Does inflation fall from heaven? (1979)

From the February 1979 issue of the Socialist Standard

People like Lord Soper tell us that the Christian Paradise will be achieved right here on earth when we get a socialist society. It seems rather a cheek that after all the thousands of years of suffering on the part of the human race, when eventually we do achieve a world fit for humans to live in, the Christian God will take the credit. If he wants any thanks from us, let him lend a hand now. If he is going to keep mum as he has done ever since humanity created him and leave it to us ordinary mortals to win our new world one day, then he can keep off the stage when the bouquets are being handed out. But there is something else. Bad news for Lord Soapbox. There ain't gonna be no paradise. Even when we have achieved socialism, people will not live forever with wings on their shoulders and little harps in their hands. 

We will still get ill and die. Children may still be born with cancer (as many are now). There will still be earthquakes and typhoons which will kill and maim people. True, socialist society will do everything possible to alleviate suffering, but we will never be immune to it.

I indulge in all this preamble because a lot of people cannot imagine a world without inflation. They seem to think it is like an act of god, some sort of primal curse which the human race must learn to live with. It is not the purpose of this article to deal with the subject from a strictly academic or economic point of view. The columns of the Socialist Standard have often featured articles showing that inflation is simply a matter of a government printing an excess of paper currency. Indeed, this seems to be so blindingly obvious as really to brook no argument. Like saying that if you walk out in the rain you’re liable to get wet. Who’s going to argue? The fact is that politicians and economists do argue and quite fiercely. One can only assume they are either dishonest or daft. (They could of course be both and often are). There was a time, and not all that long ago, when the very word inflation was more or less unknown — or restricted to such things as car tyres.

This train of thought occurred to me when reading the remarks of a Ford worker at the beginning of their strike as quoted in the Guardian on Sept. 27. Here are his words of wisdom: “I’m proud of Ford’s in Dagenham, but we’re working like peasants down there. 'Thirty years ago, I earned £6 a week and 1 was a millionaire. I could buy a new suit every other month. Now, I’m a peasant’’. Let us ignore the unfortunate attitude of a member of the working class in 1978 who is a self-confessed peasant and yet is proud of his Baron Ford. That could well be the subject of another article—or maybe a book. The thing that struck me was his claim that thirty years ago this ordinary worker could buy a suit every other month.

How can this possibly be true, you may well ask? Surely workers are not worse off now than thirty years ago? But with suits running at nearly £100 a time (£200 in places like Harrods), one suit a year is probably nearer the mark than six. But the funny thing is that our worker is probably not far out and his memory is not playing him tricks. Thirty years ago, do you know what the name was of a huge men’s tailoring chain (second only to Burtons)? Fifty Shilling Tailors. Two and a half quid in modern language. But here I am more concerned with the actual name of the firm than the fact that suits were so cheap in those days. Because there is something very striking about that name. And it is this. No firm could dream of giving themselves a name like that today. How could it tie itself to a price when its price goes up every year? It would be an absurd thing to do. Like the slogan of Woolworths in those days. “Nothing over sixpence in the store”. Two and a half pence in modern parlance.

Now the firm from which our worker had bought his suit thirty years ago had been in existence with the same name for thirty years before that. And the mental process of the capitalist who ran the business (ironically his name was Price and he became a Lord just like Wilson’s raincoat manufacturer today) was clear enough. “I am going to sell suits at fifty shillings. So it must be a fine advertising gimmick to put the fact in the name over the door”. It never even occurred to this smart and very successful capitalist that the time would come when the name would be a source of acute embarrassment and would have to be changed. You are obviously going to make a fool of your business if it is called Fifty Shilling Tailors when the price is actually fifty pounds — or a hundred pounds. So just about the time our worker is referring to, when inflation first began to be really noticed (inflation has been with us ever since World War II — though it only broke into a gallop in the last decade), they changed their name to John Collier.

So it is clear that neither capitalists nor workers gave a thought to the prospect of price rises in those days. God might send earthquakes. He never sent inflation. And oddly enough, neither did man for many generations. From the Battle of Waterloo in 1815 to the start of World War I in 1914, prices remained more or less stable. This was the first industrial country in the world. So there was nothing which said that inflation was an essential fact of capitalist life. It just didn't happen. Until governments decided to make it happen. And the very governments that do so are those with the nerve to blame it on the workers for being too greedy. They conveniently overlook that if it's greedy to want to maintain, and if possible even improve, their standard of living within the confines of capitalism then workers were always greedy. But inflation never happened. Workers in England were struggling and striking during the thirties but prices, if anything, went down.

There was of course one country where inflation hit hard and has remained a folk nightmare to this day and that was Weimar Germany in the Twenties. The awful days when workers had to take home their millions of marks on Friday in a wheelbarrow. But, of course, the workers did not print all those millions of notes. The German government did. And when it stopped printing, inflation stopped too. Which brings up another thought. When economists and politicians (and socialists too) discuss inflation, one always hears that in Germany today, inflation is not so serious. It is currently running at around 4 per cent and has never hit double figures, even at times when inflation in this country was over 20 per cent. And the reason is always given: Ah you see, the Germans have such dreadful memories of inflation between the wars. They couldn’t let such a thing happen again. And, for a change, the reason is more or less the right one. Any German government which printed notes on a scale like the British or the Italian governments have done over the last few years would be kicked out of office in quick time. The voters wouldn't stand for it. Even as things were, when Brandt was Chancellor and inflation was showing signs of going over 5 per cent, there was a joke in Germany which said that if he was Chancellor over a desert island you would soon notice the sand getting dearer. So, unlike the British government, the Germans decided to keep their inflation within strict limits. It was entirely up to them. The fact that the German workers are just as “greedy” as the British made no difference. It could not cause inflation unless the government wanted it. And, oddly enough, in another very successful capitalist country, even in these days, there is at present no inflation at all. Despite the high wages that the workers earn in Switzerland, their inflation rate is currently nil. So not only did heaven not send down inflation in the last century, it does not send it down in this century either in countries where the governments decide to solve their problems (or try to) without recourse to the printing presses.

The government in Britain (Tory and Labour alike) decided that the workers could learn to live with inflation. And of course, they are right. Capitalism goes on by and large in the same way whether there is inflation or not. It is true that it is worrying to find that every time you go shopping your wages have to stretch further. And a council flat that cost £2 a week quite recently costs £12 today. All this sort of thing is part of the hassle of capitalism which makes life full of stress and strain. Roll on the day when there won’t be high prices. Or low prices. A moneyless and — within limits — worryless society, too.

L. E. Weidberg