The global economy is increasingly marked by low investment and low growth, financial speculation, declining real incomes, rising social inequality, and greater domination by giant multinational corporations, according to the newest UN Trade and Development Report.
“Today’s global economic landscape is characterized by growing inequalities and divergence of growth paths between key regions,” the report said.
The world’s economy is “flying at ‘stall speed’…meeting the definition of a global recession,” the report stated.
The global economy will grow 2.4 percent this year and 2.5 percent in 2024, the UN has projected.
The study highlights the rising dominance of giant corporations and finance capital, which has cut workers’ share of business income from 57 percent in 2000 to 53 percent now, a global reduction in annual pay of about $4 trillion.
“The declining labor share and the rising profits of [corporate giants] point to the key role of large corporations dominating international activity, driving up global income inequality,” it added.
Also, high interest rates and the costs of the COVID War have left “some 3.3 billion people—almost half of humanity—[living in] countries that spend more on debt interest payments than on education or health.”
Debt in these countries has tripled since 2013, the UN noted, with debt service payments claiming an average of 16 percent of GDP in 2021, compared to 6 percent in 2010.
About a third of these endangered economies are at “the precipice of debt distress,” meaning these nations are close to defaulting on their foreign debt.
The report also links much of the recent spikes in food prices to commodity speculators and giant food corporations.
“Profiteering from financial activities now drives profits in the global food trading sector,” it contends.
Higher natural gas prices have boosted the cost of fertilizers. As a result, fewer farmers have been able to afford to use them, leading to lower harvests, higher food prices, and growing food insecurity.
However, at the same time nine major fertilizer producers saw their profits grow from $14 billion before the COVID War to $28 billion in 2021 and a whopping $49 billion in 2022, according to the UN study.
Big food and beverage corporations collectively averaged $14 billion in windfall profits in 2021 and 2022, according to Oxfam, a nonprofit global aid agency. The profits were more than twice the $6.4 billion needed to relieve hunger in East Africa, Oxfam said.
These outsize profits underscore the “disproportionate role” that “non-operating activities (speculation) play in the current era of super profits,” the UN report emphasized.
“In other words, the global food market is a giant casino in which the chips in the hands of ultra-wealthy players are the lives and livelihoods of billions of workers and their families,” the World Socialist Web Site said.
“If a handful of companies continue to hold inordinate power over the world’s food system, any policy effort to mitigate the short-term effects of food price spikes will be futile in the long term,” the UN warned.
TREND FORECAST: Most giant food companies are publicly/private equity owned. In the U.S. and other countries, laws call for corporations to act in the best interests of their shareholders. In the past, that has meant maximizing profits. Dealing with the consequences of those actions was thought to be the job of governments and nonprofit organizations.
However, activist shareholders have begun to exercise more power to define what “best interests” means – first in forcing corporations to divest from South Africa in protest of apartheid in the 1980s and early ‘90s and, currently, pressuring oil majors to cut their operations’ greenhouse gas emissions and diversify into renewable energy.
Under growing public pressure, more corporations will play an artificial role as more virtuous actors, in large part so their marketing efforts can associate their products with social good.
New corporations will increasingly opt for “B corporation” status in the U.S. and similar designations in other countries. B corporations are legally able to weigh social considerations equally with financial ones in their operations.