The Cooperative Society Newsletter
May 2021, Issue 28
by E.G. Nadeau, Ph.D.
We have been writing about whether or not humans have been moving toward or away from a more cooperative society since 2016. The pandemic, which began in December 2019, has had a profound effect not only on our health and mortality, but on the world’s economy, political landscape, social well-being, and the environment. That impact is continuing in 2021, and very probably will have significant consequences in subsequent years.
We will talk about the effects of Covid-19 on our lives in three installments of The Cooperative Society Newsletter, beginning with this May issue and continuing in July and September.
First, a little background on The Cooperative Society Project.
There are three core premises to the Project:
- We have reached a point in human history at which there are adequate resources for all human beings to experience a decent quality of life. Similarly, humans are now able to establish and maintain a sustainable relationship with nature. The problem is: We are not yet achieving these goals.
- It is important to measure the extent to which we humans are moving toward a sustainable quality of life for all and a sustainable environment, and, when we are falling short, to take corrective action.
- Achieving these goals does not depend on forces outside of our control. We have the power to shape the conditions of our lives and those of future generations. We are the agents of history, not its powerless subjects.
The 2018 edition of The Cooperative Society: The Next Stage of Human History and “The Cooperative Society 2020 Report” both review progress (or the lack of it) related to seven measures: economic power, the distribution of wealth, conflict, democracy, population, quality of life, and the environment.
Following is an update on the first two of these variables – economic power and wealth distribution. The other five measures will be addressed in the next two newsletters.
Economic Power
Key questions
To what extent has the pandemic affected the concentration of corporate and country-related domination of the world’s economy in 2020 and so far in 2021? Are checks and balances, along with alternative forms of business, being applied and planned to reduce the negative consequences of this concentration?
Importance of this measure
As long as economic decision-making is dominated by the few, the rest of us are dependent on the choices that they make. This concentrated economic power is the primary cause of periodic, large-scale disruptions to the economy (for example the Great Recession of 2008-2010). It also has a significant impact on how we deal with crises such as those precipitated by the pandemic and global warming.
Major trends in economic concentration in 2020 and 2021:
- The largest, publicly traded corporations in the world increased their combined market value by 47% between mid-April 2000 and mid-April 2021 – from $54 trillion to $80 trillion.
- The United States and China are headquarters for the world’s corporations with the largest combined market values. As of April 2021, the U.S. accounted for 35% and China 7% of the market value of the top 100 corporations in the world.
- Due to the pandemic, the world gross product (WGP) – the combined value of the goods and services produced by all countries – declined by a little over 4% in 2020. The only other time in the last 50 years there has been a decline in WGP was in 2009 during the Great Recession, and the drop that year was only .1%.
Analysis
These data indicate that the world’s most powerful corporations and the countries in which they are located became even more powerful during the pandemic. This was at a time when the rest of the world economy made a significant downturn.
Corrective action
The biggest factors that would reduce the power of these corporations are changes in the policies of International bodies such as the United Nations and the world’s most developed countries toward them. Tighter international anti-trust policies and enforcement of these policies, concerted efforts to thwart tax evasion by large companies, and progressive corporate taxation systems could reduce their inordinate influence on the world economy. Taking actions to strengthen small- and medium-size businesses, and including cooperatives and social enterprises, would also make a huge difference. These approaches to creating a fairer world economy in the post-pandemic era are increasingly being discussed by world leaders, including President Biden, but so far, there has been little action.
Wealth distribution
Key question
Is the distribution of wealth becoming more or less unequal around the globe?
Importance of this measure
The concentration of wealth has consequences for everyone’s economic and social well-being. Large differences in wealth and income mean that many of us earn less, receive fewer social benefits, and have less influence over the political decision-making that affects our day-to-day lives than we would have in a more equitable society. Inequality also leads to social unrest and conflict.
Major trends in wealth inequality during the pandemic:
- According to Oxfam:
- We could face the greatest rise in inequality since records began, with the pandemic increasing economic inequality in almost every country at once.
- It could take more than a decade for billions of the world’s poorest people to recover from the economic hit of the pandemic while the 1,000 richest people recouped their COVID-19 losses within just nine months.
- Just 10 people – the world’s richest billionaires, all men – have seen their combined wealth skyrocket by half a trillion dollars since the pandemic began. That’s more than enough to pay for a COVID-19 vaccine for everyone and to prevent the pandemic from pushing anyone into poverty.
- We could face the greatest rise in inequality since records began, with the pandemic increasing economic inequality in almost every country at once.
- The World Bank estimates that the number of people living in extreme poverty – defined as $1.90 per day or less – increased by between $119 and $124 million in 2020 because of the pandemic. This is the first increase in extreme poverty in 20 years.
- The World Food Programme estimates that the total number of acutely food-insecure people increased to 272 million in 2020, compared to 149 million people in 2019.
- According to the United Nations, the pandemic could force almost a billion people into destitution by 2030 “unless nations introduce energy, food and climate reforms.”
Analysis
The above data clearly indicate that the pandemic has “made the rich richer and the poor poorer.” Although there has been a long-term pattern of increasing concentration of wealth around the world, the level of extreme poverty had been dropping dramatically during the two decades prior to 2020. But the pandemic reversed the long-term trend in the decrease of extreme poverty.
Corrective action
This projection of widening inequality in the decade ahead is not a foregone conclusion. It can be addressed in two primary ways: by increasing taxes on the wealthy, and by implementing reforms to drive down the poverty rate.
Along with an increase in corporate taxes, President Biden is proposing more progressive taxes on individuals and families that would particularly focus on the very wealthy. Other developed countries have instituted such tax reforms, or are considering doing so.
International economic reforms could get the world back on track in reducing extreme poverty between now and 2030. According to the United Nations Development Programme,
“These measures include investments aimed at changing patterns of food, energy, and water consumption and increasing internet access as well as supporting low-carbon economies.
Rich nations also face calls to look beyond their own economic woes and support developing countries by increasing foreign aid, cancelling debt, and financing affordable vaccines.”
Conclusion
Both the trends of increasing economic power of large corporations and increasing inequality between the wealthy and the rest of us accelerated as a result of the pandemic in 2020 and the first half of 2021. In addition, the progress that had been made in reducing extreme poverty during the past 20 years suffered a significant reversal.
But, progressive policies during the next decade can reduce the power of large corporations and decrease the wealth gap between the rich and the poor.