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If anybody tells you that he knows The One True Cause Of All Inflation (or stagflation, for that matter), you should check your wallet because you are being taken for a ride.

In the particular historical case of the '70s, the primary causes of the growth slowdown were (a) increasing demand drain from deteriorating foreign balance between The WestTM and raw materials producing countries (principally OPEC) and (b) the end of the rebuilding of the European capital plant destroyed by the world wars.

The growth slowdown created a distributional problem, because the Fordist political economy's distributional policies were based on high real growth rates. Inflation followed from the failure to resolve this distributional conflict. Inflation was firmly and finally arrested when the distributional conflict was resolved by breaking the labour side's power to sustain the conflict.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Aug 5th, 2011 at 04:21:20 PM EST
[ Parent ]
Neither should we mystify these matters.
It is just a simple logical conclusion that growing monopolisation rises prices and cuts production at the same time.
by kjr63 on Tue Aug 9th, 2011 at 04:32:56 AM EST
[ Parent ]
Simple and logical, perhaps, but not necessarily true. There are plenty of historical examples of monopolies leading to lower prices and more production, when profit maximisation is rendered subordinate to the logic of industrial mass production.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Aug 10th, 2011 at 05:55:19 AM EST
[ Parent ]

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