Unmasking the Unseen Force: How Corporate Greed Amplifies Inflation
In recent times, inflation has established its unwavering dominance in headlines, relentlessly driving up prices across various sectors. But beneath this economic turmoil lies a hidden malefactor: corporate greed. While supply chain disruptions and heightened demand are undoubtedly factors, the insidious hand of many corporations exploits inflation as a convenient excuse to bolster their profits, leaving consumers to bear the brunt of the consequences. This phenomenon, aptly coined “greedflation,” is a disturbing trend that warrants our attention.
So, what exactly is greedflation? At its core, greedflation signifies companies raising prices beyond what’s necessary to cover their increased costs, all with the ulterior motive of fattening their profit margins. Instead of absorbing some of the higher expenses themselves, these corporations are passing on every bit of inflationary pressure to consumers, and then some.
Closely related to greedflation is the concept of profiteering. This nefarious practice involves businesses capitalising on periods of scarcity, societal turmoil, or heightened demand to impose exorbitant prices and rake in excessive profits. A poignant example can be found during the COVID-19 pandemic, where some retailers faced accusations of profiteering by charging exorbitant prices for essential items like cleaning products and PPE when people were desperately in need.
The problem of greedflation and profiteering is further exacerbated by the presence of large corporate conglomerates with significant market dominance. Their outsized pricing power and lack of substantial competition mean they can freely hike prices purely for the sake of inflating their profit margins. This is done through tacit collusion. While ordinary people struggle with the daily grind at a time of rising costs and prices, corporate profits continue to go up, and the only reason for this is simply because of profiteering. Consumers, left with few alternatives, are forced to pay inflated prices, even for basic necessities.
Unfortunately, the conventional monetary policy response of raising interest rates does little to combat greedflation. While higher interest rates might slightly curb demand, they do nothing to restrain corporate avarice. Their primary impact is to make it more costly for consumers to borrow money. Consequently, many individuals find themselves taking on additional personal debt simply to afford everyday essentials like groceries and gas. None of this will have an impact on reducing inflation, and so central banks are somewhat deluded by an old-school approach that isn’t fit for today’s times, leading to tremendous suffering and pain for the vast majority of people everywhere.
It is painfully evident that greedflation exacts a tangible human toll. As prices soar faster than incomes can keep up, consumers find themselves struggling to keep pace. More and more people are faced with daunting trade-offs and are compelled to cut back on essentials as they navigate an increasingly expensive landscape. Corporate entities in Europe and America, rather than collectively bearing the burden of inflation, are exacerbating the problem, widening the gap between themselves and the struggling masses.
The reality is that it is difficult to stand up against the exploitation of consumers and to hold profiteering corporations accountable. Powerful bodies and boards influence government policy through clientelism and oligarchic power structures. In the light of neoliberal globalisation, these have taken hold throughout the world with little or no alternatives presented as viable solutions to economic policy. The fact that we are all consumers now means that we are all vulnerable to the power of large corporations, perhaps more than ever in recent history.
