seen as a pivotal moment for rethinking global capitalism and restoring faith in democratic systems. Experts insist that tackling inequality is no longer a matter of charity — it is a fight for the survival of democracy itself.