Rising oligarchic power, ballooning inequality, and the quality of democracy

Decades of Neoliberalism led retreat of regulation, and greater inclusion of private sector to provide essential public goods and services of essential nature has increased corporate power disproportionately both in terms of ability to practice not only over-profiteering, but keep those profits mainly between CEOs and major shareholders, who, in turn, likely use this wealth and monopoly power to influence public policy, including tax policy to their advantage. On the other side, little of those profits has transcended into much needed higher pay of the working class, especially in the wake of rising cost of living in recent years.

Moreover, lack of deep investments into supply chains to weather shocks, especially the existential threat of climate change and linked ‘Pandemicene’ phenomenon at the back of neoliberal wave riding private sector looking for short-term profit maximization, and a fall in real wages over the years allowed a number of major corporations to earn super profits when the Covid pandemic hit, and which has been accentuated by political conflict since.

The recently released report ‘Inequality Inc.’ by Oxfam while revealing this research points out that not only gap between the super wealthy, the top one-percent income group, and the rest has increased significantly, especially in the wake of the pandemic, this decade has also seen increase in global inequality.

The report points out in this regard: ‘Since 2020, the richest five men in the world have doubled their fortunes. During the same period, almost five billion people globally have become poorer. Hardship and hunger are a daily reality for many people worldwide.

At current rates, it will take 230 years to end poverty, but we could have our first trillionaire in 10 years. A huge concentration of global corporate and monopoly power is exacerbating inequality economy-wide. Seven out of ten of the world’s biggest corporates have either a billionaire CEO or a billionaire as their principal shareholder. …For most people around the world, the start of this decade has been incredibly hard. At the time of writing, 4.8 billion people are poorer than they were in 2019. …Global inequality – the gap between Global North and the Global South – has grown for the first time in 25 years.’

Here, while the Report rightly cites contributing reasons in this accentuation of inequality to ‘Through squeezing workers, dodging tax, privatizing the state and spurring climate breakdown, corporations are driving inequality and acting in the service of delivering ever-greater wealth to their rich owners’ it does not clearly link neoliberal, and austerity policies, and lack of public investments both into improving the quality of public opinion – through better health, education, and economic empowerment – and also enhancing the influence of demos on public policy so that their interests could be better cared for.

Hence, the remedy the Report suggests ‘To end extreme inequality, governments must radically redistribute the power of billionaires and corporations back to ordinary people’, although useful, does not include this clear targeting of Neoliberalism, and austerity policies, and therefore lacks the emphasis needed to dismantle the hold of this flawed but deeply entrenched policy paradigm, both under the influence of ‘Chicago boys’- styled policymakers in individual countries, and in the policy prescription of multilateral institutions like the International Monetary Fund (IMF).

The Report also rightly emphasizes the burgeoning level of debt distress being faced by developing countries in general that is also contributing to rising global inequality because governments are unable to make needed development spending.

The Report points out in this regard: ‘Governments are finding it impossible to stay financially afloat in the face of mounting debt and the escalating costs of importing fuel, food and medicines. Low- and lower-middle-income countries are set to pay nearly half a billion US dollars a day in interest and debt payments between now and 2029, and they are having to make severe cuts to spending to be able to pay their creditors. …This is driving a wave of austerity.

More than half (57%) of the world’s poorest countries, home to 2.4 billion people, are having to cut public spending by a combined US$229 billion over the next five years: this is more than the total amount of official development assistance (ODA) in 2022.’

The missing link in the Report, it appears, is that while it underscores the need for governments to dilute corporate- and monopoly power, and to make policies that empower people in general, and although Bernie Sanders does rightly complements Oxfam in the foreword of the Report, for emphasizing the strengthening of oligarchic interests as ‘Each and every year, Oxfam does an extraordinary job in shining a spotlight on the rapid movement toward global oligarchy, in which just a handful of billionaires own and control a major part of the world economy. And each year, the movement toward global oligarchy becomes more pronounced and more obscene’ lack of greater understanding of the deep influence of wealth over public policy, mainly created and perpetuated though financing of political parties and their election campaigns by these very oligarchic interests requires greater pressure from public in the first place, mainly through better focused political and intellectual leadership, and better quality of political voice.

Sadly, and which all the more necessitates move towards better quality of democracy, is that the wealthy countries present on the boards of multilateral institutions like the IMF once again have political representation likely compromised by this extractive collusion of oligarchic interests and political power, weakening in turn efforts for bringing in deeper pre-distribution and redistribution policies for reducing income- and wealth inequality.

Copyright Business Recorder, 2024