This is a bad take in a couple of ways, starting with the title. "Is Inflation Caused by Greedy Corporations?" offers a 'Simplistic, facile narrative' that inflation has a single cause, which it doesn't. A better question would be "Are Greedy Corporations Contributing to Inflation?" You would be hard pressed to answer this in the negative, which leads to the actual question "How Much Are Greedy Corporations Contributing to Inflation?" Matt Stoller broke it down about a year ago: https://mattstoller.substack.com/p/corporate-profits-drive-60-of-inflation
"the question of why inflation only picked up in the past year or two." - Because once supply chains and other issues started the inflation ball rolling, corporations had cover to increase prices, since consumers had started to expect price increases. Or, "our ability to adapt to inflationary market pressures led to improved profitability overall," says the leading egg supplier. https://www.cnn.com/2023/01/13/business/egg-prices-cal-maine-foods/index.html
"And if they set prices too high they won’t sell enough, also resulting in lower profits." This is incorrect in a couple ways: we can all think of "luxury" brands who create artificial scarcity by underproducing, and then make a huge profit. But this is also called Type II inflation, and wealth inequality contributes to it. You can see an example of looking at charts of Argentina's productive capacity during high inflation; production fell while prices went up.
"The companies that balance these considerations most skillfully will win market share" - this ignores the monopolistic concentrations of market share that exist. When there's only a few corporations that control a market, profit considerations are more important than market share. After all, which one drives the stock price?
The fourth-to-last paragraph is a hodgepodge of questions, presumably not all serious, that go unanswered, but I'll take on one: "if we don’t want to see corporations making large profits while consumers are being squeezed by higher prices, what options are available to prevent it?" The populists at the end of the 19th century advocated for breaking up large corporations to bring more competition to bear; i.e. antitrust action. Another option would be for the government to buy out a supplier in concentrated industries, to serve as a baseline for fair prices. The TVA did something similar, selling electricity at a fair price, thereby preventing its local competitors from price gouging. And Bernie has suggested a windfall profits tax.
Of course inflation doesn't have a single cause. That was the whole point of the article! Many leading politicians, academics and media outlets are promoting the narrative that it does have a single (or primary) cause -- i.e. corporate greed. In my view, this is either deliberately deceptive (to promote a specific policy agenda) or simply ignorant.
Yes, supply chain disruptions absolutely contributed to rising prices. This is entirely consistent with the general thrust of my article -- i.e. attributing inflation to corporate greed is simplistic and inaccurate, and its real causes are much more complex.
Re. your point about luxury brands, while it is undoubtedly true for certain niche goods & services, I don't think it applies to a broad enough slice of the overall economy to generalize based on it.
You are correct that monopolistic concentration increases the pricing power of dominant market participants. And of course "profit considerations are more important than market share." That's why I wrote "Every student of every business school in the world learns about profit maximization." Profits are what drives stock prices, and that is what management prioritizes.
While I have no objection to anti-trust policies in general, I don't believe they are the most effective remedy. From a Gesellian perspective, the root problem is our flawed form of money. Hoardable money gives rise to interest, which in turn creates a hurdle rate of return on investments, below which new investment opportunities will not receive funding. If investors have the option to earn a risk-free return of, say, 4% on US government bonds, they will obviously not choose to invest in a risky business venture that is expected to return 4%. But if we had a more rational form of money that doesn't give investors the option to grow (or even preserve) their money without risk, the trillions of dollars that are currently parked in unproductive government debt would have to find other employments. That would result in a massive amount of capital formation, which in turn would create increased competition as well as greatly increased demand for labor. In my view, this is by far the single biggest thing that could be done to shift power from capital to labor. My earlier article "What the Left Gets Wrong About Wages" examines this point in more detail.
Lastly, I'll share an excerpt from the introduction to The Natural Economic Order by Silvio Gesell that makes this point very eloquently:
"The abolition of unearned income, of so-called surplus-value also termed interest and rent, is the immediate economic aim of every socialistic movement. The method generally proposed for the attainment of this aim is communism in the shape of nationalization or socialization of production. I know of only one socialist - Pierre Joseph Proudhon - whose investigations into the nature of capital point to the possibility of another solution of the problem. The demand for nationalization of production is advocated on the plea that the nature of the means of production necessitates it. It is usually asserted off-hand, as a truism, that ownership of the means of production must necessarily in all circumstances give the capitalist the upper hand when bargaining with the workers about wages - an advantage represented, and destined eternally to be represented, by 'surplus-value' or capital-interest. No one, except Proudhon, was able to conceive that the preponderance now manifestly on the side of property can be shifted to the side of the dispossessed (the workers), simply by the construction of a new house beside every existing house, of a new factory beside every factory already established."
I don't understand your question. How much each worker rests is between him and his employer. That's a matter for the market to decide.
Also, I don't agree with the term "oversupply of production". It is the other way around. Our current system puts an artificial brake on the formation of capital, which causes a perpetual imbalance of power between owners of capital and labor. If we had a more rational monetary system, a more natural balance would exist. That wouldn't be an oversupply.
More production means more demand for labor, which means higher wages. That doesn't necessarily mean individual workers will work more hours. More likely it would mean lower unemployment, more equitable division of proceeds between employers and employees and lower costs of goods and services. This is why I always argue that Gesell's proposals would result BOTH in a realization of the ideal of free markets AND achievement of the goals of socialism. (My next article will be about this point, by the way.)
This is a bad take in a couple of ways, starting with the title. "Is Inflation Caused by Greedy Corporations?" offers a 'Simplistic, facile narrative' that inflation has a single cause, which it doesn't. A better question would be "Are Greedy Corporations Contributing to Inflation?" You would be hard pressed to answer this in the negative, which leads to the actual question "How Much Are Greedy Corporations Contributing to Inflation?" Matt Stoller broke it down about a year ago: https://mattstoller.substack.com/p/corporate-profits-drive-60-of-inflation
"the question of why inflation only picked up in the past year or two." - Because once supply chains and other issues started the inflation ball rolling, corporations had cover to increase prices, since consumers had started to expect price increases. Or, "our ability to adapt to inflationary market pressures led to improved profitability overall," says the leading egg supplier. https://www.cnn.com/2023/01/13/business/egg-prices-cal-maine-foods/index.html
"And if they set prices too high they won’t sell enough, also resulting in lower profits." This is incorrect in a couple ways: we can all think of "luxury" brands who create artificial scarcity by underproducing, and then make a huge profit. But this is also called Type II inflation, and wealth inequality contributes to it. You can see an example of looking at charts of Argentina's productive capacity during high inflation; production fell while prices went up.
"The companies that balance these considerations most skillfully will win market share" - this ignores the monopolistic concentrations of market share that exist. When there's only a few corporations that control a market, profit considerations are more important than market share. After all, which one drives the stock price?
The fourth-to-last paragraph is a hodgepodge of questions, presumably not all serious, that go unanswered, but I'll take on one: "if we don’t want to see corporations making large profits while consumers are being squeezed by higher prices, what options are available to prevent it?" The populists at the end of the 19th century advocated for breaking up large corporations to bring more competition to bear; i.e. antitrust action. Another option would be for the government to buy out a supplier in concentrated industries, to serve as a baseline for fair prices. The TVA did something similar, selling electricity at a fair price, thereby preventing its local competitors from price gouging. And Bernie has suggested a windfall profits tax.
Of course inflation doesn't have a single cause. That was the whole point of the article! Many leading politicians, academics and media outlets are promoting the narrative that it does have a single (or primary) cause -- i.e. corporate greed. In my view, this is either deliberately deceptive (to promote a specific policy agenda) or simply ignorant.
Yes, supply chain disruptions absolutely contributed to rising prices. This is entirely consistent with the general thrust of my article -- i.e. attributing inflation to corporate greed is simplistic and inaccurate, and its real causes are much more complex.
Re. your point about luxury brands, while it is undoubtedly true for certain niche goods & services, I don't think it applies to a broad enough slice of the overall economy to generalize based on it.
You are correct that monopolistic concentration increases the pricing power of dominant market participants. And of course "profit considerations are more important than market share." That's why I wrote "Every student of every business school in the world learns about profit maximization." Profits are what drives stock prices, and that is what management prioritizes.
While I have no objection to anti-trust policies in general, I don't believe they are the most effective remedy. From a Gesellian perspective, the root problem is our flawed form of money. Hoardable money gives rise to interest, which in turn creates a hurdle rate of return on investments, below which new investment opportunities will not receive funding. If investors have the option to earn a risk-free return of, say, 4% on US government bonds, they will obviously not choose to invest in a risky business venture that is expected to return 4%. But if we had a more rational form of money that doesn't give investors the option to grow (or even preserve) their money without risk, the trillions of dollars that are currently parked in unproductive government debt would have to find other employments. That would result in a massive amount of capital formation, which in turn would create increased competition as well as greatly increased demand for labor. In my view, this is by far the single biggest thing that could be done to shift power from capital to labor. My earlier article "What the Left Gets Wrong About Wages" examines this point in more detail.
Lastly, I'll share an excerpt from the introduction to The Natural Economic Order by Silvio Gesell that makes this point very eloquently:
"The abolition of unearned income, of so-called surplus-value also termed interest and rent, is the immediate economic aim of every socialistic movement. The method generally proposed for the attainment of this aim is communism in the shape of nationalization or socialization of production. I know of only one socialist - Pierre Joseph Proudhon - whose investigations into the nature of capital point to the possibility of another solution of the problem. The demand for nationalization of production is advocated on the plea that the nature of the means of production necessitates it. It is usually asserted off-hand, as a truism, that ownership of the means of production must necessarily in all circumstances give the capitalist the upper hand when bargaining with the workers about wages - an advantage represented, and destined eternally to be represented, by 'surplus-value' or capital-interest. No one, except Proudhon, was able to conceive that the preponderance now manifestly on the side of property can be shifted to the side of the dispossessed (the workers), simply by the construction of a new house beside every existing house, of a new factory beside every factory already established."
Would workers ever rest if they are going to defeat the property holders by this oversupply of production?
I don't understand your question. How much each worker rests is between him and his employer. That's a matter for the market to decide.
Also, I don't agree with the term "oversupply of production". It is the other way around. Our current system puts an artificial brake on the formation of capital, which causes a perpetual imbalance of power between owners of capital and labor. If we had a more rational monetary system, a more natural balance would exist. That wouldn't be an oversupply.
Doesn't the text say there must be more production than there is now? This means extrawork.
More production means more demand for labor, which means higher wages. That doesn't necessarily mean individual workers will work more hours. More likely it would mean lower unemployment, more equitable division of proceeds between employers and employees and lower costs of goods and services. This is why I always argue that Gesell's proposals would result BOTH in a realization of the ideal of free markets AND achievement of the goals of socialism. (My next article will be about this point, by the way.)