Something seems to have broken with capitalism.
Albert Edwards
Albert Edwards is an economist for the Societe Generale investment bank. He is concerned that capitalism is no longer working as it should. During a time of a slowing economy – with higher commodity prices and a labor shortage (as during the 4th quarter of 2022) corporate profit margins should decline. Instead, corporations in the US and abroad are showing what he calls “super-normal profit margins.”
After working in finance for over 40 years I had felt there wasn’t much that could surprise me. Yet I find the unprecedented levels of corporate Greedflation in this economic cycle astonishing. The latest release of US whole economy profits data delivered another shock to my weakening confidence that the capitalist system is working as it should. . . .
Companies have used first the pandemic and then the war in Ukraine to ‘profiteer’. At a time when social cohesion is already fraying at the edges, I think the sight of companies generating super-normal profit margins in a crisis can only inflame social unrest. This is a big issue for policy makers that simply cannot be ignored any longer.
Albert Edwards
Profiteering
Edwards uses the words “greedflation” and “profiteering” to describe what corporations are doing. The normal checks and balances of a capitalist economy have failed due to excessive greed. In an increasingly frenzied pursuit of power and gain, corporations have abandoned the traditional moral and ethical rules and restraints of society.
Merriam-Webster defines “profiteering” as “the act or activity of making an unreasonable profit on the sale of essential goods, especially during times of emergency.” Edwards (along with others) blames this shameless corporate profiteering for the inflation problem in the US and the UK.
The profiteering crisis isn’t just a few bad apples – it’s systemic across our broken economy. Entire industries are choosing to take advantage of a crisis, resulting in the spiraling prices of goods we all need.
Sharon Graham, Unite, UK
Former US Labor Secretary Robert Reich agrees that widespread corporate profiteering is the primary cause of our recent inflation problem and that it is being driven by pure, undisguised, greed.
When corporations are so flush with cash, why are they raising prices? They are not raising prices solely because of the increasing costs of supplies and components and of labor…. Corporations enjoying record profits in a healthy competitive economy would absorb these costs. Why? Because they can. And they can because they don’t face meaningful competition.
Robert Reich
Greed leads to destruction
Latter-day Saints should be very familiar with this story. The pattern of economic greed leading to complete societal collapse happens more than once in the Book of Mormon.
In the New Testament, The Apostle Paul warned the members of the Church that material covetousness was the root cause of all other evils.
For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows.
1 Timothy 6:10
The Book of Mormon warns us repeatedly against those who combine together to pursue power and gain. Yet we continue to treat corporations, our modern-day secret combinations, as if they were solutions rather than the problem.
And whatsoever nation shall uphold such secret combinations, to get power and gain, until they shall spread over the nation, behold, they shall be destroyed.
Ether 8:22
We are part of the problem
Most American Latter-day Saints continue to support so-called “business-minded” Republicans for office, and continue to oppose any governmental regulation of the economy that could block corporate malfeasance.
We continue to ignore the clear warnings of scripture. In fact, we DELIBERATELY IGNORE everything the scriptures say about money or the economy because WE DON’T WANT TO HEAR IT. Even our Sunday School lessons skip over those verses. We prefer to blindly continue our tragic pursuit of the things of this world.
Of course the scriptures also show what will happen when we fail to heed the warnings – and they graphically describe the consequences we are about to face for our stubbornness and failure to repent. The Book of Mormon calls our attitude “stiffneckedness”.
We are repeating the pattern of selfish greed again. Unless there is immediate and widespread repentance, devastation, destruction, and collapse will surely follow….
Sources:
Will Daniel, “‘We may be looking at the end of capitalism’: One of the world’s oldest and largest investment banks warns ‘Greedflation’ has gone too far,” Fortune, April 5, 2023.
Andrew Glover, et al, “How Much Have Record Corporate Profits Contributed to Recent Inflation?” Economic Review, Federal Reserve Bank of Kansas City, First Quarter 2023.
Bryce Elder, “The Wealth of Greedflations,” Financial Times, April 5, 2013.
Phillip Inman, “‘Global greedflation’: big firms ‘driving shopping bills to record highs’, The Guardian, March 12, 2023.
As a small businessman in the fast food business, I know we are still experiencing product shortages. That results in loss of confidence which in turn trails in loss of business, and finally the consequential loss of profit. It’s normal to blame problems on the other guy, so I’m going to blame the issues discussed here on big business, not the little guy.
I had an institute teacher 50 years ago that said this very thing. I was talking about the problems of the world with him and he boiled it down to one word, greed. At first I didn’t really believe him but then I didn’t understand what he was saying either and as I’ve grown older, I’ve come to understand he was 100% right, as is this article.
I also think we all have to share in the blame. It’s just a matter of scale or distance from the problem. Big business is easy to target but small business may be part of the problem because they don’t pay their employees a living wage because of the pressures of the market. Each of us also have to share the blame because we demand the lowest prices on everything regardless of where or how something is made. So jobs end up leaving the USA and go to sweatshops in Asia but leave workers here having to get lower paying jobs and all of this results in people who don’t really understand the economics of it all blaming government or unions instead of employers who are reacting to the market and trying to deliver products at the lowest possible prices, until competitors are gone and they can start charging higher prices but still not bring back the jobs.
I’m not disagreeing with Thomas, but I must say that we employ mostly dependent high school students who we are now providing with training on their first real job ever. Gotta say that it is necessary to always qualify who needs the living wage. Other than that qualification, rightly said.