Inflation is the oldest known form of wholesale robbery of the people. Historically, this robbery has been carried out behind an array of smoke and mirrors, while the corporate media does its job of throwing “learned dirt” into the eyes of the people.
The people stagger out of the grocery store staring at the check out
list, shaking their heads in disbelief. No one has to tell them we are
caught in a dangerous spiral of inflation. The government spin masters
show us figures to prove there is no or little inflation. Their figures
conveniently leave out “volatile” items such as food and fuel. Looking
at inflation we must proceed from the old warning that figures don’t
lie—but liars can figure.
What is inflation? How and why does it take place? Inflation is the
fall of purchasing power of a currency. Before we go any further
we must restate some obvious facts. When you purchase something with
paper money, that money represents a definite amount of labor time of a
certain quality. So essentially you are exchanging your spent
labor for a different kind of spent labor—your brick for a dollar and
the dollar for someone else’s cup. Gold, in different quantities,
has long been accepted as expressing all forms of value and is the
foundation of exchange. Since there is not enough gold or
precious metals to conduct the trillions of dollars worth of exchanges
that take place every day, nations print paper money and make
adulterated silver or copper coins which represent the value of gold.
The Romans found out that when they began adulterating their silver
coin, the denarius, prices rose. The death penalty for raising prices
did not prevent inflation. They found out that no political law could
set aside an economic law. However, the capitalists are still trying.
The United States has had a powerful, stable economy. The saying “sound
as a dollar” expressed the confidence the world market had in the
dollar. Although it was a complex process, this confidence in the
dollar allowed the United States to move off the gold standard and for
all practical purposes the dollar replaced gold. When inflation
under President Nixon rose to 4% he imposed price and wage controls.
Today, 5% is considered normal. What happened? The wars, the looting of
the public treasury and the recovery of Europe from WWII forced the
government to print more paper money than there was gold to back it up.
Therefore, prices rose and the value of the dollar fell accordingly.
Today with corporate power becoming the government, expenditures are
exploding. For instance, the Iraqi war is costing $341, 400,000
per day. The bill is met by speeding up the printing presses, with the
consequent fall in the value of the dollar and corresponding rise in
There is another, more serious element in today’s inflation. We
had mentioned that, essentially, buying and selling is the exchange of
labor in different forms. That spent human labor is known as value. In
the long run, price and value have more or less reflected one another.
The introduction of robotics is destroying any way of measuring value,
since some commodities are made with labor and identical ones are not.
So the market place sets not only price, but also value. Oddly
enough two tendencies evolve. One is inflation, because of greater and
greater deficit spending. For example, this year, our economy will grow
by about 1% while the economies of Middle Europe, China and the Far
East will grow at 10%. Who is going to invest in the United States?
Printing more money that only fuels inflation will make up the
The other tendency is the opposite—deflation. As robotics expand,
more and more commodities are produced that have no value. Yet, in the
marketplace, they are sold beside identical commodities that do have
value. The result is labor-produced commodities are sold below their
value and this forces down wages, which in turn creates a glut of
commodities which force down the price of labor below its value—that
is, the cost of its reproduction. This vicious cycle is the cause of
the growing world poverty in the midst of mountains of necessary goods.
What is happening and how it is happening are two different things.
This round of inflation is part of the ending of the
wage-labor—capitalist—system. It will not happen overnight, nor will it
be a steady, stable process. It will be a series of partial recoveries
followed by backsliding until the economic revolution forces a
political revolution which will construct an economic order compatible
with robotics and the other forms of productive electronics.