useful related info here saii:
http://libcom.org/library/proles-guide-recession-economics-truth-wildcat-uk
Inflation scissors
Quote:
Inflation
A means of attacking real wages (as stated by J. M. Keynes in his "General Theory..."). A common means of making the working class pay for wars, for example. It can also be a concession to the working class since it tends to keep inefficient businesses functioning - every wage slave with a grain of class consciousness knows that these are the best ones to work for! Inflation tends to undermine debts (by reducing the value of repayments) and so favours industry relative to finance capital, creating more employment so as to maintain social peace. This was why the post-war boom (a sort of productivity deal on the level of society) needed a few percent inflation per year. High inflation, then, is generally a sign that the bourgeoisie is weak since it has to buy social peace. This is why the Thatchers of this world are always going on about fighting inflation. At the G7 conference in July when they were talking about restructuring the CIS (even more!) John Major described hyperinflation as the "seedcorn for revolution".
does this not suggest two contradictory things? Inflation hammers real wages through higher prices, but inflation is also a sign of weaknesses in the capitalist economy because it is a concession to wage demands ... 
Marshall wrote:
does this not suggest two contradictory things? Inflation hammers real wages through higher prices, but inflation is also a sign of weaknesses in the capitalist economy because it is a concession to wage demands ...
I think it's saying it's a way of attacking wages when the ruling class are weaker.
Yeah I'd come across some of that before, I was mainly commenting on the seeming recent tactic of actively downplaying inflation using CPI as opposed to RPI, so as to make poor wage rises seem reasonable in this case as opposed to, as you say, using high inflation to justify wage attacks.
Seems like a change of emphasis - reasonably clever if I'm reading it right, as it makes it more difficult to demand higher wages in the face of higher inflation when the government are insisting that actually, inflation isn't all that bad and all we need is a bit of discipline to keep to the 1.8% figure.
I think that's right - it sets the bar for a pay rise matching inflation incredibly low - so even if there's a u-turn and everyone ends up with a 3-4% increase (which the unions and SWP would hail as a massive victory), it's still shit. 2x shit is shit.
Quote:
does this not suggest two contradictory things? Inflation hammers real wages through higher prices, but inflation is also a sign of weaknesses in the capitalist economy because it is a concession to wage demands ...
Yes I think it does - the Wildcat article shows how high inflation can aid manufacturing and the state (by lowering real debt) against finance capital - so it's a sign of divisions within the ruling class as well as between the working class and capital.
Catch, and John., thanks for that
I am still bewildered about inflation - voodoo economics anyone?
Been trawling through Capital Vols I-III for the chapter and verse, but not much joy for what I am specifically after, ie., what actually sets the price. It's abstract labour-time of course, but more than that. I can't quite fathom. The prices are part of the the mystical veil, it seems.
Value, Price and Profit is more useful because it is more direct, but inadequate for how the economy work now, 150 years or so on ...
Anyone any good recommendations?
[Catch -as for pissppor wage demands, I agree. Have been reading the stuff in Library on the Winter of Discontent - workers at the time were demanding 40% increases!]
CPI and RPI inflation rates are decided on the prices of a 'typical shopping basket' of around 650 items I think.
Very briefly (I think this is about right, but people can correct me):
Prices rise depending on how much money is in circulation attempting to pay for them. The amount circulating rises because banks lend out more than they have (via fractional reserve banking) and these are then paid back even more in interest by the people selling the goods produced with these loans.
The goods have to sell above their production price to pay for profits and interest repayments. The profits and interest then goes to the pockets of the rich, who effectively spend a bunch of money which never actually existed in the first place on actual goods (and investing in new productions), thus driving up competition for them and so the price of the goods, and indeed of the raw materials used to build the goods.
So, according to the latest reports, the Consumer Price Index of inflation, which the government uses to calculate the health of the economy (and entirely co-incidentally wages) has fallen to a rather less frying-panish 1.8%. Phew that's a load off innit.
However, the Retail Price Index, which is the one which includes stuff like mortgages and council tax, has gone up again to breach the 4.1%. This has led to a bit of a scissoring of the indices:
http://www.statistics.gov.uk/images/charts/19.gif
Yikes! Apparently mortgage repayments are going through the roof (in response to interest rate hikes?) is the main reason, but what's the potential outcome if this tendency continues? The government already seem to be basing their pay increases on the 1.8% figure,. so how quickly is this going to impact on living standards if pay continues to fall so far short of RPI?
Given that the bank of England has been trying to control inflation by the raising of interest rates int he first place, does this mean that what's actually happening is a shift in where the debt is going - people are taking on less new consumer debt but the same amount of money is going out due to the raised mortgages? Is this right? In which case, Aren't they simply shifting the figures around to make it look like everything's carrying on as normal while attempting to strip vast quantities of money away from workers?