Inflation and the World

The application of Keynesian techniques by bourgeois governments.to keep their economies on an even keel is a major source of inflation at the best of times. The recent world-wide trade - recession has merely exacerbated this inherent trend. ~ One of the reasons why there has been a high level of employment maintained in advanced capitalist countries for most of the time since the Second World War, is the extensive amount of state expenditure on armaments, social welfare programmes, motorway construction, etc. A fairly significant sector of the working class has beén engaged in this ty pe of employment which does not produce commodities . for the open market; armaments is an obvious example. The purchasing power of the population has therefore been increased without a proportionate increase in the amount of consumer goods put on the market to meet the demands of this excess purchasing power. Under these circumstances price rises, inflation are bound to occur.

Because public expenditure in the major — capitalist states accounts for 12 to 20% of the gross national product we can see immediately why inflation is inevitable even in the most stable conditions.

RECESSION I stated earlier that trade recessions intensified the growth of inflation. Why is this so? During the course of any generalised recession, workers are made redundant, and the manufacture of industrial products drops. But because of the vast amount of public expenditure the falling off in the purchasing power of the working class does not occur in sympathy with ‘the decrease in the production of goods. The number of consumer goods for sale is thus being chased by a relatively higher level of money still in circulation. As we noted before this situation naturally leads to price increases to absorb the excess purchasing capacity. But the methods employed to fight recessions by modern governments give’ a further boost to the inflationary spiral.

Since 1945 cyclical down-turns in production have not developed to such a thorough going crisis as was experienced in 1929 because the bourgeoisie have consciously combatted recessions by an increase in public expenditure. More money is pumped into the economy and after a while the economy revives in response . to increased demand. But though the crisis has been prevented from culminating into a pre-war style depression the injection of state funds into the system gives inflation a shot in the Capitalism i is faced with the choice of either depression or inflation, it cannot sidestep the crisis without falling into the frying pan of inflation.

The international character of inflation is merely indicative of the international character of the recession which started in 1969, Inflation world market, but the present aod marked could be tolerated if there was an expanding by an intense trade war which is developing between the various rival capitalist countries. America’s pretensions to being the dominant trading power in the world are being challenged by Japan, Western Germany and the other European states. Inflation for all these countries is bad because it tends to price their exports out of the world market.

REAL WAGES To hold down prices it is necessary to cut back the working class’s real wages and increase the rate of profit. Virtually all the main industrial countries have witnessed attempts by their respective bourgeoisies to reduce the real wages of their proletariats. The means to achieve this end are many. and varied. All the states have seen combinations of the following tactics: deliberately fostered unemployment, wage freezes, prices and incomes policies, productivity deals, state legislation on industrial relations, integration of trade union bureaucracies into the state structure, rationalisations and redundancies. The fact that these methods are common to many couniries is a clear pointer to the international nature of the crisis of capitalism.

The general boom that preceded the 1969 down-turn has not passed us by without having any effect on the working class. The long periods of full employment enabled strong trade union structures to be established. This, coupled with the fact that none of these working class movements have suffered a serious defeat since the war, makes it. very unlikely.that they will allow their living standards to be eroded without a hard feught struggle.

The long-term slow-down in the growth of world trade will continue in the 1970's (any boom that occurs in the immediate future will be short lived) and this means an intensification of the inter-imperialist trade war, attacks on the living conditions and organisations of the working class and extremely explosive confrontations between the bourgeoisie and theby increasing the doses of inflation. The word - inflation is likely to remain in popular usage for some considerable time yet.

The Plough June 1973 Page 7

The last few weeks have seen an upsurge of interest and attention paid to the whole position of women, economically, politically and socially, in Ireland. the Status of Women ~__ACTION COR! ATtOW

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Inflation is as much a part of the modern capitalist system as maggots are to bad meat. .

proletariat. Future recessions will only be dampened down