Technology to blame?
In his book advocating Green Party politics It Doesn't Have To Be Like This reviewed in last month's Socialist Standard David Icke writes:
"It is technology that took people off the land into the mills and the mass production factories. It is technology that has ravaged the countryside by creating the new farming methods. Technology has dictated how people live, where they live, where they work, whether they work, what they produce, how they produce it. and almost everything we do and buy . . . We must tame this technological monster and not just sit there passively allowing it to control us” (p. 36).Replace, in the above quotation, the word technology with capitalism and it begins to make some sense. No, the system is not shaped by the techniques of production, but by the relationships of production, by how society is organised to produce wealth. The society that used the scythe in the 19th century and the one that uses the combine harvester today only differ in the techniques, not in the relationships, of production. The existence of destructive technology is no more the cause of environmental destruction than the existence of the weapons of war is the cause of war.
The system is much more than “a form of economic thinking that sees the profit figure at the bottom of the balance sheet every year as the only measurement of success. Keeping the shareholders happy by increasing profits by the biggest margin possible is its only aim in life" (p. 15)— though that is certainly part of it.
"Keeping the shareholders happy" is not simply "a form of economic thinking", but an economic fact of life today: as legal owners of property, of the means of production in the form of capital, the shareholders are also the possessors of economic and social power—class power
It is of the utmost importance to the cause of saving our world that people are made aware of the issues facing them and of what they have to do: to wrest power from all those who own and control the industries responsible for all the devastation. This demands a political will and understanding that goes far beyond simply voting for a political party, however dedicated. Political power not supported by a majority determined that the means of production become common property would be impotent. If the means of wealth production were common property the impetus, the driving force, towards destroying the planet would have been destroyed.
In the article "Inflation: the Endless Farce" (April Socialist Standard) you seem to have moved away from previous suggestions that inflation is a deliberate revenue-raising exercise by those elements in the government who control the currency issue. You point out that "in the current year the £800 million from additional notes in circulation is less than one-half of one percent of government expenditure of £181,000 million". However, surely, there are very powerful political and economic reasons for governments (particularly those of the monetarist type) to reduce deficits or even (as I believe the Thatcher government is doing) to run a budget surplus? When this £800 million is viewed as a component of a budget deficit or surplus then it becomes a very significant figure indeed, particularly when the government is using this surplus to repay debt.
Another argument tending to support the idea that inflation is deliberate is that post-war governments have never accidentally under-issued currency thereby sparking across-the-board price falls.
Here in New Zealand the hard-line monetarist Labour government is boasting that its high interest policies are "squeezing inflation out of the system" and indeed price rises are increasing at a lower rate than in recent years (currently around 7 per cent). However would the Socialist Party not agree that a high interest regime merely tends to suppress demand and does not affect currency inflation in any way? I believe that when demand returns the inflation will quickly manifest itself as rapid price rises. As far as I can work out what "monetarism" really is all about, to put it fairly crudely, is the domination of financial capital (lenders) over industrial capital (borrowers).
In New Zealand the government delivers currency into the economy from the Reserve bank through the trading banks. In Britain I believe the job is done via the Bank of England through the joint-stock banks. Could you explain the mechanism of how this extra currency is pumped into the banking system?
Finally the question of the reason for inflation would seem to come down to the proposition that either the ignorance and confusion that pervades the economics profession goes all the way to the top or else there is a deliberate policy of high financial fraud which governments have carried out and consciously masked with lies and confusion.
Inflation cannot be described as "a deliberate revenue-raising exercise by those elements in the government who control the currency issue". In the first place it is inflation which sends prices up and therefore increases government expenditure. It can give little pleasure to the government, having through inflation increased its own expenditure by a large amount, to know that it will receive a small amount of additional revenue by printing the notes. Between 1987 and 1988 British government expenditure went up by £6,900 million because of inflation All it got back by printing more notes was £1.740 million. If they halted inflation they would not receive the £1,740 million but they would be saved having to spend the additional £6,900 million.
Budget surpluses and deficits have nothing to do with inflation, and reducing the national debt is not nowadays a serious issue in British politics. Under the previous Labour government the national debt was largely increased. Since 1979 the Tones have increased it by another £100,000 million. Two years ago the revenue was unexpectedly buoyant and the government decided to aim at a balanced budget and even some repayment of the National Debt. They have repaid some £15.000 million. but surpluses are now running down There is not the slightest chance that the government will repay the rest of the £100,000 million they have added to the debt.
The British Tory government, like the New Zealand Labour government, believes that high interest rates reduce demand and therefore limit price rises. In March 1984 the bank minimum lending rate was 8 percent Since then it has risen to the present 15 percent. So prices ought to have stopped rising. Actually they have gone up by 43 percent since March 1984 and are now rising faster than they were then. Since higher interest rates increase the income of the lenders by exactly the same amount as they reduce the spending power of borrowers, why should demand be affected?
There is no way in Britain that the currency could "accidentally" be under-issued because, since 1938. there has been no limit at all on the amount of notes and coin in circulation, either by law or by Treasury instruction. The Bank of England's declared policy is to issue currency “as required by its customers". Nominally Parliament has control because every two years a paper about currency is "laid before Parliament" but no action is ever taken to restrict the permitted amount and usually it is not even debated.
The way additional currency gets into circulation is Britain is described by Professor Parish:
In some countries it [the government] might simply print more notes and use them to pay for its expenditure. Nowadays, in a country such as Great Britain, the government would borrow from the banks, printing more notes to enable the banks to maintain their cash reserves. (See Benham's Economics, p. 465).The proceeds of the additional notes are of course credited to the government's account.