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The ability of social status to generate significant economic activity is based on cultural values regarding such social status. Cultures that have low social stratification tend to recognize the economic potential of the motivated lower classes that have achieved some form of social status through their accumulated wealth. Countries with high social stratification tend to view such fortunes of the lower classes as accidental and not indicative of long-term economic stature.

Proof that there exists a fair allocation of labor and consumption in a productive economy is given. Specifically, a Spence-Mirrlees-like condition which satisfies both Pareto-optimality and equal-liberty criteria is introduced. This condition correlates individual differences in productivities to individual differences in labor-consumption preferences. It also enables the introduction of a class of economies which describe real-world situations.

A generalized tax schedule (GTS) is designed for the first-best allocation implementation of optimal income taxation. GTS is dependent both on the income of the given taxpayers and the whole profile of incomes of the society. The results show that the mechanism is critically influenced by the fixed distribution of characteristics and the finite number of agents.