Millions are facing extreme poverty because a handful of the richest people on the planet are making astronomical profits, writes John Clarke
The present cost of living crisis unfolds in a context in which some of the very richest and most powerful capitalist interests are raking in huge profits while, at the same time, the most terrible levels of hardship and suffering are being imposed on hundreds of millions of people across the world.
The international grain trade is a particularly dreadful example of a wild feast of profit making that is taking place against a backdrop of literal famine. ‘Food prices have surged more than 20% this year, according to the UN Food and Agriculture Organisation’ and this is leading to appalling consequences. ‘About 345 million people are experiencing acute food insecurity, according to the World Food Programme, compared with 135 million before the Covid-19 pandemic.’
As this situation unfolds, four companies that have dominated the grain trade for decades ‘have seen record or near-record profits or sales.’ They are all confident that this bonanza is going to continue and even intensify over the next two years. The Archer-Daniels-Midland Company, Bunge, Cargill and Louis Dreyfus are referred to as the ABCD and they are estimated to control between 70% and 90% of the grain trade across the world.
The killing that these companies have been making in this situation is quite remarkable. Archer-Daniels-Midland brought in the highest profits in their entire history during the second quarter of this year. Bunge registered a 17% increase in sales revenues in the same quarter. ‘Cargill reported a 23% increase in revenues to a record $165bn (£140bn) for the year ended 31 May.’ ‘Dreyfus reported profits for 2021 up by more than 80% on the previous year, as revenues rose by nearly a quarter to $1.62bn.’
It is hard to see how any decent minded person could fail to be revolted by such blatant profiteering in the midst of a global cost of living crisis that is impacting the lives of hundreds of millions of people and generating conditions of outright starvation in some countries. Mainstream NGOs are calling for a windfall tax to be imposed on companies that ‘are clearly capitalising on the reduced supply and increased demand, further exacerbated by commodity trading.’
A spokesperson for Bond, a network of international development charities, points out that “When supply is significantly lower than demand, it gives space for price increase. But this is also exacerbated by speculative stock markets, since wheat and other commodities are traded on stock markets and therefore prices fluctuate.” Oxfam suggests that “There are fears that speculation could be a driver in food price rises. Anything that causes hunger and starvation is immoral.”
The grandees of the grain trade are, of course, not the only ones who have buried their heads deep in the trough without any regard for the human cost. The supply shocks that have beset the global economy, generated by the impacts of the pandemic and compounded by the Ukraine conflict, have lent themselves to shameless price gouging and profiteering by others who are in a position to take full advantage of the situation.
Looking on as ‘the US’s biggest oil companies pumped out record profits over the last few months as Americans struggled to pay for gasoline, food and other basic necessities,’ even the far from radical Joe Biden felt compelled to declare that “Exxon made more money than God this year.” Indeed, that company last month ‘reported an unprecedented $17.85bn (£14.77bn) profit for the second quarter, nearly four times as much as the same period a year ago, and Chevron made a record $11.62bn (£9.61bn). The sky-high profits were announced one day after the UK’s Shell shattered its own profit record.’
The big pharmaceutical companies have also been front rank profiteers throughout the pandemic, making vast gains from the production and distribution of vaccines, as political leaders ensured their ‘intellectual property rights’ would be protected. This has led to a global regime of ‘vaccine imperialism’ that has ensured that people in the poorest countries have been left unprotected and that the risk of new and more lethal variants of the virus has been needlessly compounded. It is the starkest case possible of profits being put ahead of human need.
If we consider the massively wealthy individuals who have been the most enthusiastic participants in this feast, matters become even more revealing. Oxfam reported at the beginning of this year that, during the pandemic, ‘The world’s ten richest men more than doubled their fortunes from $700 billion to $1.5 trillion —at a rate of $15,000 per second or $1.3 billion a day.’ This tiny group of billionaires
‘now have six times more wealth than the poorest 3.1 billion people.’ Oxfam, with a distinct note of bitterness, concludes that ‘Billionaires have had a terrific pandemic.’
It is, of course, entirely true that the present inflationary instability within global capitalism is being greatly exacerbated by the efforts of major capitalist interests to maximise their profits in the face of the crisis. It is also fully justified to speak of a ‘profit price spiral’ and to dismiss the claim that is being used to justify class war interest rate increases that wage increases are the force that is driving inflation. Yet, it is also important to understand that this is all very far from a situation where robust profits are being generated by productive investment in a stable and expanding capitalist economy. On the contrary, we are dealing with the most parasitic and destructive forms of wealth generation conceivable.
In assessing the prospects for some easing of the inflationary impacts, Michael Roberts looks beyond the present round of price gouging and considers the actual state of capitalist economies. He concludes that ‘productivity growth has been slowing towards zero in the major economies for over two decades’ and offers some reasons why this is so.
Firstly, he points to ‘slowing investment growth in productive (ie value-enhancing) sectors compared to unproductive sectors (like financial markets, property and military spending).’ At the same time, ‘behind this decline in productive investment is the long-term decline in the profitability of such investment compared to investing in financial assets and property.’
This ability of well placed capitalists and speculative players to drive up prices doesn’t speak to any return to stability or economic health for global capitalism but rather highlights the destructive greed that marks the present period. It represents an approach that is neither rational nor sustainable and that puts those raking in such gains on a collision course with the working class populations they are so ruthlessly gouging.
It is, indeed, glaringly obvious that the reckless ‘let them eat cake’ arrogance of the profiteers is reaping what it has sown. From the strike wave that is now growing in Britain to the recent Indigenous-led general strike that forced a major concession from the government of Ecuador, working-class mass action and movements of social resistance are gaining ground. Those who seek to profit from the present global crisis are being challenged by millions who refuse to pay for it.
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John Clarke became an organiser with the Ontario Coalition Against Poverty when it was formed in 1990 and has been involved in mobilising poor communities under attack ever since.
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