A Socialist Primer on Monetary Policy and Inflation
Utter the words “monetary policy” and many of us fall asleep. But that policy is crucial to how capitalists exert power. Instead of leaving it to the “experts,” socialists and the labor movement should demand a democratic say in what monetary policy looks like.
The solutions to inflation need not be anti-worker. (Vladimir Solomianyi / Unsplash)
Republicans and out-of-style economists warn that the Biden administration is leading the economy into runaway inflation. The Biden administration and Federal Reserve, by contrast, point to the major disruptions caused by the pandemic, arguing that the inflation we’ve seen is caused by sector-specific supply-chain bottlenecks. Upon learning of this discussion, most of us quietly choose to close the tab or change the channel — all this stuff seems way over our heads.
It doesn’t have to be that way, Tim Barker argues. Leftists can talk about inflation and monetary policy in a comprehensible way — precisely to challenge the kind of commonsense wisdom expressed in the contemporary mainstream debate on inflation, as Barker does in a recent piece in Phenomenal World.
In this piece, Barker argues that both sides of this debate share the same staunchly anti-worker premises. These premises in action can be traced back to 1979, when Carter-nominated Federal Reserve chair Paul Volcker implemented what is now known as the “Volcker Shock,” sending interest rates through the roof, inducing a recession, and crushing worker power in the US. The Volcker Shock was one of the first acts in the transition to the neoliberal era.
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