Inflation (1947)

From the April 1947 issue of the Socialist Standard

There is a lot of talk by Labour Ministers and others about the possibility of inflation and it may be well if we have some inkling of what to expect in this connection.

The money in circulation has been increased without a corresponding increase in the quantity of goods placed upon the market. Lord Teviot, in an article in the “Recorder” last year, struck an alarmist note.

“Mr. Dalton has reduced public expenditure by 30 per cent., tax reductions amount to only 10 per cent. Civil Service expenditure has increased from £550 million to £2,000 million, i.e., by 300 per cent.

“The continued shortage of consumer goods is reducing the velocity of money in circulation, and there is almost a complete absence of investment for the purpose of capital development or the purpose of capital equipment Mr. Dalton is endeavouring to draw off the unspendable surplus possessed by the public by the stimulation of National Savings, thus creating a capital accumulation not for industrial expansion nor for the production of consumer goods but for the financing of administrative projects. Thus money is used in large quantities for no productive purpose whatever. The control of investment is already leading to the inflation of share values in the stock market. When the time comes to redeem loans, where is the money to come from? It cannot come from a stagnant [industry under-producing and under-equipped. It can only come from increasing the fiduciary issue. This increase will be dictated not by policy but by need and at that moment which is not far distant we shall be in the grip of uncontrolled inflation.” (June 29th, 1946.)

There is something in what he says, but methinks he goes too far, and anyhow we are only interested in the matter from a Socialist standpoint. Capitalists' worries are not our problems except as their struggles reveal more and more clearly that the barrier of capital must be removed before the world becomes a place fit for human habitation. Capital is the power that exploits. In the hands of the Capitalist the means of production function as the means of exploitation. The “money trick” enables our masters to conceal the method of obtaining profit by the employment of wage labour. There is only one way at present for the Capitalist class to prevent inflation and that is to intensify the exploitation of the worker, who must be cajoled or tricked into producing more for less. The worker’s real wages must be made relatively smaller without him getting wise to how it is being done.

He is ready to strike, in spite of the efforts of most trade union leaders to keep him on the job, whenever he realises that prices have risen, and his money wages have remained stationary.

His exploiters, supported by the ‘‘Labour” Government, want him to get down to it, to put his back into it, but he fails to respond wholeheartedly,, and the difficulty of applying pressure is apparent when the unemployed have not yet reached the number that enables the wages of those working to be kept down to that low level suitable to Capitalist interests.

Oscar Hobson stated the problem of the capitalists in the News Chronicle (July 6th, 1946).

“The suppressed inflationary potential can only be overcome by increased willingness to save. The hope of a return to a free economy depends upon a reconversion of the national psychology.

“Meanwhile the main current danger lies in the acceleration of the wages spiral which is calculated to increase both active inflation and the suppressed inflationary potential, and against which the ordinary controls are powerless."

The working class are no longer as patient as they were, they are becoming more difficult to deal with and if capital is to be served something drastic may be attempted and we hope resented.

The change-over from the production of war material to the production of consumption goods has taken place here more smoothly than was expected, the Capitalist class have to thank the present Government for this. The working class have stood more from the Labour Party than they would have from the Tories, but the mask is slipping off.

Wealth is not produced in a bank or in the mint, and certainly not in the halls of legislation. It comes into being at one place only, and that is where work is done. All exchange values are the result of labour being applied to the natural resources of the earth.

The paper currency now in circulation gives those who possess it a claim on what the workers produce.

The claims have been printed in too great a quantity and the result is a rise in prices because production has not increased so rapidly as the claims made upon it If the workers obtain higher wages by strikes, etc. more claims may be printed and! if production is not increased prices go up again and so on indefinitely.

Some of the Capitalists fear inflation, they call upon the workers to work harder to save, etc., but one thing they never do and that is to work themselves. The exploiter is not a producer. He claims the right to consume and succeeded in getting a really good living, even in war time, at the wage slaves' expense. His one object is to prevent his victims finding out how he really does it. Our object is the opposite, for we are workers ourselves. The class struggle cannot he exorcised by a Labour Government, it is a fact that no power at the disposal of capital can eliminate.

Let our rulers deal with problems of the present system, we refuse to help them. We are with our class, we are glad to see them kicking and we hope they will continue to do so until a consciousness of what causes the conflict between Capital and Labour enables them to see the necessity of joining with us to put an end to it.

The implements of Labour must not be allowed to remain in the category of Capital.

The people must own in common all those things upon which they in common depend, so that wealth may in future be produced for the use, benefit, and the enjoyment of mankind.

Charles Lestor