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It's also amazing how inflation is treated as some mysterious, unpredictable force of nature that just strikes out of the blue. Recently, I've seen a lecture on

It's also amazing how inflation is treated as some mysterious, unpredictable force of nature that just strikes out of the blue. Recently, I've seen a lecture on inflation from Marxist point of view - and it was a refreshingly intuitive take on the subject that I've never heard expressed anywhere else: Inflation is an increase in price level. Who sets the prices? Corporations (or landlords). They may increase the prices either because their inputs are more expensive, or to pad their profits. But all the inputs, in the end, derive from someone's labor. There might genuinely be situations when more labor is required to achieve the same output (e.g. drought for agriculture, or mineral extraction got more difficult), but most of the time, the opposite is true - less labor is required to achieve the same output. If wages do not rise at the same pace as prices, somebody is pocketing that extra money But we never see that inconvenient fact being mentioned...anywhere. Newspapers run headlines like "beef prices up X%", without the corollary - "and the price increase is pocketed by meat packing plant cartel". And it turns out, empirically, that's pretty much what's happening: Corporate profits drive 60% of inflation increases: https://mattstoller.substack.com/p/corporate-profits-drive-60-of-inflation https://mattstoller.substack.com/p/corporate-profits-drive-6...

esarbe 5y ago
My guess is that the rent takers and corporations simply realized that with Governments trying to stabilize the economy and paying out Covid support money, the little guys for the first time in decades also got some bounty from the money-printing-bonanza the high-finance and large corporations have been enjoying for the last 13 years. When only the rich guys got free moneys and "invested" it into stocks and buybacks, it didn't make any sense to raise prices. Now that the little guys (potentially) have money in their greedy little hands, it is time to raise prices. You can't have ordinary people with money to save, right?
makomk 5y ago
I think you're missing the more important and immediately obvious corrolary to that argument - we're in the middle of a situation right now where more labour is required to achieve the same level of output, due to people off sick, self-isolating, businesses running under capacity due to pandemic restrictions or just being outright closed and their staff paid to stay home, global supply chain disruptions absolutely wrecking efficiency everywhere, and so on, and this has to cause prices to rise faster than wages. Also, you're counting every single retired person's pension as "corporate profits" since they're people who're pocketing money without working (and that's not really wrong in the case of many pension schemes - corporate profits are often exactly where the money is coming from). Actually the ordinary retired are probably more relevant here than the super-wealthy; most of the super-wealthy's money isn't spent on stuff that uses labour, and I doubt they consume such a disproportionate amount of the labour-produced goods and services to make a huge difference, plus a bunch of people retired at once during Covid.

esarbe 5y ago

My guess is that the rent takers and corporations simply realized that with Governments trying to stabilize the economy and paying out Covid support money, the little guys for the first time in decades also got some bounty from the money-printing-bonanza the high-finance and large corporations have been enjoying for the last 13 years. When only the rich guys got free moneys and "invested" it into stocks and buybacks, it didn't make any sense to raise prices. Now that the little guys (potentially) have money in their greedy little hands, it is time to raise prices. You can't have ordinary people with money to save, right?

makomk 5y ago

I think you're missing the more important and immediately obvious corrolary to that argument - we're in the middle of a situation right now where more labour is required to achieve the same level of output, due to people off sick, self-isolating, businesses running under capacity due to pandemic restrictions or just being outright closed and their staff paid to stay home, global supply chain disruptions absolutely wrecking efficiency everywhere, and so on, and this has to cause prices to rise faster than wages. Also, you're counting every single retired person's pension as "corporate profits" since they're people who're pocketing money without working (and that's not really wrong in the case of many pension schemes - corporate profits are often exactly where the money is coming from). Actually the ordinary retired are probably more relevant here than the super-wealthy; most of the super-wealthy's money isn't spent on stuff that uses labour, and I doubt they consume such a disproportionate amount of the labour-produced goods and services to make a huge difference, plus a bunch of people retired at once during Covid.