Price controls are needed to tackle inflation
Inflation is still running far too high, way ahead of wage increases. So that most people are in effect suffering a wage cut. In the three months to March 2023, average weekly earnings for total pay in the UK grew by 5.8 per cent. In the same month, the inflation rate for the Consumer Price Index was 10.1 per cent. The British establishment claim they want to stop inflation. But they only know one way – to squeeze the spending power of working people. Look at every measure they have taken in recent months: increasing tax take by freezing tax thresholds and driving up interest rates on borrowing. They know that mortgage rate rises will follow on, yet they are doing all in their power to resist wage and salary increases.
They think that if they squeeze hard enough spending will decrease and that will in turn lead to lower inflation. It’s the same old Tory mantra. It was John Major when he was the Chancellor of the Exchequer who first said, “If it isn’t hurting, it isn’t working.” The same tired policy is being tried again by the establishment. It is incredibly cruel. And it is totally one-sided in its effect. Cruel because we already have millions of families living in poverty and it hits them hardest.
And it’s not working. Month after month when the figures are about to be published, pompous spokespersons announce that the figures will show a fall in inflation. And month after month they don’t.
On Wednesday we were told by the BBC news at 6am to expect inflation to have fallen. At 7am they were proved wrong once again. This was the headline at 10 am: ‘inflation stays at 8.7% despite hopes of a fall‘.
They think that by restricting the money supply they can cut the inflationary processes. It hasn’t worked and it won’t work in an equitable manner. It’s totally unjust and barely effective.
The truth which conventional economists and political figures ignore lies in a different way of seeing how the economy works. Of course, they choose to avert their eyes because to do otherwise would require a radical and transformative shift from the way in which the economy works.
A clue to what is actually happening can be seen in the explosion in the wealth, profits and dividends paid to shareholders which is taking place across the British corporate sector. The truth is that price rises are being driven by corporate greed. Avarice can be delivered because of the power of so many corporations who dominate the market – which is not challenged, but actually encouraged by our political structures. Look at the following examples from the retail sector. After all, it is the retailers who decide the price rises of goods they sell. Marks & Spencer posted a pre-tax profit before adjusted items of £482 million in 2021/22. WH Smith pre-tax profits before non-underlying items more than tripled from £14m to £45m while sales rocketed 41 percent to £859m in the half to 28 February. Sainsbury’s/Argos pre-tax profits were £854 million.
So, price rises squeeze the incomes of working people but contribute to super profits. Equally scandalous, is that so many retailers, including all the above, have been found to have paid their employees less than the minimum wage. So, if you really want to tackle inflation, why not tackle it at its roots? Rather than attacking household incomes with rising rents, interest rates, mortgage rates and unrestrained price rises, why not go to the source of the problem and start by introducing price controls
and a windfall tax on super profits by banks and other financial institutions?
We can make a start on driving down inflation, tackling unaccountable corporate power, and securing a decent living wage for everyone. It’s time to remedy the whole broken and failing system with bold transformative action.
This article first appeared in Left Foot Forward