Capitalism is broken and the labour union movement, the leftover rump of Marxism, the natural critic of capitalism, isn’t going to fix it.
That’s for a very simple reason: the more broken capitalism is, the higher the corporate profits, and the more money the labour union pensions accrue.
It was a stroke of genius: make all the political movements a beneficiary of corporate greed and crony capitalism.
And crony capitalism indeed.
According to a recent, widely reported paper by American think-tank Groundwork Collaborative, 53 percent of the inflation in the second and third quarters of 2023 was attributed directly to corporate greed. When the inflation rate was 11 percent, it should have been five percent. It’s not just this side of the Atlantic. Earlier this year, the IMF reported corporate greed was responsible for almost half of the European inflation.
The global corporate hegemony is profiting off your pain. Great for shareholders and union pension funds. Not so great for you.
Why is this happening?
Well, because for capitalism to work, you need competition. Competition keeps prices down. So when you don’t have competition, the corporations lose their honesty. And you lose your money.
Some influential economic theory would have you believe otherwise. The Chicago school of economics, for instance, while claiming to value competition, also believes monopolies are acceptable.
The key to their claim is that monopolies are more efficient. Sure, one huge vertically integrated grocery store chain is more efficient than a bunch of mom and pop grocers.
They are so efficient; the competition bites the dust.
But a key issue is who benefits from the efficiency of a monopoly? When a supermill can produce a 2x4 for half the cost as a smaller mill, do you reckon they’d pass those savings onto you the consumer? In the absence of competition, of course not. The efficiency gains go to the owners, that is the shareholders.
Maybe that’s why the elite, from both left and right, are OK with the record profits we are seeing. They all belong to the owner class, and the more monopolistic and profitable the corporate sector, the better for their investor returns.
So when you hear about gouging, don’t expect anyone on the political spectrum to pipe up and look out for the public good. Not the labour union movement. Certainly not the corporate-allied conservative movement, who think the more corporate profits the better.
Everyone is in on the game.
Missing in all this discussion is that excessive profit is a contradiction of classical economic theory.
In a truly competitive economy, profits should be heading towards zero. Excessive profits are in fact a sign of a broken economy. They become a drag on the efficiency of the economy. Sure, you need the profit motive to inspire people to start businesses in under-served sectors. But in the long term, a sector, particularly a sector that doesn’t do anything particularly innovative, like running a sawmill, shouldn’t be high profit.
If our ruling classes across the political spectrum weren’t financially benefitting from the excessive corporate profits and payouts, we might have some policies to address it.
James Steidle is a Prince George writer
