Tuesday, November 24, 2020

Workers in debt

 Nearly half of families with children have been forced into some form of debt since the start of the pandemic, prompting warnings that Britain risks becoming a nation “surviving on credit”.

Almost 18 million people, a third of the population, have had to use credit cards, go into their overdraft or borrow from friends and family since March. 3.6 million families have been pushed into debt. One in 10 families with children had been forced to sell belongings to make ends meet since March, while three in four parents had worked extra hours or taken on an extra job.

The Equality and Human Rights Commission (EHRC) said more families now risk being pushed into economic hardship and groups who already faced poverty were likely to see their income reduced further, because coronavirus was “exacerbating existing inequalities”.

People on furlough were considerably more likely to be borrowing money, with half of those who have been furloughed since March falling into debt, compared to 23 per cent of people who have seen no change to the employment.

Thomas Lawson, chief executive at Turn2us, said financial resilience across the UK was at an “all-time low.” 

“Even if a vaccine for Covid-19 became available tomorrow, the damage has been done to people’s finances. People have spent their savings and used up their rainy day funds, there is nothing left,” he said.

Nearly half of families forced into debt since start of pandemic, figures show | The Independent

Europe's Toxic Air


Governments across Europe are failing to protect their citizens from toxic air pollution, with most Europeans still breathing filthy air. Pollutants from farming, domestic heating and vehicles are beyond the levels needed to ensure breathable air within World Health Organization guidelines, despite EU legislation, government pledges and years of campaigning. Exposure to such pollution caused about 417,000 premature deaths across Europe – including non-EU member states – in 2018.

Only Ireland, Iceland, Finland and Estonia showed levels of fine particulate matter – one of the most dangerous forms of air pollution – that were below the WHO guidelines in 2018. Six member states – Italy, Poland, Romania, Bulgaria, Croatia and the Czech Republic – breached the EU’s limits for fine particulate matter, called PM2.5, in 2018. The EU limits are less stringent than WHO guidelines. There were 54,000 premature deaths from nitrogen dioxide (NO2) in 2018 in the EU-28, which includes the UK, which was then still a member of the EU. Ground-level ozone caused about 19,000 premature deaths in the EU-28 that year.

Green campaigners said governments must act urgently. Margherita Tolotto, the senior policy officer at the European Environmental Bureau, which represents campaigning groups across the EU, said: “How many wake-up calls do government officials need to take on air pollution? Their delay is costing us our health and a safe environment. They know what needs to be done to improve air quality: cleaner energy and industrial production, greener and smarter transport, and sustainable farming.”

European governments failing to protect citizens from air pollution, data reveals | Environment | The Guardian

Governments had failed to meet EU targets, the EEA said. Under EU rules, every member state should have submitted a plan for bringing air pollution within health limits in 2018. However, Italy’s plan is still at draft stage, while Greece, Luxembourg and Romania have yet to submit any plan.

Monday, November 23, 2020

CO2 - Little change in rise

 Climate-heating gases have reached record levels in the atmosphere despite the global lockdowns caused by the coronavirus pandemic, the UN’s World Meteorological Organization has said. There is estimated to have been a cut in emissions of between 4.2% and 7.5% in 2020 due to the shutdown of travel and other activities. But the WMO said this was a “tiny blip” in the continuous buildup of greenhouse gases in the air caused by human activities, and less than the natural variation seen year to year.

The data shows action to cut emissions is currently far from what is needed to avoid the worst impacts of the climate emergency. Scientists calculate that emissions must fall by half by 2030 to give a good chance of limiting global heating to 1.5C, beyond which hundreds of millions of people will face more heatwaves, droughts, floods and poverty. 

“The lockdown-related fall in emissions is just a tiny blip on the long-term graph. We need a sustained flattening of the curve,” said Petteri Taalas, the WMO secretary-general. “We breached the global [annual] threshold of 400ppm in 2015 and, just four years later, we have crossed 410ppm. Such a rate of increase has never been seen in the history of our records. CO2 remains in the atmosphere for centuries. The last time the Earth experienced a comparable concentration was 3m-5m years ago, when the temperature was 2-3C warmer and sea level was 10-20 metres higher than now. But there weren’t 7.7 billion  inhabitants.”

Talaas said a “complete transformation of our industrial, energy and transport systems” was needed. “The changes are economically affordable and technically possible and would affect our everyday life only marginally,” he said. “It is welcome that a growing number of countries and companies have committed themselves to carbon neutrality. There is no time to lose.”

Climate crisis: CO2 hits new record despite Covid-19 lockdowns | Environment | The Guardian

The word missing from Talaas' statement is profitability

Domestic Servitude

 Thousands of women who have come to the UK from outside the EU to accompany an existing employer in their private household on an overseas domestic worker visa, usually so they can send their earnings to families in their home countries.

In 2012, the government introduced restrictions which removed the rights of holders of the visa to change employer and renew their stay in the UK. Instead, workers entered on a six-month, non-renewable visa, on which they could not change employer, no matter the reason. Following a damning review of the visa scheme in 2016, the Home Office made changes to it which allowed domestic workers to switch employers within the six-month term of their visa, and to apply for further leave to remain as a domestic worker for up to two years if they were recognised as having been enslaved under the National Referral Mechanism (NRM), the UK’s framework for identifying modern slavery victims.

However, charities supporting domestic workers say the changes have made no difference to the levels of abuse and domestic servitude reported to them by women who have successfully escaped their workplaces, and that people are often left fearful of deportation after fleeing. Kalayaan, the UK’s leading organisation for domestic workers, along with the Voice of Domestic Workers, are calling on ministers to urgently reinstate the original overseas domestic worker visa. They argue that, due to the hidden and unregulated nature of domestic work, combined by the workers’ status as a migrant and dependence on their employer for work, immigration status and accommodation, it is placing domestic workers at heightened risk of abuse and exploitation.  Campaigners say that in order to prevent people from being left in a state of limbo after escaping from abusive situations – and to ensure that domestic workers aren’t discouraged from fleeing exploitation – ministers must revert the overseas domestic worker visa back to its pre-2012 requirements.

Kate Roberts, UK and Europe manager at Anti-Slavery International, said: “People who hold the overseas domestic worker visa have been repeatedly shown that restrictive immigration measures facilitate the exploitation of migrant workers. Domestic workers migrate because they need to work. People are making really difficult choices to work and support their families. And if they don’t have this right it work, it’s something exploiters can abuse to create this vulnerability. People need to be able to exercise their rights.” Ms Roberts pointed out that under the previous visa, domestic workers were able to exercise rights and leave and get another job without jeopardising their livelihood and their immigration status. “None of this is rocket science. It’s frustrating that it’s something domestic workers have been saying for so long, and they’re presenting a solution, but are not being listened to,” she added.

Marissa Begonia, a domestic worker and founding member of the Voice of Domestic Workers, said, “The government is so proud of their Modern Slavery Act and says it’s a world leader in ending modern slavery and trafficking. Yet forcing migrant domestic workers to apply under the NRM is not a solution but another form of exploitation. The pre-2012 visa protected and recognised us as workers because that’s what we are.”

Ministers urged to change policy that ‘facilitates exploitation’ of overseas domestic workers | The Independent

China's Ageing Problem

 China is planning to include new measures to encourage more births and address  its rapidly ageing population and shrinking workforce.

In China, the number of citizens aged 60 or over stood at 254 million at the end of last year, accounting for 18.1 percent of the population. The number is expected to rise to 300 million by 2025 and 400 million by 2035, putting huge pressure on the country’s health and social care system. The number of people of working age could decline by 200 million by 2050.

The Chinese government will offer extensive financial and policy support to encourage couples to have more children. The measures include introducing more affordable nursery services as well as relaxing the limits on the number of children Chinese couples are allowed to have.

“More inclusive population policies will be introduced to improve fertility, the quality of the workforce and the structure of the population,” Yuan Xin, vice-president of the China Population Association, explained.

The world’s most populous nation decided in 2016 to relax restrictions on family size and allow couples to have a second child in a bid to address the rapid increase in the elderly, as well as a dwindling workforce. Some experts say it should now scrap all limits entirely.

Policies aimed at suppressing population growth must be replaced by a system designed to boost fertility, the official Legal Daily said, citing government experts.

“More research and discussion is needed as to when the policy can be further relaxed, and to what extent it will be relaxed – whether all couples will be allowed to have three children, or whether the family planning policy will be entirely abolished,” said Lu Jiehua, a population studies professor at Peking University.

Despite the relaxation of the one-child policy in 2016, the number of live births per 1,000 people fell to a record low of 10.48 last year, down from 10.94 in 2018.

“To proactively tackle the ageing population, urgent measures are required to reform our country’s family planning policies and liberate fertility,” said Zheng Bingwen, an expert with the China Academy of Social Science.

China to introduce new policies to tackle ageing population | China | Al Jazeera

Sunday, November 22, 2020

Burning down Parliament in Guatamala

Parts of the Guatemalan parliament were set on fire by anti-government protesters on  Saturday, demonstrating against  controversial budget bill. People took to city and town squares around the country with demands ranging from a presidential veto of the budget bill and prosecution of corruption to resignations across all branches of government and the constitutional assembly.

“We’re tired of corruption,” Karla Figueroa told Al Jazeera at a rally in Guatemala City’s central plaza. “It doesn’t matter which government – they’re all the same,” Figueroa said.

Guatemala’s Congress had passed the budget bill Tuesday night, increasing lawmakers’ own expenses for meals while it axed $25m destined to combat malnutrition. Guatemala has one of the world’s highest rates of chronic malnutrition and the hurricanes have exacerbated hunger; for many, the funding cut affecting malnutrition was the last straw.

Flori Salguero, one of the demonstrators, said she wants Giammattei and the legislators who passed the budget bill to resign.

 “We are tired of so much theft. I don’t want my kids and my grandkids to live in such an indebted country,” she told Al Jazeera.

Due to the failure of the leftist governments in several countries in Latin America ( South, Central and Caribbean )  peoples have elected right wings government but it has been proven that both sides  are two wings of the same bird known as capitalism, and both sides have been allied or representative of the local  ruling class, and also it has been proven that the problems facing the working class  around the world are not the presidents, political parties,  or the ministers, it is the mode of production, but due to the lack of proletarian consciousness peoples are going to come back to fall in  the hands of the left

The governments are placing austerity on the peoples because as we have said for many years that the state is financed with surplus-value and the rich peoples are not contributing with any taxes and the state is forced to cut down education, social benefits, and health services, but they have increased the budget for state ministers, and debts with the IMF,  in some countries, ministers arrive at the congress palace without any money and they leave driving helicopters and Rolls Royce and living in big mansions, and religious leaders ( Catholics and protestants )  are also allied of the right-wingers because they are also part of the budget

The ironic thing is that the Vice President of Guatemala has asked the President to resign and he will also resign for the good of the country, but probably it is just another political tactic to look for his own re-election later on, but the president insists staying in power. This is a different situation to the USA where one sector of the working class is supporting their own rulers, but in this case,  the peoples are rejecting all of them.

This is a very corrupted government involved in several criminal activities including drug trafficking and it is one of the puppets of the USA, there is a  saying in Latin America that when the USA intervene in any country, drugs and corruption come along with that, it is like in Haiti since the invasion the traffic of drugs has increased drastically, but drugs traffic is also part of the production of profits in the capitalist system, it like selling cars, chairs or any other capitalist commodity.

Countdown to catastrophe in Yemen

 “Making billions from arms exports which fuel the conflict while providing a small fraction of that in aid to Yemen is both immoral and incoherent.”  Oxfam’s Yemen Country Director, Muhsin Siddiquey remarked  “The world’s wealthiest nations cannot continue to put profits above the Yemeni people.”

The members of the G20 which is currently being hosted by Saudi Arabia have exported over $17 billion worth of arms to Saudi Arabia since it intervened in the Yemen civil war.

Yemen is in imminent danger of the worst famine the world has seen in decades, UN Secretary General Antonio Guterres warned.

"In the absence of immediate action, millions of lives may be lost," Guterres said.

 The UN requires about $1.5 billion this year for its humanitarian operations in Yemen. To date, it has received less than half of that. 

In contrast,  the USA has  through the $23 billon sale of 50 F-35 fighter aircraft, 18 MQ-9B Reaper drones, air-to-air missiles and various other munitions to the United Arab Emirates, another member of the Saudi Arabian-led coalition that has been pounding Yemen since 2015.  

The Yemen Civil War Arms Bonanza | Countercurrents

Protecting the Pensioners? Or Protecting the Rich

 The UK’s biggest supermarkets received £1.9bn in business rates relief given as a financial cushion in the pandemic.

Sainsbury’s disclosed business rates relief worth £230m in the first half of its financial year, while paying £231m in dividends.

In October, Tesco announced a £315m dividend despite receiving £585m in relief.

 A stockbroker Shore Capital told the Times it was “absolutely right” for Sainsbury’s to look after “its retail and pension fund shareholders”.

Telecom Plus – a FTSE 250 utility company – paid a dividend for the same period as it claimed furlough funds from the government. In a response that mimicked Black’s comment, it said: “We ensured those shareholders who are reliant on the dividends would retain this important source of income.” Asked if the shareholders it had in mind were pensioners, the company said yes.

BlackRock manages more than $7 trillion (£5.3tn) of funds and makes it clear that lobbyists for the organisation represent the interests of hardworking pension savers.

When the finance industry gets into trouble, it pleads that it is funding ordinary people’s retirements. It isn’t true. Pensioners are a useful defence in the City’s fight to preserve its privileges. Unwittingly they are wheeled out as human shields by the finance industry, and increasingly major corporations, to serve and protect probably the most powerful interests in the UK.

Individual shareholders own just 13.5% of the London stock market. UK pension funds own 2.4% and insurance companies, which could be said to be investing on behalf of pension savers, account for a further 4%. Collectively, that is less than a fifth of the market. The largest slice is held by overseas investors, who own 55%. 

The myth of the ‘poor pensioner’ helps shield the City | Financial sector | The Guardian

Saturday, November 21, 2020

Escaping Tax

 “A global tax system that loses over $427bn a year is not a broken system, it’s a system programmed to fail," 

The UK and its "spider's web" of overseas territories are responsible for more than a third of global tax avoidance each year, a study has found. The research gives the clearest picture yet of the damage wrought by those who funnel profits into tax havens and stash wealth offshoreThe UK maintains its position at the top of the list of jurisdictions helping firms shift vast sums of money away from public  investment and services.

Abuse of the tax system by multinational firms and wealthy individuals deprived countries of $427bn (£321bn) for hospitals, nurses, schools and other public services last year, according to advocacy group the Tax Justice Network. Of that figure, more than $160bn was facilitated by the UK and its territories and dependencies. 

It calculated that Europe lost the equivalent of one-eighth of its health budget to tax dodging last year. While wealthy countries are responsible for 98 per cent of tax avoidance, less wealthy ones bear the brunt of the impact. Latin America and Africa lost the equivalent of a fifth and half of their respective health spending, TJN calculated. Lower-income countries lose the equivalent of 5.8 per cent of the total tax revenue they typically collect a year whereas higher income countries on average lose 2.5 per cent.

The Cayman Islands – a British Overseas Territory of just 65,000 people – helped multinational companies and individuals avoid paying $70bn, or one dollar in every six that countries are deprived of each year.  

The UK itself, which provides world-beating tax avoidance advice through City of London banks, trust lawyers and accountants is second on the list, responsible for $42bn of tax losses. Together, the UK and Cayman facilitate more than a quarter of the booming tax avoidance industry. The UK helped to create the world’s tax haven network, ministers have claimed that they have little control over territories like Cayman.  However, the UK has power to veto laws and appoint key government officials, and is also responsible for the island’s defence and international relations.

The Netherlands is the third most damaging country for the global tax system, responsible for $36bn of losses annually. Luxembourg and the US make up the top five, responsible for £28bn and  £24bn respectively. Jersey, Bermuda and the British Virgin Islands make the top 20, alongside China, Singapore, Ireland and Hong Kong.

Globally, more than half of tax losses – $245bn – resulted from companies shifting $1.38 trillion of profits out of the countries where they were generated into jurisdictions where they pay little or no tax.

The rest was from individuals avoiding tax by holding $10 trillion of assets offshore. The amount held in secretive, low-tax countries is roughly equivalent to five years of the entire economic output of every person in the UK.

Rosa Pavanelli, general secretary at Public Services International, said: “The reason frontline health workers face missing PPE and brutal under-staffing is because our governments spent decades pursuing austerity and privatisation while enabling corporate tax abuse.  For many workers, seeing these same politicians now 'clapping’ for them is an insult..."

UK responsible for more than a third of $427bn global tax avoidance each year, report finds | The Independent

San Francisco Taxing the Rich

 The “extreme, shocking inequality” led Matt Haney, a member of the San Francisco Board of Supervisors, the city’s legislative body, to propose a new “overpaid executive tax” designed to help tackle the problem. “It is the 0.001% of society who are causing the problem, there has to be a reckoning or we will see more suffering and poverty and it is a concern to all of us – our health and quality of life. The pandemic has shown us how we are all connected, and when some people are unable to take care of themselves it can put us all at risk.”

San Francisco voters overwhelming backed a new law that will levy an extra 0.1% tax on companies that pay their chief executive more than 100-times the the median of their workforce. The surcharge increases by 0.1 percentage point for each factor of 100 that a CEO is paid above the median, up to a maximum of 0.6%. San Francisco’s new tax is estimated to bring in an extra $60m-$140m a year, revenue that will be spent on improving the housing and healthcare provision for the city’s poorest people. The tax, which comes into force in 2021, will be collected from all companies operating in the city, not just those headquartered there. The pay ratio will be calculated comparing CEO pay with the median of workers in the city, not worldwide.

Many of the biggest and best-known US companies would easily fall into the highest bracket. For example, Elon Musk, the chief executive of Tesla and the world’s third richest person, was paid $595m (£449m) last year, almost 10,000 times the firm’s median salary of just under $60,000.

Tim Cook, the chief executive of Apple, was paid $134m in 2019, more than 2,300 times the firm’s median pay of $57,600.

At Google’s parent company, Alphabet, Sundar Pichai’s $86m was only 350 times the median of $246,804. Unlike Tesla and Apple, Alphabet does not operate high street stores, which brings down average pay.

The pay levels of US chief executives have increased by an average of 940% since 1978, compared with a 12% increase in workers’ pay. 

Haney said that while the city desperately needs more money, the tax is also designed to “encourage companies to pay the lowest paid more or cut their executives’ huge pay...San Francisco has some of the most extreme inequality anywhere in the world, and many of the best-known companies growing here have some of the largest gaps between executive pay and worker pay,” said Haney.

Haney represents District 6, which includes the Tenderloin, Mission Bay and South of Market. He added: “The contrasts are especially stark in my district where I represent some of the richest parts of San Francisco – and the country – and some of the poorest parts with huge numbers of homeless people without access to healthcare.”

“The heath system was already very strained, and the pandemic has exposed it even more,” Haney said. “It has shown how stark the inequality is, poor people could not afford to shelter and people of color and essential workers bore the burnt of the pandemic. At the same time the richest have gotten much richer [from the pandemic] it shows the fundamental flaw of our economic system. A small number of people continue to make massive profits at a time when almost everyone else was suffering more than ever.

“The only way to solve inequality in San Francisco, is to make those making making huge profits to share it,” he said.

Shocking inequality: why San Francisco voted for 'overpaid executive tax' | Executive pay and bonuses | The Guardian

Surely, it is time to go beyond the reformist concept of sharing profits and begin demanding the end of the profit system, itself.

An Economic Debate

 Paul Mattick Jnr is a Marxist economist who we admire as we did his father before him. However, even comrades can disagree when it comes to analysing capitalism.

In a recent article, ‘Magic Money’ that can be read at the magazine ‘The Brooklyn Rail’ Money Magic – The Brooklyn Rail where he criticises Keynsianism. In the article, Mattick  suggests that businesses cause inflation (a rise in the general price level) by raising prices:

Businesses defended their bottom lines by raising pricesPrices increased throughout the economy as different business sectors struggled to make others pay the costs of the debt: the dread stimulus-induced inflation.“

But businesses normally charge what the market will bear and how can the market bear an increase in prices when trade is bad in a recession? It can’t. So another explanation must be sought. The one we have offered is that inflation is caused by the government overissuing an inconvertible currency (what the Americans call “fiat money”); this causes the currency to depreciate reflected in a rise in the price level, Hence the result of Keynesian policies was inflation in a recession — “stagflation”

Mattick explains well enough why and how “quantitative easing” raises stock market prices. Nevertheless, his explanation as to why it has not caused general inflation is still based on the assumption that businesses have the ability to raise – or not raise — prices at will.

His argument is that, because businesses are making capital gains from the stock exchange boom QE generates, they don’t need to raise prices

“Basically, none of this costs business anything, while the rise in stock prices disproportionately benefits the small super-wealthy minority who disproportionately own stocks, so there is no motivation to raise prices—especially under the deflationary conditions of a global business slowdown—producing an inflation-free expansion”.

So, he is saying that businesses are choosing not to raise prices even though they could do. But why would they not do so if they could since that would enable them to make more profit, which after all is their primary “motivation”?

The fact is that businesses don’t have a choice in the matter. They sell at a price that the market can bear and in a recession the market will not bear an increase. Mattick in fact undermines his whole argument by adding “especially under the deflationary  conditions of a global business slowdown.” Precisely. In other words, they don’t raise prices even with QE because they can’t. It’s not that they choose not to since they are already making enough money from capital gains on the stock market, but because they can’t.

The reason why QE hasn’t led to general inflation is that the extra money is injected only into the financial system but not into the general economy. So it inflates only the price of shares not prices generally, as explained in this article

It is government policy to inflate the general price level by about 2 percent a year. This they do by increasing  the supply of “basic money” (M0) in the usual way of allowing banks to withdraw money from their accounts with the Bank of England in the form of bank notes.


Mattick responded to this criticism with the comment:

‘I  wish these critics would address the issue in the [Brooklyn] Rail. They forget, of course, the “oil crisis”, a successful attempt to increase prices by restricting supply, which forced a general price increase. But it is also generally recognized that increased taxation and interest rates also impelled businesses to raise prices.’


In response to Adam Buick’s reply published in the Brooklyn Rail, elaborating on those above remarks, Paul Mattick responded:

Adam Buick accepts the monetarist explanation of inflation as due to an excess of money relative to economic growth, the 20th-century version of what in the 18th century was called the quantity theory of money (roundly criticized by Karl Marx in his own theory of money). This conception is a natural correlate to the idea that, apart from distortions due to governmental monetary policy, prices are normally set by “what the market … will bear” as businesses compete for maximum profits.

The reality of business life is not as simple as this picture suggests. Prices are affected by a multitude of factors besides supply and demand, including subsidies, quasi-monopoly positions of producers, and international exchange rates, as well as government credit and money policies. To take some recent extreme examples: Amazon, founded in 1995, did not make a profit until 2001, devoting its efforts in the meantime to driving other book purveyors out of business by keeping its prices ultra-low. Uber has followed this model, regularly posting multibillion dollar quarterly losses. On the other hand, prices (and profits) in the healthcare sector have risen steadily thanks to a complex system of government subsidy and other forms of business protection. To return to the stagflation years, the increased price of oil engineered by Organization of the Petroleum Exporting Countries (OPEC) in 1973—almost 10 years after a decline in corporate profits had become visible—was transmitted throughout the fossil fuel-based economy, despite the serious downturn often blamed on the “oil shock.” In 1974, while the recession was in full flood, according to the US Department of Commerce 60 percent of profits of American firms were “inventory profits,” measured by the difference between the prices paid for materials used and the (increasing) prices of finished products.

During the post-World War II period government economic policy became an increasingly important aspect of the capitalist economy, affecting the workings of the market mechanism (which had never really existed as a pure phenomenon). Worried about a resurgence of social unrest should unemployment and other forms of social misery increase too much, governments continued the expansionary monetary and fiscal policies evolved during the Depression and the war. In Europe, much government spending took the form of an enlarged welfare state, while the US put its money more into war and production for war, which combined an enlargement of production with keeping the world safe for democracy. Production for government use—although it merely redistributed already-produced profit to favored companies—maintained sufficient demand for business in general, experiencing declining profits and taxed to pay for government spending, to raise prices competitively in an attempt to boost bottom lines. Contrary to Adam Buick’s conception of inflation, all prices do not rise simultaneously, and in particular the price of labor power, wages, rises more slowly than commodity prices, improving business profitability.

At the present time, in contrast, already very low wage rates, historically low rates of business taxation, and a stagnant, low-growth economy have removed earlier “cost-push” reasons for price increases for many firms. Hence we have an expansion of the money supply, this time feeding financial speculation rather than industrial production, with a low level of general inflation.

Mattick’s first error, Buick explains, is about Marx and the Quantity Theory of Money. He did indeed “roundly  criticise” it where gold and/or a paper currency convertible on demand into a fixed amount of gold was the currency. He argued that it only applied when there was an inconvertible paper currency

Paul Mattick is right that the prices of commodities can rise for all sorts of reasons other than a depreciation of the currency but this does not alter the argument that over-issuing an inconvertible paper currency does cause a rise in the general price level. Obviously, contrary to what he supposed to be the argument, this does not happen immediately it one go; it spreads throughout the economy as sellers have occasion to increase their prices.

Here is what Marx wrote in chapter 3 section 2c of volume 1 of Capital, alluding “here only to inconvertible paper money issued by the State and having compulsory circulation”:

”The State puts in circulation bits of paper on which their various denominations, say £1, £5, &c., are printed. In so far as they actually take the place of gold to the same amount, their movement is subject to the laws that regulate the currency of money itself. A law peculiar to the circulation of paper money can spring up only from the proportion in which that paper money represents gold. Such a law exists; stated simply, it is as follows: the issue of paper money must not exceed in amount the gold (or silver as the case may be) which would actually circulate if not replaced by symbols. Now the quantity of gold which the circulation can absorb, constantly fluctuates about a given level. Still, the mass of the circulating medium in a given country never sinks below a certain minimum easily ascertained by actual experience. The fact that this minimum mass continually undergoes changes in its constituent parts, or that the pieces of gold of which it consists are being constantly replaced by fresh ones, causes of course no change either in its amount or in the continuity of its circulation. It can therefore be replaced by paper symbols. If, on the other hand, all the conduits of circulation were to-day filled with paper money to the full extent of their capacity for absorbing money, they might to-morrow be overflowing in consequence of a fluctuation in the circulation of commodities. There would no longer be any standard. If the paper money exceed its proper limit, which is the amount in gold coins of the like denomination that can actually be current, it would, apart from the danger of falling into general disrepute, represent only that quantity of gold, which, in accordance with the laws of the circulation of commodities, is required, and is alone capable of being represented by paper. If the quantity of paper money issued be double what it ought to be, then, as a matter of fact, £1 would be the money-name not of 1/4 of an ounce, but of 1/8 of an ounce of gold. The effect would be the same as if an alteration had taken place in the function of gold as a standard of prices. Those values that were previously expressed by the price of £1 would now be expressed by the price of £2.”

It appears Mattick hasn’t noted that passage that says that as soon as money becomes inconvertible the position is effectively reversed!

Also questioned is Mattick’s comment that

‘Contrary to Adam Buick’s conception of inflation, all prices do not rise simultaneously, and in particular the price of labor power, wages, rises more slowly than commodity prices, improving business profitability.’

Firstlya general rise in the price level doesn’t mean every price rises at the same time or indeed at the same rate. In slumps in particular, some prices can still fall against the general trend. But it’s the last part of that sentence that’s really odd – does he have any empirical evidence for it? Despite setbacks in recent times, we all know real wages have risen enormously since the inception of capitalism. But have commodity prices kept pace in real terms? There’s been a long term increase in average real commodity prices (presuming this is what he means) but it’s well behind long-term real wage growth in most advanced countries from what I’ve seen, though admittedly it’s difficult to get exact comparative data. Similarly business profitability (rate of profit?) hasn’t increased over the long-term, even if the accumulated stock of capital has increased hugely.

Also, his example of Amazon/Uber is an example of companies setting prices below the market rate (and being able to do so because of their disruptive business model and the scale of capital invested in them). Prices rising from government protection are rents, and even they are limited, ultimately, by the extent of effective demand in the economy.

State Subsidizes Low Pay Corporations

 A new report by the non­par­ti­san Gov­ern­ment Account­abil­i­ty Office (GAO), commissioned by Bernie Sanders, shows that corporations are soaking up profits—while paying workers so little they depend on government assistance to survive.

The report ana­lyzed data from 15 agen­cies admin­is­ter­ing Med­ic­aid and the Sup­ple­men­tal Nutri­tion Assis­tance Pro­gram (SNAP, or food stamps”) across 11 dif­fer­ent states. For all 15 agen­cies, Wal­mart was in the top four employ­ers of Med­ic­aid enrollees and SNAP ben­e­fi­cia­ries, while McDonald’s was in the top five for 13 of the 15 agencies.

Oth­er major retail­ers and fast-food com­pa­nies were found to be among the most com­mon employ­ers of work­ers receiv­ing Med­ic­aid and SNAP, includ­ing Dol­lar Tree, Dol­lar Gen­er­al, Tar­get, Ama­zon, Burg­er King, Wendy’s, Taco Bell, Home Depot, Lowe’s, Wal­greens and CVS. Rideshare ser­vice Uber — which recent­ly spent mil­lions of dol­lars suc­cess­ful­ly defeat­ing a Cal­i­for­nia law that would have made its dri­vers eli­gi­ble for basic work­er pro­tec­tions and ben­e­fits — was also ranked among the top 15 employ­ers of work­ers on pub­lic assistance.

The new GAO report echoes the con­clu­sions of sim­i­lar stud­ies by the Uni­ver­si­ty of Cal­i­for­nia, Berke­ley Labor Cen­ter in 2013 and 2015, which found that U.S. tax­pay­ers are sub­si­diz­ing large cor­po­ra­tions to the tune of $153 bil­lion per year in the form of pub­lic assis­tance pro­grams to sup­port their low-wage employees.

At a time when huge cor­po­ra­tions like Wal­mart and McDonald’s are mak­ing bil­lions in prof­its and giv­ing their CEOs tens of mil­lions of dol­lars a year, they’re rely­ing on cor­po­rate wel­fare from the fed­er­al gov­ern­ment by pay­ing their work­ers star­va­tion wages,” Sanders said of the report. That is moral­ly obscene.” Sanders added,   It is time for the own­ers of Wal­mart, McDonald’s and oth­er large cor­po­ra­tions to get off of wel­fare and pay their work­ers a liv­ing wage.”

The fed­er­al min­i­mum wage has been stuck at $7.25 an hour since 2009. While a major­i­ty of states have raised their respec­tive min­i­mum wages above the fed­er­al floor in the past decade, 21 states have not. Thanks to union-dri­ven cam­paigns like the Fight for $15 and Unit­ed for Respect (for­mer­ly OUR Wal­mart), eight states and mul­ti­ple cities have enact­ed grad­ual increas­es to a $15-per-hour min­i­mum wage in recent years. And on Novem­ber 3, vot­ers in Flori­da over­whelm­ing­ly approved a mea­sure to raise their state’s hourly min­i­mum wage to $15 by 2026.

In Geor­gia — where vot­ers will soon deter­mine the short-term fate of the $15 fed­er­al min­i­mum wage — the offi­cial state min­i­mum wage is a mere $5.15 an hour, with employ­ers only required to pay $7.25 because of the fed­er­al leg­is­la­tion passed over a decade ago. Accord­ing to the new GAO report, over 143,000 work­ing adults in Geor­gia depend on SNAP ben­e­fits and over 208,000 rely on Medicaid. 

The ral­ly­ing cry of fast-food and retail work­ers in recent years has been “$15 and a union.” Because they are orga­nized and can bar­gain with their employ­ers, union work­ers on aver­age earn high­er wages and have greater ben­e­fits than their nonunion counterparts. 

 Food inse­cu­ri­ty has more than dou­bled from 8.5 per­cent of all U.S. house­holds before the pan­dem­ic to 23 per­cent, and at least 8 mil­lion more Amer­i­cans have fall­en into pover­ty since May. More than 12 mil­lion U.S. work­ers and their fam­i­ly mem­bers have lost their employ­er-spon­sored health insur­ance in the midst of the pan­dem­ic.

No one in this coun­try should live in pover­ty. No one should go hun­gry. No one should be unable to get the med­ical care they need,” Sanders said. 

Millions of U.S Workers for Walmart, McDonald’s and Other Corporate Giants Rely on Food Stamps and Medicaid - In These Times