Union Power
EDITORIAL
As the year comes to a close perhaps, nothing affects the daily existence of every working class family today as does price increase. Never in living memory has inflation and particularly food price inflation been so high and persistent. Today it has been in double digits for 40 months without a break making it longest ever stretch since price records have been maintained in India. The government, with the Prime Minister leading from the front, has issued repeated assurances that inflation will taper off ‘next month’. That month is yet to come.
The working class is correct in its intuitive understanding that price inflation is caused primarily by the rising cost of food prices. Food price inflation has never been higher. And it affects working people disproportionately since food continues to remains the largest component of consumption of every working class household. Food price inflation has been persistent since there has been a complete collapse of agriculture. Alongside there is a persistent decline in land under cultivation of food as rich farmers are moving to production of profitable cash crops and protein rich food that are demanded by the better off section of the urban population. As a result there is a decline in the availability of food grain in tune with the growing population. This shortage is pushing up food prices. This shortage also opened the scope for intermediaries and traders engaging in hoarding and speculation in food grains with the objective of gaining higher prices by creating scarcities.
Integration with the global economy has meant that food prices within the country are increasingly linked closely with global food prices that tend to be higher than domestic prices. The urge for high profits is a source of enormous political pressure by the upper peasantry for allowing the export of agricultural products. There has been a strong and repeated pressure to open up exports, in particular, for rice and sugar, amongst essential food, since profit margins in global markets are particularly high and the quality of Indian produce is amongst the best in the world.
Price increases are however not restricted to food grain and other food products alone. Although there has been a decline in the demand and therefore production of manufactured goods, prices of manufactured goods continues to rise and contributes to inflation. That prices of manufactures is rising in a period of declining demand is indicative of only one thing and that is that manufacturers are controlling prices by creating networks and cartels amongst themselves, thereby concentrating capital, so as to retain profits despite declining sales.
A third factor that is driving price inflation is the cost of petroleum and related products. The import dependence of our economy for these products coupled with their very high cost of as a result of imperialist wars in the global south has made this a persistent factor. The inherent vulnerability of the Indian economy, manifested most recently in the dramatic 20% fall in the value of the Rupee in relation to the dominant global currencies indicates that even if the price of oil products would lower in the coming months our import costs would continue to be high and therefore continue to fuel price inflation. Apart from petroleum products, manufacturing industry is more import dependent than ever before for inputs and this too will contribute further to inflation.
The Indian working class crafted its response to inflation seven decades ago, on the eve of the World War II, by fighting and winning dearness allowance. And yet only a small minority of working people receive DA even today. We must not just fight for the minimum wage but for an inflation indexed minimum wage. Price fixing needs to be fought and not just for food products but in all sectors. The need is for a substantive and effective legal mechanism against price fixing with sufficient restrictions on the export of essential food produce and development of an import substituting industrial economy. And above all there is a need for a universal food security system that regulates both production and distribution at affordable prices.
The fight to stem the decline of the real value of the social wage and begin building an economy that meets the needs of the working class must form our key struggle as we enter the New Year and the NTUI goes forward, with militant energy and determination, to the Third General Council in Kolkata from 6-8 January 2012.
Continue reading at December 2011