Beating around the bush: polycrisis, overlapping emergencies, and capitalism / by Güney Isikara

Photo: Jernej Furman

Originally published in Developing Economics on November 22, 2022

It is in vogue nowadays to describe the multifaceted and intertwined crises of capitalism without referring to capitalism itself. Obscure jargon of ‘overlapping emergencies’ and ‘polycrisis’ are brought up to describe the complexity of the situation, and they serve, with or without intention, to conceal the culprit, namely the totality of capitalist relations. This short piece discusses the content, function, and limits of these evasive practices with concrete examples.

A Hodgepodge of Risks

“A polycrisis is not just a situation where you face multiple crises” writes Adam Tooze, it is rather a situation “where the whole is even more dangerous than the sum of the parts” (Tooze 2022a). Even at first sight, he is able to count seven radical challenges on the radar, including Covid, inflation, recession, hunger crisis, climate crisis, nuclear escalation, and a ‘Trumpite’ Republican Party storming back to power.

Former long-time Harvard President, Larry Summers celebrates the term polycrisis for its capacity to capture the many aspects at stake, and adds: “I can remember previous moments of equal or even greater gravity for the world economy, but I cannot remember moments when there were as many separate aspects and as many cross-currents as there are right now” (Summers 2022). Make no mistake, the approval comes from a life-time mouthpiece of the establishment, foe of the working classes and the oppressed, frank enough to argue as the then Chief Economist of the World Bank that “the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable”.

In Tooze’s view, in the 1970s, too much or too little growth, or late capitalism could be shown as the ultimate source of the problems at hand depending on one’s political position. What makes the current moment distinctive is the fact that “it no longer seems plausible to point to a single cause” (Tooze 2022b). He is thus quite explicit that one should avoid the use of grand narratives, or, in line with that, the designation of the capitalist mode of production as the root cause of the radical challenges upon us.

A similar concept is that of ‘overlapping emergencies’, which has been in use by mainstream outlets such as CNN or the United Nations, and has been adopted by critical thinkers. Isabella Weber, for instance, who has employed the term in popular and academic writings with various co-authors, argues that “we are living in a time of overlapping emergencies: the pandemic is not over, climate change is a reality, and geopolitical stability has reached a nadir” (Weber 2022).

Weber is one of the architects of the cap on the gas price in the German case, and an advocate of additional tools and institutions such as expanded state capacity to react to supply bottlenecks, monitoring of essential sectors and targeted intervention in case of need, and so forth.  Rather than regarding this as a one-shot, ad hoc policy response, Weber argues, “we need to generalise this approach and be prepared for targeted emergency stabilisation. We need economic disaster preparedness to guarantee that we are able to react to shocks in sectors that are important for the work of [the] whole economy. These are stabilization measures needed in our age of overlapping emergencies”. (Weber, in Gerbaudo 2022)

Although Weber’s broader scholarly work emphasizes the limitations of the market mechanism from a more systematic perspective, a common aspect of both ‘overlapping emergencies’ and ‘polycrisis’ as a framework is what seems a notable reluctance to explicitly acknowledge capitalism as an underlying force conditioning all facets of the ‘overlapping emergencies’ or ‘polycrisis’ at stake. The analysis and implications thereof are confined to the level of appearances, and, therefore, become incapable of grasping the web of contradictions that give rise to them. These contradictions, or the source of the emergencies seem to be outsourced to a shock (Russia-Ukraine war, climate destabilization, present and expected future pandemics) or state of affairs external to the political terrain on which they are recognized and discussed. Within this depoliticizing and neutralizing narrative, capitalism at best looms as an imperceptible, shadowy figure in the background, not worth problematizing, especially as the bells are constantly tolling, heralding crisis after crisis.

Reshape or Replace?

The reluctance to openly challenge capitalism, be it intentional or not, is also seen in the comeback of industrial policy, with much more attention now given to its proponents such as Ha-Joon Chang (2002) and Mariana Mazzucato (2018; 2021), to mention the most prominent ones. Industrial policy is portrayed as a way out of the looming long-term stagnation towards green transition. Prescriptions to industrialize are issued to peripheral economy so that they can ‘develop’, while disregarding structural relations of dependency, the global division of labor (Pradella 2014). As such, the role of exploitation as the ultimate foundation of capital accumulation—and the necessary unevenness of capital accumulation—is papered over. Similarly, the narrative of a mission-oriented reframing of economic growth creates the illusion that a nation or region can be unified under the government’s leadership as to promote inclusive capitalism, coordinating the interests of various sets of owners of resources.

Within this framework, ‘crisis’ is also employed as a tool to frame the narrative around symptoms of our global economic system. For example, Mazzucato “the world’s scariest economist” according to the Times (Rumbelow 2017), argues that “capitalism is at least facing three major crises”, namely a pandemic-induced health crisis, financial instability, and the climate crisis (Mazzucato 2020a). These are not considered to be crises of capitalism as such, but of how we do capitalism (Mazzucato 2020b).

It follows that “there’s all sorts of different ways to do capitalism. There’s the kind of maximization of shareholder value. There’s the more stakeholder value perspective […] that fundamentally affects how public and private come together” (Mazzucato, in Nelson 2019). It is the latter partnership model which allows for the government to determine the rate and direction of innovation-led growth, which prioritizes public interest over private gain. Problematizing capitalism as such and raising the alternative of socialism, Mazzucato argues, is a distraction, and “it’s not going to make [companies] do anything different from what they’re doing now” (ibid.).

However, this view overlooks the fact capitalism is about profit and accumulation, and not about use value, or wealth, in the first place. Accumulation can be temporarily restrained, redirected, curbed, yet the fundamentals of capitalism cannot be overturned by means of any mission-oriented partnerships.

An important lesson that tends to be forgotten is that the cuts in social services, decoupling of real wages from productivity, aggressive expansion of commodity frontiers and similar interventions as to extend terrains of accumulation in the last few decades are precisely the collected outcomes of capital’s backlash to the profitability crisis in the imperialist center in the 1970s, a crisis which followed from the attempts to tame capital and establish a class compromise within the larger context of growing ‘threat’ of socialism. It is therefore difficult to understand how critical scholars today can commit to the possibility of another ‘Golden Age’ capitalism, while the driving force and regulating principles of the capitalist system itself are left unchallenged in any substantial way.

Whither Capitalism?

The conceptual frameworks for viewing ‘crises’ discussed above have the common feature of ‘reshaping’ capitalism or ‘stabilizing’ the global economy in the face of multiplying crises dynamics. Rather than interrogating the structural forces that shape systemic outcomes, these frameworks suggest that the pressing manifestations of the ecological breakdown, geopolitical tensions and wars, supply bottlenecks, inflation, or other discussed phenomena result from policy mistakes, greedy powerful corporations, bad intentions, or a lack of historical knowledge, and not from the accumulation imperative constitutive of capitalism.

Problems such as ecological breakdown, militarization, inadequate and unjust responses to an ongoing pandemic, the rise of openly racist and anti-immigrant politics, which appear to be independent, are integral parts of the capitalist totality with its peculiar property, production and exchange relations, structural imperatives and limitations, the resulting exploitative and oppressive dynamics along with their conflictual subjectivities.

Take ecological breakdown, for instance, which seems to be the alarming phenomenon for many commentators. Without grasping capital as a set of social relations between the owners of means of production and workers laboring for wage, and without conceiving of this relation as the expansion of value as its single overriding goal, neither the exploitative character of capitalist growth nor the imperative of cost efficiency can be comprehended as structural phenomena. The systematic shifting of costs to third parties (Kapp 1971), ruthless plundering of non-human natures in the context of the continuous adjustment of commodity frontiers as to appropriate cheap nature (Moore 2015), and the failure to make any significant progress to slowdown ecological breakdown even in the face of its increasing recognition by the public would then appear as accidental or a result of policy mistakes.

What is at stake here is not reducing all argumentation and analysis to an abstract notion of capitalism as to render any concrete discussion redundant. Quite the contrary, concrete appearances can only be made sense of by carefully studying their inner connections—not only with one another, but also with the totality of capitalist relations, which is undeniably larger than the sum of its parts.

Indeed, we are confronted with challenges at an unprecedented scale and complexity. Indeed, they call for radical responses and ruptures. To do so, however, we should be able to call the culprit by its name in the first place. And perhaps pick our side more carefully in the light of histories of the intertwined crises at stake. Are we going to partner up with governments and institutions complicit in decades of ecocide, imperialist aggression and warmongering, impoverishment of working classes at home and abroad, and oppression of ‘the wretched of the earth’, or organize among and with the working classes and the oppressed to fight for a future free of capital’s dominion?

Güney Işıkara is a a Clinical Assistant Professor in Liberal Studies at New York University.

MRonline, November 28, 2022,

The Indian economy since Independence / by Prabhat Patnaik

Indian Farmers – Bacbone of Economy | Photo credit: IJR

The post-colonial state in India had two primary tasks before it: one was to overcome the hegemony of metropolitan capital, so that a development strategy in relative autonomy from imperialism could be pursued; the second was to attack landlordism both to free the agrarian population from its clutches, and to increase agricultural output for rapid industrialisation based on a growing home market. These two tasks were interlinked: unless agricultural growth was stepped up considerably by attacking landlordism, the inflationary and balance of payments pressures associated with a relatively autonomous development strategy would keep overall growth constrained, generating social contradictions that would force an eventual capitulation before imperialism.

The attack on landlordism however was limited. It amounted to getting rid of absentee landlords, turning the remaining landlords into agricultural capitalists on the land they retained as khudkasht, and giving ownership rights on whatever land was taken from the landlords to the upper layer of tenants. Land concentration in the sense of the proportion of land owned by, say, the top 15 per cent of landowners, remained unchanged, but the composition of this top 15 per cent changed; and the ground was cleared for capitalist farming in the countryside. At the same time, State investment in irrigation, in the development of better agricultural practices, and in extension activities, were all stepped up.

The main instruments used for overcoming the hegemony of metropolitan capital were: pervasive protection of the domestic economy; control over trade especially in agricultural products; keeping out agribusiness altogether (and even preventing Indian business houses from having any direct relationship with the peasantry); strict control over cross-border capital flows;  nationalisation in certain key areas, notably finance (though the substantial nationalisation of banks was to come later); and the development of the public sector as a bulwark against such hegemony. The development of a relatively autonomous capitalism which was the sine qua non of this strategy was sought to be kept under control by the institution of a policy of investment–and foreign exchange–licensing that also covered collaboration agreements with foreign capital.

This dirigiste period marked a substantial break from the dismal state of the colonial era. The growth-rate of both the overall gross domestic product and of the agricultural sector accelerated greatly. There was a remarkable turnaround in foodgrain availability per capita: the per capita foodgrain availability in British India which had been about 200 kg per annum at the beginning of the twentieth century, had dropped to an abysmal 136.8 kg by 1946-47; this drastic retrogression was reversed and per capita availability reached close to 180 kg by the end of the 1980s.

But this pace of change, though rapid relative to the colonial period, could not satisfy people’s aspirations. Even in 1973-74, despite the rise in per capita foodgrain availability and the associated fall in poverty defined through a nutritional norm, 56 per cent of the rural population could not access 2200 calories per person per day, and 60 per cent of the urban population could not access 2100 calories per person per day. Likewise, the 2 per cent annual increase in the magnitude of employment, while it may have broadly matched population growth, also meant a growth in the backlog of unemployment, which specially alienated the youth. The big bourgeoisie which had supported the project of building an autonomous capitalism, found the growth-rate of the economy too stifling once it had grown to a considerable extent and had become more ambitious; and even this growth rate became difficult to sustain because of the growing fiscal crisis of the State.

The push for a regime change, away from dirigisme towards neo-liberalism, came from the big bourgeoisie. It saw greater opportunities for itself in the new situation by getting integrated with international finance capital that had emerged as the hegemonic element after the oil price shocks of the seventies. The middle class backed it up: it was lured by the prospects of greater employment if activities were outsourced from the metropolitan economies to India, as neo-liberalism promised. And the working people, who might have been expected to stand up in defence of dirigisme, did not do so, as that regime had belied their expectations. Starting from 1985 therefore, but especially after 1991, India moved to a neo-liberal regime which meant freer cross-border flows of goods and services, and of capital, including above all of finance; it also meant the end of licensing.

This was not just a change of economic regime. It entailed the reassertion of the hegemony of metropolitan capital over the Indian economy, though in a vastly altered context, with the big bourgeoisie integrated with it and with segments of the upper middle class acquiescing in this reassertion. The contradiction between imperialism and the Indian society that had united several classes against imperialism in the pre-independence period, of which the dirigiste strategy after independence was seen to be a carryover, now divided the nation itself. The dividing line in short shifted from its location between imperialism and the nation to within the nation itself, between international finance capital, together with the domestic big bourgeoisie integrated with it, on the one hand, and the working people on the other.

An immediate fall-out of this related to the State. Instead of being an entity apparently standing above classes, it became concerned exclusively with the interests of the big business and landlords, and international finance capital with which big business got integrated. A manifestation of this shift was the withdrawal of State support from petty production, including peasant agriculture, and an opening up of this sector to encroachment by international agribusiness and the domestic big bourgeoisie. Such withdrawal of support, eg, of price-support for cash crops (the attempt to withdraw price support for foodgrains was defeated by the year-long kisan agitation), and of subsidies on inputs including credit, led to a sharp decline in the profitability of peasant agriculture. The crisis that followed for peasant agriculture resulted in mass suicides and also peasant emigration to cities in search of non-existent jobs, which only swelled the relative size of the reserve army of labour.

Neo-liberalism in short was loaded with false promises. No doubt the growth rate of GDP in the economy went up, but the rate of growth of employment was halved compared to earlier, to about 1 per cent per annum, because of the high rate of productivity growth that was simultaneously labour-displacing. This acceleration in labour productivity growth came about because of the exposure of domestic producers, not just those exporting but even those producing for the home market, to foreign competition because of the withdrawal of protection under neo-liberalism. The rise in the relative size of the reserve army of labour showed itself not necessarily as a higher unemployment rate, but as the sharing of a given number of jobs (each with a given wage) among more and more people. This rise however kept down the wages even of the organised workers by reducing their bargaining strength.

By squeezing the peasants and petty producers, and by reducing the bargaining strength even of the organised workers, the neo-liberal regime necessarily reduced the average real income per capita of the working people of the country which manifested itself in an increase in the poverty ratio, no matter how high the GDP growth might have been. The per capita foodgrain availability that had risen until the end of the 1980s, at best stagnated thereafter. The proportion of the rural population that fell below 2200 calories per person per day in 1993-94 was, according to the National Sample Survey, 58 per cent; it went up to 68 per cent by 2011-12. The next NSS in 2017-18 came with such dismal findings (apparently per capita real expenditure had fallen by 9 per cent between 2011-12 and 2017-18 in rural India) that the Modi government suppressed them, and decided even to discontinue the NSS in its old form! In urban India the proportion of people falling below 2100 calories per person per day had increased from 57 to 65 per cent between 1993-94 and 2011-12.

The working people’s misery, increasing even in the heyday of neo-liberalism (and thus showing the bogusness of the theory of “trickle down”), has accentuated sharply as neo-liberalism has moved into a crisis, from which there is no clear way out. This crisis is hardly surprising. We saw earlier the tendency under neo-liberalism for the per capita real incomes of the working people to decline on average, even as labour productivity increases, which increases the share of economic surplus in output (this in fact is a world-wide phenomenon). This is the reason behind the sharp rise in income inequality in India and elsewhere during the period of neo-liberalism.

Since a rupee in the hands of the surplus earners generates less consumption than the same rupee in the hands of the working people, such an income shift tends to create a tendency towards over-production. This tendency, kept in check in the world economy because of the asset-price bubbles in the U.S., which artificially increase demand by making asset-holders feel spuriously wealthier, has asserted itself after the collapse of the American housing bubble. The world economy has been more or less in a state of stagnation since then, and this has caught up with the Indian economy too, pushing it towards greater unemployment, and accentuated distress. Matters have been made even worse by the Modi government’s ill-conceived measures like demonetisation and the introduction of the GST (the work on which had begun under the Congress earlier).

This crisis cannot be overcome within the neo-liberal regime. The only possible mechanism for overcoming it, viz. larger State expenditure, can work if this expenditure is financed either by a fiscal deficit or by taxing the surplus- earning rich; if it is financed by taxing the working people, who more or less spend their entire income anyway, then one kind of demand would simply get substituted by another, with no net expansion in demand. But both an increase in the fiscal deficit and an increase in taxes on the rich are unacceptable to international finance capital; if they are resorted to under neo-liberalism then finance will simply quit the country en masse, causing an acute financial crisis.

On the other hand, neo-liberalism’s own way of coping with the crisis, which is to give tax concessions to the capitalists in the hope that they will raise investment, actually worsens the crisis: the capitalists just pocket the money without investing a rupee more (they will do so only if demand has increased), while the reduction of expenditure elsewhere for financing these handouts to capitalists, actually reduces demand.

Getting out of this crisis, which has nothing to do with the pandemic and which predates the pandemic (though the pandemic has added to it in the short-run) requires therefore a transcendence of neo-liberalism. But precisely to forestall such a possibility, neo-liberalism in crisis has made an alliance with Hindu communalism to change the discourse. The aim of this corporate-Hindutva alliance is to shift the discourse away from issues of material life to the alleged “atrocities” committed, whether in the present or in the past, by a hapless minority group. Its aim is to keep people engaged in hatred against this group while they suffer growing distress, even as international capital and domestic big business add to their wealth despite the crisis, by getting hold of assets, of raw material extracting rights, and of investment opportunities, from the public sector and the petty production sector.

Big business finances the Hindutva Party to come to power and supports it through the media it controls; in return it increases its wealth inter alia through measures of primitive accumulation of capital. And any opposition to this process is stifled through a combination of blatant authoritarianism, the creation of disunity among the people, and the use of hoodlum elements against dissenters.

Neo-liberalism even in its heyday increases economic inequalities greatly, abrogates whatever democratic content there was in the operation of the State, subverts the autonomy of the State, and increases absolute poverty; in addition however it ends up getting enmeshed in stagnation and mass unemployment from which there is no exit. Because of this dead-end, it imposes a neo-fascist political regime upon the country. This regime can be overthrown not just by democratic elements coming together. That of course is necessary; but the transcendence of neo-fascism requires the transcendence of the conjuncture that produced it, viz. the crisis produced by the neo-liberal order, for which this order itself has to be transcended. This is a difficult task; it can be accomplished only by the widest mobilisation of the working people.

Prabhat Patnaik is an Indian political economist and political commentator. His books include Accumulation and Stability Under Capitalism (1997), The Value of Money (2009), and Re-envisioning Socialism (2011).

MR Online, August, 13, 2022, The Indian economy since Independence / by Prabhat Patnaik

The anatomy of inflation / by Jack Rasmus

Whether the Fed can succeed in taming inflation and do so without precipitating a recession remains to be seen but is highly unlikely.

The focus of the U.S. media and economists for the past several months has been increasingly on inflation. In recent weeks, however, U.S. policymakers awoke as well to the realization that inflation is chronic, firmly embedded, and growing threat to the immediate future of the U.S. economy.

A qualitative ‘threshold of awareness’ was reached this past week when the U.S. central bank, the Federal Reserve, accelerated its pace of rate hikes by 75 basis points—purportedly to bring the rate of price hikes under control. Whether the Fed can succeed in taming inflation and do so without precipitating a recession remains to be seen but is highly unlikely. Taming inflation without provoking a recession is thus the central economic question for the remainder of 2022.

Clearly some think this is possible—i.e. that further rate hikes will moderate the pace of inflation without driving the real economy into recession and result in what is called a ‘soft landing’. Clearly the Fed and the Biden administration believe that will happen. But a growing chorus of even mainstream economists and bank research departments don’t think so. Almost daily new forecasts by global banks and analysts appear indicating recession is more than 50-50 likely—and arriving sooner in late 2022 than in 2023.

This article concludes unequivocally that today’s Fed monetary policy of escalating interest rates is not capable of reducing inflation while avoiding recession—any more than similar Fed rate hikes in 1980-81 did. And this time rate hikes will not need to rise as high as in 1980-81 before they trip the economy into another bona fide recession.

As of June 2022 the Fed raised its benchmark federal funds interest rate to a high end range of 1.75%. It plans to double that at least by the end of 2022, to a 3.5% to 4% range. But the U.S. economy is already nearly stagnant and signs are growing it is becoming even weaker. As this writer has argued since the fall of 2021, a Fed rate to 4% or more will almost certainly mean a ‘hard landing’, i.e. recession. Moreover, it will not reduce inflation that much either. Prices will not slow appreciably until the U.S. is actually well into a recession. That means a condition called stagflation, a contracting real economy amidst rising prices and an economic scenario not seen in the U.S. since the late 1970s. Stagflation has already arrived if one considers the almost flat U.S. economy in the first half of 2022; and it will deepen once recession begins in the second half.

To understand why inflation won’t abate much in 2022, and why recession will occur sometime before the current year’s end, it is necessary first to understand the Anatomy of Inflation (i.e. structure and evolution) that has emerged over the past year. That anatomy, or structure, of inflation shows its current causes are not responsive to Fed rate hikes in either the short or even intermediate term of the next twelve months.

It is necessary to understand why monetary policy in the form of Fed rate hikes will not dampen inflation much before recession occurs—as well as why those same rate hikes will have a greater effect on precipitating a recession long before the Fed can bring the inflation rate down to its long run historic target of only 2%.

The Anatomy of U.S. Inflation: 2021-22

After rising moderately around 4% annual rate when the U.S. economy first opened in the spring of 2021, it is important to note the pace of consumer prices remained virtually steady for the following four months throughout the summer of 2020, at around 5.5%. (Bureau of Labor Statistics New Release, May 11, 2022, Chart 2). That pace began to rise steadily every month only after late August 2021.

Beginning last September 2021 U.S. Inflation not only began accelerating but has since become embedded and chronic. Even U.S. policy elites can no longer deny it. Earlier in 2022 Treasury Secretary Janet Yellen opined publicly that U.S. inflation would be ‘short lived and temporary’. In June she then recanted and apologized for the inaccurate prediction. And this past week admitted that inflation is now ‘locked in’ for the remainder of 2022.

What then are the reasons and evidence inflation has become permanent and chronic—at least until recession sets in?

There’s no doubt that Demand, due to the reopening of the U.S. economy after the worst of Covid in March-April 2021 contributed to the emergence of inflation last spring-summer 2021. But excess Demand is not the primary explanation for it. Demand for goods and services rose during April-May 2021 as workers returned to their jobs and wage incomes grew. However, the record shows after rising modestly in April-May 2021, consumer prices leveled off throughout the summer of 2021, June to August 2021, at just over 5%. It remained steady thereafter at that level for those months as the economy continued to re-open.

The surge in prices at a faster pace only began in the late summer, around August-September. That price escalation coincided with rising problems in Supply chains—both in the form of global imports to the U.S. as well as domestic U.S. supply issues associated with goods transport, warehousing, and skilled labor access. In short, as the U.S. economy attempted to reopen global supply chains were still broken and, domestically, U.S. Product and Labor markets were severely wounded by the impact of Covid events of March 2020 through March 2021.

Conservative politicians, business interests, and their wing of the mainstream media nonetheless claimed at the time—and mostly still maintain today—that it was the too generous, excess income support from the American Relief Plan (ARP) social safety net programs passed by Congress in March 2021, and their predecessor programs a year before, that was responsible for excess Demand in mid-2021 and thus the escalating inflation that followed after September of that year.

But even U.S. government data don’t support that view. The ARP authorized only $800 billion spending in the entire next twelve months. The 3rd quarter—the first full quarter when ARP program spending hit the economy and when prices began their accelerations around August—saw probably no more than $200 billion from ARP programs entering the economy. The supplemental income checks had already been distributed and mostly spent in the 2nd quarter. What remained in the 3rd of any magnitude were supplemental unemployment benefits, modest rental assistance, and the child care subsidies for median and low income families introduced that July. $200 billion injection was probably high as well. Certainly not all the $200 billion income injected was actually spent that quarter. (As economists admit, consumers’ marginal propensity to spend added income is always less than ‘one’—i.e. they don’t immediately spend it all). $150 billion or so was probably actually spent. That $150 billion compares to a 3rd quarter overall GDP of more than $5 trillion! There’s no way an economy that size could result in the price acceleration that began at that time from an injection of $150 billion on more than $5 trillion.

Moreover, $150 billion may be too high an estimate as well. Much of the ARP stimulus was cut off significantly by early September, the last month of the 3rd quarter: for example, supplemental unemployment benefits provided previously for 10 million workers was ended, along with rental assistance, the Payroll Protection Plan grants for small businesses, and other lesser injections.

In short, to the extent Demand contributed to the rise in prices in both the 2nd and 3rd quarters, that Demand effect is explainable far more by the continued reopening of the economy rather than attributable to the income support programs of the American Rescue Plan that amounted to no more than $100-$150 billion throughout the entire 3rd quarter when prices began to accelerate. So much for arguments that workers were too flush with income from jobs they were returning to and the government over-generous ARP income programs! The data just don’t support the view it was Demand and government spending Demand in particular that was responsible for the onset of escalating prices last September 2021.

The more likely explanation behind escalating prices in late summer 2021 was global supply chain bottlenecks, especially involving goods imports from Asia and China in particular. In August-September it was mostly goods prices driving inflation. Consumer spending on services again was just emerging. A problem with Supply chains was corporations around the world had shuttered their operations during the worst of Covid, allowing workers and suppliers to drift away. When the economy began to reopen in the summer of 2021, many of these workers and suppliers were not available. That was especially true with global container and other shipping companies. There just weren’t enough ships available to deliver goods from Asia to North America. What shipping was available was initially dedicated to transport between Asia countries first. In addition, USA West Coast ports had a similar problem: the ports were short of traditional workers and transport. Not only port workers but independent truckers that carried the freight from the Los Angeles port, for example, to inland central warehouses. And from those mega-warehouses to regional warehouses from which goods are then distributed to companies’ storage and stores. Like the trucker shortage, there was an insufficient return of workers to warehouses as well. A similar, somewhat lesser labor shortage problem existed with railway workers. In other words, domestic U.S. supply chains were still broken—along with global supply.

As inflation rose and the public was increasingly aware of it, corporations with monopolistic power (i.e. where four or five or fewer companies produced 80% or more of the product or service in the economy) manipulated and took advantage of that public awareness of rising inflation in order to raise their prices—even when their respective industry was not experiencing supply chain issues.

A good example is the U.S. oil corporations that didn’t have a supply problem at all at the time and still don’t. U.S. oil corps were capable then, as now, of raising their output of oil in the U.S. (i.e. supply) by at least 2 million more barrels/day. They chose instead to leave that oil in the ground, not to expand production at U.S. refineries, and refused to reopen many of the drilling wells they had capped during the worst of the preceding 2020-21.

In the months preceding the onset of Covid shutdowns in March 2021 U.S. oil corps were producing more than 13 million barrels per day; by fall 2021 they were producing barely 11 million per day (and still are). Nevertheless, U.S. oil corporations raised their prices faster than perhaps any other industry. By the fourth quarter 2021 energy prices were rising at 34.2% annual rate, according to the U.S. GDP accounts (U.S. Bureau of National Economics, NIPA Table 2.3.7).

With prices now surging after September 2021 the important new factor also driving prices was thus neither supply nor demand related. It was price manipulation by U.S. corporations with market power to do so. And it was not just oil corporations, although they were responsible for more than half of the price index surge at the time—and still are. Other food processing corporations, airlines, utilities, and so forth with monopolistic power did so as well. This political (market power) cause, combined with Demand and Supply forces, after August resulted in yet a further surge of prices through the remainder of 2021.

Beginning in 2022 further forces also began to determine the U.S. Anatomy of Inflation:

Commencing March 2022, added and overlaid onto 2021 inflation drivers was U.S. and EU sanctions on Russia commodities, which were especially critical as the global economy was still in the process of trying to reopen and restore and heal Covid shattered global supply chains.

Russia supplies 20% to 30% of many key global commodities—including oil, gas and nuclear fuel processing in the energy sector. But also industrial metals commodities like nickel, palladium, aluminum and other resources required for auto, steel and other goods manufacturing in the U.S. and EU. Also agricultural commodities like 30% of the world’s wheat; 20% of global corn production used in production of animal feed; 75% of critical vegetable oils like sunflowers; and 75% potash fertilizer—to name the more important.

Even before U.S./EU sanctions on these key Russian commodities began affecting actual supply, global financial commodities futures market speculators began driving up commodity inflation in anticipation of the sanctions eventually taking effect. Speculators were quickly followed by global shipping companies that jacked up their prices before actual sanctions. They were joined in turn by shipping insurance companies. All along the commodities supply chain, capitalists in sectors capable of exploiting the coming sanctions-driven shortages began manipulating prices in anticipation. Physical shortages from sanctions thereafter began to have a further impact late in 2nd quarter 2022 as war in Ukraine intensified and sanctions were implemented. The speculators, shippers and insurers thereafter added further price increases to the general sanctions effect.

When U.S. Treasury Secretary Yellen voiced her prediction earlier in 2022 that inflation would be temporary she no doubt did so based on the erroneous assumptions that somehow the global and domestic supply chain problems of late summer 2021 would be resolved in 2022, and corporate price gouging that overlaid supply chain issues would also somehow abate. She clearly did not factor in to her inflation prediction the very significant effect of war and sanctions.

President Biden called the now further escalation of prices in spring 2022 as ‘Putin’s Inflation’. That claim might be laid on shortages of some agricultural products directly disrupted in Ukraine war zones, but can’t be laid on global energy prices which were virtually all from within Russia’s economy not Ukraine’s. Thus to the extent inflation is due to rising energy prices—which accounts for more than half the total price rise at the consumer level—it is more attributable to Biden’s sanctions and thus is ‘Biden’s Inflation’ rather than Putin’s.

By the 2nd quarter 2022 all the above combined forces driving inflation (i.e. moderate Demand, global & domestic broken Supply chains, widespread corporate price gouging, oil, energy & commodities prices) converged to produce an embedded, chronic, and continued rise of inflation.

For the period for which latest prices are available, March-May, consumer prices (CPI Index) have been rising at a steady 8.5% rate while producer prices that eventually feed into consumer prices have been rising at an even faster rate of 10-11% for the three months. Furthermore, pressure on producer prices (that feed into consumer prices) may accelerate even that 10-11% current producer price hike average. For example, the most recent Producer Price Index released for May shows the category of ‘Intermediate’ goods and services prices are rising even faster. Intermediate processed goods (e.g. steel) have been rising at a 21.6% annual rate over the past year, while intermediate unprocessed goods (e.g. natural gas) have risen at a 39.7% annual rate.

Supply chain and Demand forces of the past year, May 2021 through May 2022, will likely continue driving prices at similar rates through this summer 2022 and likely the rest of the year as well. There appears no end in sight, for example, for the Ukraine war and the Sanctions on Russia which continue to tighten. Price gouging in these commodities impacted by war and sanctions will certainly continue as will the general phenomenon of monopolistic corporations price gouging. Commodity futures financial speculators will continue to speculate; shipping companies continue to manipulate price to their advantage; and insurers continue to hike their rates on bulk commodity shipping worldwide.

In addition, new forces are also emerging this summer 2022 that will contribute still further to chronic inflation throughout the rest of 2022 and possibly even further beyond.

One such new factor is rising Unit Labor Costs for businesses, which many will try to pass through to consumers this summer and beyond. Unit labor costs (ULCs) are determined by productivity change for businesses and/or wages. If wages rise, ULCs rise; similarly if productivity falls, ULCs rise. While wages appear to be moderately rising in nominal terms, productivity is falling precipitously. The most recent data on productivity trends in the U.S. indicate productivity collapsing at the fastest rate since data was first gathered in 1947. That’s because business investment is stalling in the face of growing economic uncertainty about inflation as well as likely recession. Wage rise contribution to rising ULCs is on average modest, as Fed chair Jerome Powell has admitted. Wage pressures are mostly skewed to the high end of the labor force where highly skilled professionals are ‘job hopping’ to realize wage income gains of 18% on average; meanwhile, low paid service workers’ wages are also rising some as many have refused to return to work at the U.S. minimum wage of only $7.25/hr which hasn’t changed since 2009. Service businesses have had to offer more. But the great middle of the U.S. labor force is not experiencing wage gains to any significant extent. Thus the ‘average’ wage hikes, as moderate as they are, do not account for the rising ULCs which businesses will soon, if not already, begin to ‘pass on’ to consumers in higher prices for the remainder of 2022. Treasury Secretary Yellen herself now admits inflation will continue high throughout 2022—no doubt in part reflecting the new forces adding to inflation pressure.

Another emerging factor of growing importance to the continuation of inflation trends throughout 2022 is the now emerging ‘inflationary expectations’ effect. Cited by Fed chair, Jerome Powell, in his most recent press conference following the Fed’s latest interest rate announcement, Powell referred to the recent University of Michigan consumer survey showing inflationary expectations now definitely emerging as well.

As inflation continues to rise, inflationary expectations mean consumers will purchase early, or even items they had not planned to buy, in order to avoid future price hikes. That means another Demand force that adds to the general anatomy of inflation, just as falling productivity and higher ULCs represent an additional Supply force contributing to future price hikes.

In short, now entering the mix of causes in 2022 are inflationary expectations, falling productivity driving up ULCs and cost pass-through to consumers, and the growing pressures on commodity inflation due to the Ukraine war and sanctions on Russia.

When all these emerging 2022 factors are added to the 2021 economy reopening and Supply chain causes of inflation—as well as the continuing corporate price gouging—the broader picture that appears reveals multiple causes of inflation—many of which mutually feed back on the other; some political, some unrelated to market supply or demand, and none of which appear to be moderating significantly. In fact, corporate price gouging, manipulation of commodities markets by speculators, Ukraine war, and sanctions on Russia all represent contributions to inflation that may well accelerate over the next six months.

Stagflation May Have Already Arrived

Stagflation is generally defined as inflation amidst stagnate growth of the real economy. That is already upon us in its first phase: U.S. GDP for the 1st quarter of 2022 recorded a decline of -1.5% while the Atlanta Federal Reserve bank’s ‘shadow’ GDP estimates zero GDP (0.0%) growth for the current April-June 2nd quarter! Should the Atlanta Fed’s forecast prove accurate, that’s stagnation at best. And if the 2nd quarter actually contracts, then it represents a yet deeper phase of Stagflation.

Just as mainstream economists and media debated for months whether current inflation was chronic or temporary, the same pundits now debate whether stagflation will soon occur when in fact it’s actually already arrived. (see Larry Summers’ latest pontification to the business media where he warns of stagflation around the corner when it’s already turned it).

The next phase of stagflation coming late 2022 and early 2023 will reflect the contraction of the real economy—i.e. a recession. GDP won’t simply stagnate with no growth, but decline. Indeed, recession is already damn close if we are to believe the Atlanta Fed’s 2nd quarter GDP forecast and the various early economic indicators now appearing. Stagflation may already be here, as the 1st quarter U.S. GDP -1.5% contraction is followed by another contraction—not just zero growth—in the current 2nd quarter. Two consecutive quarters of contraction define what’s called a ‘technical recession’. Actual definition of a recession is left to the National Bureau of Economic Analysis, NBER, economists to call. They always wait months after the fact to make their call. But ‘technical recessions’ almost always result in NBER declarations subsequently of actual recession. And the U.S. economy is clearly on the cusp of a technical recession at minimum.

Biden’s Empty Inflation Solutions

Biden’s various solutions to date are more public relations events designed to make it appear something is being done instead of actions that directly address the problem of embedded and chronic U.S. inflation.

Biden’s proposed solutions include getting U.S. oil corporations and other global producers of oil to raise their output; somehow convincing countries who agree with U.S. sanctions in Russia to enforce a ‘cap’ on the price of oil worldwide; reducing tariffs on imports from China to the U.S.; offsetting the price of energy productions for U.S. consumers by lowering the price of other consumer goods; increasing competition among U.S. monopolistic corporations by subsidizing new competitors to enter their industries; introducing a federal gas tax suspension.

Despite Biden’s railing against the oil companies, shipping companies, and other obvious price gougers, it’s been all talk and no action. All his proposals have not been implemented to date. They’ve been either just ideas raised with no actual executive or legislative proposals. Or they’ve already been rejected by Congress. Or, even if implemented, will be ‘gamed’ and absorbed by corporations with little net impact on consumer prices. Or will produce insufficient additional global output of oil, gas, and energy products to dampen energy price escalation much.

Biden’s strategy has been to ‘talk the talk’ without the walk, as the saying goes.

The only actual solution the administration has quietly agreed upon, but dares not admit publicly, is to have the Fed precipitate a recession by means of its record level of rapid interest rate hikes over this summer 2022 now in progress. And as they say, ‘that train has left the station’. It’s a done deal. Biden’s ‘solution’ is to have the Fed precipitate a recession.

Enter the Federal Reserve

The Fed itself has already decided on recession! Moreover, it’s a policy template that’s been employed before.

The origins of the coming recession appear very much like the 1981-82 recession. At that time the Fed also precipitated a recession by aggressively hiking interest rates with the objective of ‘Demand destruction’ as it is called. In other words, then as now, the strategy was to make households’ and workers’ pay by destroying wage incomes by means of layoffs, for what was essentially at the time a Supply caused inflation associated with rising global oil access destruction by OPEC and middle east oil producers.

At 75 basis points Fed rates are already rising at a pace not seen since 1994. !981-82 rate hikes were even more aggressive. However, as this writer has argued, the global economy is more fragile and interconnected today than it was in 1980-81 when the Fed raised rates to 15% and more. Today’s global capitalist economy won’t sustain rate hikes even a third of that 15% before contracting sharply.

It is more likely than not that the Fed will continue raising interest rates at the 75 basis points when it next meets in July, and possibly the same in the subsequent meeting. At 4% for its benchmark federal funds rate (not at 1.75%) the economic damn will crack. It won’t even get to the one-third of 1982 level, the 5%.

Why the economy will slide into recession well before the 5% rate level was discussed by this writer in 2017 in the book, ‘Central Bankers at the End of Their Ropes: Monetary Policy and the Coming Depression’, Clarity Press.

In the sequel to this essay, why the U.S. real economy is quite fragile today is addressed including most recent evidence of a weakening U.S. real economy. Also addressed is why Fed federal funds rate increases to 4% or more will precipitate a serious U.S. recession sooner rather than later, and, not least, why Fed rate hikes of that magnitude will likely have severe negative impacts on financial asset markets as well, provoking serious liquidity and even insolvency crises in the global capitalist financial system.

Should financial asset contraction occur along with a contraction of the real economy, then the 2022 recession will almost certainly deepen in 2023. And in that case the economic crisis will appear more like 2008-10 as well as 1981-82. Or perhaps a merging of the two recession dynamics into one.

Jack Rasmus is author of the recently published book, ‘The Scourge of Neoliberalism: US Economic Policy from Reagan to Trump’, Clarity Press, 2020.

L.A. Progressive, June 21, 2022,

Inflation, wages, and profits / by David Ruccio

CEOs Get Huge Raises While Workers Suffer (Photo: Jobsanger)

On one side of the debate are mainstream economists and lobbyists for big business, the people Lydia DePillis refers to as having a simple mantra: “Supply and demand, Economics 101.” In their view, inflation is caused by supply and demand in the labor market, which is allowing workers’ wages to increase at an unsustainable rate (a story that, as I showed in April, has no validity), and supply and demand in the economy as a whole, with too much money chasing too few goods.

Simple, straightforward, and. . . wrong.

Fortunately, there’s another side to the debate, with heterodox economists and progressive activists arguing that increasingly dominant corporations are taking advantage of the current situation (the pandemic, disruptions in global supply-chains, the war in Ukraine, and so on) to jack up prices and rake in even higher profits than they’ve been able to do in recent times.

Josh Bivens, of the Economic Policy Institute, has offered two arguments that challenge the mainstream story: First, while “It is unlikely that either the extent of corporate greed or even the power of corporations generally has increased during the past two years. . . the already-excessive power of corporations has been channeled into raising prices rather than the more traditional form it has taken in recent decades: suppressing wages.” Second, inflation can’t simply be the result of macroeconomic overheating. That would suggest, at this point in a classic economic recovery, that profits should be shrinking and the labor share of income should be rising. As Biven notes,

The fact that the exact opposite pattern has happened so far in the recovery should cast much doubt on inflation expectations rooted simply in claims of macroeconomic overheating.*

So, we have dramatically different analyses of the causes of the current inflation, and of course two very different strategies for combatting inflation. The mainstream policy (as I also wrote about in April) is to slow the rate of growth of the economy (for example, by raising interest rates) and increase the level of unemployment, thus slowing the rate of increase of both wages and prices. And the alternative? Bivens supports a temporary excess profits tax. Other possibilities—which, alas, are not yet being raised in the debate—include price controls (especially on commodities that make up workers’ wage bundles), government provisioning of basic wage goods (including, for example, baby formula), and subsidies to workers (which, while they wouldn’t necessarily lower inflation, would at least make it easier for workers to maintain their current standard of living).

What we’re witnessing, then, is an important debate about the causes and consequences of inflation. But, as DePillis understands, the debate is about much more than that:

The real disagreement is over whether higher profits are natural and good.

In the end, that’s what all key debates in economics are about. Profits are the most contentious issue in economics precisely because the analysis of profits reflects both a theory and ethics about two things: whether capitalists deserve the profits they capture and what they can and should do with those profits. For example, profits can be theorized as a return to capital (and therefore natural and fair, as in mainstream economics) or they are the result of price-gouging (and therefore social and unfair, as in Bivens’s theory of corporate power).**

Similarly, capitalists can be seen as investing their profits (and therefore making their firms and the economy as a whole more productive, with everyone benefitting) or they can distribute a significant portion of their profits toward other uses (such as pursuing mergers and acquisitions, engaging in stock buybacks, and offering higher dividends, which do nothing to increase productivity but instead lead to more corporate concentration and make the distribution of income and wealth even more unequal).

Mainstream economists and capitalists have long sought to convince us that profits are both natural and good. In other words, when it comes to corporate profits and escalating charges of “greedflation,” they prefer to see, hear, and say no evil. The rest of us know what’s actually going on—that corporations are taking advantage of current conditions to raise prices, both to increase their profits and to lower workers’ real wages. We also know that traditional attempts to contain inflation through monetary policy will hurt workers but not their employers or the tiny group that sits at the top of the economic pyramid.

It’s clear then: the debate about inflation is actually a debate about profits. And the debate about profits is, in the end, a debate about capitalism. The sooner we recognize that, the better off we’ll all be.


*Even the Wall Street Journal admits that the wage share is not in fact growing: “The labor share of national output is roughly where it was before the pandemic.” Moreover, the current situation represents just a continuation of the trend of recent decades: “Over the last two decades. . . the share of U.S. income that goes to labor has fallen, despite periods of low unemployment.”

**Corporate profits can also be theorized as the result of exploitation (and thus a different kind of social determination and unfairness, as in Marxian theory).

David Ruccio (@Dfruccio) used to teach in the Department of Economics at the University of Notre Dame (until it was split and renamed) and then in the Department of Economics and Policy Studies (until it was dissolved). He is currently Professor of Economics “at large” as well as a member of the Higgins Labor Studies Program and Faculty Fellow of the Joan B. Kroc Institute for International Peace Studies. Ruccio blogs at Occasional Links and Commentary on Economics Culture and Society and is a contributor to the Real-World Economics Review Blog.

MR Online, June 11, 2022,

Neo-liberalism and anti-inflationary policy / by Prabhat Patnaik

Federal Reserve Board of Governors | Photo: Wikipedia

Central banks all over the capitalist world are raising, or are about to raise, interest rates as a means of countering the currently rampant inflation, which is certain to push a world economy that is barely recovering from the effect of the pandemic, back towards stagnation and greater unemployment.

Of course the Federal Reserve Board of the U.S. which sets the standard in this respect for all other central banks, claims otherwise. It argues that the rise in interest rate it is decreeing will have little impact, or at the most a transitory impact, on the real economy; the recovery will be largely unimpaired. But this is based on reasoning which is fundamentally flawed and goes as follows.

The current inflation in the U.S., Fed chairman Jerome Powell argues, is because of a money wage push, which in turn arises because people are expecting inflation to occur; the rise in interest rate, by making people expect an abatement of inflation, will end this money-wage push, and hence actually bring down inflation. Since all adjustments will thus remain confined to the sphere of expected prices, and hence by that route to the sphere of actual prices, the real economy of output and employment will hardly face any recession. This entire argument however is wrong because of one simple fact: the workers’ money wages have lagged behind inflation, because of which they have suffered real wage declines. Hence to argue that inflation in the U.S. is because of a money-wage push, is a gross error.

Likewise the other common explanation given for inflation is that the Russo-Ukraine war has created scarcities of various commodities, especially of oil and food-grains in the world market. This explanation too however is unconvincing: while the war may cause such scarcity, there has as yet been no such scarcity. In fact there is little evidence of any decline in supplies of such commodities in the world market due to the war; hence to attribute the inflation to such war-induced scarcity is erroneous, certainly in the context of the U.S..

The reason why there is inflation in the U.S. is because prices are rising faster than wages owing to an autonomous rise in profit-margins. Profit-margins are supposed to rise when there is a scarcity of some commodities, but in the present case there is no shortage of a range of commodities that are witnessing inflationary pressures; and even in the case of commodities where there may be immediate shortages because of supply-chain disruptions on account of the pandemic, the rise in price is more pronounced and persistent than warranted. There is in other words an autonomous profit-margin push underlying the current inflation in the U.S. which is indicative of speculative behaviour.

There is a tendency to think of speculative behaviour as characterising only traders and middlemen but not manufacturers; but this has no basis. Speculation underlies pricing behaviour of multinational corporations too, and the reason why speculation-induced inflation is afflicting the world’s largest economy, is because of the easy availability of credit as a result of the extraordinarily easy monetary policy pursued until now. “Quantitative easing”, namely pushing money into the U.S. economy by the Federal Reserve and its maintenance of near-zero short-term and long-term interest rates, has created a liquidity overhang in that economy that has been conducive to an autonomous profit-margin push, and is manifesting itself in the form of inflation even before production has reached anywhere near full capacity. Further, against the inflation caused by this history of monetary policy, the only measures available are either “fiscal austerity” or a rise in interest rates (as is occurring now), both of which cause recession and unemployment.

Here we come to the nub of the problem. The economic arrangement under contemporary capitalism is such that to beat down the fall-out of the behaviour of a handful of speculators in the U.S., mass unemployment has to be generated not only in the U.S. economy (which is absurd enough in itself) but in the entire world economy. This last point arises because under neo-liberalism with global cross-border mobility of capital, especially of finance, the array of interest rates all over the world must move up when the U.S. interest rate moves up (for otherwise finance will keep flowing out of peripheral economies into the U.S. causing a continuous depreciation of the former’s exchange rates vis-à-vis the dollar). Speculation in the U.S. in other words, instead of being directly tackled through other means, is tackled, under a regime of financial “liberalisation”, through the generation of mass unemployment all over the world. This is the acme of irrationality.

John Maynard Keynes, writing under the shadow of the Bolshevik revolution and in the midst of the Great Depression, was acutely aware of this irrationality. To save the system which was his goal, he wanted what he called the “socialisation of investment”. For this fiscal intervention by the State was essential as was an appropriate monetary policy, both of which required the subservience of financial interests to the needs of society as a whole.

In this intellectual ambience, many newly-liberated third world countries after the war erected innovative financial structures that directly curbed speculation without causing any reduction in activity, let alone mass unemployment. In India for instance long-term finance for investment was provided by a whole range of specialised financial institutions at interest rates that were generally lower than the rates on short-term credit given out by banks. A range of instruments was also used by the banks, to curb speculation other than merely the interest rate (and traditional instruments like the reserve ratio). One such was the direct restriction of credit-flows to specific, speculation-hit, sectors or what was called “selective credit controls”. Inflation control was effected not only through fiscal and monetary policies but also through “supply management” and putting in place a system of public distribution and rationing. All these ensured that investment, output and employment were largely insulated from the behaviour of speculators.

The Bretton Woods institutions and its loyal neo-liberal economists were staunchly critical of all these arrangements. They called such financial arrangements “financial repression” and wanted instead a “liberalisation” of the financial system where all such direct interventions in financial markets were eschewed. They even wanted a jettisoning of public distribution and rationing that still continues in the case of foodgrains, and got the Modi government to pass the three infamous farm laws towards this end. Though they did not succeed in their endeavour to jettison public distribution and rationing, they did enforce “financial liberalisation” as part of the neo-liberal “reforms”.

“Financial liberalisation” virtually meant an exclusive reliance on the interest rate as an instrument of monetary policy, and even here since the interest rate in a world of relatively easy financial flows is linked to the U.S. rate (as noted earlier), the country did not have much leeway. And since “fiscal responsibility” meant that government spending got linked to government revenue and government revenue itself could not be raised through heavier taxes on the rich (for they would then look elsewhere for locating their investment projects), the same interest rate that was used for inflation control was also a key determinant of investment, output, employment and growth.

This meant going back to a world where not only do we have the behaviour of a bunch of domestic speculators determining output and employment in a particular country, but the behaviour of a handful of American speculators determining the output and employment in every country of the world, that is, in the entire world economy.

The eminent economist Dr KN Raj had once lauded the financial system we had under the dirigiste era on the grounds that it did not allow the whims of a handful of speculators to determine the employment prospects of millions of workers. Financial liberalisation destroyed precisely this insulation; and, what is more, it linked every country’s level of employment to the whims of a few American speculators.

Much is being written all over the world debating the wisdom of raising interest rates as a means of combating inflation. This discussion generally presumes a neo-liberal setting and then takes positions on what particular point should be chosen in the trade-off between unemployment and inflation; but the trade-off itself arises because of the neo-liberal setting that removes a range of other instruments from the government’s hands. The whole point therefore is to avoid such a trade-off altogether by transcending the neo-liberal setting itself; but this scarcely figures in the discussion.

Originally published: Peoples Democracy on June 4, 2022

Prabhat Patnaik is an Indian political economist and political commentator. His books include Accumulation and Stability Under Capitalism (1997), The Value of Money (2009), and Re-envisioning Socialism (2011).

MR Online, June 5, 2022,

Report card on a failing economic system / by Greg Godels

On Friday, May 6, the Federal Reserve released data showing that consumer credit (debt) has been accelerating since the fourth quarter of last year, with revolving credit (largely credit card debt) speeding up at an even greater pace since the third quarter of 2021. Total consumer credit grew by an annualized rate of 7% in the fourth quarter of last year, increased to 9.7% in this year’s first quarter, and expanded to 14% in March.

At the same time, revolving credit–the debt largely incurred through credit cards–grew 8.3% in the third quarter and 12.7% in the fourth quarter of 2021, and then 21.4% in the first quarter of this year, and an astonishing 35.3% in March!

Clearly, the U.S. economy’s reliance on consumer spending is more and more dependent upon consumer debt, especially the credit card. For months, the business press has been hailing the continued expansion of consumer spending–a huge contributor to overall economic growth–as the one bright spot in the news. Now we see that consumer spending is built on the sands of consumer debt.

Likewise, personal savings (as a percentage of disposable personal income) in April, 2022 reached a low unseen since September of 2008, a sure sign that people are dipping into savings to make ends meet.

And subprime–low credit score–loans are failing. Subprime car loan and lease delinquencies hit a record high in February.

To make matters worse, the Federal Reserve has, after more than a decade of unprecedented near-zero Federal funds target interest rates, raised the rate by half a percentage point, the greatest one-time increase in 22 years. Without a doubt, this will translate into higher credit card interest rates going forward, applied to a broad, rapidly growing mass of consumer debt.

Thus, the consumer is turning to the credit card–incurring debt–precisely when the cost of using the card is rising.

Higher interest rates are exploding mortgage rates–and dampening the over-heated housing market–in some cases, doubling this year. Because of rising mortgage rates, new home sales fell 16.6% in April from March, yet prices of homes continue to rise: the median existing home price rose 14.8% from April, 2021 to April 2022. While it’s dramatically costlier for the homebuyer to finance a new home, the price of a house continues to rise alarmingly–a perfect, classic housing-market bubble on the verge of bursting!

But the plight of the consumer gets worse: inflation continues to drive the cost of living for the average consumer higher and higher. For eight months, the annualized rate of inflation has been rising, culminating in an 8.5% rate in March and 8.3% rate in April–rates rarely seen in the last 40 years. Food prices alone–the most critical consumer goods for the least advantaged–are up 10.8% for the year ending in April, 2022, the greatest 12-month increase since November, 1980.

When inflation raised its ugly head last year, pundits and the Federal Reserve dismissed it as temporary, an anomaly caused by dislocations following the Covid pandemic. In response, I wrote:

Despite the admonitions of the central bankers and financial gurus, inflation seldom self-corrects. It rarely runs its course. Instead, inflation tends to gather momentum because all the economic actors attempt to catch up and get ahead of it.

Today, the central bankers and financial gurus agree that inflation will be around for some time, eroding the buying power of the average worker.

Despite the dire accusations in the business press that increases in worker compensation is driving inflation, the truth is the opposite. The average worker’s hourly income–adjusted for inflation–has dropped by 2.6% from last April! Whatever gains are made, they are soon devoured by inflation.

Nor does the future portend well. U.S. economic growth (GDP) sunk by 1.5% in the first quarter of 2022. As they did with the inflation crisis, pundits are shrugging this off as a self-correcting aberration. Yet, it is hard to imagine that the shrinking incomes, expanding debt, and fierce inflation will not take its toll on consumer confidence and spending, the factors that contribute far-and-away the most to U.S. growth.

A powerful indicator of roadblocks ahead for growth was the first-quarter collapse of labor productivity. Thus, labor productivity dropped by an astonishing 7.5% in the nonfarm business sector, the largest decrease since the third quarter of 1947–nearly 75 years ago! This collapse was brought on by a 5.5% increase in hours worked and a 2.4% drop in economic output (this is a broad measure of hours worked, including employees, proprietors, and unpaid family workers).

Companies continue to compete for employees and hire new employees, while the economic product shrinks, a formula–under capitalism–for future slowing accumulation, a coming decline in the rate of profit. Some of the U.S.’s largest retailers are reporting a decline in earnings.

This employment boom arose especially in the technology sector, where tech start-ups round up capital, borrow heavily, and hire furiously on the faith that profits will come later. Risk taking, future high return-seeking venture capitalists and the extremely low cost of borrowing, combine with a young, educated, competitive workforce to create the perfect conditions for inflated expectations and recklessness. With interest rates rising and uncertainty growing, the tech bubble is now leaking–hiring freezes, layoffs, and austerity are occurring or in the offing.

The technology sector is the most vulnerable sector of the capitalist economy because of a long period of easy access to capital and a long incubation period before returns on investment appear. Banks have become impatient for profits from the latest glitzy app, just as they gave up waiting for returns on their investment in promiscuous fracking a few years ago (that is being corrected with the greatly increased demand for energy in Europe as a result of the Ukraine war).

The tech sector’s troubles are reflected in equity markets, with the tech-based NASDAQ sinking faster, yet dragging down the S&P index as well. So far this year, as of May 20, the NASDAQ composite has dropped well over a quarter, with the S&P falling 19%, the S&P’s worst start to a year since 1970. With 8 straight weeks of losses, the Dow Jones Industrial Averages has incurred its worst stretch since 1932. For those whose only exposure to the stock market is their 401(k) retirement plans, stock performance is a disaster–investment advisors and managers have put a greater proportion of their funds into stocks (as opposed to other investment instruments like bonds) than in the past. This will be catastrophic for those planning to retire in the next few years.

Bonds, a usual safe haven when the markets are down, are also down for the year. And bitcoin, the darling of the financial hipsters and the crooks, has lost a third of its value this year.

Nonetheless, investors are buying in the face of a deepening bear market, seduced by the old saw of “buying on the dip”–buying stocks when they are at the bottom and, therefore, a bargain. Despite the market’s abysmal performance in March, individual investors bought a net $28 billion in stocks and ETFs–a record. This would appear the greatest exercise in wishful thinking since the 2007-2009 crash. Maybe it’s an omen!

Certainly, if equity markets continue to lose trillions of dollars of hypothetical wealth (the top six Standard and Poor’s companies lost $3.76 trillion of nominal value through May 20), the negative wealth effect will restrain spending, especially among those in the middle strata and in the bourgeoisie. Bloomberg estimates that global stocks have lost over $11 trillion in value: “Investors continue to reduce their positions, particularly in technology and growth stocks,” said Andreas Lipkow, a strategist at Comdirect Bank. “But sentiment needs to deteriorate significantly more to form a potential floor.”

What does all of this bad economic news mean?

The end of the Cold War brought not a peace dividend, but a gift to the victorious capitalist ruling classes. It was, after all, a struggle between capitalism and socialism, despite what the bogus left thought about Soviet socialism. Without question, the capitalist class understood the Western confrontation with the Soviet Union as an existential battle.

With capitalist triumphalism came decades of super-exploitation of millions of workers thrust into the global labor market. Billionaires abounded, income and wealth inequality exploded, and the resultant accumulated capital sought new and creative destinations. To a large extent, the financial sector enthusiastically accommodated this need by devising innovative, complex instruments, new investment structures, and opaque financial operations.

Capital’s imperative to reproduce itself took it into riskier and riskier places; the growing volume of accumulated capital became more difficult to productively reinvest; investors booked “profits” that were more and more contingent or hypothetical; the euphoria of hyper-accumulation invited greater and greater leverage; and the accumulation mechanism finally crashed under the weight of tenuous, hypothetical, and “fictitious” capital in 2007.

The history of the twenty-first century since the 2000 tech collapse has been one continuous struggle on the part of the Central Banks, international economic organizations, government administrations, and financial institutions to rescue capitalism from the giddy orgy of speculation and overinvestment triggered by capitalist triumphalism.

These actors have attempted to seal off the trash–bad investments, overvalued, unredeemable bonds, unrecoverable debt–from the healthier economy, while injecting massive volumes of no- or low-cost (near-zero interest rates) liquidity into a shell-shocked economy.

The raging inflation that emerged late in 2021 places the masters of the capitalist economic universe in a policy vice. To stem inflation, they must raise interest rates, which invariably dampens economic growth. But economic growth has already slowed–indeed, turned negative in the U.S. for the first quarter of this year. With so many economic indicators declining or going negative, rising interest rates will only accelerate the slowdown of consumer spending, productivity, wage growth, investment, and social spending, while increasing debt and its costs.

This is truly a bleak picture and it’s not clear what useful tools remain in the hands of the policy makers to brighten it. The NATO/Russia/Ukraine blunder of a disruptive, grinding war can only worsen global economic conditions for everyone except the arms makers.

We can only hope that people will make the connection: capitalism breeds misery and war.

Originally published on May 28, 2022 by Greg Godels:

MR Online, May 31, 2022,

It’s past time for a $15 federal minimum wage / by Martin Hart-Landsberg

It may seem like a lot, but it’s not the most important change in the bill. (Photo: J. Scott Applewhite / AP)

President Biden’s 2022 State of the Union Address included a call for a $15 federal minimum wage. According to an Economic Policy Institute study, a phased increase to a $15 federal minimum wage by 2025 would raise the earnings of 32 million workers—21 percent of the workforce, no small thing.

The current federal minimum wage is $7.25. The federal minimum wage was established in 1938, as part of the Fair Labor Standards Act. Congress has voted to raise it 9 times since then, the last time in 2007. That last vote included a mandated three step increase that brought it to its current level in July 2009.

It has been 13 years since the last increase in the federal minimum wage, the longest period since its establishment without an increase. Taking inflation into account, workers paid the federal minimum wage in 2021 earned 21 percent less than what their counterparts earned in 2009, and prices keep rising.  Outrageously, this eroding federal minimum wage continues to set the wage floor in 20 states. Where is the justice in that?

Lawmakers have resisted boosting the federal minimum wage for years, no doubt responding to corporate pressure. And, without a strong outcry, Biden’s call for a $15 federal minimum wage will also likely be ignored; in fact, it remains to be seen how hard he will fight for it. We need to shine a bright spotlight on the importance of this demand and do our best to mobilize and apply our own pressure for a long overdue and meaningful increase in the federal minimum wage.

A $15 federal minimum wage is popular

A strong majority of adults support a $15 federal minimum wage. A 2021 Pew Research Center survey found that 62 percent of U.S. adults “favor raising the federal minimum wage to $15 an hour, including 40 percent who strongly back the idea.” Of the 38 percent who oppose a $15 wage, 71 percent said the minimum wage should be higher than it is now.  Only 10 percent of U.S. adults said that “the federal minimum wage should remain at the current level of $7.25 an hour.”

Not surprisingly, as we see in the figure below, the younger, the poorer, the stronger support for $15.  Black, Hispanic, and Asian adults were also far more favorable to a $15 federal minimum wage than were White adults.

| Demographics | MR Online

A number of states, as well as some cities, do have minimum wages higher than the federal minimum wage, but the great majority are significantly below $15 an hour. According to the Pew survey, in areas where the minimum wage is set by the federal minimum of $7.25, 59 percent of adults support raising the federal minimum wage to $15.  The level of support is the same in areas where the minimum wage is between $7.25 and $11.99 an hour. And in areas where the minimum wage is $12 or higher, 69 percent of respondents voiced support for a $15 federal minimum wage. In sum, there is widespread support for a $15 federal minimal wage.

Why corporations might object to a $15 federal minimum wage

The Economic Policy Institute and the Shift Project have collaborated to produce an on-line interactive company wage tracker. It offers a range of data on 66 large retail and food service firms, including the number of workers they employ, the revenue generated by their U.S. operations, how much they pay their CEOs, and what shares of their U.S. hourly workers fall within certain wage bands. The tracker makes clear that a $15 federal minimum wage would lead to meaningful wage increases for a large share of their employees.

As an Economic Policy Institute post discussing the data notes:

At Starbucks—where workers have sparked a union organizing wave in recent months—63 percent of workers make below $15 an hour. At Dollar General and McDonald’s, 92 percent and 89 percent of workers, respectively, make below $15 an hour, with nearly one-in-four workers making below $10 an hour at both companies. A majority (51 percent) of workers make below $15 an hour at Walmart.

| Major businesses with  an hour | MR Online

What follows are a few company snapshots that highlight their wage distributions. A look at CEO compensation provides a telling counterpoint.

And as intended, reliance on low-paid workers has helped finance a massive transfer to stockholders and an explosive growth in CEO compensation. The latter is illustrated in the following figure.

| CEO wages | MR Online

Minimum wage trends and consequences

In 1968 the federal minimum wage was set at $1.60 an hour. This marks its high point in inflation-adjusted dollars. Taking inflation into account, that wage is equivalent to $11.12 today. Thus, the federal minimum wage, at its current value of $7.25, has declined in purchasing power by 34 percent relative to that 1968 peak.  In other words, we need a substantial increase in the federal minimum wage just to restore its past real value.

Of course, as noted above, a number of states have raised their own minimum wages above the federal level—30 states to this point, but only California currently has a $15 minimum wage. Although eleven states will soon join it, having passed legislation or ballot measures that will gradually increase their respective minimums to $15 an hour, the great majority of states have far lower minimum wages. In fact, 20 states still use the existing federal minimum wage.

Opponents of a higher minimum wage claim that a higher wage would prove disastrous for low wage workers as well as the economy. However, a number of careful studies have shown that raising the minimum wage does help its intended beneficiaries. Arindrajit Dube, a highly respected labor economist, summarizes the results of his own work on the effects of a minimum wage increase as follows:

Through my research, I’ve found raising the minimum wage by 10 percent may reduce poverty by 2 to 5 percent, which is a sizeable change. I also find that increases in the minimum wage end up saving taxpayers 35 cents on the dollar from reductions in public assistance.

On the question of intragenerational mobility—wage and earnings growth across a worker’s lifetime—there is strong evidence that higher minimum wages lead to greater wage growth. . . .

In 2019, my colleagues and I published a paper in the Quarterly Journal of Economics that tried to provide a more comprehensive assessment of the effects of minimum wages on low-wage jobs. We looked at effects on low-wage jobs that pay slightly at or above the minimum wage and at jobs across the distribution.

When looking at minimum wage increases up to 2016, we found these increases didn’t seem to have much of an impact on jobs. We then looked at what happens when the minimum wage is 50 to 60 percent of the median wage and didn’t see evidence of job losses at those levels. That was an encouraging finding. In 2014, as I wrote my Hamilton Project policy memo, I thought maybe 55 percent of the median wage was a safe place to land for many places. But in the past five years, we have expanded the evidence base substantially, and the evidence has continued to be positive.

In a recent paper, we looked at 21 large cities that raised minimum wages. Some had raised them as much as 80 percent of median wages. And yet, looking over a long period of time, we didn’t see evidence of a reduction in low-wage jobs compared with other cities.

As noted above, the Economic Policy Institute actually did a study of the consequences of phasing in a federal minimum wage of $15 by 2025. It concluded that it would raise the earnings of 32 million workers. More specifically, it would:

  • Raise the wages of at least 19 million essential and front-line workers—60 percent of all workers who would see a pay increase.
  • Increase pay for nearly one in three Black workers (31 percent) and for one in four Hispanic workers (26 percent), compared with about one in five white workers.
  • Lift out of poverty up to 3.7 million people—including an estimated 1.3 million children.
  • Result in an annual pay increase of about $3,300 for affected workers working year-round. In total, a rising wage floor would provide over $108 billion in additional wages to affected workers.

The focus here is on the benefits of a $15 federal minimum wage, but there is nothing magical about this number, and it is far from ensuring a living wage in most of the country. In fact, the economist Dean Baker has pointed out that one could easily make the case that the minimum wage should be tied to the growth in productivity. As he notes,

We actually did have a minimum wage that kept pace with productivity growth from when it was created [in 1938] until 1968, so for three decades. And of course, the economy did very well in that period.

According to calculations done by the Center for Economic and Policy Research, if the federal minimum wage had continued to grow at the same pace as productivity, our current productivity and inflation adjusted federal minimum wage would be $23 an hour. From that perspective, a $15 federal minimum wage represents a modest boost.

Increasing the federal minimum wage to $15 certainly won’t solve all our problems, but as the studies cited above make clear, such an increase is both doable and would be a game changer for many working people and their families. Moreover, a spirited campaign in support of the increase could help focus attention on both the importance of public policy for achieving desired social outcomes and the ever more punitive nature of our current economic system.

Martin Hart-Landsberg is Professor Emeritus of Economics at Lewis and Clark College, Portland, Oregon; and Adjunct Researcher at the Institute for Social Sciences, Gyeongsang National University, South Korea. His areas of teaching and research include political economy, economic development, international economics, and the political economy of East Asia. He is also a member of the Workers’ Rights Board (Portland, Oregon) and maintains a blog Reports from the Economic Front where this article first appeared.

MR Online, May 2, 2022,

Blaming workers, hiding profits in primetime inflation coverage / by Ines Santos and Luca GoldMansour

An NBC Nightly News segment (11/12/21) on the “Inflation Crisis” stressed the role of labor shortages.

Rising prices directly impact virtually the entire population, so it’s not surprising that there has been a constant drumbeat of reports in the corporate media laying out the factors contributing to inflation as well as its economic and political consequences. But while the media cite many legitimate factors, including pandemic-induced effects on supply and demand, their choices of which causes to emphasize can have political and economic consequences of their own.

A FAIR study looking at six months of coverage across six primetime television news shows and NPR‘s All Things Considered found that segments on inflation put far more emphasis on the contributions of labor shortages and social spending—through driving up the cost of labor—than to the role of corporate profit-taking.

This portrays the economy as a zero sum game between workers and consumers, who appear to be intractably at odds if corporate profits are left out of the equation.

During the same period, the shows proved capable of hearing workers’ demands for higher wages when their coverage framed the issue as a “Great Resignation,” or during the shows’ scant coverage of “Striketober,” when a wave of labor militancy swept through much of the country.

This points to an inconsistency in coverage of the same labor market trends: When the shows were covering inflation, the “tight” labor market was mostly treated with the cool and icy calculation of market logic. But on the comparatively rare occasions when the shows covered the grievances of workers and their demands for dignified work—which are widely popular demands, given that most consumers are in fact workers too—the reports showed a more human side to what would otherwise be numbers on a scorecard, and mentioned the record profits of corporations.

Causal arguments

FAIR analyzed the transcripts from ABC World News TonightCBS Evening NewsCNN’s Situation RoomFox Special ReportMSNBC’s The BeatNBC Nightly News and NPR’s All Things Considered between September 2021 and February 2022, using the Nexis news database. We searched for stories mentioning “inflation” and identified 310 segments.

We also searched for segments mentioning “labor,” “union” or “worker.” The labor search terms were meant to identify coverage of worker activism and how it compared to labor market coverage in the context of inflation. The search turned up 73 such segments.

We recorded the main causal arguments identified in inflation segments, grouped into six main categories:

  • Supply (“The supply of new cars was limited by that shortage of semiconductors.”—All Things Considered1/12/22)
  • Demand (“People just said they had more money from not going out and doing stuff last year.”—All Things Considered11/26/21)
  • Labor shortage (“There aren’t enough truck drivers. So, more containers get stacked up. They don’t get delivered.”—Situation Room11/10/21)
  • Social spending (“The spending plan could create more inflation to the extent that it’s pumping more dollars into an economy that has a lot of money flowing around in it.”—Fox Special Report, 11/24/21)
  • Covid-19 (“The emergence of the Omicron variant poses increased uncertainty for inflation.”—Fox Special Report12/22/21)
  • Profiteering (“There’s increasing evidence and suspicions that this market power has gone too far and is beginning to hurt consumers.”—All Things Considered9/13/21)

These categories were non-exclusive; a suggestion that Covid had caused supply problems, for example, would be counted in both categories. Many segments included more than one causal argument, while 116 attributed inflation to no cause in particular.

| the main causal arguments identified in inflation segments grouped into six main categories | MR Online

We don’t talk about profit-taking

A report by Jacob Ward (NBC Nightly News, 1/22/22) was one of the only segments that looked at how corporate consolidation contributed to rising prices.

Of the 310 segments that covered inflation, eight identified profiteering as a causal factor, while 50 put the focus on workers, either in the form of labor shortage or supply-side social spending arguments (the latter being a proxy for the former). While labor market trends have had an inflationary impact, the disproportionate focus on them, without mention of the underlying conditions that lead to labor shortages in the first place, erases the culpability of corporations. And as economist Dean Baker (Beat the Press11/10/21) explained, it would be a “perverse” solution to inflation to put “downward pressure on wages” by increasing unemployment, when companies are already incentivized to “innovate to get around bottlenecks…in ways that could lead to lasting productivity gains.”

An NBC Nightly News investigation by Jacob Ward (1/22/22) was one of the only segments that focused on the inflationary impact of market consolidation. Tyson, Cargill, JBS and National Beef, Ward reported, “control roughly 85% of all beef production in America, and saw their profits tripled during the pandemic.” Other references to the meat trusts were limited to Joe Biden’s plan to apply pressure to meatpackers and Tyson’s decision to raise prices due to “escalating costs” (NBC Nightly News, 12/10/21, 11/15/21). This angle was absent when it came to other powerful industries, however.

David Dayen and Rakeen Mabud of the American Prospect (1/31/22CounterSpin2/11/22) raked through company earnings calls and CEO statements, and found ample evidence for profit-taking in the direct accounts of numerous retail executives:

Corporate profit margins are at their highest level in 70 years, and CEOs cannot help but tout in earnings calls how they have taken advantage of the media commotion around inflation to boost profits. “A little bit of inflation is always good in our business,” the CEO of Kroger said last June. “What we are very good at is pricing,” the CEO of Colgate-Palmolive added in October. Inflation is being enhanced by exploitation, with companies seeing a “once-in-a-generation opportunity” to raise prices.

Corporations with no choice

CBS News (11/10/21) made a small business owner the face of corporate America: “If they’re charging me, I have to turn around and charge my customers.”

Despite this, the decision to raise prices was often reported from the perspective of small business owners. Five such segments appeared across CBS Evening News, including a Houston boutique owner (11/10/21) lamenting that she hates having to raise prices, but that “if they’re charging me, I have to turn around and charge my customers.”

One of the segments that directly addressed the decision from the perspective of multinationals appeared on ABC World News Tonight (10/22/21), where Gio Benitez reported:

Major companies facing rising costs now expecting to charge more, like Nestle, the world’s largest food and beverage company; Unilever, maker of Dove soap and Ben & Jerry’s; Procter & Gamble, from grooming products to diapers; and Danone, maker of yogurts and plant-based milks, even Evian water. Inflation shooting up by 5.4% in just a year. That supply chain crisis is taking center stage.

The profitability and market dominance of these firms, especially Nestle and Procter & Gamble, made no appearance—with price hikes instead attributed to corporations “facing rising costs.”

Despite this framework, recent polling from Data for Progress suggests that Americans aren’t buying it, with only 29% of respondents believing that corporations had no choice but to price-gouge. And with $19 billion being paid out to Procter & Gamble shareholders in the wake of a 14% rise in the cost of diapers, that skepticism is hardly surprising.

Ari Melber of MSNBC’s The Beat (1/11/22) covered inflation’s disproportionate impact on workers, even citing the “Great Resignation” as a factor in labor shortages, but did not mention monopolistic corporations’ price-gouging. Melber pointed out that it is average workers who “bear the risk in our version of capitalism,” as opposed to “pandemic billionaires.” He described this disproportionate impact as “classism.” The omission of the evidence for price-gouging was all the more stark in the context of reporting that ostensibly focused on the interest of workers.

Slamming social spending

Despite the mounting evidence that corporate greed plays a significant role in rising prices, the shows tended to focus on social spending as a possible factor, with 67 segments framing debates around both whether the already-passed stimulus bills were responsible for current inflation, and whether Build Back Better would worsen it.

These debates centered around both supply-side and demand-side factors. On the supply-side, the debate was whether social spending was keeping Americans from seeking work, given that the stimulus provided an alternative form of income. This in turn fueled the labor shortage and strengthened workers’ hands, the argument went, contributing to the rising cost of labor and the shortage of goods. It follows that businesses had no choice but to pass these rising costs onto consumers.

Washington Post opinion writer Charles Lane went on Fox‘s Special Report (10/8/21) to share his view that redistribution will slow job growth and increase inflation:

Two bills of spending that are more than $4 trillion. And we’re going to pretend that this is going to have no effect on jobs? No effect on inflation?

NBC News (11/12/21) cited Rep. Jim Jordan (via Fox News): “Their plan is basically, lock down the economy, spend like crazy, pay people not to work.”

While other networks proved more willing to provide an alternative view when discussing social spending as a possible inflationary cause, they rarely outright refuted the claim, let alone touched on corporate profits.

Kristen Welker (NBC Nightly News11/12/21) reported that although Biden was

insisting that while more spending generally drives prices up, his trillion dollars bipartisan infrastructure bill will bring prices down long term…. Moderate Democrat Joe Manchin suggest[ed] the president’s spending bills could raise prices even more.

And Republicans were “blasting the president’s policies.” The report cut to Rep. Jim Jordan (R.–Ohio), who claimed,

Their plan is basically, lock down the economy, spend like crazy, pay people not to work.

To center debates over inflationary causes around redistributive measures, while failing to bring up the stacks of cash lining the pockets of the very corporations raising prices, leaves an impression of scarcity and implies a necessary struggle between workers and consumers. It also ignores the reality that countries like France and Japan, which had larger stimulus packages, actually saw less inflation.

Not only do supply-side social spending arguments blame labor for rising costs, they do so by claiming that workers have it too good. Redistributive measures can’t work, they presume, because if labor is not desperate enough to seek alienated, low-wage jobs, the economy will grind to a halt. Something has to give, and it won’t be the billionaires who happen to own the media outlets.

On the demand side, opponents of social spending argued that the stimulus put far too much disposable income in the hands of ordinary people, whose spending therefore outpaced supply. To argue that there is too much money in the hands of regular people, in light of more than a decade of quantitative easing by the Federal Reserve—transferring wealth to the very wealthy to prop up stock markets—brings to mind Martin Luther King’s statement that this country has “socialism for the rich, and rugged individualism for the poor.”

Inconsistent labor reporting

The six-month timeframe coincided with both “Striketober” and the “Great Resignation,” moments that together saw workers utilizing their temporarily enhanced bargaining power. While union membership is at a historic low, support for unions is at the highest it’s been since 1965. According to Cornell University’s Labor Action Tracker, there were 442 strikes and labor protests between September and February—likely an undercount, given the rise in strike activity not sanctioned by unions.

FAIR found that NPR’s All Things Considered included 28 segments on labor activism, but the remaining shows had at most half that amount. NBC Nightly News came in second place, with 14 activism segments, while Fox Special Report had 11, ABC’s World News Tonight had six, MSNBC’s The Beat and CNN’s Situation Room had five, and CBS Evening News had four.

| FAIR found that NPRs All Things Considered included 28 segments on labor activism but the remaining shows had at most half that amount | MR Online

While the coverage of strikes proved some shows were capable of hearing the concerns of workers bargaining collectively, the focus on labor shortages in inflation reporting highlighted a disregard for the perspective of labor.

When reporting on the John Deere strike that saw more than 10,000 workers walk off the job, Charlie De Mar (CBS Evening News10/14/21) noted that it came “as the company is forecasting its best earnings ever”;  he listed workers’ demands, including “livable hours and benefits.”

CBS Evening News (12/10/21) noted that “a shortage of truck drivers to deliver the goods.” contributed to inflation—but didn’t mention the conditions causes truckers to leave the business.

However, in the show’s segments that attributed inflation to labor market trends, workers’ grievances were mostly left out of the picture. Carter Evans (CBS Evening News12/10/21) reported that the rising costs of “just about everything,” from beef prices up by 50% to fuel prices up by 53%, were the result of soaring demand, while the supply chain was hampered by “a shortage of truck drivers to deliver the goods.” Never mind the evidence of price-fixing in a meatpacking industry fraught with consolidation, or the poor labor conditions driving people to resign from trucking.

CBS‘s Scott McFarlane (1/12/22) reported that “a survey by an association of the nation’s grocery stores finds 80% of them are having trouble recruiting or retaining workers right now,” citing this as evidence that labor shortages were a factor in empty grocery shelves and higher prices. McFarlane neglected to mention the low wages and safety concerns that prompted more than 8,000 Kroger grocery workers in Denver to go on strike that very morning (Wall Street Journal1/12/22).

Claims of a trucker shortage received the most emphasis, appearing in 13 unique segments across all shows. ABC‘s Whit Johnson (10/13/21) included “not enough truck drivers” among a list of inflationary pressure points. Fox News chief correspondent Jonathan Hunt (10/8/21) claimed that “supply and demand is not the problem…. There simply aren’t enough truck drivers to get goods to American store shelves.” News flash: If there aren’t enough drivers, that’s a supply problem.

While primetime audiences were made well aware of how few truck drivers are on the highways, they were left in the dark about how trucking deregulation has led to stagnant wages and lack of driver protections (American Prospect2/7/22). Segments reporting on ports remaining open 24/7 to alleviate backlogs (NBC Nightly News10/13/21) made no mention of the stolen wages and general precariousness of the labor making that happen.

Fickle supply chain

While there were multiple mentions of “supply chain bottlenecks” across the seven shows, the decades-long transformation of the global supply chain to maximize profits at the expense of its resiliency (CounterSpin2/11/22) was generally not a part of the story.

Just three ocean shipping alliances control 80% of the market, giving them substantial power to set prices and squeeze wages. In order to keep down the costs of production and distribution, shipping companies promoted a “just-in-time” delivery schedule, reducing warehouse costs but also raising the chances of disruptive shortages. Coupled with the outsourcing of manufacturing, just-in-time delivery supply chain “shocks” are less shocking than they might appear.

But according to Fox News correspondent Jacqui Heinrich (11/24/21), the White House’s accusations of price-gouging by the ocean shipping cartel as a driver of inflation were “ominous,” as they indicated that supply chain crises may take years to resolve. Not once did she mention the cartel in question made nearly $80 billion in the first three quarters of 2021, giving the companies ample and unaccountable price-setting capabilities (American Prospect1/31/22).

News media that feature constant coverage of inflation may appear to be serving the public interest, but with an issue that directly affects so many peoples’ wallets, it’s important that the corporate media give an accurate portrayal of the contributing factors. And while sympathetic coverage of labor activism may seem pro-worker, that’s undercut when the debate about what’s making it harder for people to put food on the table is centered around low-wage essential workers saying enough is enough.

Originally published: FAIR (Fairness & Accuracy in Reporting) on April 21, 2022

Ines Santos is a writer based in Queens, New York and senior at CUNY Hunter College. She’s currently an editorial intern at FAIR and graduating with a BA in Media Studies.

Luca GoldMansour is a FAIR editorial intern and a senior at the City College of New York with a major in political science and minor in journalism.

MR Online, April, 23, 2022,