ALB
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Looks as if the government are going to try and see off the RMT just as Thatcher did with the NUM. Could be a dangerous strategy as at least half the population are on the railway workers’ side for the obvious reason that they too want to get a wage increase to mitigate the rise in the cost of living and see the railway workers are trail-blazers.
But that other workers will follow the railwaymen’s example is precisely what the government is afraid of. That is why they are trotting out the traditional stuff about the danger of starting a wage-price spiral. That’s a scare story but if there is going to be a spiral it would be a price-wages spiral since other prices rose first.
On the radio yesterday, during interviews with the minority of workers not supporting the railway workers, more than one person said they didn’t see why the railway workers should get special treatment. A stupid argument but it is true that the railway workers shouldn’t be treated as a special case. All workers should be treated the same as them and get a wage increase of well over 2 or 3 percent.
I think you must have meant at the turn of the 19th century. Bad as conditions were in 1900 they weren’t that bad! Mind you, the Whigs, the predecessors of today’s Liberal and Labour parties, weren’t much better than the Tories from a working-class point of view. In fact in some ways were worse as the Liberals were the party of the factory owners.
It’s true that capitalism without rising prices is no utopia. From 1815 to the end of the century the price level was relatively stable. And, after a period of inflation following the end of WW1, prices were often falling in the 1920s and 30s. In fact the second Labour Government collapsed in 1931 over whether or not to reduce benefits and civil servants pay in line with falling prices.
The government might find itself out of step with people’s attitude towards the rail strike. Far from seeing it as “harming the public”, people might see it as a group of workers making a reasonable demand with a double-digit rise in consumer prices on the horizon — asking for something that they too think they should get.
Danger: Nasty Nationalists At Work. If any other state passed a blatantly discriminatory law like this against a minority group within it, liberals would be denouncing it as undemocratic. But because Ukraine is, apparently, fighting for “Western values” and even for “Good against Evil” we don’t hear a squeak from them. I suppose they might protest if these books were burnt in public.
The NATO general Secretary has just called for the Donbass to be ethnically cleansed. As what else can clearing the Russian troops out of it mean? If this happens well over a million people living there who consider themselves Russian or see Russian troops as there protectors wouldn’t stay. No wonder the Ukrainian censors have banned people saying that what is happening is even partly a civil or ethnic war.
https://www.politico.eu/article/stoltenberg-more-modern-weapons-could-free-donbas/amp/
He went to say admit that workers in the West would have to suffer the pain of a lower standard of living due to “rising energy and food prices”:
“We must not let up in supporting Ukraine, even if the costs are high, not only for military support but also because of rising energy and food prices.”
I think he could be wrong in thinking that workers will be prepared to accept this.
Here (I think the link works) are the figures on the notes and coins in circulation since 2008. It has gone up to £95,171 million since Hardy’s day and from £48,888 million in 2008.
I think it is simpler to say that the move towards a cashless society means that less money (notes and coins) is required. It would be stretching things a bit to say that it represents an increase in the velocity of circulation of existing money, even though this too would mean that less money was needed.
As an example of how the equation is used today here’s an extract from the FT in 2009 (even if the author got in wrong about QE and tumbling prices, that’ll be the day):
“MV=PT is true, but how to use it?
The equation at the heart of quantitative easing and crude monetarism is known as the “quantity theory of money” where MV = PT. M is the quantity of money, V is the speed money flows round the economy, P is the level of prices and T is the number of transactions. By definition, the equation is true, but controversy has raged over the use of this formula. If you believe V and T are stable, then control of the money supply guarantees control of inflation. Quantitative easing raises M, so if V is fixed, it will push up P or T or both.
In today’s recessionary and deflationary world, that would be a welcome result. But if banks, companies or households sit on the extra cash sending V plummeting, M may go up while P and T still tumble. History tells us V has never been sufficiently predictable to be reliable for use in policy.”I don’t know who it is from but it wasn’t Marx. It has also been expressed as MV = PT, as by Irving Fisher in the 1930s.
In Marx’s day the Quantity Theory of Money, as expounded by David Hume and David Ricardo, was not just an equation that was true by definition, but a theory that the level of prices was determined by the amount of money in circulation, so that if this was increased the result would be a rise in prices.
Marx and others rejected this theory, arguing that, on the contrary, it was PT that determined how much money was required. At the time gold was the main currency for international trade and paper money was convertible into it. If an attempt was made to put more gold in circulation this would fail as it would become more profitable to hold gold as billion than gold coins and so to convert them into it.
For Marx the Quantity Theory was valid only where there was an inconvertible paper currency (as today). In that case if the amount of money was increased the result would indeed be a rise in the general price level.
The classic quantity of money equation is:
M = P x T, divided by V
Where M is the quantity of money, P the prices to be realised, T the number of transactions, and V the velocity of circulation of money.
Mathematically, if V increases then M should decrease. What you think would happen in practice depends on whether you think the level of prices determines the amount of money in circulation (in which case money would be withdrawn from circulation) or whether you think the amount of money determines the level of prices (in which case the price level would go up).
I would have thought that today, when money is no longer convertible into gold (and so can’t be withdrawn from circulation as bullion), the effect should be to raise the price level or, rather, that the central bank would not have to issue so much new money to fulfil its remit to keep the price level rising (and money depreciating) at 2 percent a year.
According to this headline, the US has begun to undo Quantitative Easing — Quantitative Tightening — by selling the government and other bonds the Federal Reserve bought. This should have the opposite effect of bringing down the price of financial assets. What the authorities are afraid off is doing this too quickly and provoking a financial crash. They want to deflate the bubble gradually. Whether they succeed we will see.
https://www.ft.com/content/2496105a-d211-4abe-ab5d-46a91876428f
Yes, raising the price of financial assets does seem to have been the main result of QE.
Even the House of Lords came to the conclusion that it was a failure in terms of encouraging real economic activity:
I don’t think “the recent increase in inflation” will have anything to do with quantitative easing. In fact it isn’t necessarily an increase in inflation proper, ie overissuing money-tokens in relation to what the economy requires leading to a depreciation of the money-tokens and a rise in the general price level.
What it is, strictly speaking, is an increase in the Consumer Price Index. This measures the changes (usually increase) from month to month in the prices of a basket of consumer goods and services bought by the average consumer. The prices of the goods and services in the basket can go up for other reasons than a depreciation of the currency (inflation proper). For instance, due to paying demand exceeding available supply (which may be limited for supply chain problems caused by covid lockdowns and now sanctions on Russia).
It is government policy (remit to the Bank of England) to raise the price level by 2% a year. In other words, to depreciate money by that amount. This will be inflation proper (monkeying with the money supply).
The increase in the CPI above this 2% to 5, 6, 7 % and predicted double-digits by the end of the year can be put down supply chain problems. It is mostly due to the increase in energy prices for heating and fuel for cars and the repercussions of this on other prices.
If this is the case, the CPI should eventually fall back towards 2% but it looks as if this may take longer than the government and Bank of England originally expected. In the meantime workers will have to try to protect themselves from a fall in their standard of living by pressing for the price of what they sell — their ability to work — to go up. As they can be expected to do, with given the relative labour shortage with some chance of success.
Incidentally, there is a discussion on this on Discord tomorrow evening at 7.30 on the eve if TUC march and rally in London on Saturday.
I think you are right. This hasn’t been mentioned on this forum but it has on our other forum for Party members. There’s also the text there of the Better leaflet, 2000 copies of which we are distributing;
https://groups.io/g/spintcom/topic/tuc_rally_in_london_saturday/91097559?p=,,,20,0,0,0::recentpostdate/sticky,,,20,2,0,91097559,previd%3D1655119107763240517,nextid%3D1651053612948159795&previd=1655119107763240517&nextid=1651053612948159795
If you or anyone else here is interested in helping distribute them, we will be meeting at 10.30 on Portland place where the march starts and at 1 o’clock near the statue of Churchill (without the Mohican) in parliament square where there’s a rally and speeches. We will have a supply of leaflets at each place.
