This story first appeared on ARENA
A recent Australian Council of Trade Unions (ACTU) report has demonstrated that the lack of competition between Australian businesses leads to increased prices. In other news, the sky is still blue (and yet to be privatised).
What should be most surprising amid allegations of unfair price increases from Australian banks, airlines and supermarkets is that there is no surprise. The commissioning of reports into price gouging can be read in two ways: either the government has no idea about the fundamentals of political economy, or there is simply no real desire to address the actual problem — capitalism itself.
Report findings that ‘exploitative business pricing practices were used to enable the extraction of extra dollars from consumers’ beg the question of what non-exploitative business practices do. Is the normal operation of capitalism not also the extraction of extra dollars?
In aftermath of the Global Financial Crisis, society was told time and time again that it was the executors of capitalism who were to blame for financial ruin, not the system itself. Bad bankers — or more recently, greedy airline CEOs — invariably get paraded as the villains by both the media and politicians who want to present a simple narrative. While it’s enjoyable to turn up one’s nose at Richard Branson, these individuals are ultimately just playing by the fundamental (and only) rule of capital: accumulate. As Slovenian philosopher Slavoj Zizek correctly observed in 2012:
Let us not blame people and their attitudes: the problem is not corruption or greed, the problem is the system that pushes you to be corrupt. The solution is neither Main Street nor Wall Street, but to change the system where Main Street cannot function without Wall Street.
The conflating of individual failures with systematic ones was also apparent in the aftermath of the now long-forgotten Panama Papers. Much like reports of price gouging in Australia, the news that world’s wealthiest people were offshoring their money in tax havens was met with feigned shock. The truly shocking aspect is that such actions are completely unsurprising. Lost in the faux rage was the acknowledgement that a majority of these accounts were perfectly legal, the outputs of a global financial system specifically designed to be murky. In the case of both the GFC and Panama Papers, our collective response ought to be asking how, and why, our economic system not only allowed but encouraged such failings.
What Australia is experiencing through post-COVID price increases is thus ‘natural’, and by all accounts organic to capitalism: concentration and consolidation. Since the neoliberal turn of the 1980s there haves been forty years of unimpeded business expansion; however, such growth necessarily involves consolidation as competition punishes the ‘inefficient’ and unlucky. And as has been well documented, Australia is now one of the world’s most concentrated economies, a trend which will not stop unless it is forced to.
Further findings that ‘some of the highest price increases occur in sectors where a few players have disproportionate market power over consumers, supply chains and their workforce’ are worrying not just because this lack of competition increases prices, but also, as a recent RBA paper highlights, lowers wages. The average Australian is thus hit with a double whammy, while business increases revenue and decreases expenses — a (largely foreign owned) shareholder’s delight.
Now that politicians have been told what they already know, is there a chance for change? Unlikely. While the recent Stage-3 tax reformindicated the government’s ability to make economic adjustments, we should note how the concept of tax cuts were never debated — merely their form. Bipartisan support for tax cuts thus ensured that at no point were alternate revenue-raising streams considered — for example, increases in corporate tax rates (given billion-dollar companies pay a marginal rate less than that paid by most individuals), or a windfall profit tax (given companies can benefit immensely from events like a war which is outside their control).
Going forward, we are likely to see bipartisan support when it comes to condemning price gouging, but little more. In part there is an ideological opposition to public intervention in the free market; beliefs about self-made fortunes and trickle-down economics still persist despite enormous evidence to the contrary. However, there is also some degree of structural impediment faced by any government wishing to enact serious economic change. Decades of overt influence have seen business action moderated by toothless entities such as the Australian Competition and Consumer Commission, while a long history of campaign donations to both major parties guarantees a level of mutually assured destruction.
As tempting as it might be to blame the C-suite individuals for bill increases, this type of anger merely obfuscates that such occurrences are a built-in feature of our economic system. The longer capitalism persists, the more concentration there will be; such is its internal logic. We cannot expect the system to save us from itself, so that task will have to fall on us.
