This paper tests the hypothesis that income inequality increases socio-political instability, which in turn reduces investment, thereby negatively affecting economic growth. Using data from 70 countries between 1960 and 1985, the study measures socio-political instability through an index constructed from variables such as political assassinations, deaths in mass violence, coups, and dictatorship status. The results show that more unequal societies are more politically unstable, and political instability significantly reduces investment. The study also finds that a wealthy middle class enhances political stability. The analysis uses a two-equation model where the endogenous variables are investment and a measure of political instability. The results are robust to sensitivity analysis and remain significant even when using alternative measures of political instability. The study concludes that income inequality and investment are inversely related, and that political instability negatively affects investment and growth. The findings suggest that reducing inequality can lead to more stable political environments and increased investment, which in turn can promote economic growth. The paper also discusses the role of fiscal redistribution and the potential benefits of redistributive policies in reducing social tensions and fostering a more stable socio-political environment.This paper tests the hypothesis that income inequality increases socio-political instability, which in turn reduces investment, thereby negatively affecting economic growth. Using data from 70 countries between 1960 and 1985, the study measures socio-political instability through an index constructed from variables such as political assassinations, deaths in mass violence, coups, and dictatorship status. The results show that more unequal societies are more politically unstable, and political instability significantly reduces investment. The study also finds that a wealthy middle class enhances political stability. The analysis uses a two-equation model where the endogenous variables are investment and a measure of political instability. The results are robust to sensitivity analysis and remain significant even when using alternative measures of political instability. The study concludes that income inequality and investment are inversely related, and that political instability negatively affects investment and growth. The findings suggest that reducing inequality can lead to more stable political environments and increased investment, which in turn can promote economic growth. The paper also discusses the role of fiscal redistribution and the potential benefits of redistributive policies in reducing social tensions and fostering a more stable socio-political environment.