Join the Socialist Party Join us today!

Printable version Printable version

Facebook   Twitter

Link to this page:

From The Socialist newspaper, 14 October 2010

Will prices rocket up?

In this feature Socialist Party general secretary PETER TAAFFE answers important questions raised by Joe Foster on prices and wages. Joe writes:

"The centre page article (Britain on the brink, The Socialist 640) was great. I wanted to ask is there the possibility of increasing inflation? Currently with pay freezes we can see living standards are being cut already but obviously workers are preoccupied with job losses and cuts in services.

"Surely the quantitative easing is worse than what was pumped into the world economy after the war, which later resulted in inflation of over 20% in some years of the 1970s in Britain. This gave an impetus to workers struggling to keep pace with inflation and oppose the pay freeze and other anti-working class pay policy of the Labour government from 1974 to 1979."

Dear Joe,

We were very pleased that you liked the article on Britain. The capitalists, at this stage, are mostly preoccupied with the issue of deflation - stagnation in the economy, lack of demand - rather than inflation and rises in prices.

There is currently insufficient 'demand' - reflected in the economic crisis - which will be enormously compounded in Britain and elsewhere by the savage cuts proposed, particularly here by the Con-Dem government.

Ireland and the state of its economy is a living refutation of the deflationary policies pursued by Cameron and Co. Brutal cuts were supposed to have put the economy 'back on its feet', cut the deficit and led to an economic rebirth. Instead, the economy has plunged further into deep recession, if not a 'depression', with unemployment officially almost 14% and, in real terms, probably over 18%.

The budget deficit, rather than contracting, has increased. Ireland, in fact, is currently going through a 'double dip' crash and the same thing could happen here. So, in today's situation, the more farsighted capitalist economists would 'prefer' a little 'inflation', especially in incomes, to deflation because this would increase spending power, to put it at its simplest, and provide a market for goods and services which at present cannot be sold profitably because there is no 'profitable' market.

This is why some economists are urging the central banks - the Bank of England and in America the Federal Reserve - for a new 'stimulus package', this time to actually boost incomes. This could take the form of tax reductions or even handouts to the unemployed, rather than the indirect and failed method of buying up the assets of the banks, particularly their government bonds. Economists believe that the necessary stimulus will then be provided to the market and thereby lead to growth. This would, at best, merely ameliorate the crisis, not solve it.

There is no likelihood of an immediate 1970s-style inflationary spiral at the present. Undoubtedly, over time, if governments continue to pump in huge resources - resorting to the printing press, without this being backed up by the extra production of goods and services, then inflation will become a problem. But we are not at that stage yet.

That does not mean to say that the rise in prices, which is particularly pronounced in Britain at the present time, in certain basic items such as food, is not a problem for working class people, particularly against the background of wage freezes. Indeed, the very policy of wage freezes, of cutting wages, of throwing more and more workers onto the dole until it reaches four million, will cut the living standards of the working class.

This will be enormously aggravated by rising prices in some necessities. Already in the neocolonial world a massive increase in food prices - occasioned by drought, floods and forest fires in Russia, for instance - has provoked mass opposition. In some cases, this has compelled governments to step back and cancel the price increases.

In Britain, the prices of basic necessities have increased and will probably continue to do so. Therefore we should press for workers and the labour movement to fight price increases by demanding the opening of the books of companies, the government and local councils in order to examine whether such increases are "justified".

It is also important, where price increases take place, that we, the socialists, and active workers everywhere fight the false notion that increased prices arise primarily from wage increases. Karl Marx explained that if wage increases resulted in rises in prices the capitalists would automatically do this on all occasions.

Why then would they resist strikes and demands for increases in wages if they could just raise prices to compensate for this? Competition from other capitalists also prevents them from doing this. We will perhaps develop this important point further in The Socialist.

Comradely, Peter Taaffe

Donate to the Socialist Party

Coronavirus crisis - Finance appeal

The coronavirus crisis has laid bare the class character of society in numerous ways. It is making clear to many that it is the working class that keeps society running, not the CEOs of major corporations.

The results of austerity have been graphically demonstrated as public services strain to cope with the crisis.

The government has now ripped up its 'austerity' mantra and turned to policies that not long ago were denounced as socialist. But after the corona crisis, it will try to make the working class pay for it, by trying to claw back what has been given.

  • The Socialist Party's material is more vital than ever, so we can continue to report from workers who are fighting for better health and safety measures, against layoffs, for adequate staffing levels, etc.
  • Our 'fighting coronavirus workers' charter', outlines a programme to combat the virus and protect workers' living conditions.
  • When the health crisis subsides, we must be ready for the stormy events ahead and the need to arm workers' movements with a socialist programme - one which puts the health and needs of humanity before the profits of a few.
Inevitably, during the crisis we have not been able to sell the Socialist and raise funds in the ways we normally would.
We therefore urgently appeal to all our viewers to donate to our special coronavirus appeal.

Please donate here.

All payments are made through a secure server.

My donation


Your message: 


In The Socialist 14 October 2010:

Anti-cuts campaign

Strike back at pensions robbery

Protest against the Con-Dem's comprehensive cuts on 23 October

TUC must name the date for strike action

PCS fights to defend jobs and pensions

Socialist Students

When they say fees will rise... we fight back and organise!

No to academy schools!

School students strike in Dover

Action against EMA cuts in Huddersfield and Mansfeild

Socialist Party news and analysis

Con-Dem attacks will lead to social cleansing

Labour shadows show: We need a new workers' party!

Children - a privilege for the rich?

Save Wanstead Flats


Community organises to resist EDL thugs

Socialist Party workplace news

The battle is on over DWP pay

Fight Passport Office closure

Greenwich council threatens mass sackings

Workplace news in brief

Socialism 2010

Come to Socialism 2010

Socialist Party Marxist analysis

The general strike: Important tool of the working class

Will prices rocket up?

International socialist news

Stalinism and capitalism - a toxic brew in Hungary


Home   |   The Socialist 14 October 2010   |   Join the Socialist Party

Subscribe   |   Donate  

Related links:

Peter Taaffe:

triangleSocialist Party executive committee positions

trianglePacked labour movement service a fitting farewell to Tony Mulhearn

triangleWirral Tories raise spectre of Militant

triangleDefending the city that dared to fight

triangleFormer Militant editor Peter Taaffe on Derek Hatton re-joining Labour


triangleMerseyside Matalan workers walk out over pay deal

triangleLabour looks to Bank of England to stall house prices

triangleBosses' pay up a fifth while workers' pay falls ...

triangleProfits up Wages down


triangleTrump, coronavirus, capitalism, and the presidential race

triangleSouth East London Socialist Party: Covid-19's impact on the economy

triangleNo return to the 1930s: World War Two and 'a land fit for heroes'


triangle1920s Britain: A "country nearer Bolshevism than at any time since"

triangleBristol North Socialist Party: Crisis, capitalism and class division - a discussion on perspectives for Britain

News and socialist analysis

News and socialist analysis



Covid crisis boosts union membership but TUC leaders want to cosy up to the bosses!



Reckless, lying cheats



Coronavirus pandemic news in brief



More blunders and profiteering in Tory track-and-trace scheme



United action can defeat Tories' dangerous school plan



Care home workers suffer PPE shortage and job loss fears



Black and Asian Covid-19 deaths: an indictment of capitalist inequality



Johnson's reckless 'back to school' plans threaten everyone's safety



Confidence plummets in Tory strategy for Covid-19



Universal Basic Income: not a solution to insecurity and poverty under capitalism



Furlough cut-off could force millions back to unsafe workplaces



Crisis in council services: Labour must fight or stand aside



Rich get handouts - workers get pay cuts



Transport workers and passengers mustn't pay the price



Pandemic shortages caused by capitalist market - socialist planning is the alternative

triangleMore News and socialist analysis articles...

Join the Socialist Party
Subscribe to Socialist Party publications
Donate to the Socialist Party
Socialist Party Facebook page
Socialist Party on Twitter
Visit us on Youtube



Phone our national office on 020 8988 8777


Locate your nearest Socialist Party branch Text your name and postcode to 07761 818 206

Regional Socialist Party organisers:

Eastern: 079 8202 1969

East Mids: 077 3797 8057

London: 07748 534 891

North East: 078 4114 4890

North West 079 5437 6096

South West: 077 5979 6478

Southern: 078 3368 1910

Wales: 079 3539 1947

West Mids: 024 7655 5620

Yorkshire: 077 0671 0041



Alphabetical listing

May 2020

April 2020

March 2020

February 2020

January 2020