|The News Line: Editorial
Wednesday, 14 September 2011
Inflation carries on cutting wages, pensions and benefits
THE Office of National Statistics has given the figures on inflation rates for last month which confirm that British capitalism faces total economic collapse, while the working class and the middle class are being pauperised.
Figures show the UK inflation rate for August, as measured by the Consumer Price Index (CPI), increased from 4.4% to 4.5%.
Using the old method of calculating inflation, the Retail Price Index (RPI), the increase was from 5% to 5.2%.
The RPI includes items such as the cost of mortgages and housing, that is items on which ordinary working people and their families are much more likely to spend their money.
Each decimal percentage point increase in the inflation rate represents a huge rise in the cost of living, rises that hit the poorest the hardest.
For instance, the cost of basic clothing increased by 3.7% in August compared to the previous month – an increase caused by huge rises in the cost of cotton as speculators moved into the international commodity market in search of profits.
Housing, water and energy costs are now 5.1% higher than a year ago, while fuel price increases have pushed the cost of transport up by 7.4% above the rate in August 2010.
All these increases in the basic requirements of life are taking place while the bosses and the government have imposed wage-cutting pay freezes that they are determined will continue for the foreseeable future.
It is clear that there is no ‘economic’ solution to the crisis of capitalism.
The Bank of England is completely helpless in the face of the crisis.
The Bank has the target of bringing the inflation rate in the UK down to 2%, a target they have attempted to reach for ages and which they always promise will be achieved ‘some time in the future’.
What is really frightening the Bank is the fact that along with spiralling inflation the UK is experiencing a massive trade deficit.
According to the ONS the UK trade deficit in goods and services last month was £4.45 billion.
According to the bourgeois economists this is simply not supposed to happen.
By keeping interest rates at a historic low of 0.5% they fully expected UK manufacturing goods to be cheap enough to lead to the often promised export-led revival.
What they forgot was that under the Thatcher government the UK’s manufacturing base was completely smashed up.
Where does this leave the ruined UK economy which today faces spiralling inflation and recession at the same time – something that the classical bourgeois economists always held was impossible.
The traditional response to inflation running out of control is for the Bank of England to increase the interest rate to dampen down spending, create more unemployment, and thus bring down inflation.
What is clear today however, is that even the slightest increase in the interest rate would create a revolutionary turmoil with millions of people suddenly unable to pay their mortgages or rent.
Now the Bank is considering trying to get out of this situation by printing even more money, a move that can only increase inflation through devaluing the currency even more.
Nothing that the Bank or the massed ranks of bourgeois economists can come up with can solve the economic crisis of capitalism.
The crisis will be resolved only through the working class carrying out a socialist revolution, putting an end to this bankrupt system, by advancing humanity to a socialist society where production is for human need, not for the profit of a handful of capitalists.
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