This country’s rate of inflation, the worst in western Europe, is everywhere in most people’s lives: in our anxious shopping and conversations, our late-night fears and fraught pay negotiations, our cancelled or rationed pleasures, and our sense of Britain’s shrinking possibilities. After the pandemic, Brexit, and years of austerity and political chaos, to be experiencing the biggest sustained fall in the national standard of living for over 60 years can feel like the final straw.
Yet in the endless conversations about the price of everything there is a frequent absence. The role of increased profits in the cost of living crisis remains a relatively neglected topic: sporadically raised by leftwing activists, business analysts and economists, occasionally the reason for protests, but largely avoided by the main parties, and seemingly not a consistently important issue for the wider public. Brief periods of anger about profiteering, as happened last year with the energy companies, give way to fatalistic silence.
In some ways, this is a surprise. Over the past decade and a half, as the privatised utilities have provided ever poorer service, reckless banks have required expensive bailouts and executive pay has soared while average wages have stagnated, big business has lost much of the authority it used to enjoy during the Thatcher and Blair eras. To say that corporations are too greedy has become commonplace, on the populist right as well as the left.
And there is more and more evidence that aggressive profit-seeking has contributed significantly to the inflation surge. Research released in March by the trade union Unite showed that for the 350 largest companies listed on the London Stock Exchange, “Profit margins for the first half of 2022 were 89% higher than in the same period in 2019.” The Financial Times recently noted that across western economies “[profit] margins reached record highs” during 2022, and “remain historically high”. New terms have been coined to describe the phenomenon: “greedflation” and “excuseflation” – the exploitation of our era’s frequent crises to excessively hike prices.
The awkwardness of these terms may explain why they haven’t quite caught on. But there are deeper reasons why profiteering hasn’t become the issue it ought to be. These reveal a lot about the state of our politics, and about how we think of the economy.
Both Labour and the Conservatives, after being critical of business under Jeremy Corbyn and Boris Johnson, are now under more orthodox leaders, who are seeking economic “credibility”. In speeches and at more discreet gatherings, they are competing for the approval of the business establishment, seeing its support as essential to winning the election and reviving the economy afterwards.
Keir Starmer, it is true, has repeatedly and rightly attacked the “excess profits” of energy firms. Yet, tellingly, he has not extended that critique to other companies that, Unite’s research shows, have also been “profiteering”, such as some of Britain’s supermarket chains, port operators and road hauliers.
Understandably, from a party-political perspective, Starmer prefers to blame the government for inflation and our economic problems generally. He rarely talks about the current economy in a more fundamental and compelling way, as a rigged system for distributing resources and rewards – a perspective that was such a novel and welcome feature of Corbyn’s leadership. With Labour no longer providing a clear economic analysis, many Britons remain greedflation’s uncomprehending victims.
Yet the passivity about profiteering can hardly just be blamed on Starmer. There is a wider culture at work. In this country, it is generally believed that the main duty of businesses is to maximise returns for their shareholders, despite the fact that the 2006 Companies Act describes their duties much more widely. This profit-fixated culture makes it hard to define what an excessive profit is, or even to argue that such a thing can exist.
Beyond these difficulties lies a more profound fatalism about the power of business. In his 2009 book Capitalist Realism, the influential leftwing theorist Mark Fisher described a “widespread sense that not only is capitalism the only viable political and economic system, but also that it is now impossible even to imagine a coherent alternative”.
The accelerating climate crisis and drastically narrowed distribution of economic rewards since 2009 have damaged capitalism’s claim to long-term viability. But the difficulty for many people of imagining a different economy remains – which is one of the reasons Corbyn did not win a general election. The idea of a society where a cost of living crisis was not exploited by greedy companies would almost certainly be dismissed by many voters as a fantasy.
The succession of national crises and deterioration in living standards since the late 00s have also accustomed many Britons to the idea that the country and their individual lives are getting worse. Artificially inflated prices seem just another problem, to work around rather than protest about. In the 18th and 19th centuries, Britons regularly rioted when they thought the price of bread was unreasonably high, but nowadays, retail analysts tell us, consumers react to inflation in essentials by shopping around, buying them in smaller quantities or going without.
It’s just about possible to see a political side to these contemporary responses: that they are undeclared, individualised forms of consumer boycott. And they may be having some effect. In the supermarkets I use, there are suddenly lots of discounts on products that have had their prices hugely hiked over recent months. This week it was announced that the rate of grocery inflation has fallen slightly. Perhaps some of Britain’s profit maximisers are beginning to realise that they have pushed their customers too far.
Yet if the profiteering of the past two years is not to recur as soon as the next global crisis gives cover, more collective and more official action will be needed: wider windfall taxes, moves by regulators to break up Britain’s many undeclared pricing cartels, and perhaps even government-imposed price controls on essentials.
Is it conceivable that such things could happen? Under as corporate a premier as Rishi Sunak, it is very hard to imagine; and under the cautious Starmer, only a little less so. Yet as rulers across the centuries have discovered, an ever poorer public can ultimately become impossible to govern. If current or future prime ministers have to choose between limiting profits and being pushed from office, they probably won’t opt for the latter.
Andy Beckett is a Guardian columnist
