Profits, Inflation and Survival in an Age of Emergencies: Why We Need a New Paradigm

The 2024 Ellen Meiksins Wood Lecture was held on Thursday, May 30th in partnership with Toronto Metropolitan University’s Faculty of Arts. A special thanks to TMU Interim Dean of Arts Amy Peng for hosting this Broadbent Institute event.

Ellen Meiksins Wood was one of the left’s foremost theorists on democracy and history, and often promoted the idea that democracy always has to be fought for and secured from below, never benevolently conferred from above. The Institute founded the annual Ellen Meiksins Wood Prize & Lecture to honour Professor Wood’s legacy as an internationally renowned scholar and to bring her work to new generations of Canadians.

The Ellen Meiksins Wood Prize is given annually to an academic, labour activist or writer and recognizes outstanding contributions in political theory, social or economic history, human rights, or sociology.

Each year’s recipient also delivers the Ellen Meiksins Wood Lecture.

2024 Ellen Meiksins Wood Prize recipient Dr. Isabella M. Weber with Broadbent Institute Executive Director Jen Hassum.

The 2024 Ellen Meiksins Wood Lecture was delivered by economist Professor Isabella Weber. She is awarded the 2024 Ellen Meiksins Wood Prize in recognition of outstanding contributions to political economy research that helps to defend the working-class in a time of economic crisis.

Her lecture, entitled Profits, Inflation and Survival in an Age of Emergencies: Why We Need a New Paradigm, demonstrates how prices on essentials have risen, while corporate profits have grown, due to economic shocks induced by pandemics, climate change, and other global events. The lecture helps to equip progressive movements with the information and analysis needed to push back against austerity, and helps to demonstrate why public policies such as public investment, wage gains, and price controls complement a policy toolkit to help ordinary Canadians out of today’s affordability crisis. Click here for our gallery of photos from the event.

 

Read the full lecture in Perspectives: A Canadian Journal of Political Economy and Social Democracy.

 

Corporate price gouging. That’s the real problem

It seems almost too obvious to say aloud: to solve our affordability challenges, prices, which have steadily increased since the beginning of the pandemic in 2020, need to stabilize so wages can catch up. This is especially true when it comes to food inflation, which is driving up food bank usage, worsening childhood food insecurity and leading to popular anger — which has recently manifested in calls to boycott and steal from Canada’s (very profitable) grocery retailers.

The traditional story around inflation goes like this: economic shocks — like those we saw in the 1970s energy shock — increase the cost of businesses’ inputs. Because of abrupt changes to supply and demand, price levels rise or fall until the market returns to business as usual and prices and wages recover at their normal pace of growth.

But what if businesses, to maintain their profit margins without interruption from shocks, decide to pass on the costs of these shocks to everyday people? As prices are “social relations” between corporations and consumers, it would not seem unreasonable that prices increase dramatically amidst a global pandemic. But this new, higher price —far ahead of wages — becomes a “new normal,” while shareholders rake it in.

This is the fundamental thesis of the “sellers’ inflation” model, as articulated by economist Isabella Weber, who is giving the 2024 Ellen Meiksins Wood Lecture at Toronto Metropolitan University on May 30. According to Weber, the traditional story does not account for today’s highly financialized and concentrated industries, which compete on who can deliver the best returns to shareholders, rather than who can deliver the best prices to consumers. Weber’s research demonstrates that even in “competitive” markets, rival companies replicate the price increases of their competitors so that they do not miss out on an opportunity to profit.

This is a recipe for an ever-worsening cost of living — and the popular anger that accompanies it. And there is evidence that we are seeing sellers’ inflation at work in the Canadian grocery market.

Clement Nocos is the Director of Policy and Engagement of the Broadbent Institute.

Read the full article published in Canada's National Observer on May 14, 2024.

Champions of Change: The Broadbent Institute's 2024 Awards

Each year, in partnership with the Canadian philosopher Charles Taylor, and Mayor of Toronto Olivia Chow, the Broadbent Institute has the honour of awarding the Jack Layton Progress Prize and Charles Taylor Prize for Excellence in Policy Research at the annual Progress Summit.

This year’s shortlist of Layton and Taylor Prize nominees represented an inspiring field of policy thinkers who have had a demonstrable impact on policy making, and activists who are organizing and achieving social change in Canada.

Read more

2024 Ellen Meiksins Wood Lecture

The 2024 Ellen Meiksins Wood Prize was awarded by the Broadbent Institute to economist Dr. Isabella Weber—for critical research on economic shocks and inflation that equip Canadian progressives with policy alternatives that push back against anti-democratic policy decisions, and help to empower workers. The award was announced on Friday, April 12th at the 2024 Progress Summit by Broadbent Institute Executive Director Jen Hassum.

The Broadbent Institute’s 2024 Ellen Meiksins Wood Lecture, delivered by the recipient of the Prize, will take place at a keynote event at Toronto Metropolitan University on Thursday, May 30th at 7pm EDT. TICKETS ARE NOW AVAILABLE.

Isabella Weber has become a leading voice on policy responses to inflation and has advised policy makers in the United States and Germany on questions of price stabilization. For her public policy work she has been profiled in the New Yorker, recognized as one of TIME100 Next, Bloomberg's 50 Ones to Watch, Germany's 100 women of 2022 and Capital 40 under 40.

Isabella’s first book How China Escaped Shock Therapy: The Market Reform Debate is the winner of the Joan Robinson Prize, the International Studies Association Best Interdisciplinary Book Award and the Keynes Price and has been recommended on best book of 2021 lists by the Financial Times, Foreign Policy, Project Syndicate, ProMarket and Folha de S.Paulo among others. The book has been translated into German, Portuguese and Persian.

Her writings have appeared in the Washington Post, The Guardian, Project Syndicate and Süddeutsche Zeitung. She is on the editorial boards of the Journal of Keynesian Economics, the Review of Political Economy and on the advisory board of Environment and Planning A and a member of the Program Committee of the International Economics Association World Congress. Previously she was a tenured Lecturer at Goldsmiths, University of London, and has been the principal investigator of the ESRC-funded Rebuilding Macroeconomics project What Drives Specialization? A Century of Global Export Patterns. Isabella holds a Ph.D. in Economics from the New School for Social Research, New York, and a Ph.D. in Development Studies from the University of Cambridge and was a visiting researcher at Tsinghua University. German born, she studied at the Free University of Berlin and Peking University for her B.A.