For decades, Oxfam shops have been a common fixture on British high streets. Their twin-track approach of selling cheap second-hand clothes, used books, tantalising bric-a-brac and ethically-sourced products from developing countries, with the promise of charitable contributions winging their way to the wretchedly poor overseas, has appeared to be a winning formula: spending and salvation. In a single transaction, Oxfam meets the needs of the enlightened shopper worrying about conspicuous consumption – or, with the deepening economic crisis, in need of cheap clothes – while promising to address the global economic inequalities that leave faraway war-torn villages desperate for clean water.
Regardless of how popular or profitable its shops have been, Oxfam is aware that the needs of the global poor will not be met by consumers alone. The economic and political levers of government and capital will need to be tilted in a more favourable direction. Investigating and exposing policies, the machinations of the market and the serendipity of global finance are deemed essential by the charity if the iniquitous distribution of wealth and resources is ever to be bent towards alleviating the suffering of the have-nots.
Report highlights monopoly superprofits in key economic sectors
To this auspicious end, a recent study published jointly by Oxfam and Action Aid drew attention to the inordinate profits made by major corporations for the second year in a row, while, according to Katy Chakrabortty, Oxfam’s Head of Advocacy: “people everywhere are struggling to afford enough for basics like medicines and heating”. Its findings do indeed make for sober reading.
Headline figures attest to 722 mega-corporations raking in $1.09tn in windfall profits [windfall defined as those exceeding average profits made by those same corporations in the previous four years] in 2021 and $1.1tn in 2022. A statistic drawn from Forbes’ ‘Global 2000’ ranking shows this to be a jump of 89 percent above the years 2017-20. These would be astounding figures for any economic period, but during a global slump they surely raise some questions. The report provides a breakdown of this fortunate group:
• 45 energy companies made $237bn, with the industry boasting 96 energy billionaires with a combined wealth of $432bn.
• 18 food and beverage corporations made on average $14bn a year in windfall profits.
• 28 drug corporations made $47bn.
• Major retailers and supermarkets made $28bn
• 9 aerospace and defence corporations made $8bn.
Oxfam is not alone in calling attention to the colossal profit surge being enjoyed by key corporations. The Guardian has highlighted the findings of a team of researchers at Unite, the UK’s largest private-sector trade union, whose report analysing the top 350 companies listed on the London Stock Exchange noted that average profit margins increased from 5.7 percent in the first half of 2019 to 10.7 percent in the first half of 2022 (see Phillip Inman, ‘”Global greedflation”: big firms “driving shopping bills to record highs”’, 12 March 2023).
It was the scale of the profits recorded by British Gas that earned the ire of The Times – or, rather, the nature of that profit. Consumer affairs correspondent Andrew Ellson clarified the formula by which the energy corporation calculates its profitability:
“About £500m of its record £969m profit in the first half of the year came from ‘one-off’ increases Ofgem made to the cap to compensate suppliers for past errors … The cap includes a fixed-rate profit margin of 1.9 percent, so 1.9 percent of a higher cap resulted in a higher absolute profit per customer” (‘British Gas profits: it is little wonder that most people will feel despair’, 28 July 2023).
Asked whether British Gas will continue to make high profits, Centrica CEO Chris O’Shea (British Gas’s parent company) is confident that the supplier will continue to make between £150m and £250m profit each year. The government is currently spending billions of pounds of public money to maintain this enormous profit margin.
The article illustrated the fallout on British households: “It may seem hard to believe, but just three years ago the cheapest energy deal available for the average household was £783 a year. The average standard tariff was £1,125 – and that was considered painfully expensive, with charities warning about the impact of fuel poverty. Today, the average bill is £2,078 … This amounts to one pound in every four of the take-home pay of someone on the minimum wage, and a quarter of the state pension.”
Huge corporate profits have been a boon for executives and shareholders alike. Oxfam estimated that top-paid CEOs across four countries enjoyed a real-term 9 percent pay hike in 2022. This seems almost niggardly when one learns that the chief executive of Proctor & Gamble, a US-listed firm last year rewarded chief executive Jon Moeller with a 44 percent pay increase (up to$18m/£14.7) for his efforts in keeping profits above 17 percent for the past three years.
Price-gouging dubbed ‘greedflation’
This bonanza for the monopoly corporations has caused widespread consternation. These superprofits have not been obtained through technological advancement, increased productivity nor, tellingly, by the conquest of new markets. Rather, the accusation being levelled at the big players in the global market is that they are guilty of ‘price-gouging’, defined by Phillip Inman of The Guardian business pages as “systematic and excessive price increases”.
This is a view ratified by Christine Lagarde, president of the European Central Bank, who labelled the boost in profit margins with the rather emotive term “greedflation”. The accusation is that, under cover of the Covid pandemic and the war in Ukraine, monopolies have been exploiting the global energy crisis, global food price inflation and higher interest rates to increase profits by artificially raising prices above the level demanded by the aforementioned factors.
Bank of England Governor Andrew Bailey maintains that there is “no evidence” that firms have gone beyond the reasonable passing on of unavoidable extra costs to consumers by “loading prices, stealthily and excessively, to enrich their shareholders” – yet the corporations’ profit and loss accounts tell a different story.
Albert Edwards, a senior analyst at Société Générale, has had no qualms in pinning responsibility for the rise in the rate of inflation into double-digit figures in Britain, the USA and Germany onto companies that have “pushed margins higher”. Moreover, he says, they have done so at a time when “their raw material costs are falling away”.
What about the money-printing?
Paul Donovan, chief economist at UBS Wealth Management, has concurred with this view, attesting that the hike in inflation is due to “profit expansion”. Donovan is even prepared to put a figure on the increase: “Typically, one would expect about 15 percent of inflation to come from margin expansion, but the number today is probably about 50 percent.”
All this discussion of monopoly price-gouging leaves entirely out of the picture the huge money-printing programme that has been engaged in by imperialist banks over the last 15 years – and in the last three years in particular. It is far simpler to blame a few greedy (and allegedly aberrant ‘bad apple’) individuals than explain that every extra billion that has been printed by the Bank of England, the Federal Reserve and the European Central Bank has been devaluing the imperialist currencies and therefore lowering the value of wages, pensions and savings not only in the home countries but all over the world.
Still, the additional burden of being forced to subsidise such engorged profit margins cannot fail to have impacted households and businesses – cutting budgets everywhere to the bone and affecting most severely those who are already least able to afford basic necessaries.
Oxfam and Action Aid are quite clear about the damage being wrought by inflation, both in Britain and overseas. The statistics (which they blame entirely on the price-gouging of monopoly corporations) are damning:
• One billion workers across 50 countries took a $746bn real-terms pay cut in 2022.
• More than a quarter of a billion people in 58 countries have been hit by acute food insecurity.
• It is estimated that one person is likely to die of hunger every 28 seconds across Ethiopia, Kenya, Somalia, and South Sudan.
• Global food prices rose more than 14 percent in 2022.
Blame the ‘bad apples’, preserve the system
The report’s concluding statement that “extreme wealth and extreme poverty have increased simultaneously for the first time in 25 years” sums up the charity’s concern about the current crisis.
It comes as little surprise that heated attacks are levelled at the “privileged few … big business … the corporate world” from charities, academics, economists – and even by various mainstream media commentators. Nor that there are proposals for remedies to tackle the rapacity of ‘renegade’ companies. Equally, it comes as no surprise that their analysis is vacuous and their proposed solutions moribund.
Workers, those who these self-appointed experts and guardians of liberal democracy claim to speak for, are provided with facts and statistics which outline problems; are furnished with a degree of explanation and context – but only ever within rigidly determined and guarded parameters. The first and more important of which is the undeniable ‘truth’ that capitalism is the only successful economic system.
Not only this, but the over-arching tenet of all this ‘investigation’ and hand-wringing is that it is possible to ameliorate the excesses of the market; possible to reform and to regulate. In short, if we work hard enough, we can create kind capitalism.
This is amply demonstrated by the Oxfam press release, in which its much-vaunted concern for the downtrodden takes an effusively moralistic stance: “People are sick and tired of corporate greed. It’s obscene that corporations have raked in billions of dollars in extraordinary windfall profits while people everywhere are struggling … A few increasingly dominant corporations are monopolising markets and setting prices sky-high to line the pockets of their shareholders … shamelessly fattening their profit margins.”
Similarly, the parlance of psychotherapy is deployed: “Big business is gaslighting us all – they are hiking prices to make monster profits, plundering people under the cover of a polycrisis.”
This is surely an analysis of the workings of market capitalism lifted effortlessly from the playbook of identity politics that will appeal to social democrats everywhere whilst enlightening no one about the true workings of capitalism.
According to Oxfam International interim executive director Amitabh Behar, the blame for profiteering lies with “a few increasingly dominant organisations”. Not only have these corporations taken advantage of the market to build their capital, but they have been allowed to do so unchecked by ineffective “regulation, including progressive taxation”. This leads Mr Behar to the conclusion that governments have “invited this”.
Behar seems affronted by the workings of the capitalist system, expressing frustration that monopoly corporations can set prices with impunity, untethered by government policy or any sense of fair play. His view displays a wilful denial of capitalism’s voracity in exploiting workers and consumers alike: “Capital always seeks maximum profit. It cannot do otherwise if it does not want to be wiped out by the competition” (Harpal Brar, Social Democracy – the enemy within, 1995).
The charity’s calls for windfall profits to be curtailed by windfall taxes are at best wishful thinking, and at worst deliberate disingenuity. Their final plea sounds hollow and tokenistic: “Enough is enough. Government policy should not allow mega-corporations and billionaires to profit from people’s pain.”
But this imagines for Western governments a meaningful legislative and regulatory role that in reality exists only within the planned economies from which the likes of Oxfam and Action Aid recoil in horror.
Most importantly, what all these ‘analysts’ and commentators are signally failing to do is to provide an accurate picture of the crisis – which is in fact a global crisis of capitalist overproduction; a systemic problem of the economic system of capitalist imperialism. While the Covid pandemic and Nato’s proxy war in Ukraine have both exacerbated the recession into which the world capitalist economy is plunging, they have also provided camouflage for the real problems, which far predate 2020.
So when Paul Donovan calls for a “rebirth of the rip-off Britain campaign that became popular during the recession that followed the 2008 financial crash”, his view is useful to workers only to the extent that it draws attention to a market-driven economy that requires public money to bail out banks.
When Andrew Ellson opines that news of profits for shareholders at Centrica “will fuel the alienation that many people feel about the economy and how it is stacked against them”, one wonders how he keeps his job in mainstream media. However, his unexpected candour about exploitative capitalism is neutralised at the close of his article in his veiled threat that, in the absence of action against these rogue corporations, a solution will be found through the “ballot box”, viz a viz the return of a Labour government. His place at the table is secure.
Isabella Weber, an economist at the University of Massachusetts Amherst, on the other hand, believes that what we are seeing is a “rational capitalist reaction to a crisis”, which is seen by those who are positioned to take advantage of it as an opportunity “to make even bigger profits when consumers are primed to expect prices to rise in leaps and bounds”.
There is a refreshing honesty in this. Capitalism is not broken. The exponential rise in the unfathomable wealth of those corporations and individuals at the top is illustrative of the normal workings of the system: against the needs of working people.
The charities, the NGOs, and the mainstream media have neither the interest nor the capacity to analyse the current economic crisis accurately, for they constitute “the shell which is no longer suitable for its contents” (VI Lenin, Imperialism: The highest stage of capitalism, 1916).
Their role is not to provide a clear and truthful explanation to workers of how they are exploited under capitalism, norto offer any real hope of a way out of the downward spiral of poverty and despair to those they purport to champion, but to protect the interests of capital at all costs.
These critics of monopoly claim to represent the interests of the poor, but what they really represent is the handwringing and complaining of the squeezed small and petty bourgeois, endlessly railing against the unfairness of the present system for themselves, against their inability to compete against the might of the global corporations, and longing for a return to the halcyon (and purely imaginary) days of small-scale ‘free market’, ‘fair’, ‘entrepreneurial’ etc. capitalism.
Oxfam provides a stopgap of sorts, something to soften the blow of cut-throat capitalism. But, as with their high street shops, all they really provide are used and recycled products.
Workers need, deserve, and will demand the new.