December 12, 2024 • 25 mins
Mia looks at both what caused the inflation that defined the Biden administration and how the reactions to it were driven by an American moral economy and the sense of injustice it invokes.
Sources:
https://strangematters.coop/supply-chain-theory-of-inflation/
https://www.econstor.eu/bitstream/10419/157973/1/bna-259_20090522_nb_casp_full_indexed.pdf
https://www.jstor.org/stable/650244
James' Links for Syria:
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
All media. Hi everyone, It's me James, and I'm coming
at you today with one of these little requests that
I make sometimes when there's something that we would like
you to do, when it's very important to do. So
today I want to talk to you about Syria, and
specifically Northeast Syria. So with the world's eyes fixed on Syria,
many are rightly celebrating as a brutal dictatorship of Basha
(00:22):
a Lasad comes to an end. But for Kurdish and
other minority communities, recent days have bought violent attacks, ethnic
cleansing and occupation by Turkis back to Jahadis groups in
an attempt to take advantage of the chaos by crushing
the Rajava Revolution. Turkey and its mercenaries are openly committing
war crimes against the region's autonomous communities. Many thousands have
(00:43):
already been forced to be displaced and thousands more are
in danger. To make matters worth this remains largely absent
from the mainstream media reporting on Syria. If you'd like
to share your solidarity with the people of northern and
Eastern Syria, please call on Congress to take urgent action
by passing the Emergency legislation to stop the fight, hold
Turkey accountable, and commit US support to the Syrian democratic
(01:04):
forces and the diverse communities under their protection. If you
want to take action today, you can go to Defendrojaba
dot org. That's d E F E N d R
o ja va dot org. If you are able to
the most effective action we can take right now is
to call a couple of representatives, one representative and one Senator.
A representative would be Gregory Meeks. He's from New York.
(01:27):
He's a Democrat. He is a ranking member of the
House Foreign Affairs Committee. His phone number is two zero
two two two five three four six one. The other
one will be Senator James rish He's an Idaho Republican.
He is a ranking member's Senate Foreign Relations Committee. His
phone number would be two zero two two two four
two seven five two. If you'd like to have some
(01:49):
talking points, you can find those on Defendrojaba dot org.
If you'd like to donate financially instead, especially to this
humanitarian aid effort for the tens of thousands of people
who who have been displaced by the SNA's advances, you
can donate to two organizations that I would suggest to
first we be Heavier store the Curtis Red Crescent. That's
(02:10):
h E Yva s O R dot com and you
want to go slash e n If you want to
see their website in English, you can donate there. The
other one will be the Free Burmer Rangers who are
currently working in Raka. I was talking to my friend
Abat who works with them. You can donate to them
at www dot free fr e E Burma b U
(02:32):
r m A rangers dot com. We will put all
of this in the show notes or the URL, so
if you're driving you don't have to write them down.
Those are the concrete ways that we can help right
now and what is unfolding as a very terrible situation
in Assyria. Thanks.
Speaker 2 (02:46):
I hope you do an episode Welcome to It could
happen here a podcast where I your host Miya One,
talks about inflation. We have covered inflation on this show extensively,
and now it is once again time to return to
it as we head into a world where concerns about
inflation and the economy are the most cited justifications for
(03:08):
people voting for one Donald Trump. But unlike our other
Oh God had so many episodes about inflation. This one
is going to be a bit different. Is going to
start out somewhat similar in that I am going to
lay out a brief explanation of the sort of material
causes of the inflation cycle, and talk a bit about
inflation theories, which is what we've been largely doing on
(03:30):
this show for a while. And then I am going
to explain why none of that shit mattered, why none
of what was actually causing inflation mattered a single bit,
because ultimately, our experience of inflation, and more importantly, of
price in general, is based on a sense of justice
or as the academics call it, a moral economy, and
not on anything that's sort of going on. So let's
(03:54):
begin with what is going on with inflation now. As
we've discussed before on this show, most economists do not
understand why inflation happens. People will take theories. Those theories
are usually quite bad. There is no mainstream consensus on
what is going on. As both me and my friends
at the magazine Strange Matters have pointed out, former Federal
(04:17):
Reserve Governor Daniel Tarulo said, quote, the substantive point is
that we do not at present have a theory of
inflation dynamics that work sufficiently well to be of use
for the business of real time monetary policy making. So again,
this is a guy who used to be a Federal
Reserve governor who has admitted that they have no idea
(04:39):
what the fuck is going on with inflation. Looking at
the extent to which people don't know what's going on
to inflation and how the various theories simply don't work
is a large part of Steve Mann's Notes towards the
Theory of Inflation, which is a Strange Matter's article that
a lot of this will be pulled from. And we've
had Ze on the talk about this before. So there
are a lot of theories about inflation and none of
(05:00):
them work very well. Inflation on a fundamental level is
just prices going up. People have this tendency to think
about inflation in terms of the value of money going down,
but on a pure level, all inflation says is that
prices go up. Now, the most common theory of inflation
is inflation is based on there being too much money
(05:23):
in the economy, And the thing about those theories is
that they don't work outside of like a very few
specific examples of hyperinflation that loom large over our understanding
of what inflation is, even though they have absolutely quantitatively
and theoretically, they have absolutely nothing to do with the
inflation that we've seen over the past four years. So
instead of talking about that shit anymore, Man and the
(05:46):
Strange Matter's crew developed what they call the supply chain
theory of inflation. So I'm going to read the quote
from Notes Towards the Theory of Inflation. As economist JW.
And Mason recently remarked on his website, inflation is just
an increase in prices. So for every theory of price setting,
there's a corresponding theory of inflation. If inflation theory is
downstream of price setting, this is still a quote from
(06:09):
that article, but not the Jovansing quote. If inflation is
downstream of price theory, then no account of inflation can
begin with the macro economy at all, since prices are
set at the micro level. Rather, you need to look
at particular industrial sectors, their supply chains, and ultimately the
pricing decisions of their firms. Only then are the true
(06:30):
causes of inflation, both the internal failures of the industrial
system and external shocks to it, which can cause price rises. Revealed.
Man's price theory is fairly simple, right. It flows from
the basic observation that prices are set by guys in offices,
not by something abstract as like market forces and supply
and demand in economic terms. What this argument amounts to
(06:53):
is the argument that corporations are price makers and not
price takers. Right, there's a bunch of guys they sit
in offices and develop a strategy of but what prices
are going to be? And that's you know, how they're set,
And what matters to the people who develop prices are
things like goodwill, which is to say, not pissing off
their customers by raising prices, and things like their balance
(07:14):
sheets which reflect you know, their incomes and costs. Price
in this model is just cost plus markup. And we
know this is how prices are actually set because, as
Man points out, people have gone through and done surveys
of pricing managers and ask them how they set prices
and the answer is costless workup. So what would cause
(07:34):
these guys in offices to increase their prices? Well, these
are companies that are all part of a global supply chain,
a very very broad global supply chain, and a very
complicated global supply chain. This means that if the cost
of the stuff they buy from other suppliers on the
chain in order to produce what they're selling, if those
(07:55):
prices go up, because there is, to use a purely
hypothetical example, a giant pandemic, those costs increases eventually had
to be passed down to the people paying the products
so that the corporation can maintain its balance sheets and
maintain it sort of price plus markup as something that
you know, covers their costs. Right, This is what set
(08:16):
off the giant inflation spike in the US and the
Biden administration. You know, the cost side of cost plus
markup exploded. But it doesn't really matter why the prices
increased for our purposes, and our purposes are looking at
sort of why Trump won the election. What was important,
you know, about inflation wasn't even the price increases. It
was the narratives around inflation and how we understand the
(08:37):
economy at a moral level. And for that we're going
to turn to one of the most popular accounts of inflation,
so called greedflation. Now, as we've said, price is cost
plus markup, and you can raise prices because of cost,
but you can also do this because you want to
increase your markup. And this is something that happened during
(08:59):
the inflation search. Companies realized that consumers were willing to
accept higher prices without the usual good will hit because
they thought the prices were going up because inflation was happening,
and because they were willing to accept the higher prices
and not you know, try to shop somewhere else, corporations went,
fuck it, let's just keep jacking the prices up. And
this really really pissed people off. It still does, and
(09:21):
this is something that was true across the entire political spectrum.
Speaker 1 (09:24):
Right.
Speaker 2 (09:24):
People were very, very angry about this sort of reflation thing,
and that rage is more important than the technical details
of why inflation happened, because the way we understand inflation
is not through conventional economics. We understand it through the
moral economy. And when we come back from a different
kind of economy, which is to say, this ad break,
(09:47):
we are going to examine what the moral economy is,
how it differs from our sort of regular economy, where
it came from, and why it's relevant to our situation now.
And we are so back, all right, let's talk about
(10:11):
the moral economy. The moral economy is a concept developed
by the British historian E. P. Thompson in the early
nineteen seventies. Thompson was attempting to explain the previous century
and a half of bread riots by what he termed
the English crowd by applying anthropological principles to their actions.
I'm just going to read from Thompson's The Moral Economy
(10:32):
of the English Crowd here. It is, of course true
that riots were triggered off by soaring prices, by malpractice
among dealers, or by hunger. But these grievances operated within
a popular consensus as to what we're legitimate and what
we're illegitimate practices in marketing, milling, baking, etc. This, in
its turn, was grounded upon a consistent traditional view of
(10:55):
social norms and obligations of the proper economic function of
le parties within the community, which, when taken together, can
be said to constitute the moral economy of the poor.
In outrage to these moral assumptions, quite as much as
actual deprivation was the usual occasion for direct action. Now,
the moral economy of the English Crowd in the eighteenth
(11:18):
century is about a very specific period in British history,
which is to say, the seventeen hundreds, and about how
people thought bread should be sold. Peasants and the new
urban workers had very specific ideas about, you know, bread,
about how bread should be produced, about who should be
allowed to sell it, about where and when they should
be allowed to sell it, about how it should be sold,
(11:38):
how it should not be sold. And because of this,
you know, because of their experience in sort of previous
systems that before the sort of imposition of the free
market system or quote unquote free market system, they have
a very specific series of hatreds. They hate middlemen, they
hate grainhoarders, they hate all of the aspects of the
new quote unquote free market impose additional costs and burdens
(12:01):
on them. And they also believed that elites have a
kind of moral duty to the masses based on the
norms and traditions of their society. And when they welch
on that deal in a way that makes people's lives worse,
people get extremely pissed off. These peasants and urban workers
particularly hated price increases, and they hated price increases so
(12:24):
much that this frequently turned into riots. But the actual
contents of these riots are very interesting. Instead of simply
seizing all of the grain, they do something else entirely.
Here's Thompson again. Quote. The central action in this pattern
is not the sack of grainaries and grain or flour,
but the action of quote setting the price. From a
(12:47):
few lines later, they might then order the farmer to
send quote convenient quantities to market to be sold, quote
and at a quote reasonable price. The justices were further
empowered to quote set down a certain price upon a
bushel of every kind of grain. So, if you follow
this here, right, what's happening in these British bread riots
is that the revolt isn't just about their you know,
(13:10):
being a price to grain. It's that people have a
very very specific moral understanding of what the price of
grain should be, and they take direct actions that are
designed to set the price of grain to the level
they thought it should rest at. And this kind of
action is extremely common sort of across Europe in this
entire time period.
Speaker 1 (13:31):
Right.
Speaker 2 (13:32):
It's also a hallmark of the French Revolution. You can
see in this right, in this sort of rage over
price in the sense of justice. The outlines of our
current moral economy you have, you know, staggering outrage's price
in clarice is seen as on jests, which is reflation
or just inflation in general, because people are just mad
about the concept of the price going up, paired with
(13:54):
rage at the elites, which manifests the sort of hatred
of Joe Biden the Democrats for being the people who
presided over the price increases. We also have our own
rage about price gouging in immediate market terms, and this
is something that the most annoying libertarians and the defenders
of the market love to point out. There's nothing actually
wrong by market economics about say Martin Skrelly jacking the
(14:16):
price of medicine up until you can't afford it anymore,
or you know, other things that we find extremely terrible,
like people jacking the price of water when people need water,
like bottled water dreat hurricanes. We are all outraged, So
why do we feel morally strong about it? And that
is the moral economy, babe. This is something that you know,
(14:37):
These these reactions, right, the emotional reactions we have to this,
the sense of injustice that we feel, are almost entirely
outside of the realm of what you would call traditional
economics right, And that's because we're functioning on something that
is in some senses older than that kind of economics.
But there's something else going on here at a fundamental level.
(14:58):
And what's important about you know, price and the reaction
to inflation is that it's an outrage based on a
sense of justice. Right. This rage is not a measure
of direct exploitation necessarily. I think it was the political
scientist James C. Scott who wrote his own book called
The Moral Economy of the Peasant, and Scott argues that,
(15:18):
you know, and ib Thompson also argues this that it's
the moral angle that causes people to revolt, not the
direct level of exploitation. You can, in fact, you know,
inflict hideous exploitation on people as long as they think
that it's just. But when you violate these moral principles,
that's when people really lose it. But it also means, right,
(15:39):
the fact that the sort of sense of outrage is
not necessarily directly tied to the exploitation level. It means
that rich people can be bad about inflation even though
they're completely fine, because these people also still have this
sort of sense of justice about what prices should be. Now.
It's also worth noting here that it is possible to
have high inflation rates and have everyone be fine. In fact,
(16:02):
we have discussed scenarios like that on this show. In
my episodes about the rise of Lulah, the current president
of Brazil, we discussed how military dictatorship in Brazil produced
an economy that was, you know, you had twenty percent
year on year inflation, right, but also you had forty
percent yearly wage increases, and so everyone was like kind
of fine with it because the amount of money you
(16:23):
were making was going up every year. So nobody really
cared about even things like the military dictatorship itself. There
was not an enormous amount of opposition to it. But
then Brazil's trade unions figured out the government had been
lying about inflation numbers, and this started off a series
of protests that you know, would send Lula like into
his big name of his political career, and eventually this
is one of the sort of dominoes that leads to
(16:45):
knocking down the military dictatorship. And that's because you know,
the level of exploitations people were living under hadn't changed,
but the deal that they had made right the sort
of deal with with the military government of like, we
won't do anything, our wages will continue to go up,
and inflation will get need to be work at a
certain level such that we're still getting paid. That deal
was violated, and that sense of injustice was powerful enough
(17:08):
to really kickstart in extremely powerful brasilient labor movements and
kickstart the fall of a dictatorship. Now, one of Thompson's
arguments was that the success of Adam Smith and his
cohort and Smith is moving around and making his arguments
about what the free market is in the period where
we're dealing with all of these sort of grand crises.
(17:28):
His argument is that the success of Smith was moving
economics out of the domain of morality where it was born.
Economics was originally an aspect of moral philosophy, right, it
was part of that discipline. But you know, Smith and
as people move it out, And this is why liberal
economists find the anger about inflation so uncomprehensible. They see
it in purely statistical terms and go like, look, the
(17:49):
economy is great. Why is everyone mad? And you know,
I could get into hear a bunch of arguments about
whether or not this is actually true. I mean, I'm
going to return to my sort of argument about like, well, yeah, okay,
even if you believe all of the economic indicators are
great for says people like I'm trans for me, the
economy is it has an unemployment rate of like nineteen
(18:11):
thirty six US great depression. So you know, there are
a lot of people for whom the economic outlook is
not good. People for whom, you know, even the wage
increases that they got in this period still leave them
in sort of hideous and crippling poverty. And none of
that shit matters because the statistics that these people are
trying to use to try to get everyone to calm
down are not operating in the inside of the moral economy.
(18:32):
They're operating outside of it because they're from a tradition
that is specifically about not working inside the moral economy.
And the people that are interacting with are in the
moral economy. But why is it like this, right? Why
why do we have a moral economy that functions this
way in the case of the peasants and you know,
the working people of the seventeen hundreds across Europe, and
(18:52):
you know, this just goes on through the eighteen hundreds
too right. We can trace the moral economy to a
very very specific set of conditions and traditions and expectations
rooted in how people traditionally bop bread. But what are
the conditions of the modern American moral economy? To understand that,
we need to turn to the concept of price itself.
(19:13):
But first, do you know what guarantees low price? Actually,
I probably should all say the word guarantee. That is
probably staggeringly illegible. You know what probably has low prices?
It's the products and services that support this podcast. We
(19:36):
are back, So let us now turn to price. The
political economist Shimsheng Bickler and Jonathan Needson argue that price
is the unit of what orders capitalist society. You know,
price is like the fundamental units of political economy. It's
it's the thing that orders and structures the entire society.
(19:57):
If you want to know more about this, read their
book Capital as Power. It's quite good. I am mentioning
them because I'm about to misuse their argument completely in
tandem with a quote from Marx that I am also
about to misuse. And I am going to do this
to make a different point. So I agree with Bickler
and needs in that price is the unit that orders
(20:19):
capitalist society. But what I'm interested in is price is
what's called a social hieroglyphic. Now, social hieroglyphic is a
term that's a one off term that Marx used wants
to talk about how price like mystifies at ature value whatever.
I don't care about that. I care about it because
there's something very interesting about price itself, and there's something
(20:41):
interesting about the notion of a hieroglyph. Now Marx is
using hieroglyph in the term of like it's something you
have to be decoded, right, because he's writing in the
eighteen hundreds. This is you know, everyone's obsessed with hieroglyphs.
I am using hieroglyphs because hieroglyphs are also a method
of encoding complex information into a single character. Right, Price
as a social hieroglyph is important because price is the
(21:03):
mechanism through which we understand and often through which we
fail to understand the world. Our entire lives in the
eyes of the people who rule this world, our entire
lives are captured in a single number. Everything you do
at work is ultimately just a price on a corporate spreadsheet.
The entirety of the labor process of producing a good,
(21:24):
every hour worked, every drop of sweat, every tier, every
broken body, and shattered city and trade union is lined
up in front of a firing squad, appears in the
end as a simple number. Price. To express it another way,
heals Daniel conn and the painted Bird from their song
the Butcher's share. Let's take a walk around the old bazaar,
(21:44):
where every little thing has treffled far, every pair of
pants and grain of rice contains this poorer story in
its price. A story of the power people wield, a
story about factories and fields, a story of which you'll
never have to be aware, just as long as the
butcher gets his share. Price, this single number is how
(22:07):
we understand the world, and it causes us to treat
price and thus inflation, as a matter of morality and
not economic rationality. Because price is the way that our
society causes us to interact with people. It's the way
we interact with objects. It is the thing that structures
the way we all behave and understand the world. But
(22:31):
price has another function. It is the gatekeeper of capitalist society.
Because price and a man with a gun is what's
standing between you and the ability to live your life
outrage of the moral economics of price increases are similar,
but not identical, to the impulses behind looting. Everything that
(22:54):
you ever need and have been unable to get is
when you walk into a grocery store, just sitting there
right in front of you, but between you and it
is a number and a man with a gun, and
the man with a gun fucking hates you. So the
moment you're free, you just take it. Price in the
(23:14):
entire economic system behind it is organized very specifically, so
you don't do this. E. P. Thompson argued that the
moral economy was pre political. The movements that it produced
could be extremely well organized, but they fundamentally were not
the real movement which abolishes the present state of things.
In twenty twenty, we for a brief moment saw the
(23:37):
outlines of that movement. The uprising was brutally crushed in
its place. We saw the emersions of pre political concerns
about price right. We saw once again a massive panic
about inflation. And this is not to say that you know,
inflation didn't hurt people. It did. It was in large
extent of fiasco. But look at the politics for a
(23:57):
moment that this has produced. Right, what the media understands
is economic anxiety, and what I think we can now
better understand as the moral economy that is a result
of the fact that our entire economic system is structured
by price, and that we encode all of the information
in our life into prices that we sell ourselves for,
and that we in turn are sold things for those
(24:19):
prices going up. The product of it was Trump, right,
and there's I think a reason why these sort of
pre economic explanations are preferred to the answers and you know,
to the actions that people saw in twenty twenty four
years later. Portland, one of the centers of the uprising,
now has almost every grocery store at the exit of
(24:40):
it is armed guards with guns. And these guards are
there to maintain the price system. They're there because, for
a very brief moment, people started thinking something dangerous. They
started thinking, what if this didn't have a price, it
could happen.
Speaker 3 (25:00):
Here is a production of cool Zone Media. For more
podcasts from cool Zone Media, visit our website coolzonmedia dot com,
or check us out on the iHeartRadio app, Apple Podcasts,
or wherever you listen to podcasts you can now find
sources for It could happen here, listed directly in episode descriptions.
Thanks for listening.
All media. Hi everyone, It's me James, and I'm coming
at you today with one of these little requests that
I make sometimes when there's something that we would like
you to do, when it's very important to do. So
today I want to talk to you about Syria, and
specifically Northeast Syria. So with the world's eyes fixed on Syria,
many are rightly celebrating as a brutal dictatorship of Basha
(00:22):
a Lasad comes to an end. But for Kurdish and
other minority communities, recent days have bought violent attacks, ethnic
cleansing and occupation by Turkis back to Jahadis groups in
an attempt to take advantage of the chaos by crushing
the Rajava Revolution. Turkey and its mercenaries are openly committing
war crimes against the region's autonomous communities. Many thousands have
(00:43):
already been forced to be displaced and thousands more are
in danger. To make matters worth this remains largely absent
from the mainstream media reporting on Syria. If you'd like
to share your solidarity with the people of northern and
Eastern Syria, please call on Congress to take urgent action
by passing the Emergency legislation to stop the fight, hold
Turkey accountable, and commit US support to the Syrian democratic
(01:04):
forces and the diverse communities under their protection. If you
want to take action today, you can go to Defendrojaba
dot org. That's d E F E N d R
o ja va dot org. If you are able to
the most effective action we can take right now is
to call a couple of representatives, one representative and one Senator.
A representative would be Gregory Meeks. He's from New York.
(01:27):
He's a Democrat. He is a ranking member of the
House Foreign Affairs Committee. His phone number is two zero
two two two five three four six one. The other
one will be Senator James rish He's an Idaho Republican.
He is a ranking member's Senate Foreign Relations Committee. His
phone number would be two zero two two two four
two seven five two. If you'd like to have some
(01:49):
talking points, you can find those on Defendrojaba dot org.
If you'd like to donate financially instead, especially to this
humanitarian aid effort for the tens of thousands of people
who who have been displaced by the SNA's advances, you
can donate to two organizations that I would suggest to
first we be Heavier store the Curtis Red Crescent. That's
(02:10):
h E Yva s O R dot com and you
want to go slash e n If you want to
see their website in English, you can donate there. The
other one will be the Free Burmer Rangers who are
currently working in Raka. I was talking to my friend
Abat who works with them. You can donate to them
at www dot free fr e E Burma b U
(02:32):
r m A rangers dot com. We will put all
of this in the show notes or the URL, so
if you're driving you don't have to write them down.
Those are the concrete ways that we can help right
now and what is unfolding as a very terrible situation
in Assyria. Thanks.
Speaker 2 (02:46):
I hope you do an episode Welcome to It could
happen here a podcast where I your host Miya One,
talks about inflation. We have covered inflation on this show extensively,
and now it is once again time to return to
it as we head into a world where concerns about
inflation and the economy are the most cited justifications for
(03:08):
people voting for one Donald Trump. But unlike our other
Oh God had so many episodes about inflation. This one
is going to be a bit different. Is going to
start out somewhat similar in that I am going to
lay out a brief explanation of the sort of material
causes of the inflation cycle, and talk a bit about
inflation theories, which is what we've been largely doing on
(03:30):
this show for a while. And then I am going
to explain why none of that shit mattered, why none
of what was actually causing inflation mattered a single bit,
because ultimately, our experience of inflation, and more importantly, of
price in general, is based on a sense of justice
or as the academics call it, a moral economy, and
not on anything that's sort of going on. So let's
(03:54):
begin with what is going on with inflation now. As
we've discussed before on this show, most economists do not
understand why inflation happens. People will take theories. Those theories
are usually quite bad. There is no mainstream consensus on
what is going on. As both me and my friends
at the magazine Strange Matters have pointed out, former Federal
(04:17):
Reserve Governor Daniel Tarulo said, quote, the substantive point is
that we do not at present have a theory of
inflation dynamics that work sufficiently well to be of use
for the business of real time monetary policy making. So again,
this is a guy who used to be a Federal
Reserve governor who has admitted that they have no idea
(04:39):
what the fuck is going on with inflation. Looking at
the extent to which people don't know what's going on
to inflation and how the various theories simply don't work
is a large part of Steve Mann's Notes towards the
Theory of Inflation, which is a Strange Matter's article that
a lot of this will be pulled from. And we've
had Ze on the talk about this before. So there
are a lot of theories about inflation and none of
(05:00):
them work very well. Inflation on a fundamental level is
just prices going up. People have this tendency to think
about inflation in terms of the value of money going down,
but on a pure level, all inflation says is that
prices go up. Now, the most common theory of inflation
is inflation is based on there being too much money
(05:23):
in the economy, And the thing about those theories is
that they don't work outside of like a very few
specific examples of hyperinflation that loom large over our understanding
of what inflation is, even though they have absolutely quantitatively
and theoretically, they have absolutely nothing to do with the
inflation that we've seen over the past four years. So
instead of talking about that shit anymore, Man and the
(05:46):
Strange Matter's crew developed what they call the supply chain
theory of inflation. So I'm going to read the quote
from Notes Towards the Theory of Inflation. As economist JW.
And Mason recently remarked on his website, inflation is just
an increase in prices. So for every theory of price setting,
there's a corresponding theory of inflation. If inflation theory is
downstream of price setting, this is still a quote from
(06:09):
that article, but not the Jovansing quote. If inflation is
downstream of price theory, then no account of inflation can
begin with the macro economy at all, since prices are
set at the micro level. Rather, you need to look
at particular industrial sectors, their supply chains, and ultimately the
pricing decisions of their firms. Only then are the true
(06:30):
causes of inflation, both the internal failures of the industrial
system and external shocks to it, which can cause price rises. Revealed.
Man's price theory is fairly simple, right. It flows from
the basic observation that prices are set by guys in offices,
not by something abstract as like market forces and supply
and demand in economic terms. What this argument amounts to
(06:53):
is the argument that corporations are price makers and not
price takers. Right, there's a bunch of guys they sit
in offices and develop a strategy of but what prices
are going to be? And that's you know, how they're set,
And what matters to the people who develop prices are
things like goodwill, which is to say, not pissing off
their customers by raising prices, and things like their balance
(07:14):
sheets which reflect you know, their incomes and costs. Price
in this model is just cost plus markup. And we
know this is how prices are actually set because, as
Man points out, people have gone through and done surveys
of pricing managers and ask them how they set prices
and the answer is costless workup. So what would cause
(07:34):
these guys in offices to increase their prices? Well, these
are companies that are all part of a global supply chain,
a very very broad global supply chain, and a very
complicated global supply chain. This means that if the cost
of the stuff they buy from other suppliers on the
chain in order to produce what they're selling, if those
(07:55):
prices go up, because there is, to use a purely
hypothetical example, a giant pandemic, those costs increases eventually had
to be passed down to the people paying the products
so that the corporation can maintain its balance sheets and
maintain it sort of price plus markup as something that
you know, covers their costs. Right, This is what set
(08:16):
off the giant inflation spike in the US and the
Biden administration. You know, the cost side of cost plus
markup exploded. But it doesn't really matter why the prices
increased for our purposes, and our purposes are looking at
sort of why Trump won the election. What was important,
you know, about inflation wasn't even the price increases. It
was the narratives around inflation and how we understand the
(08:37):
economy at a moral level. And for that we're going
to turn to one of the most popular accounts of inflation,
so called greedflation. Now, as we've said, price is cost
plus markup, and you can raise prices because of cost,
but you can also do this because you want to
increase your markup. And this is something that happened during
(08:59):
the inflation search. Companies realized that consumers were willing to
accept higher prices without the usual good will hit because
they thought the prices were going up because inflation was happening,
and because they were willing to accept the higher prices
and not you know, try to shop somewhere else, corporations went,
fuck it, let's just keep jacking the prices up. And
this really really pissed people off. It still does, and
(09:21):
this is something that was true across the entire political spectrum.
Speaker 1 (09:24):
Right.
Speaker 2 (09:24):
People were very, very angry about this sort of reflation thing,
and that rage is more important than the technical details
of why inflation happened, because the way we understand inflation
is not through conventional economics. We understand it through the
moral economy. And when we come back from a different
kind of economy, which is to say, this ad break,
(09:47):
we are going to examine what the moral economy is,
how it differs from our sort of regular economy, where
it came from, and why it's relevant to our situation now.
And we are so back, all right, let's talk about
(10:11):
the moral economy. The moral economy is a concept developed
by the British historian E. P. Thompson in the early
nineteen seventies. Thompson was attempting to explain the previous century
and a half of bread riots by what he termed
the English crowd by applying anthropological principles to their actions.
I'm just going to read from Thompson's The Moral Economy
(10:32):
of the English Crowd here. It is, of course true
that riots were triggered off by soaring prices, by malpractice
among dealers, or by hunger. But these grievances operated within
a popular consensus as to what we're legitimate and what
we're illegitimate practices in marketing, milling, baking, etc. This, in
its turn, was grounded upon a consistent traditional view of
(10:55):
social norms and obligations of the proper economic function of
le parties within the community, which, when taken together, can
be said to constitute the moral economy of the poor.
In outrage to these moral assumptions, quite as much as
actual deprivation was the usual occasion for direct action. Now,
the moral economy of the English Crowd in the eighteenth
(11:18):
century is about a very specific period in British history,
which is to say, the seventeen hundreds, and about how
people thought bread should be sold. Peasants and the new
urban workers had very specific ideas about, you know, bread,
about how bread should be produced, about who should be
allowed to sell it, about where and when they should
be allowed to sell it, about how it should be sold,
(11:38):
how it should not be sold. And because of this,
you know, because of their experience in sort of previous
systems that before the sort of imposition of the free
market system or quote unquote free market system, they have
a very specific series of hatreds. They hate middlemen, they
hate grainhoarders, they hate all of the aspects of the
new quote unquote free market impose additional costs and burdens
(12:01):
on them. And they also believed that elites have a
kind of moral duty to the masses based on the
norms and traditions of their society. And when they welch
on that deal in a way that makes people's lives worse,
people get extremely pissed off. These peasants and urban workers
particularly hated price increases, and they hated price increases so
(12:24):
much that this frequently turned into riots. But the actual
contents of these riots are very interesting. Instead of simply
seizing all of the grain, they do something else entirely.
Here's Thompson again. Quote. The central action in this pattern
is not the sack of grainaries and grain or flour,
but the action of quote setting the price. From a
(12:47):
few lines later, they might then order the farmer to
send quote convenient quantities to market to be sold, quote
and at a quote reasonable price. The justices were further
empowered to quote set down a certain price upon a
bushel of every kind of grain. So, if you follow
this here, right, what's happening in these British bread riots
is that the revolt isn't just about their you know,
(13:10):
being a price to grain. It's that people have a
very very specific moral understanding of what the price of
grain should be, and they take direct actions that are
designed to set the price of grain to the level
they thought it should rest at. And this kind of
action is extremely common sort of across Europe in this
entire time period.
Speaker 1 (13:31):
Right.
Speaker 2 (13:32):
It's also a hallmark of the French Revolution. You can
see in this right, in this sort of rage over
price in the sense of justice. The outlines of our
current moral economy you have, you know, staggering outrage's price
in clarice is seen as on jests, which is reflation
or just inflation in general, because people are just mad
about the concept of the price going up, paired with
(13:54):
rage at the elites, which manifests the sort of hatred
of Joe Biden the Democrats for being the people who
presided over the price increases. We also have our own
rage about price gouging in immediate market terms, and this
is something that the most annoying libertarians and the defenders
of the market love to point out. There's nothing actually
wrong by market economics about say Martin Skrelly jacking the
(14:16):
price of medicine up until you can't afford it anymore,
or you know, other things that we find extremely terrible,
like people jacking the price of water when people need water,
like bottled water dreat hurricanes. We are all outraged, So
why do we feel morally strong about it? And that
is the moral economy, babe. This is something that you know,
(14:37):
These these reactions, right, the emotional reactions we have to this,
the sense of injustice that we feel, are almost entirely
outside of the realm of what you would call traditional
economics right, And that's because we're functioning on something that
is in some senses older than that kind of economics.
But there's something else going on here at a fundamental level.
(14:58):
And what's important about you know, price and the reaction
to inflation is that it's an outrage based on a
sense of justice. Right. This rage is not a measure
of direct exploitation necessarily. I think it was the political
scientist James C. Scott who wrote his own book called
The Moral Economy of the Peasant, and Scott argues that,
(15:18):
you know, and ib Thompson also argues this that it's
the moral angle that causes people to revolt, not the
direct level of exploitation. You can, in fact, you know,
inflict hideous exploitation on people as long as they think
that it's just. But when you violate these moral principles,
that's when people really lose it. But it also means, right,
(15:39):
the fact that the sort of sense of outrage is
not necessarily directly tied to the exploitation level. It means
that rich people can be bad about inflation even though
they're completely fine, because these people also still have this
sort of sense of justice about what prices should be. Now.
It's also worth noting here that it is possible to
have high inflation rates and have everyone be fine. In fact,
(16:02):
we have discussed scenarios like that on this show. In
my episodes about the rise of Lulah, the current president
of Brazil, we discussed how military dictatorship in Brazil produced
an economy that was, you know, you had twenty percent
year on year inflation, right, but also you had forty
percent yearly wage increases, and so everyone was like kind
of fine with it because the amount of money you
(16:23):
were making was going up every year. So nobody really
cared about even things like the military dictatorship itself. There
was not an enormous amount of opposition to it. But
then Brazil's trade unions figured out the government had been
lying about inflation numbers, and this started off a series
of protests that you know, would send Lula like into
his big name of his political career, and eventually this
is one of the sort of dominoes that leads to
(16:45):
knocking down the military dictatorship. And that's because you know,
the level of exploitations people were living under hadn't changed,
but the deal that they had made right the sort
of deal with with the military government of like, we
won't do anything, our wages will continue to go up,
and inflation will get need to be work at a
certain level such that we're still getting paid. That deal
was violated, and that sense of injustice was powerful enough
(17:08):
to really kickstart in extremely powerful brasilient labor movements and
kickstart the fall of a dictatorship. Now, one of Thompson's
arguments was that the success of Adam Smith and his
cohort and Smith is moving around and making his arguments
about what the free market is in the period where
we're dealing with all of these sort of grand crises.
(17:28):
His argument is that the success of Smith was moving
economics out of the domain of morality where it was born.
Economics was originally an aspect of moral philosophy, right, it
was part of that discipline. But you know, Smith and
as people move it out, And this is why liberal
economists find the anger about inflation so uncomprehensible. They see
it in purely statistical terms and go like, look, the
(17:49):
economy is great. Why is everyone mad? And you know,
I could get into hear a bunch of arguments about
whether or not this is actually true. I mean, I'm
going to return to my sort of argument about like, well, yeah, okay,
even if you believe all of the economic indicators are
great for says people like I'm trans for me, the
economy is it has an unemployment rate of like nineteen
(18:11):
thirty six US great depression. So you know, there are
a lot of people for whom the economic outlook is
not good. People for whom, you know, even the wage
increases that they got in this period still leave them
in sort of hideous and crippling poverty. And none of
that shit matters because the statistics that these people are
trying to use to try to get everyone to calm
down are not operating in the inside of the moral economy.
(18:32):
They're operating outside of it because they're from a tradition
that is specifically about not working inside the moral economy.
And the people that are interacting with are in the
moral economy. But why is it like this, right? Why
why do we have a moral economy that functions this
way in the case of the peasants and you know,
the working people of the seventeen hundreds across Europe, and
(18:52):
you know, this just goes on through the eighteen hundreds
too right. We can trace the moral economy to a
very very specific set of conditions and traditions and expectations
rooted in how people traditionally bop bread. But what are
the conditions of the modern American moral economy? To understand that,
we need to turn to the concept of price itself.
(19:13):
But first, do you know what guarantees low price? Actually,
I probably should all say the word guarantee. That is
probably staggeringly illegible. You know what probably has low prices?
It's the products and services that support this podcast. We
(19:36):
are back, So let us now turn to price. The
political economist Shimsheng Bickler and Jonathan Needson argue that price
is the unit of what orders capitalist society. You know,
price is like the fundamental units of political economy. It's
it's the thing that orders and structures the entire society.
(19:57):
If you want to know more about this, read their
book Capital as Power. It's quite good. I am mentioning
them because I'm about to misuse their argument completely in
tandem with a quote from Marx that I am also
about to misuse. And I am going to do this
to make a different point. So I agree with Bickler
and needs in that price is the unit that orders
(20:19):
capitalist society. But what I'm interested in is price is
what's called a social hieroglyphic. Now, social hieroglyphic is a
term that's a one off term that Marx used wants
to talk about how price like mystifies at ature value whatever.
I don't care about that. I care about it because
there's something very interesting about price itself, and there's something
(20:41):
interesting about the notion of a hieroglyph. Now Marx is
using hieroglyph in the term of like it's something you
have to be decoded, right, because he's writing in the
eighteen hundreds. This is you know, everyone's obsessed with hieroglyphs.
I am using hieroglyphs because hieroglyphs are also a method
of encoding complex information into a single character. Right, Price
as a social hieroglyph is important because price is the
(21:03):
mechanism through which we understand and often through which we
fail to understand the world. Our entire lives in the
eyes of the people who rule this world, our entire
lives are captured in a single number. Everything you do
at work is ultimately just a price on a corporate spreadsheet.
The entirety of the labor process of producing a good,
(21:24):
every hour worked, every drop of sweat, every tier, every
broken body, and shattered city and trade union is lined
up in front of a firing squad, appears in the
end as a simple number. Price. To express it another way,
heals Daniel conn and the painted Bird from their song
the Butcher's share. Let's take a walk around the old bazaar,
(21:44):
where every little thing has treffled far, every pair of
pants and grain of rice contains this poorer story in
its price. A story of the power people wield, a
story about factories and fields, a story of which you'll
never have to be aware, just as long as the
butcher gets his share. Price, this single number is how
(22:07):
we understand the world, and it causes us to treat
price and thus inflation, as a matter of morality and
not economic rationality. Because price is the way that our
society causes us to interact with people. It's the way
we interact with objects. It is the thing that structures
the way we all behave and understand the world. But
(22:31):
price has another function. It is the gatekeeper of capitalist society.
Because price and a man with a gun is what's
standing between you and the ability to live your life
outrage of the moral economics of price increases are similar,
but not identical, to the impulses behind looting. Everything that
(22:54):
you ever need and have been unable to get is
when you walk into a grocery store, just sitting there
right in front of you, but between you and it
is a number and a man with a gun, and
the man with a gun fucking hates you. So the
moment you're free, you just take it. Price in the
(23:14):
entire economic system behind it is organized very specifically, so
you don't do this. E. P. Thompson argued that the
moral economy was pre political. The movements that it produced
could be extremely well organized, but they fundamentally were not
the real movement which abolishes the present state of things.
In twenty twenty, we for a brief moment saw the
(23:37):
outlines of that movement. The uprising was brutally crushed in
its place. We saw the emersions of pre political concerns
about price right. We saw once again a massive panic
about inflation. And this is not to say that you know,
inflation didn't hurt people. It did. It was in large
extent of fiasco. But look at the politics for a
(23:57):
moment that this has produced. Right, what the media understands
is economic anxiety, and what I think we can now
better understand as the moral economy that is a result
of the fact that our entire economic system is structured
by price, and that we encode all of the information
in our life into prices that we sell ourselves for,
and that we in turn are sold things for those
(24:19):
prices going up. The product of it was Trump, right,
and there's I think a reason why these sort of
pre economic explanations are preferred to the answers and you know,
to the actions that people saw in twenty twenty four
years later. Portland, one of the centers of the uprising,
now has almost every grocery store at the exit of
(24:40):
it is armed guards with guns. And these guards are
there to maintain the price system. They're there because, for
a very brief moment, people started thinking something dangerous. They
started thinking, what if this didn't have a price, it
could happen.
Speaker 3 (25:00):
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sources for It could happen here, listed directly in episode descriptions.
Thanks for listening.
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