Last month, workers from the British transport trade union, the RMT, went on strike over wages, conditions, job security and what RMT General Secretary Mick Lynch described as the “transport austerity” of job cuts and inadequate pay. The Sun newspaper, harking back to the Arthur Scargill led miner strikes of the mid-1980s, proclaimed in its headline:
Rail unions cripple UK, Scargill joins picket line and teachers threaten to strike too. It’s . . . CLASS WAR
The Sun, for once, was right. Whenever inflation rises, different social groups experience different outcomes. Some benefit and some lose out. For workers who are organised it makes sense to strike for better pay to mitigate against the effects of inflation. For corporations who are making extra money due to rising prices, it makes sense to resist these claims. Such is the bread and butter of class war during times of inflation.
As inflation rises, we should expect to see many more such industrial conflicts. And it is rising, quite rapidly. Right across the western world, the price of almost everything we pay for in order to live reasonable lives is getting noticeably higher. In the US, the inflation rate hit 8.6 percent in May, a figure surpassed by the UK where it reached 9 percent. Inflation in the EU reached a new high of 8.1 percent although some individual countries are experiencing sharper price increases. In Estonia, for instance, inflation rose to an all-time record of 20 percent. All in all, the cost of living is rising at a faster rate than at any time since the 1980s.
Central banks, which are public institutions whose job it is to manage the currency of a nation, have responded by raising their interest rates (i.e., the rate they charge regular banks to borrow money from them). When these rates are low it means the cost of borrowing is cheaper and more money flows into the economy, potentially pushing up prices. When rates go up borrowing becomes more expensive, banks cut back on their lending, and there is a restriction in the supply of money which, in theory at least, leads to a reduction in prices. Adjusting these rates is one of the core functions of…