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Corporate Monopolies Are Accelerating Global Poverty and Enriching the One Percent

Every year Oxfam produces an economic report that coincides with the gathering of the World Economic Forum – representing the world’s business and political elites – in Davos, Switzerland.  The Forum regards its purpose as nothing less than ‘to shape global, regional and industry agendas’.  The elitist nature of the gathering was reflected in 1,040 private planes flying in and out of Davos during the 2022 Forum which quadrupled CO2 emissions from private jets.  The economic narrative and analysis of Oxfam’s report is, therefore, a much needed corrective to the rarified parallel universe occupied by the Forum and its guests.  Titled Inequality Inc.: How Corporate Power Divides Our World and the Need for a New Era of Public Action, Oxfam’s 2024 report is a cold blast of reality at odds with the WEF’s hope that it is on the path to ‘a more sustainable, inclusive and resilient economic system in the future’.  Inequality Inc. presents evidence of grotesque levels of inequality that are the out-workings of a deeply flawed neoliberal economic system that has ‘supplanted government regulation in favour of the unfettered market’.  Oxfam sets its sights on corporate monopolies which have emerged in key sectors such as food and agriculture, media and entertainment, and energy.  Between 1995 and 2015, 60 pharmaceutical companies merged into just 10 ‘big pharma’ corporations which enables them to control markets and the terms of trade, and maintain high prices even as inflationary costs drop.  A report from Groundwork Collaborative, a thinktank in the United States has found that out-sized corporate profits have been driving inflation, ultimately punishing consumers.

Rewarding shareholders not workers

Oxfam’s research focuses on four calamitous ways in which corporate monopolies and power are driving inequality and enriching the wealthiest one percent of the world’s population.  First, corporations reward the wealthy rather than their employees, with the report finding that seven out of the ten largest corporations have either a billionaire chief executive officer or principal shareholder.  This in turn is resulting in greater wealth accumulation by the super-rich, with Oxfam predicting that the first ever trillionaire is just a decade away.  But while the fortunes of the five richest men in the world have doubled since 2020, five billion people have seen their wealth fall. 

Around the world, we are seeing extreme wealth sitting uneasily alongside severe poverty.  Take Ireland as an example.  The richest one percent hold 35.4 percent of Irish financial wealth yet, according to Social Justice Ireland, 671,000 people (13 percent of the population) are living below the poverty line, including almost 190,000 children.  There are also 13,500 homeless people in Ireland, including 4,000 children.  In the north of Ireland, 150,000 public sector workers were forced to go on strike for better pay and conditions on 18 January 2024 in the largest industrial action in living memory.  With static wages unable to match rising food, energy, rent and mortgage payments, greater numbers of poorly paid workers in the north of Ireland have had to make recourse to foodbanks.  While poverty is on the rise in the global North, the report depressingly finds that the poverty gap between the global North and South has grown for the first time in 25 years.  Since 2020, billionaires have become US$3.3 trillion or 34 percent richer with most of this wealth (74 percent) concentrated in the global North which is home to only 21 percent of the world’s people. 

Tax evasion and privatisation

The second main outworking of corporate monopolies has been aggressive tax dodging which has seen statutory corporate income tax more than halved in OECD countries since 1980.  This is facilitated by the abuse of tax havens and policy campaigns to reduce corporate tax rates as part of industrial planning.  An Irish parliamentary committee found that closing tax loopholes could net the state €7.1 billion but the loss of corporate tax revenue is a global problem with the Tax Justice Network finding in 2020 that countries are losing a total of over $427 billion in tax annually to international corporate tax abuse and private tax evasion.  While high income countries lose more to tax evasion ($382bn) than low-income countries ($45bn), tax losses in the latter are equivalent to nearly 52 percent of their combined public health budgets or 5.8 percent of their total tax revenue.  Closing tax loopholes would, therefore, go a long way toward reducing inequality and poverty, particularly in the global South.

Third, corporate monopolies are accelerating the privatisation of public services by relentlessly encroaching on sectors that are too important to be commodified as profit-making entities such as healthcare, transportation, water and education.  These are services upon which all citizens rely from the cradle to the grave and can be a bulwark of equality if they are state-supported and universally accessible.  In corporate hands, however, they can result in segregation, inequality and the erosion of human rights as those unable to pay for services become marginalised and impoverished.  ‘The world has been fundamentally reordered by widespread neoliberal economics’, argued Professor Philip Alston, the former UN Rapporteur on Extreme Poverty and Human Rights, ‘with often disastrous impacts on the human rights of the extremely poor’.  Oxfam finds that the World Bank has prioritised the privatisation agenda ‘effectively treating basic services as asset classes and using public money to guarantee corporate returns rather than human rights’.

Climate breakdown

The fourth way in which corporate power drives inequality is by accelerating climate breakdown and bankrolling lifestyles that result in the wealthiest one per cent being responsible for 16 per cent of the world’s total CO2 emissions.  Oxfam finds that the investments of just 125 billionaires emit 393 million tonnes of CO2 each year at an individual annual average that is a million times higher than someone in the bottom 90 per cent of humanity in terms of share of wealth.  The surge in oil prices in 2023 saw the five largest oil companies – BP, Chevron, Shell, Exxon Mobil and TotalEnergies – make record payouts to shareholders totalling $100 million as consumers struggled to meet their energy bills.  Fossil fuel corporations, argues Oxfam, have also been seeking ‘to block progress on a fast and just transition, deny and spin the truth about climate change, and crush those who oppose fossil fuel extraction’.  No fewer than 2,456 fossil fuel lobbyists attended COP28 in Dubai last December, four times the number who attended COP27 in Egypt.  Climate activist, Greta Thunberg, refused to attend COP27 describing it as an exercise in greenwashing.

So, what is to be done in the face of such immense corporate and political power when according to Oxfam’s 2024 report, ‘the world’s five largest corporations combined are valued at more than the combined GDP of all economies in Africa, Latin America and the Caribbean’?  This is wealth predicated on a neoliberal system that is deeply racist and sexist with ‘women, racialized peoples, and marginalized groups in every society’ suffering most from the inequality created by corporate nodes of production.  It is also a system that sustains neo-colonial relationships between the global North and South which are ‘perpetuating economic imbalances and rigging the economic rules in favour of rich nations’. 

Revitalise the state

The first prescriptive proposal to rein in corporate power by Oxfam is to revitalise the state as a development actor with interventionist economic policies, including public monopolies in sectors prone to monopoly power, to tackle inequality and a green transition away from fossil fuels.  This approach would, of course, involve investing heavily in ‘inequality-busting’ public services and improving ‘transparency, accountability and oversight of public institutions’.  In a speech to the OECD during the COVID-19 pandemic, Irish president Michael D. Higgins said that the state’s response to the crisis confirmed that ‘the public sector has the capacity and expertise to deliver quality universal services to its citizens’.  This capacity needs to be ramped up across all services to challenge the creeping corporate privatisation of the public good.  Second, Oxfam recommends breaking up private monopolies, drawing on anti-monopoly cases of the past which sought to challenge price fixing and market dominance.  Tax evasion can be tackled through public country-by-country tax reporting and the creation of a Global Asset Registry.  Measures proposed to empower workers include: supporting trade unions; capping CEO pay; ensuring climate and gender justice; banning dividend payments and buybacks; and radically increasing taxes on corporations and the super-rich including permanent wealth tax and excess profit taxes.  And, third, reinventing business to prioritise the needs of workers rather than shareholders and investing in cooperatives, social enterprises, and fair-trade businesses.  The report states that ‘10 percent of the world now works for a cooperative’ and finds that areas ‘with high cooperative density have lower levels of inequality’.  It also argues that tax and other economic instruments can be used to prioritise ‘equitable business models’ and ensure that companies adhere to climate targets and a green transition. 

It may seem fanciful to suppose that governments can rein in corporations with economic clout greater than a nation state but tackling corporate wealth is key to addressing the wealth and carbon emissions of the one percent.  It will help challenge racialized and gender discrimination on corporate commodity chains while re-couping lost tax revenue will strengthen public services, particularly in the global South.  Many of the problems discussed in Oxfam’s report are inter-connected and rooted in neoliberal economics.  It is critical that the recommendations of this report are acted upon across civil society, particularly the international development sector.  Research published in 2022 by the Centre for Global Education and Financial Justice Ireland found that:

“neither the international development nor the development education sector give anywhere near adequate attention to explorations with the public of the economic causes of poverty, inequality and injustice and of responses, through education, to the global neoliberal system”.

It is imperative that international NGOs launch themselves into public education and government advocacy work that will begin to make the recommendations, set out in Oxfam’s urgent and timely report, a reality.

Stephen McCloskey is Director of the Centre for Global Education and Editor of Policy and Practice: A Development Education Review.