“Largest increase in global poverty since WW2”: capitalists profit while the rest of us suffer

A new report from Oxfam titled ‘Survival of the Richest’, exposes what may be the biggest increase in global poverty and inequality since the Second World War. Such is the extent of the yawning chasm between rich and poor, that Oxfam’s CEO warned in his speech introducing the report that “the entire capitalist system is under threat”.

This data is one more piece in the enormous pile of evidence that capitalism is a corrupt system that benefits the rich at the expense of working people. As Marx wrote over 150 years ago, “Accumulation of wealth at one pole is at the same time accumulation of misery, agony of toil, slavery, ignorance, brutality, mental degradation, at the opposite pole”. Unfortunately, this quote is more relevant than ever before.

Corporate gains and capitalist crisis

In the past decade, the richest one percent has captured half of all the new wealth created, with the other half being divided amongst the remaining 99 percent. Recently, however, this gap has widened significantly. Since 2020 – i.e. the beginning of the pandemic – the top one percent has appropriated two-thirds of all new wealth created, nearly doubling their profits in that short time. Of the $42 trillion of wealth created in the past three years, $26 trillion has gone to the 1 percent, with the rest of humanity receiving just $16 trillion.

Since 2020, the profits of billionaires have increased by $2.7 billion a day / Image: Steve Jurvetson

The world’s billionaires have been enjoying historic profits. In the past decade, the number of billionaires and the share of the wealth that they’ve taken have doubled. Since 2020, the profits of billionaires have increased by $2.7 billion a day. If you break down those figures, you find that for every new dollar of wealth earned by someone in the bottom 90 percent of society, a billionaire has earned $1.7 million.

While the rich are enjoying some of the biggest wealth gains in history, things look increasingly bleak for working-class people of all countries. The IMF forecasts that one third of the world economy will see recession in the coming year. As the economy worsens, capitalist governments everywhere will do what it takes to place the burden on workers and the poor. Oxfam projects that three-quarters of world governments will decrease social spending over the next five years, with cuts expected to exceed $7.8 trillion.

The world working class has already seen a huge deterioration in its quality of life. For the first time ever, the United Nations global Human Development Index (HDI) has dropped for two years in a row. In fact, the HDI is declining in 9 out of every 10 countries.

A large part of this is due to inflation. According to the IMF, global inflation hit 8.8 percent in 2022. This figure is expected to fall to 6.6 percent, but even this is still nearly double pre-pandemic rates. The wages of 1.7 billion workers worldwide are seeing inflation outpace their wages.

Inflation has played a big role in the decrease in quality of life for the working class / Image: Socialist Appeal

By all metrics, the cost of living is increasing. Food prices have been seeing record highs. The FAO Food Index, a metric that tracks and compares global prices for many commonly traded food items, recorded a 14 percent increase in average prices. The United Nations Food Price Index hit its highest levels since records began in 1961.

The prices of many staple foods are expected to increase throughout the coming year. Wheat, for instance, spiked to record highs several times over 2022. The price of rice, which is a staple for billions of people all over the world, has soared in price and will most likely continue to rise.

In a similar vein, energy prices, which have recently begun to ease somewhat, are still expected to remain 75 percent higher than the average in the preceding five years – and that estimate is assuming that high prices level out this year, which certainly isn’t guaranteed. The International Energy Agency (IEA) has noted that around 75 million worldwide who only recently gained access to electricity will be disconnected because they can no longer afford it. This would make 2023 the first recorded year in which the IEA has recorded an increase in the number of people without power.

Millions of people across the world are having to choose between heating their homes, and electricity and other essentials. In the United States, a quarter of households have had to cut back on food and medicines in order to afford energy bills. In the United Kingdom, where prices jumped by more than 65 percent, over 3 million households have been unable to pay for heating at all this winter.

Meanwhile, the capitalists are profiting from this crisis. Oxfam reports that 95 of the biggest food and energy companies more than doubled their profits last year. These industries made $306 billion in unexpected revenue, $257 billion of which was distributed to wealthy shareholders.

Energy companies in particular have been doing extraordinarily well. The American oil company Exxon made $56 billion – or $6 million every hour – making it the most profitable year for a publicly traded oil company in history. Their national competitor, Chevron, doubled its profits, and the British company BP had their most profitable year in the company’s history.

Socialism or barbarism

Once again, capitalism has proven itself to be bankrupt. Inequality is a natural feature of the system. When the overwhelming bulk of the economy is owned by a tiny group of people, wealth inevitably comes to be distributed obscenely unevenly. As the crisis worsens and the global economy continues its trend downwards, this divide is only going to grow. The capitalists will always defend their profits and look for ways to make the workers pay in times of crisis.

Capitalism is rotten to its core; it must be overthrown and done away with in its entirety / Image: Socialist Appeal

The only ‘solution’ that Oxfam puts forward is the introduction of new wealth taxes. But under the current state of things, that’d be like attaching a bandaid to a sinking ship. There’s no reforming greed out of a system based on greed.

There’s only one way out of this crisis: the creation of a socialist planned economy. Capitalism is rotten to its core; it must be overthrown and done away with in its entirety. Under socialism, the economy would be held in common and used to address the needs of society, rather than just the narrow interests of a few parasites at the top. Only on this basis can we create a system that can provide a plentiful, dignified life to everyone.