Yes, yes. I agree with all of this (well, "grows sub-linearly" is grossly speculative, but matches the marginal utility of consumption, etc.) But you misunderstand my question.
To counteract the power of wealth, some other sort of power is needed. Doesn't this lead to power inequality again? Do we know anything about power inequality dynamics that lets us choose this or that structure of coercion?
Well, democracy counteracts the power of wealth when it places limitations on it (in the form of policies that aim to reduce wealth inequality and in more limited ways like regulating political campaign finance) as well as other forms of power (like hereditary authority, power through the threat of violence not controlled by society etc.).
Even if we did have a good model of power dynamics, controlling it would still be hard, as it's an intractable system. Instead, what we have is politics, where different groups fight for their power (and freedom). That's exactly what politics is. When power inequality grows too much, we have revolutions.
What scares me is that we may be seeing an increase in soft, non-authoritarian power (like the power in the hands of companies like Google and Facebook), that is almost as bad as authoritarian power but harder to fight against because it doesn't feel coercive.
To counteract the power of wealth, some other sort of power is needed. Doesn't this lead to power inequality again? Do we know anything about power inequality dynamics that lets us choose this or that structure of coercion?