Covid-19, Economics, International, US Politics

Covid recession casts 100 million into extreme poverty, while world’s richest gain record trillions

Two mainstream reports issued in October, the USB Billionaire’s Report and the World Bank Poverty Report, together showed that under the Covid-19 pandemic the rich getting richer and poor getting poorer have reached gargantuan levels. Together they are, as Eric Fretz notes here, an unwitting indictment of capitalism. 

The combined wealth of the world’s billionaires has reached a staggering new high of $10.2 trillion, up by over a quarter from the previous high of $8.9 trillion in 2017. This upward trend was accelerated by the coronavirus pandemic, while millions of people lost their jobs. This wealth is owned by 2,200 billionaires around the world, also a new high, according to a new report by the pro-business USB Global Wealth Management and PwC Switzerland.

This new “billionaires report” did not detail individual fortunes, but Bloomberg billionaires index recently reported that Amazon’s Jeff Bezos (whose $189 billion fortune makes him the world’s richest person), has seen his wealth increase by $74 billion so far this year. Elon Musk of Tesla has also had $76 billion added to his wealth during this year of coronavirus depression.

At the same time, recently released World Bank figures conclude the economic consequences of the coronavirus pandemic are especially affecting the poorest, and will push up to 150 million worldwide into “extreme poverty” by 2021.

Back when the 2017 billionaires report was published, lead author Josef Stadler said that with this “wealth concentration” and growing inequality between rich and poor in this “new gilded age,” his billionaire clients were starting to worry “at what point will society intervene and strike back.” The worldwide revolts of 2019 were a hint of that happening. But if Stadler’s billionaires were concerned, it has not resulted in a decrease in their own wealth, calls for higher taxes, or increased pay to their workers. Despite a proportionately trivial increase in “charitable” spending and donations mentioned in the recent report (democratically unaccountable and often self-serving), the rich seem more concerned with safeguarding this unimaginable wealth for themselves and their descendants—and protecting their fortunes from the consequences of global climate change—rather than doing anything to reverse it. In fact, the enormous wealth leads to increased influence in government and policies aimed at continuing these disparities.

None of this is theoretically surprising. Whether we look at the last 40 years, the “Gilded Age” of the late 19th Century, or the birth of capitalism as described by Marx, we see how it is less the beliefs of individual capitalists that make a difference, but the priorities of the capitalist economy overall that drives accumulation for the sake of accumulation. Despite fluctuations, this dynamic trends towards greater inequality and environmental destruction. Nonetheless, the extent of this destructive trend today is mind-boggling.

Extreme poverty worldwide

Other figures coincidentally published the same week estimated the coronavirus pandemic has already thrown between 88 million and 114 million people into extreme poverty. The World Bank Poverty and Shared Prosperity report, predicted that their measure of extreme poverty (living on less than $1.90 a day) is expected to rise in 2020 for the first time in over 20 years, and continue increasing in 2021. In many parts of the world things are even worse than this suggests: the World Bank’s definition of “extreme poverty” (or global “absolute poverty”) has rightly been criticized as artificially low. Almost 3.3 billion people—40% of the world’s population —are now living on less than $5.50 a day.

Last month’s report by the Gates Foundation also noted that tens of millions had been driven into poverty during the Covid-19 crisis, but added alarming details of how it decimated vaccine programs and other world health and development goals as well. 

The World Bank report found that these “new poor are more urban, better educated and less likely to work in agriculture than those living in extreme poverty before Covid-19.”

The United States

Within the United States, the Covid-19 recession has been the most unequal in US history. It decimated workers and small businesses overall, but disproportionately affected low-wage and minority workers. Many of them are still feeling the brunt of the crisis while Wall Street and some sectors of the economy entered an unstable recovery by the end of this summer. 

While recessions often hit poorer households harder, an analysis of government figures by the Washington Post shows this crisis “is doing so at a scale that is the worst in generations.” At the height of the coronavirus crisis, low-wage jobs were lost at about eight times the rate of high-wage ones. While white workers recovered over half the jobs lost between April and February, for Black workers the figure is just over a third. While some of the ultra-rich cited above are seeing record gains, there has also been “a mild setback” for others near the top, contrasted to “a depression-like blow for those at the bottom.” 

While not mentioned in the Washington Post analysis, unionized workers are hit somewhat less than workers without official organization, and Covid has only reinforced a growing desire for unionization in the US working class. But bosses are also using the Covid disruptions and mass unemployment in attempts to sideline, resist, or even break unions, in both private and municipal sectors. Over several decades, a growth in US inequality has been proportional to a decline in union membership and strike days. 2018 and 2019 saw an inspiring uptick in strike activity, reversing this trend. While 2020 has not seen the same numbers of workdays lost in major strikes, an inspiring eruption of smaller-scale workplace actions in the period of Covid and Black Lives Matter suggests the mood is there for a more coordinated fightback. 


Both the World Bank report and the previous Gates Foundation report on Covid tend to talk of “mutually exacerbating catastrophes,” putting a pause on “progress,” a loss of trillions to the “global economy,” and at best a distinction between “wealthier” and “lower-income countries,” without mentioning class, structural causes, or the growth of wealth in the small minority of billionaires (and where that wealth comes from) as part of the problem. Nor do their descriptions of “government action” analyze how US and other stimulus programs were aimed more at big banks and the stock market than at the poorest. Of course there is no questioning of the key reliance on “growth” rather than redistribution, despite the expanding environmental crisis.

A deeper crisis

The above reports talk of the Covid-19 crisis as an unexpected reverse to general improvement. Certainly the beginning of the pandemic triggered a global slowdown, and in the US a second wave this winter may yet necessitate more shutdowns and a second dip in the recession. But Covid is not the underlying cause of economic malaise, which is based in longer-term decline in average industrial profitability. The crises we face today are in-built features of capitalism, not aberrations.

The Covid corporate and financial bailouts partially staved off a more catastrophic collapse, but worsened the longer-term underlying problems. “Without a clearout of unprofitable firms on a far greater scale than has happened thus far,” as Joseph Choonara described this malaise, “it is unlikely that profit rates will rebound.” And (short of socialist revolution) it is only a re-invigorated workers movement that can resist those clearouts increasing unemployment and misery on our side, while the ruling class sweep up the profits made in other sectors off our immiseration. 

When socialists are involved with these struggles we must point out how these horrors are rooted in a world run by capitalism. And we must be internationalist. While the results in the US have been deviststing, and look to get worse, in huge parts of the world the death count from the economic consequences of the pandemic may rival that of the virus itself. 

Combined, the figures from these two reports are an obvious indictment of a system which needs to be torn down.