Inflation and working-class learning

This month (August), amid the public discussion of current inflation and the standard of living, is the somewhat obscure 50th anniversary of a significant union pamphlet that explained how inflation happens.

In 1974 the Amalgamated Metal Workers Union (nowadays the AMWSU) produced a booklet for their members that explained how inflation works from the workers' viewpoint in plain language. It included a summary of the 3 main contending explanations of the time.

It was called Inflation – the Silent Robber! written by the national research officer, Jack Hutson[1].

The working-class learning from this project enabled healthy disrespect for mainstream messaging about inflation and other economic commentary and reinforced union campaigns for the benefit of the whole working class.

Is it possible that in our 2020s non-academic activists can learn economics and apply their learning to stronger deeds that tackle the many problems and the polycrisis that dominates our lives?

The short answer is “yes”, so I explain why and how that can happen. I go further. I suggest layperson learning of how this society produces and reproduces itself is far more important than what comes from mainstream academia and its associated pubic commentariat: politicians, popular media and alternative media.

Trust the mainstream experts?

In a recent post I focused on inflation and interest rates in Australia and its implications for workers.

How might movement activists learn about inflation and the modern capitalist economy and apply that to their activism?

Further, the enemies of the working people and of nature do not hold back with their story about what makes inflation a problem and how workers’ wage increases, associated union militancy, and excessive government spending combine to cause it. This is mostly bulldust but there is now an artificial whirly-whirly of it, whose deliberate intent is to bring down the Labor government and prevent more determined living standards campaigning.

The current inflation is not the first time working-class activists have had to deal with an inflation problem. Inflation reappears regularly in capitalist societies.

Activists can allow the mainstream, “expert” commentary to dominate the messages that go into working-class thought. Or they can develop a story about it that helps their campaigns grow so that they start winning in the face of bulldust blindness.

This is not an argument against academic activity. Paying people to wonder, research, learn, reinforce existing knowledge, and produce new knowledge that is socially useful and shared is essential.  

Rather, I argue for more intense intellectual effort by “ordinary” people, especially those participating as activists in various actions, campaigns and movements for a better society. Producing that learning is socially useful for all because it enables coordinated action for the majority and for nature against all features of the poly-crisis of the 21st century.

The ideas can be applied to any other major event or development in the economy, for example, the cost of living, productivity, climate change, alienation and mental health, manufacturing industry policy, the Annual Wage Review, enterprise bargaining, the gender wage gap, the housing crisis, the Budget, poverty, recessions and worse, the pandemic and other interacting crises, and the simple question, “what is the alternative?”.

Inflation – the Silent Robber! - working-class union learning about inflation and society

There are 2 distinctive features to this old pamphlet – its content (see below for a summary) and its presentation.

Working-class learning

How the content was presented was just as important, and maybe, even more so.

The content was presented as a pamphlet and, as an instalment series in the members’ monthly union journal.

Each issue of the monthly journal went to every member in “hard copy”.

Every member regularly received short instalments that explained, in plain language, how inflation happened and how the economy worked. The members were encouraged to read the material and then discuss it with each other at work and any other gatherings, formal and informal, where it was possible to do so.

Of course, not every member did so and, probably, not every member of the union thought that it was right for the union to make this sort of material a priority. The right-wing minority organized within and external to the membership opposed this type of learning.

There are profound ideas in this method. First, Hutson and most of the union’s leadership knew that members could learn economics, starting from their experience at work and in society. Leaving school at 14 or 15 years did not prohibit that. They knew that the members could handle complexity. They did not believe in a “dumbed-down” membership that required leaders only to hold and use the knowledge essential for effective unionism. 

They did not believe that economics was the property of mainstream commentators, whether academics or journalists. They challenged the idea that it was.

The instalment form started with and required personal effort: reading and thinking during reading and afterwards.

The next step is ground-breaking. The members can discuss what they have learned through personal effort with family members, friends and, of course, their workmates at work and away from it. That includes union branch meetings.

Thus, the members continue their learning in their collective, thus adding power to it. The learning shapes their collective, intellectual response to mainstream messaging - TV, radio and newspapers of the day - and that becomes a big deal as campaigns are formed.

Their instinct is that wage increases do not cause inflation because they are always chasing price increases, trying to maintain their effective standard of living.

Their learning from within their own intellectual effort validates their instinct and adds shared muscle to it.

Mindful militancy, as it was being defined in those times, is nourished, and stimulated by union leaders who wanted to see more of it rather than being worried or frightened by it.

The semi-structured interaction of personal and collective learning breaks from the dependence on economic “experts” banking what they know into the empty heads of those who do not know. This is ground-breaking because it is liberating. It is also fragile because it can wane as the years pass if not deliberately cultivated.

The banking method of “teaching” using economic experts is now dominant in our modern union and other movements.

Hutson’s material: what causes inflation

The content is divided into 2 parts of 11 and 10 segments respectively. It is substantial.

Part 1 starts with an overview of the inflation happening at that time. Hutson then explains, over 4 sections, the main theories of how the economy and inflation work: the classical, Marx, and Keynes. From there he works through post-war price movements to explain the 4 kinds of inflation and how they interact with each other.

The next 3 sections turn to policy, “Cause and Cure”, and Australian inflation.

The last instalment in part 1 addresses the key question: “Do wage increases cause inflation?”

Part 2 explores the broader context of that time. Each instalment addresses significant changes to capitalist societies as they were happening, including the more powerful influence of multinational corporations on society and its governments. There is also the currency crisis, restrictive trade practices, resale price maintenance, the control of monopolies, the tariff system and the control of prices.

The contending explanations in our time

“… it has been said that the greatest inflation has been in the literature on inflation. The big problem, however, is to sort out from the mass of available material that which will help best to clarify the issues involved without over-simplifying them.”

Jack Hutson’s 3 contending explanations for inflation are the “classical economic theory” of Jean Baptiste Say, and then the work of Karl Marx and John Maynard Keynes. These remain relevant in our times and the summaries he provides are a good starting point.

Hutson includes Marx because first, he knows the material and, second because it deals best with the workers’ daily life. How Marx treats the connections between inflation, wages, profits and crises is about working-class life at work and in society. What happens in working-time and how that is reproduced is the common thread. That was still ground-breaking in the 1970s, 120-odd years after its presentation. In plain language: “Beware any economist that tries to explain any problem or circumstance without talking about profits and the exploitation of people and nature to get them.” It remains relevant in our times.

Since the AMWU pamphlet, we have powerful new “insights” in these 3 contending explanations and, arguably, 3 more frameworks that seek to explain inflation and the dynamic of capitalist society in general. They include heterodox economics and Modern Monetary Theory (MMT).

We have the development of feminist and anti-racist perspectives, some standing in their own right. They push forward “improvements” and more, especially to Keynesian and Marxist explanations. Feminism’s grasp of reproduction, including the reproduction of the working class on a daily and generational basis is essential.

And of course, we have the penetration and validation of ecological economics into all of them.

The Marxist insights on profits and exploitation, especially with its feminist, anti-racist and ecological infusions, still stand separately from the others, despite points of convergence. Its daily and longer-term implications are still too much for most, including in the labour movement.

Can the modern working-class activist learn this stuff?

The short answer is “yes”.

Broadly speaking there are 2 ways of doing so. One is to go to university and do a course. However, with rare exceptions, we know university courses are loaded with anti-worker economics in the classical tradition.

The other is to adapt to present circumstances the AMWU method as delivered in the Jack Hutson pamphlet. 

“Read (thinking should take care of itself) – discuss with activist comrades formally and informally – act (eg expand to others) – read etc.”

It’s a learning spiral to bring more people and add quality to the participants in the campaigns and struggles

In this endeavour, there is now an explosion of accessible material through blogging, and video and audio podcasts. Much, self-labelled as unique as if that makes it ground-breaking, is dross, ignoring the breakthrough questions, and leaving the system comfortable. Sifting out what will help change the world into a place that does survive remains a big problem.

However, deliberate new loads of worker-to-worker learning in learning circles based on critical, inquiring dialogue will be a breakthrough for new momentum for a better society.

[1] Jack Hutson was an engineer who returned to being a tradesman before he became the AMWU’s Research Officer. He wrote two other groundbreaking books for the AEU, AMWU and other union members: Six Wages Concepts and From Penal Colony to Penal Powers.  For a bit more, click here.