This paper examines the relationship between income distribution, political instability, and investment. The authors test hypotheses that income inequality increases socio-political instability, which in turn reduces investment. Using a sample of 70 countries from 1960 to 1985, they estimate a two-equation model where investment and socio-political instability are endogenous variables. The results show that income inequality is positively correlated with socio-political instability, and that socio-political instability is negatively correlated with investment. The authors also find that a wealthy middle class reduces socio-political instability, which has a positive effect on investment. The findings suggest that income inequality can hinder growth by increasing social discontent and reducing investment. The paper discusses the implications of these findings for policy and future research.This paper examines the relationship between income distribution, political instability, and investment. The authors test hypotheses that income inequality increases socio-political instability, which in turn reduces investment. Using a sample of 70 countries from 1960 to 1985, they estimate a two-equation model where investment and socio-political instability are endogenous variables. The results show that income inequality is positively correlated with socio-political instability, and that socio-political instability is negatively correlated with investment. The authors also find that a wealthy middle class reduces socio-political instability, which has a positive effect on investment. The findings suggest that income inequality can hinder growth by increasing social discontent and reducing investment. The paper discusses the implications of these findings for policy and future research.