Oxfam Novib: ‘Market power of large companies is a major driver of inequality’

By our editor Egbert Street

How long will an extreme situation remain an exception, even if it becomes increasingly extreme? NGO Oxfam Novib asks itself this question in its annual report on increasing inequality in the world. At the start this Monday of the World Economic Forum, the political-economic high mass in Davos, Switzerland, Oxfam once again notes that the rich have become even richer in recent years, and the poor even poorer. “As we enter the year 2024, the very real danger is that these extraordinary extremes will become the new normal,” Oxfam said.

But what is normal? Anyone who delves into the figures behind the trends cannot help but be amazed. The wealth of the five richest billionaires in the world (Elon Musk, Bernard Arnault and family, Jeff Bezos, Larry Ellison and Warren Buffett) has more than doubled since 2020: from $405 billion to $869 billion (794 billion euros). And yet 60 percent of humanity, almost five billion people, has actually become poorer in the same period. Since 2020, billionaires’ wealth has increased by 34 percent, three times faster than inflation. The so-called ‘Global North’ (developed economies in Europe, the US, Australia and New Zealand, Israel, Japan and South Korea), where roughly a fifth of the world’s population lives, collectively owns more than two-thirds of the world’s wealth.

Never been so wrong

In the foreword to the report entitled Inequality Inc. (loosely translated: The BV Inequality) US Senator Bernie Sanders puts it this way: “Never before in human history have so few people owned so much property. Never before in human history has there been such inequality in income and wealth. (…) Never before in history have we seen a class of billionaires with so much political power.”

The political power Sanders mentions is at the heart of the inequality report. With the help of new data, Oxfam analyzes the role of the ultra-rich in business and therefore in society. At a third of the world’s fifty largest companies, billionaires are either the owners or the CEOs. Of the top ten largest companies, seven have a billionaire as their boss or main owner. This concentration of power enables the super-rich to further expand the position of their companies, often thanks to government policy. And that business position mainly serves to increase revenues for the owners themselves, at the expense of society, according to Oxfam.

As an example of the growing power of the business community (and its owners), Oxfam outlines the concentration that has taken place in recent decades. While at the end of the last century sixty pharmaceutical companies were the world’s top companies, there are now only ten. Things aren’t much better in the tech sector: three-quarters of the money spent on online advertising goes through Meta, Alphabet and Amazon. And in the financial world, about a fifth of global money flows through three companies: BlackRock, State Street and Vanguard together manage $20 trillion.

Corporate power and inequality

The increasing concentration of corporate power is one of the major drivers of greater inequality, says Oxfam. This happens in four ways. First of all, the super-rich use the power of their companies to reward the rich (usually the shareholders), and not the employees. They even oppose legislation that should improve the position of employees. Secondly, large companies use tax routes to pay as little tax as possible. This avoidance literally costs countries thousands of billions in tax revenue, previous research showed. Money that is no longer available to companies, especially in the southern hemisphere, because companies divert the profits made there to countries where hardly any taxes have to be paid.

Third, Oxfam warns of the ongoing wave of privatizations of public services such as education, water supply and healthcare, which are widening the gap between rich and poor. And finally, the super-rich contribute disproportionately to climate change through their companies, while they benefit from the profits of industries that contribute a lot to CO₂emissions. Slowing down measures to combat climate change is therefore to the advantage of the rich and other investors, according to Oxfam. And while the price of climate change is often paid by the less fortunate: they more often live in areas affected by climate change.

No matter how detailed the report is, it confirms an image that everyone has known for a long time. Oxfam also recognizes the risk that continuing to hammer on the same anvil will lead to a certain weariness. But what is the alternative? Bram Joanknecht, economic policy advisor at Oxfam: “It is therefore crucial that this important topic remains on the agenda, worldwide and in the Netherlands, so that governments, citizens and businesses know what economic inequality stands for worldwide and what problems it causes.”

Fundamental choice

And although the contours of next year’s report are already being drawn out, something is definitely changing, Joanknecht emphasizes. “The debate about inequality has intensified in recent years. And it is starting to translate into concrete policy proposals – think of the OECD’s minimum profit tax of 15 percent for large multinationals. Also consider the political discussions about more taxes for the rich surrounding last year’s House of Representatives elections.”

According to Oxfam, these are steps in the right direction, but in essence it is a fundamental choice that must be made: does the world opt for a new era of billionaire supremacy, controlled by monopolists and financiers, or for a gradual shift to public power? which is based on equality and dignity. Governments have that choice, the organization says. To regulate companies more strictly, to make policies that reduce inequality, to combat tax avoidance with other tax systems, to invest in public facilities.

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