High prices, shrinking wages & juicy profits
Published May 10, 2008 7:18 AM
The working class everywhere is taking a huge pay cut. It comes in the form of
high prices for necessities, especially food and fuel, and is affecting
workers, the unemployed, seniors and anyone else who has to pay for living
expenses—from Albuquerque, N.M., to Nairobi, Kenya, to Jakarta,
In the United States, the prices of wheat and soybeans have doubled in the last
year while corn and milk have gone up by about 25 percent. Meat and eggs, both
dependent on grain for feed, have followed suit.
But a comparison with last year doesn’t tell the whole story, because
2007 was itself a year of big inflation in food prices.
The steep rise in gasoline prices is also tearing a huge hole in many
workers’ budgets, since U.S. public transportation is woefully
inadequate, even though the population is very spread out and people often live
far from where they work, shop and go to school. And then there’s the
rising cost of heating oil.
It all adds up to big problems for the working class, especially those already
living near the edge. And it comes at a time when workers’ real wages and
incomes are continuing the long slide downward that started over 30 years
You don’t have to read an article to know this. You’re living it
already. But you may want to know why this is happening, and what can be done
The first thing to know is that rising prices are not inevitable. Countries
with planned—i.e., socialist—economies have kept prices remarkably
stable, beginning with the Soviet Union, continuing with People’s China,
until it opened up to the world capitalist market, and still in Cuba and the
Democratic People’s Republic of Korea today. This is because prices there
have been set not by a capitalist market but by the government—and food
prices have always been set deliberately low so that no one goes hungry.
All the socialist revolutions have occurred in the less-developed
countries—that’s where mass struggle has been the greatest and the
capitalist class the weakest—yet they achieved an end to hunger despite
starting from a very low productive base. However, their underdevelopment left
them vulnerable to intense military and economic pressure from the imperialist
What’s so striking—really amazing—about a country like the
U.S. is that hunger is growing here amid great abundance. Workers’ wages
have been going down even though productivity continues to advance, and the
assets of individual wealthy people are now measured in billions and even
hundreds of billions of dollars. Homelessness is rising as the inventory of
unsold, brand-new, single-family homes remains at around half a million,
despite a 13 percent decline in the median price for these homes over the last
Look around any supermarket. There’s no shortage of meats, grain, fresh
fruits and vegetables or dairy products. And the workers who do the sowing,
picking, processing, slaughtering and transporting of these foodstuffs
aren’t making any more money than before—whether they work in the
U.S. or in South America.
So where is the extra money you are paying at the cash register going?
The excuse given for the high prices is that oil now costs a lot more than it
used to. And that’s true. In fact, the price of oil on the futures market
just hit $120 a barrel. But don’t blame the oil-producing countries. They
are only one small part of the process by which petroleum products reach the
market. The major players are the giant transnational oil monopolies. And, at a
time of economic downturn, their profits are still in the fabulous range.
Take Exxon Mobil. It reported profits of nearly $11 billion in the first
quarter of this year—a 17-percent increase over the same period last
year. Now that’s nice. Wouldn’t you like to get a 17-percent raise?
But evidently that didn’t satisfy Wall Street investors, who were
expecting more and sent the company’s stock down on the news. They had
been hoping for at least $11.7 billion, which the company earned in the last
quarter of 2007.
But what about agribusiness, which is directly bringing us high prices? The
biggest U.S. agricultural company, Cargill, reported in mid-April that its
profit of $1.03 billion in the first quarter was an increase of 86 percent from
that of a year ago.
Archer Daniels Midland, another grain monopoly that is benefiting from the
growing ethanol market, said its earnings rose to $517 million in the quarter
ending March 31—a 42-percent jump over last year.
One-fourth of the corn grown in the U.S. is now being used to produce ethanol.
This diversion of land away from food crops is contributing to the spike in
world food prices. Adding ethanol to gas was supposed to overcome shortages and
keep fuel prices down. Obviously, it hasn’t.
The lesson should be clear: the capitalist market doesn’t solve the
workers’ problems. In fact, it causes them. A “tax holiday”
on gas over the summer, as some candidates are proposing, is a teeny-tiny
band-aid over a gaping problem and would leave the state budgets in even worse
Let’s face it. We need a revolution to get rid of the corporate parasites
and reorganize society to meet people’s needs. In a time of awesome
global climate change, expanding imperialist wars, and now a serious recession
or depression in the works, nothing less will do.
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