The Wallstreet Journal published an opinion piece on ‘greedflation’, a newly coined term describing companies that justify price increases based on inflationary pressure, even if those pressures might be exaggerated or non-existent.  The WSJ article makes the claim that this greedflation “might” just be good for the economy, but is it good for the consumer? Let’s take a deep dive into greedflation, corporate responsibility and how technology has the potential to disrupt some of this corporate behavior.‍

The Threat of Inflation and the Rise of 'Greedflation'

Inflation poses a clear threat to the economy with rising interest rates, a 4.82% increase in the cost of goods since 2020, and a significant rise in mass layoff events. While inflationary pressure is evident, some economists argue that corporations are excessively raising prices far beyond their rising costs, hence the term "greedflation." This economic climate limits consumer buying power and choice.

For instance, four companies control 85% of the protein industry, two giants dominate the soft drink industry, and a single corporation dictates the nation's seed corn price. This industry consolidation strengthens corporations' ability to establish and maintain price hikes, leaving consumers with limited alternatives to counter these increases.

The Power of Corporations and Their Societal Accountability

It feels as if the accountability of a corporation to society is inversely related to its power. We have witnessed industry leaders consolidate power via strategic purchases or forcing smaller competitors out of business at a pace unlike any other time in history. As their power grows, their social responsibility dwindles. Which I believe makes them less accountable to society and their customers. Which begs the question, does a corporation have social responsibility?

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This question gained popularity in the 1960s and 1970s, exploring the role of a corporation’s broader ethical obligations beyond profit taking, examining areas such as environmental sustainability, labor and human rights, and ethical business practices. Most Fortune 500 companies have created sustainability departments and invest significant sums in advertising campaigns to showcase their positive, societal contributions. However, the main measure of success for these corporations, right or wrong, has been their stock price, which has been their guiding light for the past 30 years. Why make changes if these companies can raise prices, maximize profits, perform mass layoffs, and still watch their stock price climb?

Inflation is a multi-layered, complex economic phenomenon created and reinforced by a multitude of factors. I don’t think anyone would argue that the dollar has less purchasing power today than it did a few years ago, but is Greedflation to blame? Yes and no. In the past four years, we’ve experienced increased interest rates that outpace wage growth, a bank liquidity crisis, huge injections of cash by the US government during the Covid crisis, supply chain issues and the devaluation of the dollar. These factors impact inflation to varying degrees, so I personally do not believe greedflation is solely to blame. However, while the Federal Reserve and the US government try to put out the inflation fire, large corporations’ greedflationary behavior adds fuel to the pyre, perpetuating the upward inflationary momentum. And they will continue to do so until it no longer makes financial sense to do so.

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How Technology Can Disrupt 'Greedflation' and Promote Corporate Responsibility

So how does technology fit into this discussion, and why was I invited to discuss greedflation on Hive’s blog? I believe decentralized autonomous organizations (DAOs) have the potential to disrupt the bad behaviors that lead to greedflation, by giving the average consumer a choice in how companies behave.

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Imagine voting on which type of recyclable bottle PepsiCo uses or voting for United Airlines to be carbon neutral by 2025. The younger generations appear to be more motived than the last generation by sustainability, human rights, and inclusivity. They are the early adopters of Web3 and DAO technologies, and if the industry leaders do not adapt quickly, their stock prices will reflect that.

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I believe Hive’s vision for a DAO Credit Union will change the way consumers view and interact with banks. I believe in their potential to be an industry leader that lays the foundation for other industries to follow, so that power can return to the consumer, and we can actively promote social responsibility. I plan on being one of the first bees in the Hive.

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