The Problem of High Prices

The present is a period of high prices. Workers and merchants alike are grumbling and wondering at this troublesome phenomenon. The workers are in a state of half-conscious rebellion ; strikes are frequent; attempts are made to bring wages up to the standard of the new prices of commodities. Merchants are receiving stereotyped letters all telling a like story: “Owing to the high cost of raw materials and fuel, and the increase of wages and salaries, the National Insurance Act, etc., etc., we are reluctantly compelled to raise our prices ten per cent.”

Though a wholesale or retail merchant is well aware of the difficulty of getting enhanced prices, yet they jump to the conclusion that the manufacturer is raising prices simply because of his wicked individual craving to do so, in order to meet new expenses, etc. This we know to be absurd ; but what of capitalist combines? what of associations and selling agreements betwixt rings of ambitious exploiters ? Have these associations the power to do what economists say a number of competitors are powerless to do ? Are the admitted effects of supply and demand upon prices cancelled when capitalists form’ combines and “artificially” attempt to raise prices ?

A trust may raise prices so extravagantly that another article is substituted. For instance, in normal times there can be no fancy price for coal: oil and electricity are ever feared by our coal barons.

Mr. Chiozza Money thinks that an important cause of present high prices is the increasing scarcity of tin, copper, and other metals. But even if a metal such as tin is scarce ; even if it is scarce and a monopoly, there are obvious limits to prices—even to prices based upon a monopolist’s desires. If tin were to reach a much higher price it is probable that it would be rendered obsolete for domestic and other uses by aluminium ware, for the exploiters of a new article are ever on the watch ready to seize a new market.

But it is probable that laws operating under a regime of competition are cancelled under monopoly. If a coterie of capitalists can control the output in any trade, it would seem as if, within certain limits, they can raise prices. Now especially, when “trade is good,” can prices be easily raised in well-organised trades; arrangements to raise prices have even been successful over periods of very slack trade. To the writer’s knowledge, amongst other things, wire fencing and cast iron holloware, articles subject to open competition and which anyone could manufacture, have been price-maintained for years by a compact between capitalists which covered the whole trade. Better known instances are oil, screws, wallpaper, cotton thread, linoleum, tobacco, etc. The predominance of propropeietary articles. price maintenance schemes, capitalist pools, and other such factors, are causing people to ask the question whether the influence on prices of supply and demand is not being modified by that “capitalist will” which economists once thought had so little influence. This issue is then raised : That if the profits in any trade rise above the average profit in all trades, then new capital is attracted to the super-profitable trade. Competition thus becomes more keen and profits tend down again to the normal. Is it not possible, however, for a newcomer in a trade that is protected by arranged prices, to be met with overtures and blandishments if he joins in the price scheme, and threatened with “price cutting” if he remains obdurate ? Such a line of action would certainly not be novel.

The laws operating under competition are likely to be altered under monopoly, and even if the desires of capitalists have not unfettered scope, yet by plotting and using discretion it would seem as if they can obtain good financial results by arrangements amongst themselves, and can influence prices to a greater extpnt than was thought possible by economists.

Karl Marx and capitalist economists agreed in seeing a connection between cheap gold and high prices. Mr. McCulloch said :

“It has been contended, by Mr. Locke and others, that the value of the precious metals is imaginary, or that it depends on the consent of the nations who have adopted them, to serve as a circulating medium. . . . Gold is not more valuable than iron, or lead, or tin, because of its greater brilliancy, durability, or ductility ; but simply because an infinitely greater outlay of capital and labour is required to produce a given quantity of gold than is required to produce the same quantity of either of these metals. … It is sufficiently well known that those who employ their capitals in the working of gold or silver mines do not, upon the average, obtain any greater returns than those who are engaged in raising of coals or the manufacture of bricks. The production of the precious metals is not subjected to any species of monopoly or restraint. All individuals at their pleasure may employ capital in the extraction of bullion from the mines ; and there is no conceivable limit to the extent to which its supply may be increased.”

To all this (save the babble of “capital and labour”) a Socialist can subscribe.

Marx, in his monograph on ” Wage Labour and Capital,” says :

“In the sixteenth century the gold and silver in circulation in Europe was augmented in consequence of the discovery of America. The value of gold and silver fell, therefore, in proportion to other commodities. The labourers recei\red for their labour the same amount of silver coin as before. The money price of their labour remained the same, and yet their wages had fallen, for in exchange for the same sum of silver they obtained a smaller quantity of other commodities.”

According to “Whitaker’s Almanack” the production of gold for the whole world since 1901 has taken the following course: In 1901 £54,000,000 ; in 1904, £69,000,000; in 1907, £85,000,000 ; in 1910, £95,000,000. And with the increasing quantities there have been discovered improved methods of treating the ore which lower the cost of production and renders the gold cheaper.

The two factors dealt with—cheaper gold and capitalist co-operation—would appear to account for the upward tendency of prices. Anyone hoping to benefit the workers by an attack on these two things is a reformer. They are effects of the capitalist system and only the destruction of capitalism will check such anti-social growths. There are the trade unions, struggling despairingly to keep wages on the track of advancing prices ; there are currency cranks with financial fads for social salvation. Well, the progress of the Socialist movement may seem slow to those in the thick of the fight, but our progress is lightning-like compared with the injuries in flicted upon capitalism by such puny fighters. The effects of capitalism upon prices, the commodity quality of price will only cease when capitalism bites the dust.


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