Capitalist crisis stokes inflation, as bosses rake in record profits

By Vivian Sahner
May 23, 2022

In recent weeks U.S. bosses have been posting record profits, 35% above the year before. “The numbers are in” an article in Bloomberg boasts, “2021 was the most profitable year for American corporations since 1950.”

While working people struggle to cope with skyrocketing costs for gasoline, diesel and heating oil, Exxon reported doubling quarterly earnings from a year earlier. Chevron — whose refinery workers in Richmond, California, have been forced out on strike — reports first-quarter profits jumped from $1.37 billion in 2021 to $6.3 billion this year.

Kellogg’s, which forced workers on strike last year, posted a 15% increase in earnings. Four of the biggest meat-processing companies tripled their net profit margins, while underpaying farmers and attempting to drive down workers’ wages and conditions on the job.

The bosses try all kinds of tricks to get more for less, like nibbling away at the contents of their products while leaving prices the same. But the key to their rising profits is that they come at the expense of the workers. It’s a class question.

Working people have seen their real wages drop. The government, which finagles its figures to hide the real impact of inflation, admits that consumer prices rose at an annual rate of 8.5% in March, the steepest increase since 1982. As all workers know from experience, the things we need most, like food, fuel and housing, leapt up higher than that.

In New York City, where renters make up two-thirds of all households, rents rose 33% last year. Roughly 2,000 eviction cases have been filed by landlords every week since March. Nationally rents are up 18%.

The surge in profits so far eclipses any increase in workers’ pay that even some of the media shills for the capitalist class have given up on the oft-repeated lie that higher wages push up prices. “It’s completely inconsistent with a wage-price spiral,” George Pearkes of the Bespoke Investment Group told Bloomberg, “there is no other way to put it.”

The so-called wage-price spiral has never been true. Bosses always strive to pay workers as close to what we need to barely survive, and always less than the value of what we produce. The “surplus” — after taking out what is necessary to replace machinery, etc. — they take as profits. Rising wages simply mean workers have been able to wrest more of the wealth they produce by their labor power, and the bosses get less. This is what we try to use our unions to accomplish.

Inflation has soared worldwide because governments have been printing vast amounts of money to try to buy their way out of today’s crisis of the capitalist system, and to help their own country’s bosses compete ever more fiercely with rivals abroad. This spurs demand, shortages and rising prices.

Jack Barnes, national secretary of the Socialist Workers Party, explains in New International no. 10, “Under such conditions, competing capitalist commercial interests bid prices up and up and up and up in an ultimately self-defeating effort to reap surplus profits.”

Working people have begun to use their unions to fight back. Members of United Steelworkers Local 5 in Richmond are on strike against Chevron to demand higher wages and relief from dangerously long work schedules. Over 5,000 nurses in Palo Alto, California, just won wage gains and other advances with a five-day strike at the Stanford Health Care system.

A key demand in strikes last year by the United Auto Workers against John Deere and by the Bakery, Confectionery, Tobacco Workers and Grain Millers unionists at Kellogg’s was for cost-of-living adjustment clauses. At Kellogg’s the bosses were forced to agree to regular cost-of-living pay adjustments of up to $3 an hour through 2026.

This is a concrete step working people can use to protect ourselves, making bosses raise our wages whenever prices go up. “These struggles set an example for workers everywhere and deserve our support,” Lea Sherman, Socialist Workers Party candidate for U.S. Congress from New Jersey, told the Militant. “We need cost-of-living adjustments in our union contracts, in retirement benefits and Social Security.”