In 2021, as the Covid-19 pandemic abated, global inflation rates began to rise. A year later, they peaked at 8.7% (IMF, 2023), with higher rates observed in the US, UK and Eurozone (Galeone and Gros, 2023). The inflation crisis, as it was dubbed, divided mainstream economic opinion regarding the key macroeconomic drivers and correct policy responses to stabilise price levels. Some argued that the crisis arose from a combination of excessive pandemic fiscal stimuluses ‘overheating’ economies, alongside tight labour markets driving up wages in the aftermath of lockdowns. These inflation hawks advocated vociferously to raise interest rates to increase unemployment and ‘cool’ demand. Others disagreed, blaming inflation on exogenous shocks to the global economy: supply chain bottlenecks as the global economy disjointedly rebooted after the pandemic, and the rapid rise in wholesale prices of energy and food staples after Russia’s invasion of Ukraine. These inflation doves, apprehensive of the impact higher interest rates would have on their economies, placed faith in the market’s ability to self-correct.

However, as millions of consumers across advanced economies struggled to cope with the aggregate rise in consumer prices, corporate profits soared to 70-year highs (Boesler, 2022). For both to occur simultaneously seemed counterintuitive and antithetical to properly functioning capitalism, prompting top financiers to question ‘is capitalism dead?’ (Edwards, 2023). Weber and Wasner’s theory of seller’s inflation provides an answer to this phenomenon, contending that the inflation crisis was amplified by corporate profiteering. Seller’s inflation ensues when firms intentionally use consumer’s imperfect pricing information, generated by initial inflationary shocks, as a smokescreen to raise prices beyond cost increases, reaping higher profits. Unlike demand-driven inflation, this form of price growth is driven by corporate pricing power and profit-seeking, especially in concentrated industries where firms face little to no meaningful competition. Studies show that increased corporate markups the percentage added to cost to set a selling price, and an indication of a firm’s market power—were a primary driver of post pandemic inflation, as powerful companies seized the opportunity to expand profit margins under the guise of rising costs. However, given competition is a core principle of capitalism, driving efficiency, innovation, and lower prices, it begs the question: how did market concentration become so significant that it could severely amplify inflation?

Rather than an aberration, seller’s inflation demonstrated the deeper structural forces that underpin neoliberal capitalism. Over the past 40 years, neoliberal economic policies—particularly deregulation, privatisation, and lax antitrust enforcement—have favoured corporate consolidation, allowing dominant firms to out-compete or acquire rivals. Consequently, highly concentrated markets across key industries have given corporations monopolistic pricing power, wage suppression leverage, and political influence, ultimately undermining the competitive ideals neoliberalism claims to promote. Market concentration has contributed to widening economic inequality in advanced economies as, while wages stagnated, corporate profits increased, thus diminishing labour’s share of GDP. With trade unions’ bargaining power weakened to promote ‘labour market flexibility’ (Hathaway, 2020), capital captured a disproportionate share of economic gains, reinforcing a cycle in which corporate and financial elites exert growing influence over policy and society. Therefore, corporate profiteering during the inflation crisis, and the seismic wealth transfer from labour to capital it engendered, was a product of—and intertwined—with neoliberalism. Full understanding of this crisis requires its contextualisation within the broader international political economy, where decades of neoliberal reforms concentrated corporate power, weakened labour, and prioritised market-driven solutions over equitable economic policies.

Aims, Research Question and Outline

This dissertation has two aims: firstly, to advance the veracity of seller’s inflation as a key economic phenomenon, ensuring future inflation crises—likely, in this age of polycrisis (Tooze, 2020)—are met with more effective monetary and fiscal policies. Second, it intends to bridge the gap between inflation, corporate profiteering, and neoliberal critique, highlighting how the wealth transfer during the inflation crisis demonstrates neoliberalism’s propensity to siphon wealth from labour to capital. Therefore, this study asks: what can the post-pandemic inflation crisis tell us about the power of corporations in neoliberal political economy?

The following study is divided into three sections. Firstly, the literature review shall provide historical background and theoretical frameworks for neoliberalism and inflation. These will be contrasted with the contemporary critique of neoliberal political economy, such as its propensity to concentrate markets, influence political systems and generate inequality. Furthermore, seller’s inflation will be evaluated as a pertinent counter-theory to the mainstream inflation debate, challenging conventional fiscal and monetary policies in combating inflation. The second section shall focus on empirical analysis of seller’s inflation, specifically on higher profit margins, increased mark-ups and their relationship with firms operating in concentrated sectors between 2021 and 2023 across advanced economies. This quantitative data will be supplemented by secondary qualitative data, namely direct quotes and statements from a range of senior bankers, politicians and financiers, which further evidence the amplification of inflation by corporate profiteering. Finally, the discussion shall relate corporate profiteering to the broader critique of neoliberal political economy, framing this as a perpetuation of previous trends and a raw demonstration of corporate power. Focus will be drawn to the lack of adequate scrutiny or accountability held to corporations during the crisis, the wealth transfer generated by corporate profiteering, and state policies that further burdened working people.

The following literature review aims to explore key theories and concepts pertinent to this dissertation and investigate the relevant debates surrounding them. By taking a thematic approach, the inflation crisis can be contextualised within wider discussions surrounding the inefficiencies, contradictions and projections of neoliberal political economy. Section one will detail the history and theory of neoliberal political economy and explore arguments surrounding its propensity to generate higher levels of market concentration, influence the political sphere and economic inequality. Section two shall discuss the concept and causes of inflation, alongside the contemporary debate between economists regarding the main drivers and policy recommendations of the 2021–2023 inflation crisis.

To understand the dynamics of market concentration that allowed for corporate profiteering during the inflation crisis, we must examine the literature behind neoliberalism and free market ideology. Neoliberalism has been the dominant political and economic doctrine across most advanced economies for over forty years and has therefore been analysed extensively. However, defining neoliberalism is often controversial, as it is not a codified ideology, and its terminology is frequently used as a diffuse catch-all regarding modern political economy. Nevertheless, as Hathaway (2020) notes, it does retain meaning. For the purposes of this dissertation, Kotz’s definition (2010) of neoliberalism suitably encapsulates the main thrust of its core tenets:

…a body of economic theory and a policy stance. Neoliberal theory claims that a largely unregulated capitalist system (a “free market economy”) not only embodies the ideal of free individual choice but also achieves optimum economic performance with respect to efficiency, economic growth, technical progress, and distributional justice. (p. 306)

…a body of economic theory and a policy stance. Neoliberal theory claims that a largely unregulated capitalist system (a “free market economy”) not only embodies the ideal of free individual choice but also achieves optimum economic performance with respect to efficiency, economic growth, technical progress, and distributional justice. (p. 306)

The theoretical and ideological underpinnings of neoliberalism are often attributed to Friedrich Hayek and Milton Friedman. Hayek’s seminal work, The Road to Serfdom (1944), is credited as one of the fundamental texts contributing to the rise of neoliberal thought in the 20th century. It was written as a critique of socialist and Keynesian economics; Hayek viewed their economic planning and emphasis on equality as ultimately totalitarian and ruinous for democracy. Hayek argued for free markets and a limited role for the state as state intervention distorts market efficiency regarding allocating and distributing goods and services and limits individual freedom. Free markets are thus essential, in Hayek’s view, to freedom, as ‘our freedom of choice in a competitive society rests on the fact that, if one person refuses to satisfy our wishes, we can turn to another’ (Hayek, 1944: p. 67). Hayek’s conflation between economic freedom and political and individual freedom is a central justification for neoliberal political economy. Friedman, a disciple of Hayek’s at the Chicago School of Economics, built upon this claim. In Capitalism and Freedom (1962), Friedman argues that the role of the state is limited to ‘protecting our freedom both from the enemies outside our gates and from our fellow-citizens’ (p. 2) and ‘to preserve law and order, to enforce private contracts, and to foster competitive markets’ (p. 2). His assertions largely aimed to push back on reigning Keynesian mixed economies, which championed government intervention in the economy.

The economic theories of John Maynard Keynes (1936) were adopted by the US and UK governments to restructure their economies in the aftermath of the Great Depression, whereby the failings of unfettered capitalism were glaringly exposed. After the Second World War, Keynesianism underpinned social democratic governance, which typified most Western nations until the 1970s, a period known as the Golden Age of Capitalism (Marglin and Schor, 1990). The social democratic compromise between governments, capital and highly unionised labour forces protected citizens from the more deleterious aspects of capitalism and led to a reduction in economic inequality (Berman and Snegovaya, 2019). Keynesianism prioritised government intervention in the economy, primarily through fiscal policies, infrastructure investment and welfare spending, with the goal of managing aggregate demand. In theory, government spending was necessary during economic downturns to stimulate demand and create jobs, thereby avoiding deep recessions like the Great Depression. Keynesian theory emphasised the Philip’s Curve, which theorised an inverse relationship between inflation and unemployment. Thus, governments believed they could fine-tune their economies, primarily through discretionary government spending and taxation policies, to reach a balanced trade-off between the inflation rate and unemployment, prioritising full employment so economies operated at maximum productive capacity. However, during the 1970s stagflation period, whereby advanced economies were beset by rising unemployment, stagnant economic growth and high inflation, much of Keynesian economic theory was discredited, particularly the Philip’s Curve (Zinn, 2013). Keynesianism had no answer to the simultaneous rise in inflation and unemployment, as government intervention via fiscal stimuluses to boost aggregate demand would only exacerbate inflation rates. Though stagflation was arguably precipitated by the 1970s energy crisis, which saw the Organisation of the Petroleum Exporting Countries (OPEC) oil embargo to the West, unions and workers were blamed for exacerbating inflation through a wage-price spiral. This phenomenon occurs when workers demand higher wages to recoup their lost purchasing power eroded by inflation—typically through the collective bargaining process. However, higher wages incur higher costs for firms, forcing them to raise prices further, creating a cyclical relationship that pushes prices ever higher. Resultantly, this helped justify neoliberal efforts to undermine trade union power, which has declined substantially since the neoliberal pivot (Blinder and Rudd, 2010).

The stagflation crisis offered neoliberalism its first chance to have a significant impact on public policy (Josifidis et al, 2013). As Friedman (1962) famously declared, ‘only a crisis—actual or perceived—produces real change… when that crisis occurs, the actions that are taken depend on the ideas that are lying around’ (p. 9). The supplanting of Keynesianism by neoliberalism is widely attributed to the elections of Reagan and Thatcher and the ensuing Volker Shock, which aimed to tame inflation by raising interest rates to historic highs, thus marking the implementation of monetarism. Counter to the Keynesian concept of inflation, which arose from both supply and demand factors and required active demand-management, Friedman’s monetarism contended ‘inflation is always and everywhere a monetary phenomenon’ (Friedman, 1960). In Friedman’s, A Programme for Monetary Stability (1960), he attributes inflation solely to ‘too much money chasing too few goods’ and argues that curbing the money supply via higher interest rates will curtail inflation to manageable levels. In simple terms, ‘inflation was simply a matter of the excessive expansion of the money supply, which inflated demand and led to generalised inflation’ (Clarke, 1988: p. 323). By raising interest rates, businesses and consumers spend less due to the increased cost of servicing debt, resulting in a contraction or ‘cooling’ of the economy. In turn, the unemployment rate increases, reducing demand and investment in the economy. This acts as a restraint on the prospect of a wage-price spiral, as higher unemployment reduces labour’s bargaining power. The Volker Shock was successful in curbing inflation; however, it also precipitated a deep recession and unprecedented rise in unemployment levels (McCarthy, 2016). Nevertheless, this period saw a consolidation of neoliberal economics, policies and ideology that diffused across the world. Neoliberalism provided the ideological and policy framework that drove globalisation, making neoliberal logic and rationality ‘the ruling ideas of the time’ (Harvey, 2005: 36).

Neoliberalism’s tenets of freedom and free markets have come under much scrutiny. Karl Polanyi’s The Great Transformation (1944), offers a powerful critique of unregulated markets, as he argues that ‘the full functioning of a self-regulating market would result in the demolition of society’ (p. 76). He points out the conflation of free markets with freedom,

degenerates into a mere advocacy for free enterprise…. This means the fullness of freedom for those whose income, leisure, and security need no enhancing, and a mere pittance of liberty for the people who may in vain attempt to make use of their democratic rights to gain shelter from the power of the owners of property. (p. 265)

degenerates into a mere advocacy for free enterprise…. This means the fullness of freedom for those whose income, leisure, and security need no enhancing, and a mere pittance of liberty for the people who may in vain attempt to make use of their democratic rights to gain shelter from the power of the owners of property. (p. 265)

Contemporary Marxist theorist David Harvey further agrees, in A brief History of Neoliberalism (2005), that the 1970s neoliberal pivot away from the redistributive, Keynesian model was merely a return to the form of capitalism that had previously presided. Harvey says, ‘neoliberalization has been a vehicle for the restoration of class power though the new elite class is managers and financiers rather than owners of the means of production’ (p. 31). Since the onset of neoliberal policies in major advanced economies, wealth and income inequality has increased, trade unions have been repressed, and labour’s share of national incomes has diminished in relation to that of capital. However, further analysis of neoliberalism in practice highlights the contradiction between supposed advocacy for free markets and the reality of corporate power and market concentration (Bruff 2023; Hardin, 2012; Sawyer, 2022; Hathaway, 2020). Hardin refers to this as corporism, whereby the only distinguishing feature of neoliberalism from previous iterations of unfettered capitalism is ‘the privileging of the form and position of corporations’ (p. 99). In The Strange Death of Neoliberalism (2011), Colin Crouch furthers the corporism hypothesis by highlighting neoliberal policies such as privatisation and deregulation, which, far from engendering free markets, allowed corporations more market share and created barriers to market-entry for others. Mirowski (2013) argues neoliberalism effectively amounts to the ‘totally uncritical acceptance of oligopolistic corporations, whose dominance prevents markets from working in the perfect information-processing way that the core of neoliberal theory requires’ (p. 51). As markets concentrate, it consolidates unprecedented wealth and power in the hands of large firms and shareholders. The paradox of the neoliberal system, which propagates the virtues of the free market whilst facilitating ever-concentrated market powers, shall be a significant focus of this dissertation.

There has been extensive literature analysing ‘actually existing neoliberalism’ (Hardin, 2012) and its propensity for generating concentrated markets and monopolistic competition. The unfettered form of capitalism that neoliberalism represents has repeatedly been argued to inevitably lead to monopoly practices. Karl Marx presciently predicted competitive markets was an impermanent period for capitalism, as capitalist logic dictated that firms seek less competition and bigger market shares. Marx wrote, ‘the larger capitals beat the smaller…. [C]ompetition rages in direct portion to the number and in inverse proportion to the magnitude of the rival capitals’ (Marx, 1867: p. 343). In accordance with Marx’s theory of monopoly-capitalism, Meagher (2020) writes, ‘markets inexorably tend toward concentration, and we seem incapable of enforcing the restraint to prevent the accumulation of money and power’ (p. 20). This observation was vindicated by President Roosevelt’s anti-trust policies in the 1930s, which aimed to curtail the power of American monopolists. This was seen as vital in de-concentrating economic power to redistribute economic gains and quash corporate influence over government and policymaking. Monopolies were thus viewed as antithetical to well-functioning capitalism and therefore government competition policy was needed to ensure the smooth running of markets. Theorists of monopoly-capitalism have come to blame the neoliberal secular stagnation—persistently low growth and weak demand—on over-accumulation by big firms and correspondingly less productivity and innovation than expected in competitive markets (Sawyer, 2023).However, in Reinventing Monopoly and the Role of Corporations (2009), Van Horn demonstrates a new take on monopolies, formulated by the Chicago School, which pushed back on the need for government intervention to mitigate capitalism’s tendency towards market concentration. He shows neoliberalism shifted the attitude from viewing monopolies as a danger to free market society that required government intervention, to a ‘benign phenomena that functioned ‘as if’ they were competitive’ (p. 219). Neoliberal economists like Friedman (1962) argued ‘private monopoly, as opposed to public monopoly or public regulation, is the least of the evils’ (Hardin, 2012), thus downplaying the risks of monopolies in comparison to the risk of government intervention in the economy.

There is a significant body of literature highlighting the growing concentration of markets and monopolistic behaviours since neoliberal policies were adopted. An OECD report (Bajgar et al, 2019) found concentration increasing in 77% of two-digit industries in Europe and 74% in North America between 2000-2014. Khan and Vaheesan (2017) show many US sectors are dominated by large firms that engage in monopolistic practices. They outline how monopoly pricing on goods and services by these firms acts as an aggregate transfer of wealth, as it ‘turns the disposable income of the many into capital gains, dividends, and executive compensation for the few’ (p. 236). De Loecker (et al, 2020) furthers this study by highlighting how mark-ups have increased since 1980. They found higher mark-ups were evident in firms that have increased market share, whilst smaller firms have seen no increase and a diminished market share (p. 562). Cairo and Sim (2020) show that concentrated markets aid the transfer of wealth from capital to labour not only via higher mark-ups, but importantly, by lowering wages and reducing investment to maximise shareholder returns. Proponents of neoliberalism argue this is precisely what a corporation is supposed to do, and the ‘social responsibility of business is to increase its profits’ (Friedman, 1970). Some business groups have come to promote stakeholder capitalism (Freeman, 1984) and corporate social responsibility, whereby firms would consider the interests of all stakeholders, such as employees and customers. However, this has been criticised for being an empty promise to appear virtuous (Reich, 2021).

Observers often lament that market concentration is attributable to the co-optation of the political sphere by powerful economic interests. Not only have neoliberal governments imbibed the attitude they should ‘get out of the way’ of markets (Innes, 2021), corporations take the opposite attitude towards politics. Hellman (et al, 2020) coined the term ‘corporate state capture’, whereby big firms successfully permeate through the political sphere to shape legislation in their favour and extract rents. As Hathaway (2020) highlights, ‘corporations have worked extensively to influence the political arena’ (p. 325), evidenced by the rise of the multi-billion-dollar lobbying and campaign donation industry in the US and Europe since the 1970s. Additionally, corporations have forwarded pro-corporate ideas through funding thinktanks, promoting their own research to combat public research, encouraging the revolving door between business and government and using their power to disseminate favourable narratives in the news media (Hathaway, 2020). The political complacency and lack of scrutiny of private enterprise has its roots in the neoliberal faith that markets ‘will lead us to the Promised Land of seamless allocative efficiency’ (Innes, 2021). The unquestioning attitude amongst public officials that private enterprise, and the axiomatic reflex that what is good for business must also benefit society in neoliberal economies, will be scrutinised as a leading cause for how profiteering during the inflation crisis was able to transpire.

Market concentration is criticised for significantly contributing to widening economic inequality in advanced economies. In a 2017 study, researchers from the OECD (Ennis et al, 2017) analysed market power and inequality data across eight OECD countries—Canada, France, Germany, Korea, Japan, Spain, the UK and the US—and found a direct correlation between market power and widening inequality. Market power augmented the ‘wealth of the richest 10% of the population by 12% to 21% for an average country in the sample’ whilst ‘may also depress the income of the poorest 20% of the population by between 14% and 19%’ (Ennis et al, 2017: p. 23). This analysis is substantiated by theories put forward in Thomas Picketty’s celebrated work Capital in the 21st Century (2014). Picketty argues that, when the rate of return on capital exceeds the rate of economic growth, wealth becomes increasingly concentrated in the hands of the wealthy. Concentrated markets play a critical role in facilitating this, as they produce higher profits to predominantly wealthy shareholders whilst simultaneously hampering economic growth through reduced investment, higher consumer prices and lower wages. Following years of stagnating wages, the neoliberal assertion that wealth will ‘trickle down’ to the rest of society has been fundamentally discredited (Picketty, 2014). Picketty points to secular stagnation, corresponding increases in wealth for the top strata of capitalist societies, and the rise of the super-rich as compelling evidence for this theory. Importantly, the neoliberal period has seen a reversal of labour’s previously rising share of GDP. In advanced economies, this often exceeded 60% of GDP in the 1960s and 70s but has steadily declined to little over 50% in 2024 (Strauss, 2024).

Inflation is broadly understood to be a sustained rise in prices across a reasonably wide swathe of the economy, creating a corresponding decrease in real purchasing power. However, the longstanding economic debate surrounding the main macroeconomic contributing factors inducing inflation failed to reach such a broad consensus (Totonchi, 2011)—as the old lament goes, ‘if you ask two economists a question you will get three different answers’ (Chetty, 2013). The post-pandemic inflation crisis and its causal underpinnings revived the inflation debate, dividing orthodox opinion into two camps: Team Transitory and Team Persistent. Team Persistent consisted of economists and policy makers (Cochrane, 2022; Summers, 2021; Ball, et al, 2022) who came out vociferously in favour of the monetarist theory of inflation and blamed higher price levels on the fiscal stimulus packages handed out during the pandemic. As lockdowns ended, they argued it increased aggregate demand beyond supply and overheated the economy. Summers (2021) surmised the pandemic fiscal spending as ‘the least responsible macroeconomic policy we have had in the last 40 years.’ Consequently, interest rates were raised to stifle rising inflation, as carried out by central banks across advanced economies to levels not seen since before the 2008 global financial crash. Believing post-lockdown labour markets were tight, these economists warned of rising wages fuelling a wage-price spiral, and pushed to suppress pay increases. Team Persistent went on to say it would be necessary to induce mass unemployment to effectively ‘cool’ the economy and bring inflation back under control (Summers, 2021; Ball et al, 2022).

‘Team Transitory’, however, maintained rising inflation was attributable to shocks to aggregate supply—principally, exogenous shocks to the global economy following global supply chain........

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