As Inflation Hits US Workers Hard, do Argentina and Venezuela Provide a Heterodox Toolbox to Confront It? (Part I)

By Dakotah Lilly – Mar 27, 2022

Part I: Introduction
Inflation is currently a problem in the United States. It is not a problem in the classical sense that inflation has been weaponized as in the past; as a trojan horse against popular, socialist, or nationalist governments in favor of neoliberal adjustment plans. Instead, inflation is a problem in the United States because it exemplifies a ramping up of an aspect of a class based warfare tactic by the oligarchic establishment in order to continue raking in huge profits and an ever increasing share of the capital-labor pie. How do we know this? Well, we know there is general inflation that is further squeezing the wallets of the average working family because every single wage earning member of a family that is not of privilege will be the first to tell you that their wage is not going nearly as far as it was 1, 2, or 3 years ago. Not only this, but the US Bureau of Labor Statistics numbers for the Consumer Price Index puts inflation at its highest numbers in 40 years.

It is worth noting that this price index does not incorporate certain things that we may consider necessary in the 21st century, such as childcare. And how do we know that this current inflationary period is another stage in the multifaceted toolbox of the ruling class in their quest for higher profits? Well, while the so-called “captains of industry” decry increased production costs and supply chain issues as the reasons they are forced to increase prices; at the same time we see these same people and companies going home with record breaking profit margins! Roughly two-thirds of the largest publicly traded US companies  reported better profits in 2021 than in the same period in 2019.

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Journalist Matt Stoller contends that a corporate drive for higher profits accounts for around 60% of the current rate of inflation that we are facing. Where are these profits going? Are the profits going towards higher pay for workers, the true drivers and hopefully the one day true masters of their own domain, the economy? Has it gone towards investments in industry so that prices in the long term will go down for consumers and workers alike? Both of these scenarios have the same chance as a snowflake in hell. This isn’t the first time that inflation has taken up a considerable chunk of the media’s time; this is the first time in a long while that it has been US inflation that pundits and newspapers are taking the time to discuss.

Two other countries in the America’s have been cross examined and held under a microscope in terms of economic policy and even more so when it comes to inflation. Venezuela under Chávez and later Maduro, and Argentina under the Kirchners, and even currently with Alberto Fernández, are constantly used by liberal publications like the Financial Times, The Economist, and the Washington Post as examples of what not to do in the realm of economics, including in terms of inflation management. This is contrary to recent economic history for a couple of reasons. In regards to Venezuela, inflation was a problem that was always present but always remained far below the levels experienced during the 80’s and 90’s, the years represented by neoliberalism and IMF backed “adjustment.”

This graph represents the monthly inflation rate in Venezuela from 1980 until 2013. Also, the years in which Chavez was president represented an unprecedented hike in wages and purchasing power, as well as a large increase in the percentage of the national budget dedicated to social inclusion and economic investment, with small and medium sized producers as well as cooperatives and communal sectors at the center.

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In Argentina the story was mostly the same particularly under the presidency of Cristina Fernández de Kirchner. Inflation was a battle that evolved throughout her presidency but was contained through a combination of initiatives that I plan to go through in my next article. What is clear is that purchasing power and the rights of workers and consumers was maintained while wages were increased at a rate above inflation. The years prior to Kirchnerismo were comparable to the years prior to Chavismo in Venezuela; high poverty, high unemployment, high inflation, and absolute rule of an anarcho-capitalist oligarchy backed by the US and the IMF. However, like Chavismo, Kirchnerismo was characterized by a national economic program centered around social justice, economic independence, and political sovereignty, coupled with industrialization and technological advances.

Now that we have compared and contrasted the situations of inflation in our respective countries, I want to use my next article to explore some of the responses that have been employed by the National-Popular and Democratic governments of Venezuela and Argentina as well as the proposals currently put forth by popular sectors of the current Argentine government personified by CFK and institutions like the Patria Institute, La Campora, and others. My next article will compare these common sense and innovative proposals which challenge the power of the oligarchy while protecting and empowering workers and consumers, with the complete lack of action on the part of the Biden administration in protecting the pockets of American workers.

 

 

Featured image: Shopping cart in a supermarket aisle empty of people and full of products. FIle photo.

DL/OT/EF