Inflation varies by neighborhoods

21 March, 2022

Inflation hits basic goods such as food and fuel.
Inflation hits basic goods such as food and fuel.

There is no truth in the claim that inflation affects everyone in the same way. Economic data show that the current inflation hides, all over the world, a real transfer of income from labor to capital and from the weakest capitals to the most concentrated ones. However, the reaction among the workers and the weakest capitals, those of the agrarian petty bourgeoisie or the hauliers, is the opposite. The workers demand universal access to basic necessities, the small landowners to be able to reduce wages and conditions of their wage earners.

Table of Contents

Inflation and the working class

Consumption of essencial goods by level of income
Consumption of essencial goods by level of income

1 The lowest 20% of the population in terms of income – the sector in which workers are overwhelmingly in the majority – spend, in all European countries, between 35% and 51% of their income on the purchase of basic necessities.

In contrast, the 20% with the highest incomes do not even spend 20% on essential needs.

In other words, price rises affect social classes unequally: the greater the relative weight of essential goods in price rises, the greater the impact on workers.

Inflation of essential goods vs. general inflation
Inflation of essential goods vs. general inflation

2 And in fact this is exactly what is happening. Inflation is hitting essential goods.

And even if we take out fuel, the difference between the rise in prices of consumer staples and the rest of the goods on the market is significant.

No wonder when international prices of basic foodstuffs are rising dramatically. Wheat has already risen by 21% and barley by 33%.

3 The result is that if we break down the impact of inflation by income levels, we see that the increase in prices suffered by the 20% with the highest income (petty bourgeoisie and bourgeoisie) and the 20% with the lowest income do not have anything in common.

Inflation for upper and lower incomes
Inflation for upper and lower incomes

In the Eurozone as a whole, the income group in which the majority of workers are, has been suffering up to 4 times more inflation.

And that is only part of it..

4 Because the other element to consider is the evolution of income.

As we can see in the graph on the right, in all European countries except France, inflation grew more than disposable income, i.e., on average, society became poorer.

Disposable income vs inflation in Europe
Disposable income vs inflation in Europe

But if we look at it separately by class, the result is very different. In both France and Spain, for example, real wages earned by workers have been falling for 10 years. They have fallen even more with the worsening of the crisis since 2019 and they are already preparing for us all over the continent an “income pact” that will further reduce the purchasing power of working families.

That is to say, the rise in incomes, where there is one, takes place outside and far away from the working class. Where the gross disposable income of families grows, it hides a transfer of income from the workers to broad sectors of the petty bourgeoisie and to the bourgeoisie.

Where it falls, as in Spain and Italy, the fall is practically equivalent to that suffered by the GDP since 2019. Since the big companies, the listed ones, have continued to offer profits and to distribute even more dividends than in 2019, this means that in the countries most “unfortunately hit” by the crisis, the transfer of income that feeds the recovery of capital is not limited to the workers. A large sector of the petty bourgeoisie is also transferring income to big capital and losing real purchasing power because their incomes are falling.

Inflation and the petty bourgeoisie

Demonstration of agricultural holders in Madrid yesterday.
Demonstration of agricultural holders in Madrid yesterday.

The question is that the effect and the stance it produces in the petty bourgeoisie is completely different from the one it produces in the workers.

We have been seeing it these weeks with the lockouts of the fishermen in France and the small transporters in Spain -which will now be joined, it seems, by the medium-sized owners. But it has been even clearer in the farmers’ mobilizations.

The protests of all these groups of small landowners have been triggered by the rise in inputs, especially energy. But their platforms, as has been a constant in recent years, added one more axis: the wages and working conditions of their employees.

In statements collected by the conservative daily ABC among the organizers and participants of yesterday’s protest, the message was clear. One young owner argued:

We are here because of the oppressive situation that the Spanish countryside is going through. Because of all the measures that the government has carried out, for example, the labor reform, which affects us in terms of contracting with the new contracting models. We have a small company in which we have hired a worker. And of course, the worker does not have to see his rights or conditions reduced [with respect to those legally established], but all this has repercussions in the wallet of the family business.

Not all demonstrations against price rises are the same

Tractors and trucks cut traffic in Málaga.
Tractors and trucks cut traffic in Málaga.

That is why protests against rising prices are not the same when they are carried out by workers, as those that are now emerging in countries like Morocco, and when they are carried out by the petty bourgeoisie, no matter how much they pretend otherwise, as in Spain.

The petty bourgeoisie demands to be able to recover the profitability lost due to the rise in input costs by reducing the wages and working conditions of the workers it employs… who are already, in fishing or agriculture, the worst paid due to the difficulties of the small agrarian property to attract capital.

Moreover, they are now asking to be able to circumvent the limits of the CAP and the restrictions of the Green Deal to return to a more intensive agriculture and livestock farming, easier to capitalize for a small property, despite the impact on the health of the population and environment following the intensive and excessive use of nitrogen fertilizers and pesticides.

On the other hand, workers, by their own social position, do not seek anything other than to ensure access to the satisfaction of basic needs, not only for themselves, but for everyone. They act as the universal class that they are, calling for the criterion of satisfying universal human needs to take precedence over the profitability that the system and its mechanisms impose on us despite the fact that the material basis for satisfying everyone’s needs is there, in full view of everyone and within reach of our hands.

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