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Last year, Andrew Bailey, the Governor of the Bank of England, called on workers to exercise self-restraint over wage demands so as not to cause inflation to get established. Last week he called on businesses to exercise self-restraint on price increases for the same reason.
Neither workers nor businesses are taking any notice. In today’s Times, it’s Financial Editor, Patrick Hosking, explains why business won’t be any more than workers:
“Surely, when first introduced to an economics textbook, Bailey learnt that firms are not driven by altruism or patriotism but by market forces and profit? They will charge what the market will bear (…) While modern-day corporations have to consider many stakeholders, they still see their primary duty over the long run to maximise profits for the shareholders.”
There you have it.
Explaining what “charge what the market will bear” means, Hoskins adds:
“Until businesses see more capitulation by their customers, the price escalation will go on. Business will stop lifting their prices only if enough customers defect to competitors, trade down to cheaper lines or find near-substitutes. Or stop buying at all. For the poorest households, this has happened already.”
Nice system capitalism, isn’t it?
I thought I’d check what Professor Richard Werner, the leading academic currency crank (in fact the only one), had to say about the failure of Silicon Valley Bank.
He has claimed to have found evidence that an individual bank on its own can create money ‘out of nothing’:
https://www.sciencedirect.com/science/article/pii/S1057521914001070
In an article on his blog on 16 March he argues that banks should not be allowed to fail because they create most of the money needed to keep the economy going. He seems to think that banks have two quite different and unrelated functions. To act as a safety deposit box, keeping safe money that people don’t want to use for the time being, and to create new money. Apparently, for him, the two are unconnected.
His blog item doesn’t address the question of why, if individual banks can simply create money ‘out of nothing’, they don’t create some, when they are in financial difficulty, to stop them going bankrupt; in fact, why they need depositors at all:
You’d think that, given what has just happened to SVB and Credit Suisse, those like him who argue that a bank doesn’t need depositors (whether individuals, companies, or other financial institutions) to be able to lend money would crawl away and hide in some dark corner. Unfortunately they won’t but will continue to point critics of the effects of the present economic system in the wrong direction.
I am not the moderator but this thread has become completely toxic descending into an exchange of insults that is a discredit to our website. I expect I am breaking the rules myself in posting this but Rule 7 of the Forum’s Rules is being consistently infringed by both sides.
7. You are free to express your views candidly and forcefully provided you remain civil. Do not use the forums to send abuse, threats, personal insults or attacks, or purposely inflammatory remarks (trolling). Do not respond to such messages.
I don’t think anyone here has suggested that people shouldn’t accept the government handouts. Our view is yes, grab them but don’t jump for joy and say “thank you” like you do. The government is only handing back a little of what the capitalist class stole from the working class in the first place.
Clever answer except that Marx didn’t call the “first phase” of communist society “socialism” as a distinct from “communism”. He called it just that “the first phase of communist society”, ie of the same society. It was Lenin who called it “socialism” (and confused it with state capitalism) and of course we are not Leninists. But at least Beck conceded that it wasn’t socialism as what Marx called “the highest phase of communist society”.
Our reply to Beck would be, in Venezuela it’s not the first phase of communist society either, as that, like the higher phase, is based in the common ownership of the means of life, with production solely for use — which of course is and was not the case in Venezuela, where there’s still production for sale, money, wages, etc.
Good news! The SNP seems to be in melt-down. Maybe we’ll now hear less of that irrelevant distraction of a separate Scottish capitalist state they say is their ultimate aim (while being a common or garden reformist party in the meantime).
More “democracy” in operation in Ukraine:
Easy, use your parliamentary majority to kick out opposition MPs.
Managed to access that article by another route and what it says about Marx is not bad:
“Throughout his work, Marx emphasized the revolutionary character of capitalism in its relation to existing social arrangements. It annihilates the “old social organization” that fetters and keeps down “the new forces and new passions” that spring up in the “bosom of society.” It decomposes the old society from “top to bottom.” It “drives beyond national barriers and prejudices” as well as “all traditional, confined, complacent, encrusted satisfactions of present needs, and reproduction of old ways of life.”
Or, as Marx observed in one of his most famous passages, the “bourgeois epoch” is distinguished by the “uninterrupted disturbance of all social conditions.” Under capitalism, “All that is solid melts into air, all that is holy is profaned, and man is at least compelled to face with sober senses his real conditions of life, and his relations with his kind.”
In context, Marx is writing about precapitalist social and economic arrangements, like feudalism. But I think you can understand this dynamic as a general tendency under capitalism as well. The interests and demands of capital are sometimes in sync with traditional hierarchies. There are even two competing impulses within the larger system: a drive to dissolve and erode the barriers between wage earners until they form a single, undifferentiated mass and a drive to preserve and reinforce those same barriers to divide workers and stymie the development of class consciousness on their part.” (my emphasis).This echoes any discussions about feminism, gay liberation, etc with some arguing that these are challenges to capitalism and so have a revolutionary potential. But it is clear that they are quite compatible with capitalism and even accord with its logic of only being interested in labour-power as such and not with the particular characteristics of its bearer, ie its drive “to dissolve and erode the barriers between wage earners until they form a single, undifferentiated mass.”
”Woke capitalism” is what you would expect. The likes of DeSantis are just backwoodsmen tilting at windmills.
Pity that New York Times is not on open access. The title suggesting DeSantis should read Karl Marx is intriguing. What does the article say?
Talk about counting your chickens before they’ve hatched. Normally victor’s justice is only administered after victory, but the International Court of Clowns has jumped the gun, besides ignoring similar war crimes committed by the Ukraine regime. What hypocrites.
MMT theorists don’t say that individual banks can make money out of thin air.
They share the mainstream academic view that only the whole banking system centred on the government Central Bank can do this. In a sense this is true as the monetary authorities can issue as much money-tokens as they want. The trouble is that, if they overdo it, this will lead to a depreciation of the currency and so to a rise in the general price level. No new wealth will be created (only the application of human labour to materials that originally came from nature can do that). All that happens is that the price of already-existing wealth goes up. What these days is called “inflation”.
MMT say that this is not much of danger, at least not below the full employment (of resources as well as workers) level. It’s a new version (with a different theoretical justification) of the Keynesian view that a government can spend its way out of a slump. Which of course has been tried — and failed. So you could say that the policy has been tried even if not as such.
If applied again, the result is likely to be no more than a short-lived boost to production. The longer term result would be a rise in the general price level (“inflation”) like that that occurred in the 1970s. Stagnation + Inflation, or Stagflation.
The result wouldn’t be so bad as if the currency crank theory about banks causing problems by creating too much money out of thin air was to be implemented. Artificially limiting the amount of loans that a bank can make when it has the money to make them would provoke a financial crisis and slump because it would restrict business investment, the driver of the capitalist economy. It would be impeding banks’ role as financial intermediaries between those with money to lend and those who want to borrow money.
I wonder how they would treat an objector who invoked socialist reasons for not wanting to be called up:
Interesting though.
The authorities in Ukraine have adopted a different approach:
