Cost of living crisis

April 2024 Forums General discussion Cost of living crisis

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    Energy bills to drop £440 a year
    according to new price cap forecast.

    Read on …

      according to analysts at Cornwall Insight which has built a reputation of accurately predicting energy price levels.

      That is due to the Government’s Energy Price Guarantee, which sees the [Government] pick up some of the tab for consumer gas and electricity bills.

    But horror …

      Cornwall Insight thinks energy bills could then start to rise slightly later this year.

    No worries …

    Government mules love to courier Government money to private corporations.

    For mules, couriering Government money to its intended recipient is the height of “social welfare”.

    And willing mules are correct …

    Class welfare for private corporations is the gold-standard of social welfare in the Thatcherite “only game in town”.

      Thank you for choosing me,

      Your money gratefully couriered,



    The article on inflation by Michael Roberts in the latest Weekly Worker makes no mention of an excess issue of notes and coins as the explanation for inflation. Paul Mattick was of the same opinion.
    The SPGB account looks like that put forward by Ricardo and JS Mill, both dismissed by Marx.


    “The article on inflation by Michael Roberts in the latest Weekly Worker makes no mention of an excess issue of notes and coins as the explanation for inflation. Paul Mattick was of the same opinion. The SPGB account looks like that put forward by Ricardo and JS Mill, both dismissed by Marx.”

    I quote:

    “But in any event none of these could explain a general rise in the prices of all commodities. What could cause such a rise? Only, it will be argued here, some change in the standard of price, some monetary change. A general rise in prices, or inflation in its strict sense, is a purely monetary phenomenon. Marx was amongst those who recognised this.”

    The Marxian Theory of Inflation


    If the paper money is in excess, if there is more of it than represents the amount of gold coins of like denomination which could actually be current, it will (apart from the danger of falling into general disrepute) represent only that quantity of gold, which, in accordance with the laws of circulation of commodities, is really required and is alone capable of being represented by paper. If the quantity of paper money issued is, for instance, double what it ought to be, then in actual fact one pound has become the money name of about one-eighth of an ounce of gold instead of about one-quarter of an ounce. The effect is the same as if an alteration had taken place in the function of gold as a standard of prices. The values previously expressed by the price £1 will now be expressed by the price £2.(Capital Vol. I, page 108 in Allen & Unwin edn.)

    Long experience has shown that Marx was right. Whenever inconvertible paper money has been issued in excess for a considerable period it has raised prices above what they would otherwise be.


    Here’s his article:

    Roberts is using the word “inflation” as the equivalent of “rise in the consumer prices index”. This can rise for other reasons than the overissue of an inconvertible paper currency and in fact the current rise in this index has largely been due to other factors (energy price shock, supply chain problems). He is right that fiddling with the bank rate won’t counter these particular price rises.

    Anyway, what was the theory put forward by Ricardo and Mill?


    That Wikipedia entry says that

    “the ‘bullion controversy’ gave him fame in the economic community for his theory on inflation in 19th-century England. This theory became known as monetarism, the theory that excess currency leads to inflation.”

    I thought that entries in Wikipedia were checked and double checked. Apparently not in this case. Ricardo had nothing to say about inflation in 19th century England. First, he died in 1823. Second, there was no inflation in 19th century Britain:

    “From the end of the Napoleonic Wars in 1815 until the start of World War II in 1914, there was no inflation in most countries, and in many cases, prices were lower in 1914 than they had been in 1815. Prices fluctuated up and down from one decade to the next, but overall, prices remained stable.”

    The reason was that during this period Britain had a paper currency that was convertible on demand into a fixed quantity of gold. This convertibility had been suspended during the Napoleonic wars and Ricardo was one of those in favour of its reintroduction (which happened in 1821) as a way of avoiding the inflation that had occurred during the Napoleonic Wars when there was no such convertibility.


    Merely going on Marx’s comments in volume three on the monetary theories of both men. Mill, it appears, was deeply suspicious of the pound note. Always rather liked them myself.
    Roberts seems to confuse a (temporary?) rise in prices due to ‘the restriction of supply, both in production and transportation’, something that goes on all the time in capitalism, (and which governments have little or no control over) with an annual rise in the general price level due to a government depreciating the currency. Two different things.
    The SPGB argument is spot on.


    The only correct argument about inflation is the one supported by the SPGB/ WSM .


    It is Engels who comments on the ideas of Ricardo and Mill. Beginning of chapter 34 and page 680 of the Pengiun addition.
    What they say is very much like the SPGB understanding of inflation, and Engels rubbishes it.
    The SPGB argument is woefully wrong, wrong, wrong!


    Yes , I noticed too that Engels had cobbled together that chapter and added quite a bit himself. He and Marx were criticising the Quantity Theory of Money as put forward by Ricardo that says that the level of prices depends on the amount of money put into circulation. Which does seem to contradict what Marx says elsewhere.

    But there is no contradiction. Ricardo was arguing that this applies when there is a currency composed of gold and paper notes convertible on demand into a fixed amount of gold. Marx (and others) challenged this theory arguing that, with a convertible paper currency circulating alongside gold, it’s the other way round — that the amount of money in circulation depends on the number of prices to be realised; if too many convertible bank notes were issued this would not cause inflation as the notes would simply return to the bank that issued them.

    With an inconvertible paper currency (as now), on the other hand, the quantity theory does apply, as Marx explained in the passage quoted by Lizzie.


    If anyone wants to go into more detail of the point Marx and Engels were making in that chapter there is this article from 1983. It also explains the controversy in the 19th century between the Currency School (based on Ricardo) and its opponents, the Banking School (who Marx thought got the better of the argument). It all very much an academic question now of course.

    Marx’s Financial Articles


    It is the same argument made by the Marxist Humanist on Engels, they have said that the only valid capital version is the French edition because Marx supervised it, and that Engels edition is questionable, everything that Engels put his hands is wrong, but they do not question Lenin distortions of Marx, on the contrary, he became a socialist when he was reading Hegel, and I think that Marx abandoned dialectic. Marx daughter asked Engels to compile volume 2 and volume 3,

    I have read the best edition which is Grijalbo, Siglo XXI and FCE and they had said that the French edition is incomplete, and those translations were made by people who knew German pretty well and they had made many translations of the work of Marx.

    I stick my gun with Engels, and without him many of the works of Marx would have not been known and I think that the SPGB argument on inflation and monetary theory is totally correct. The article published by Adam does clarify the situation in a very detailed manner. Engels did not make any alterations of Marx works.

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