#grace blakeley

[dispatchesfromtheclasswar]

The UK is a rich country built on mass poverty

Record levels of very deep poverty expose the true cost of austerity, inflation and the concentration of power at the top.

[capitalism-is-parasitism]

[eelhound]

"The main reason for the explosion in billionaire wealth over the course of the pandemic has been the asset-purchasing programs undertaken by central banks. In the wake of the financial crisis, and following in the footsteps of the Bank of Japan after its crisis a decade earlier, central banks set about creating new money to purchase long-dated government bonds and some other assets in order to reduce yields (previously, they had primarily dealt in short-dated bonds as a way to influence interest rates).

The idea behind what is now commonly known as quantitative easing (QE) was that pushing down yields on long-dated government bonds would encourage investors to purchase other assets, like equities [i.e. stock shares]. Some argue that this was simply a measure designed to increase lending and investment; others argue that central banks were actively attempting to increase asset prices, enriching the wealthy based on the assumption that that wealth would 'trickle down' to everyone else.

Whatever the original intentions, central bank asset purchases have unquestionably led to significant asset price inflation and increased wealth inequality. If that trend was not obvious in the run-up to the COVID-19 pandemic — US equities had undergone their longest bull run in history and many observers were pointing to a bubble in high-yield corporate debt — then it is certainly obvious today.

Saying that central bank asset purchases have increased wealth inequality is another way of saying that the state has intervened directly in order to increase the wealth of those at the very top. In this context, the idea that billionaire wealth simply represents a reward for effort and innovation — the size of which is determined by the 'market' — is clearly absurd. These billionaires didn’t earn the massive increases in their wealth seen over the last year — they were effectively handed this wealth by the state.

And QE is not the only form of upward redistribution promoted by capitalist states today. Even before the pandemic, the United States had a massive problem with so-called corporate welfare. Special interest groups — from oil to agriculture to aviation — received huge direct handouts from the US state in the form of tax breaks and subsidies.

The response to the global financial crisis could itself be considered a form of corporate welfare. Some of the largest banks, insurance companies, and other financial institutions received massive direct or indirect bailouts for undertaking activities that many of their senior executives were aware were incredibly risky.

These bankers no doubt knew that their organizations were 'too big to fail': they knew that their collapse could bring down the world economy. The trump card held by these large organizations is a form of structural power inherent to the functioning of capitalism: as long as a small number of people control most of the world’s resources, they’ll be able to blackmail even the most progressive governments.

The pandemic has seen a massive revival of corporate welfare — only this time, rather than bailing out their financial sectors, governments are bailing out the entire capitalist class. On top of the $9 trillion worth of QE that’s been undertaken since the pandemic began, governments all around the world have spent trillions on loans and subsidies to big businesses, financiers, and landlords. Most have also provided some support for workers; yet without breaks on debt, rent, and bills, much of this has ended up in the pockets of the wealthy too.

These are only the indirect channels through which capitalist states support the global billionaire class. Oxfam identified in 2015 that a third of billionaire wealth comes directly from crony connections to the state or monopolies. Whether through outsourcing, subsidies, or privatization, state policy has created many billionaires over the years — as should be clear from the fact that state-capitalist China created the most new billionaires this year.

It is not an exaggeration to say that the dramatic increase in the wealth of those at the very top of society would have been impossible without the direct intervention of capitalist states all over the world. Those who attempt to justify the extraordinary levels of inequality on the basis that they are the natural result of the operation of the free market would do well to remember this.

But so would those on the Left who see state intervention as the answer to all of capitalism’s problems. More often than not, capitalist states undertake policy in the interests of capital. This is not because states are mere instruments of the ruling class; it is because the balance of power between capital and labor has shifted decisively in favor of the former in recent years, which has influenced the class struggle taking place within state institutions.

It may be possible to imagine a world in which public power is used to support the interests of labor over capital, but there is no way this can be achieved without class struggle within and — crucially — outside of the capitalist state."

- Grace Blakeley, from "Corporate Welfare Props Up the Billionaire Class." Jacobin, 13 June 2021.

[indizombie]

Part of the reason Amazon has to work so hard to maintain its monopoly position is that its business model relies on network effects that only obtain at a certain scale. Tech companies like Amazon make money by monopolizing and then selling the data generated from the transactions on their sites. The more people who sign up, the more data is generated; and the more data generated, the more useful this data is for those analyzing it. The monetization of this data is what generates most of Amazon’s returns: Amazon Web Services (AWS) is the most profitable part of the business by some distance. Far from representing its social utility, Amazon’s market value — and Bezos’ personal wealth — reflects its market power. And the rising market power of a small number of larger firms has actually reduced productivity. This concentration has also constrained investment and wage growth as these firms simply don’t have to compete for labor, nor are they forced to innovate in order to outcompete their rivals. In fact, they’re much more likely to use their profits to buy back their own shares, or to acquire other firms that will increase their market share and give them access to more data. Amazon’s recent acquisition of grocery store Whole Foods is likely to be the first of many such moves by tech companies. Rather than the Darwinian logic of compete or die, the tech companies face a different imperative: expand or die. States are supporting this logic with exceptionally loose monetary policy. Low interest rates make it very easy for large companies to borrow to fund mergers and acquisitions. And quantitative easing — unleashed on an unprecedented scale to tackle the pandemic — has simply served to raise equity prices, especially for the big tech companies.

Grace Blakeley, 'Why the Superrich Keep Getting Richer', Jacobin

[readsky]

Current reading mood: Political

[indizombie]

There is an explanation for the huge profits of the world’s largest corporations and the huge fortunes of the superrich. Not higher productivity. Not simply globalization. But rising global market power. Many of the world’s largest tech companies have become global oligopolies and domestic monopolies. Globalization has played a role here, of course — many domestic firms simply can’t compete with global multinationals. But these firms also use their relative size to push down wages, avoid taxes, and gouge their suppliers, as well as lobbying governments to provide them with preferential treatment. Jeff Bezos and Amazon are a case in point. Amazon has become America’s largest company through anticompetitive practices that have landed it in trouble with the European Union’s competition authorities. The working practices in its warehouses are notoriously appalling. And a study from last year revealed Amazon to be one of the world’s most “aggressive tax avoiders.”

Grace Blakeley, 'Why the Superrich Keep Getting Richer', Jacobin

[indizombie]

Mainstream economists claim that the dramatic increase in income inequality has been driven by the dynamics of globalization and the rise of “superstars.” Firms and corporate executives are now competing in a global market for capital and talent, so the rewards at the top are much higher — even as competition also constrains wages for many toward the bottom end of the distribution. According to this view, high levels of inequality are a reward for high productivity. The most productive firms will attract more investment than their less productive counterparts, and their managers, who are performing a much more complex job than those managing smaller firms, will be rewarded accordingly. But productivity has not risen alongside inequality in recent years. In fact, in the United States and the UK productivity has flatlined since the financial crisis — and in the United States, it has been declining since the turn of the century.

Grace Blakeley, 'Why the Superrich Keep Getting Richer', Jacobin

[indizombie]

This week, Amazon CEO Jeff Bezos saw the largest single-day increase in wealth ever recorded for any individual. In just one day, his fortune increased by $13 billion. On current trends, he is on track to become the world’s first trillionaire by 2026.

Grace Blakeley, 'Why the Superrich Keep Getting Richer', Jacobin