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System in Crisis: Inflation

By VVAW

Unless you're rich, you can't ignore it. You can't hide from it. In some way, it affects everyone in the country and is rampant throughout the "free world." Its name is INFLATION and it has people scared stiff. Simple, it means that you dollar buys less, and right now, in the U.S., the rate of inflation is 12% per year.

The economists, who work out the economic theories which the U.S. government uses, expect a little inflation. They say that a healthy, expanding economy with many buyers waiting to purchase goods and services should have a little inflation. But there's a joker in the situation today -- the economy isn't growing. The total amount of goods and services, the Gross National Product, is falling, not rising. And when this happens, we have recession; when it keeps on happening, we have a depression. Recession and inflation, according to these theories, can't happen at the same time.

However, the economists ought to talk to the GM worker who has recently been laid off, and who is trying to get by on his unemployment checks. He sees that there is a recession -- GM cut back and laid him off, he can't find other jobs because no one is hiring; and he knows there is inflation -- his check just doesn't buy as much food for his family as it would have bought a year ago. And he is just one of hundreds of thousands of American workers facing the same situation. If he tries to get a bank loan to get him through, he finds interest rates so high that even if the bank would loan him the money (which it won't because he's unemployed) he couldn't afford to pay it back.

What has happened to all the theories which have worked in the past? Big business always operates on one basic principle: maximize profits. For years, the government has assisted in this project by pumping money into the system (the government has a number of methods of adding money to the economy, the easiest of which is simply to crank up the government printing presses). That worked fine -- so long as inflation was kept at a low level, and so long as corporations could turn to the developing countries for cheap labor, cheap raw materials, and markets for finished products. But two things happened: first, was the War in Vietnam. The U.S. government couldn't increase taxes to pay for the war -- the American people were already opposed to the war, and increased war taxes would have been the final straw -- so it had to increase the amount of money it pumped into the system. Secondly, people around the world have been winning in their fight against the exploitation of U.S. business, making it much more difficult to continue to rip off the people and material overseas.

Now, the government is in a bind. It has two choices: it can continue to pump in funds. This will increase inflation, make the value of the dollar fall still further. The American people have already begun to show that they will stand for only a little more of this kind of bloated economy. Or, the government can let the recession (which has already got a good start) keep going; it can let unemployment continue to grow, it can ask the American people to sacrifice. The danger to the government is that a recession won't stop -- a full scale depression will develop, and the people will not stand for that solution, either.

Both inflation and recession hurt the same people -- people whose incomes cannot keep pace with the rising prices; and people -- particularly third world people -- who will be the first to lose their jobs if the recession continues to creep along. Always keeping the highest possible profits in mind, the owners of the corporations try to put the burden on the worker -- speed-ups, no strike agreements, threats of runaway shops. Inflation or recession makes no real difference to the corporate executive -- he doesn't have to worry about losing his job or finding enough money to buy gas to get to work. So long as the profits keep coming in, he is satisfied -- and if there is a 10% unemployment rate, or a 15% inflation rate, he won't be bothered. That is, until the people unite and say "Stop, we won't go on this way."

How does all this theory-gone-mad affect the worker laid-off by GM? When he tried to buy food for his family he pays 50 cents a loaf for bread which cost him 35 cents a year ago. What happened? The reason, as usual, is corporate profit. In 1971, Nixon devalued the dollar. Foreign companies, also looking for profit, were cutting into the U.S. markets with their products. Because the U.S. needed those sales overseas, the value of the dollar was dropped; this made U.S. products relatively cheaper overseas, and thus made for greater profits here at home. But there was another factor: since the dollar was worth less, that also meant that U.S. wheat was cheaper. So foreign countries began to buy. This, added to the huge wheat deal with the Soviet Union, meant that the supply of wheat was less at home. And, since agriculture has become agri-business, often owned by the large corporations, and since they too wanted to maximize profits, the price of wheat began to climb, and a loaf of bread got more expensive.

For as long as it is possible, the corporate powers will continue to shift the burden of economic hardship onto the workers and to the poor who can least afford it. The present system is perfectly designed to help the "haves" get more, and to see that the "have-nots" get less. But that economic system is under attack from all directions -- from the workers who strike for wages which can keep up with the rising cost of living, from workers who refuse to go along with no-strike agreements, from unemployed workers who organize for better benefits, and form people around the world who refuse to be exploited any further. Whichever way the government turns to try to find a way out of its crisis, it will meet people fighting back, refusing to continue to let the corporations of this country exploit them for increased profit.