The war requires the removal of mass of people from everyday production activities, and marketplace production is partially replaced by arms production. Money in soldiers and workers associated with the arms manufacture is rising and consumer goods are decreasing.
State spending is expanding and budget gross is falling. It remains the printing of money by the central bank and the borrowing of political debt by the state to cover expenses for current needs. The deficiency of certain goods and the increase in their prices are seen, inflation begins, real wages for employed workers, pensions and pensions are falling. The situation becomes beneficial for combinationists, speculators and officials with a weak moral skeletal bone.
Inflation and public debt have accompanied all major socio-political events in past – wars, revolutions, crises and systemic transformations and have reduced the standard of surviving of broad social groups. Inflation and public debt were not an absolute evil, but an crucial lever for economical and political processes.
When PiS came to power again in 2015, it did not gotta fight inflation, on the contrary, it started on various social goals (300+, 500+, thirteenth and fourteenth pensions, etc., etc.) to throw extra money on the marketplace to fight deflation. Actors of the previously ruling Citizens' Platform began to call it "the money distribution", but did not dare to admit that it was a necessity to defend the poorest social groups created by their policies. The anti-deflation actions of the Law and Justice were not a fresh and crucial contribution to the explanation of political economics. besides Joe Biden After winning the presidential election on March 11, 2021, he signed the American Rescue Plan, including a single payment of $1,400 to all adult citizens and citizens. besides in Russia under leadership Vladimir Putin Various social programmes have been implemented in connection with the granting of additional backing to citizens. The government of the Law and Justice organization pursued the arms policy and record-breaking arms purchases, and this policy continues the Civic Platform under the leadership of Donald Tusk, after his triumphal return from Brussels. And that means the threat of inflation.
The mechanics of inflation and its effects has been known for years. Already in 1920 even Keynes in his work The economical Effects of Peace wrote that "It is said that Lenin declared that the best way to destruct the capitalist strategy is to corrupt the currency. Through the continuous process of inflation, governments can confiscate, secretly and unnoticed, an crucial part of their citizens' assets. Thus they not only confiscate, but confiscate arbitrarily; and although this process impoverishs many, it actually enriches some. The imagination of specified arbitrary regrouping of wealth strikes not only security, but besides trust in the justice of the existing division of wealth. Those to whom inflation brings extraordinary profits, greater than what they deserve and even beyond what they expect, become “speculators”, whose impoverished mediate classes hatred no little than proletariat. As inflation 235-236 progresses, and the real value of the currency changes rapidly from period to month, all lasting relations between debtors and creditors, which constitute the eventual foundation of capitalism, are subject to specified a complete discord that they are almost meaningless; and the process of gaining wealth turns into gambling and lottery. I'm certain Lenin was right. There is no subtler, more assured way to overthrow the existing foundations of society than to spoil currency. This process involves all the hidden forces of economical law on the side of demolition and it does so in a way that no 1 in a million can diagnose.”
Polish economists who mention these views of Keynes, for ideological reasons ignore sentences in which Keynes (considered to be 1 of the largest economists of the 20th century) cited views of Vladimir Lenin. Against the citation of Lenin there is indeed a conspiracy of silence among scholars and publicists in Poland. However, the Keynesians allowed small inflation, not to gradually undermine the foundations of capitalism, but to consider it beneficial to the economy and reducing unemployment. However, they could not explain the paradox, namely, despite inflation, unemployment continued.
Therefore, with the dominance of monetaryism and neoliberalism in political economics, the view that the best support for economical activity was a marketplace economy operating without state interference, and the expanding social inequalities on a global scale were to be the social costs of fast economical growth. As the opponent of inflationism noted, the monetarian Milton Friedman"Small inflation causes any revival at first – like a tiny dose of drug in a recently addicted drug addict – but then more and more inflation is needed to trigger recovery. Just as it takes an expanding and expanding dose of the drug to make a highly dependent individual become drunk." And that's what happened.
Pro-war statements by Tusk, Holownia, Kosiniaka-Kamysz and respective of our retired generals, who have no thought of the geopolitical situation, and the wars are known by proceeding – do not give optimism and announce further increases in inflation and public debt. Today's public debt is simply a twelve times greater than it was in the time Edward Gierek, and the current generations will not be repaid, and the costs of debt handling are enormous.
There utilized to be a physical barrier to money ruin, in the form of amounts of gold and silver held. In the modern democratic system, since political authorities have been elected, they are faced with the temptation to hotel to inflation as a means of winning electoral votes, by stimulating request before elections. In the modern world, there are additional reasons for the improvement of inflation and public debt – work is underway in the main countries of the planet to make an electronic currency strategy with the value and value of wages being programmable and not straight linked to the productivity of the workforce. 1 of the options under consideration is the periodic devaluation of currencies and the liquidation of the current global settlement system. That's why all countries have been stockpiling gold for a long time.
The apologists of capitalism, however, diverting public attention from the actual causes of the crisis and its social consequences – all of them laid the blame on COVID, Biden's unlawful sanctions, and of course Putin's "contransations". Putin's alleged counter-sanctions were in fact the effects of Western sanctions, mainly the US, which are trying to make at the expense of Russia, China and the European Union. Although the United States is the world's largest debtor, so far they have managed to keep the stableness of their currency and avoid increased inflation. This is due to the fact that the United States, due to the fact that the dollar plays the function of a planet reserve currency, can have a chronic trade deficit and shift inflation to another countries, and proceed a historically unknown arms program that allows to destruct the present civilization.
Dedollarisation of global trade
To date, attempts to break out of the dollar settlement strategy of individual states have ended tragically with the U.S. oligarchy. Saddam Hussein wanted to express the price of oil in euro, and Maummar Gaddafi wanted to make a fresh regional currency – a gold-based denara. all financial and political crisis in the United States is dealt with utilizing wide streams of dollars. Thus far, the function of the dollar, which is simply a historical paradox, is strengthened with all crisis, alternatively than weakening. This is seen during the war in Ukraine. The United States practically maintains the full Ukrainian army and administration. And Ukrainian oligarchs, despite the war, are able to buy out businesses in Poland. Dollars obtained in this way, given the situation, must burn into the hands of their holders. Therefore, the proposals for specified transactions should be taken with large care. The government will surely usage the money it has obtained on these transactions to acquisition weapons that will then end up in Ukraine anyway...
The BRICS states are announcing the simplification of dollar bills among themselves and the creation of a single currency. But while the United States is simply a major or crucial partner for the economy of China, Brazil, India or South Africa and there is simply a low level of economical integration between BRICS countries, de-dollarisation and the creation of its own currency can only be of limited importance. The United States is an crucial outlet for these countries and they acquisition high-tech goods and modern technologies. So as long as there is simply a request for dollars to make purchases on 3rd markets, the situation will not change radically. A Donald Trump announces sanctions for those countries that will call for a departure from the dollar settlement system.
The essence of inflation
In many textbooks on political economics inflation is defined as a general price increase. However, the Central Statistical Office defines inflation as a process of price changes. The inflation basket, i.e. a list of 1,800 goods and services surveyed, is grouped into 12 main categories and is divided into about 340 simple groups. The CSO develops baskets for 7 socio-economic groups. The CSO never publishes a detailed list of the goods under investigation, as it claims this could be considered a way of advertising them. But at the same time, it gives the authorities large opportunities to manipulate the results of this research. As a result, the statistical reading of inflation is always lower than that of individual citizens. The overall increase in prices is felt differently by the various social groups with different wealthes, since the quality of life of a given social group is determined by the ‘basket of goods’ which has certain prices. The sources and effects of inflation are not purely monetary, but deep in structural problems. Trade unions must fight for sound monitoring of inflation developments.
Inflation involves not only growth but besides changing price relations. A proportional increase in all prices would not make any sense, as this would not increase the redistributive effect. To this end, it is crucial that the prices of any goods increase faster or slower than others. specified differentiated price increases change the consumption structure of individual groups, classes and social classes and relate straight to their needs and interests, find their quality of life. Interests, the degree of awareness of the course of the inflation process and its effects, the scale of organisation of individual classes, layers and groups importantly influence the change in price relations and the inflation of money in relation to individual goods.
Another is consumer inflation, which is felt by individual consumers and another is production inflation, which is felt by workplaces erstwhile purchasing natural materials or energy charges. And yet another is inflation in financial markets erstwhile purchasing sovereign securities or public limited companies. Production inflation is frequently higher and better reflects real economical processes in a given economy. Therefore, production inflation and inflation in securities markets speaks more about the actual inflation of a monetary unit.
Fetishisation of inflation
In explanation and everyday practice there is simply a fetishization of inflation, akin to the process of fetishizing goods, described by Marx in the Capitol. In the approach to inflation, fetishization is that inflation is considered at the level of the quantitative proportions between individual goods and the mass of money not related to individual social groups. Defining inflation as a fall in the purchasing value of money, it accurately describes only 1 way inflation manifests, but does not indicate its origins and social consequences. Inflation is always the consequence of a full production relationship, their organic part and at the same time a separate strategy of social and economical relations.
The essence of inflation is determined not only by the relation between the exchangeable values of goods and the moral consumption of goods, but mainly by existing social relations and frequently opposing objectives of social forces, which find their quality of life. This social relation manifests itself as relations between things and commodity and monetary relations. As a consequence of inflation, commodity-monetary relations are an expression of changes in the overall social relation and the way in which they are deepened. Despite the declaration, inflation will not be effectively fought by the social forces that usage it. Masses operating in isolation are incapable to effectively fight inflation, as the paradox arises – they do not realize its actual sources, although they feel it most. Freight Fetishism is simply a origin that facilitates the process of money inflation, as the effects of inflation are taken for its substance and cause.
Inflation is not a purely monetary and financial phenomenon, but it goes deeper into the disparity in the structure of production and division, as defined by it, and the relations between the different classes, their divisions or their layers and groups. any economists re-assemble human relations, and the process of creating inflation push prices of goods to the level of self-being, the self-trafficking of commodity prices, and do not see social (social) relations and the underlying price changes, changes in the value of goods. In inflation, among another things, the ratio of social exploitation, changes in the distribution of additional values and production efficiency and unit costs, which are changing powerfully in the free marketplace economy as a consequence of the impossibility of planning and predicting the actual cost of production at the time of the release of individual goods. The problem of sources of inflation is not as much in work as in capital. Their influence on inflation and expectations after it are completely different. Inflation, therefore, is not only an expression of a breach of the relation between separate economical variables, but is besides an arena and a way of acute class struggle. The price structure at a given minute reflects not only the circumstantial cost of production, but besides the consequence of existing social-political forces agreements, the consequence of awareness and organisation of individual social classes.
Prices shaped on the markets are not the consequence of a simple translation of the value of goods into prices, but are influenced by the overall social – economical and social, technological, institutional, political, degree of marketplace and economical monopolization, trade union forces, level of awareness, organisation and will of the conflict of the working class and another classes and groups, the interest rate determined by state policy. At the same time, prices are actively affecting social relations, which is why price changes can trigger powerful social-economic and political processes, as we have seen in 1956, 1970, 1976, 1980 and 1989.
Unfortunately, current political elites either do not realize these problems, or represent a part of a society for which inflation is not a problem or even a benefit. After all, many parliamentarians and civilian servants have considerable assets, respective apartments for rent or luxury cars. But there is simply a likelihood that the current political elite in Poland, thanks to various relationships, even household (such as abroad Minister Radosław Sikorski), pushing the country to war, not counting the negative effects of inflation, serves the interests of abroad corporations.
Discussions on inflation in Russia
Inflation must not be lower than the percent offered by the central bank as the state budget would not benefit from inflation. And the government's full cunning is that the credit he borrows in more valuable money pays off little valuable. The Central Bank of Russia argues that over 20% of its loans are utilized to fight inflation. In commercial banks, loans are granted at 25-30 percent. The declared anti-inflation mark is 1 large fraud and self-deception. The advanced interest rate is not a problem, e.g. in the oil and natural gas mining industry, in trade, and in financial speculation. However, since the vast majority of companies, especially those with a long production cycle and fresh investments, are incapable to make specified a profit rate, they are:
First – companies know that they will not pay specified loans, but they proceed to take loans without any reflection. They are then able at best to extend the operation of the company for a fewer months, after which they are definitively closed, for free privatised or sold;
Secondly, – manufacturing companies in which profits are low, either do not take credit at all, or restrict production, release people and prepare to declare bankruptcy;
third – weaker companies take loans economically, but the funds obtained are placed in savings accounts, as the rate of return on them is higher than they are able to make profits from production.
All these conservative strategies, at besides advanced percent rates, only postpone execution on production companies. gross for the state budget is falling and inflation is creeping up. In Russia, even arms companies are at risk. So the advanced rate in the Central Bank is at the same time force on the political authorities to end the war as shortly as possible, or to start another, this time the final privatisation process of Russian state-owned enterprises and natural resources. The advanced interest rate deepens the Russian economy's drive into a natural yoke from which it will never be able to free itself.
The crisis in Russia is so a consequence of the deindustrialisation of Russia after 1991 and further deepened by the Central Bank for the implementation of the interests of Russian oligarchy about global capital. The Russian strategy has quite a few inertia, but everyone is waiting for Donald Trump to presume the office of president and the results of the accelerated elections to the parliament in Germany, and is counting on the creation of another possibilities to end fighting in Ukraine. The Russian Government grants relief to peculiarly crucial companies. But it does not change the climate in the full economy, whose speech is given by oligarchs of natural materials industries, and especially in tiny business. The suppression of economical improvement by advanced interest rates is simply a "short duvet" policy, reducing the supply of goods on the marketplace and thus contributing to the increase of their prices and inflation. If inflation is to be reduced, the balance between request and supply must be restored, not only by rising prices, but mainly by expanding production. Otherwise, a self-restraint economical mechanics is triggered.
The bourgeoisy of all nations is eager to reconstruct the marketplace balance by reducing the request of the working masses, but if they are driven into absolute poverty, the labour force will be lost irretrievably and the road to further deindustrialisation will open up. However, Putin retains another anticipation – due to the increasing contradictions between the industrial and banking sectors – his squad can nationalise the central bank and nationalise abroad trade. From this the strategy in Russia would not change, but before this step it can be stopped by a intellectual barrier – the existence of these solutions in the USSR...
Dr Edward Karolczuk
photo of Moscow City (wikipedia)
CDN
J.M. Keynes, "The economical Consequences of the Peace", HARCOURT, BRACE AND HOWE, fresh York, 1920, pp. 235-236.
Economic consequences of peace: Keynes, John Maynard : Free Download, Borrow, and Streaming : net Archive, 4.08.2022.
Milton Friedman, Rose Friedman, "Tyrania position quo", Sosnowiec 1997, p. 103.
Think Poland, No. 1-2 (5-12.01.2024)
