Tatsat Chronicle Magazine

Concentration Of Wealth In Hands Of Few Cause Of Burgeoning Inequality

The latest inequality report by Oxfam highlights the perils of concentration of global wealth, including in India, among a small set of people and companies. This has serious repercussions on access to resources for the majority of peoples
March 13, 2024
In India, 5% of the population own more than 60% of the country's wealth. Photo: Vivek Mukherji

In George Orwell’s Animal Farm, a political allegory on the Russian Revolution, animals revolt against their cruel owner, Jones, and drive him out of his farm to replace him with their own regime on the founding maxim, ‘all animals are equal’. But, as time goes by, the high ideals fade and it begins to resemble Jones’s time, and the maxim itself is revised to reflect it. To ‘all animals are equal’ is added the strange proviso ‘but some are more equal than others’, creating space for inequality within equality.

The doctrine of equality gained international acceptance when the world adopted the Universal Declaration of Human Rights as a United Nations treaty in 1948. But the wave of decolonisation of those times that inaugurated an era of self-rule and equality in dozens of Asian and African countries appears to have ebbed only to be replaced by widening economic inequality. A few appear to have become ‘more equal than others’ by cornering a disproportionate share of the world’s wealth.

As an example of rising inequality, Oxford-based non-governmental organisation Oxfam says that since 2020 the five richest men in the world have doubled their fortunes.

During this period almost five billion people globally have become poorer, says a report published by Oxfam in January titled “Inequality.inc”. “Hardship and hunger are a daily reality for many people worldwide. At current rates, it will take 230 years to end poverty, but we could have our first trillionaire in 10 years.”

Seven of the world’s top 10 corporations are headed by billionaires. “Through squeezing workers, dodging tax, privatising the state and spurring climate change, corporations are driving inequality and acting in the service of delivering ever-greater wealth to their rich owners,” says the report. It carries a foreword by Bernie Sanders who ran for Democratic Party presidential nomination in 2020, unsuccessfully.

In an acid comment on the skewed distribution of wealth, Sanders said that never before in human history have so few owned so much. “Never before in history, have we seen a billionaire class with so much political power. And never before, have we seen this unprecedented level of greed, arrogance and irresponsibility on the part of the ruling class.” But, says Sanders, more and more people are making the connection between the “harsh economic realities of their lives and the destructive nature of our uber-capitalist system that rewards greed and profiteering above any other human value”.

While overall the divide is created by the increasing gap between the rich and the poor, the same gap is reflected in difference in wealth between the Global North and the Global South (former European colonies). Oxfam calculations, based on Forbes’ billionaire list and the UBS Global Wealth Report 2023, show that over two-thirds (69.3%) of global private wealth and three-quarters (74%) of billionaire wealth are concentrated in the Global North — that is home to only a fifth of the world’s population. So, it seems that rich people in the Global North still own the world.

The Oxfam report traces the reason for the concentration of the world’s super-rich in the Global North, particularly Europe, to a legacy of colonialism and empire.

It cites the estimate of Indian economist Utsa Patnaik that during its rule in India, Britain extracted as much as $45 trillion worth of wealth. Since the formal end of colonialism, neo-colonial relationships with the Global South persist, perpetuating economic imbalances and rigging the rules in favour of the rich nations, says the report.

Multinational corporations were invented in the colonial era, and this helped facilitate the transfer of wealth from the Global South to the Global North. This legacy is now being carried on by global corporations and their super-rich owners, according to the report. The current period is described as an era of monopoly power that enables corporates to control markets, set the terms of exchange, and profit without fear of losing business. “Far from being accidental, this power has been handed to monopolies by our government,” says the report.

Globally, for example, over two decades 60 pharmaceutical companies merged into just 10 giant, global ‘Big Pharma’ firms between 1995 and 2015. Similarly, two international companies now own more than 40% of the global seed market. A handful of ‘Big Tech’ firms dominate the markets with three-quarters of global advertising being cornered by Meta, Alphabet (Google), and Amazon. Agriculture has seen concentration in Africa, while India faces rising industrial concentration, especially by the top five firms.

On India, the report cites a paper presented at the Washington-based American think tank, Brookings Institution, last year by Dr Viral Acharya, former deputy governor of the Reserve Bank of India (RBI), which flagged rising concentration of power in industry as one of the challenges facing the Indian economy. In the paper Dr Acharya said that the share of the top five private companies in India in non-financial sectors began to rise in 2015. Their share in total assets of non-financial sectors rose from 10% in 1991 (the year economic liberalisation started) to nearly 18% in 2021, while the share of the next big five (Big 6-10) business groups fell from 18% in 1992 to less than 9%. “In other words, Big-5 grew not just at the expense of smallest firms, but also of the next largest firms.”

“Arguably, this growth has also been supported by a conscious industrial policy of creating ‘national champions’ via preferential allocation of projects and in some cases regulatory agencies turning a blind eye to predatory pricing,” said Dr Acharya, who was at the RBI over 2017-19.

The four ways listed in the Oxfam report by which corporate power fuels inequality were, using their power to drive down wages and direct profits to the ultra-rich, dodging taxes, privatising public services, and driving climate breakdown. The report said that corporations were undertaking a highly effective war against taxation, giving the example of the Organisation for Economic Cooperation and Development (OECD) countries where corporate income tax had more than halved since the 1980s. “Aggressive tax planning, abuse of tax havens, and incentives result in tax rates that are much lower, and often close to zero.” The collapse in corporate taxes in recent decades has provided tax cuts for the wealthy. It has also deprived governments, particularly in the Global South, of trillions of dollars in revenue that could be used to reduce inequality.

The report says that around the world corporate power is relentlessly pushing into the public sector, commodifying, and segregating access to vital services such as education, water, and healthcare. “This can gut the government’s ability to deliver the type of high-quality, universal public services that can reduce inequality.” It is critical of the policies of the World Bank and other development finance actors as they have prioritised private service provision “effectively treating basic services as asset classes and using public money to guarantee corporate returns rather than human rights”.

But the report strikes an optimistic note when it says that “runaway corporate power and runaway private wealth have been curbed in the past and can be again”. It supports the proposal of a group of economists, former World Bank employees and former heads of government that urged the UN and the World Bank to back strategic goals and indicators to redouble efforts to address rising extreme inequality. There were 236 signatories to the letter, including Thomas Piketty, Jayati Ghosh and Utsa Patnaik, that was written in July 2023, to UN Secretary General Antonio Guterres and World Bank President Ajay Banga.

Oxfam offers a brief three-point solution to remove inequality — revitalising the state, regulating corporations to end monopolies and empower workers, and reinventing business so that, first and foremost, they do not put shareholder interest first.

Kalyan Chatterjee

The writer has been a media professional for 38 years. He was the former HoD of the Amity School of Communication, Amity University.