The cost of living crisis seems to have been set into motion by 2 forces.
- Inflation. I don’t know what the non-neoclassical explanation for inflation is. For example, I don’t know how marxists ascribe inflation.
- Energy prices seem to have risen, because capitalists have raised prices on account of reduced Russian gas supply.
Digital capitalism is rife with precarious employment (e.g. zero hour contracts) that complicate workers enduring the cost of living crisis. Aside from the complications of precarious employment in tech, I am wondering how else digital capitalism can be tied to the cost of living crisis.
Any thoughts?
Very simply put it’s a rise in the price level over time but to me this is a systems definition, and not one which is very human. I personally prefer to consider it as a decrease in the purchasing power of individuals/families/businesses - both of these explanations are the same, but when you talk about price levels it sounds as if the thing in question exists outside of humans.
A lot of people will rightly link some of this inflation to Russia/Ukraine, and these same people will frequently go on to talk about how the issue cannot be mitigated through high wages, due to the invoking of wage/price spiral theory… it goes like this:
- Prices in an economy increase, so
- Workers demand higher wages, so
- Prices in an economy increase, so
- Workers demand higher wages, so
- Prices in an economy increase, so
- Workers demand higher wages, so
- Prices in an economy increase, so
- Workers demand higher wages, so…
This shows how simplistic a lot of Economic thinking can be; while I’m sure this kind of situation has occurred before, it’s likely infrequent, and it critically is not the case today. To me one connection to Digital Capitalism here is the quantity of companies (including in the digital realm here) who now have runaway profits (a relevant piece: Bloomberg - Are you a robot? with a gloomy outlook.) This is not something that solely exists within tech, mind.
As Grace Blakeley says about this round of inflation…
IPPR and Common Wealth found that 90 percent of the increase in profits over the past few years was accounted for by just 25 companies. These corporations are using their market power to push down wages, raise prices and gouge suppliers to maximise their profits. They effectively act as rentiers; like landlords, they can simply skim returns off value created elsewhere in the economy.
Adding in my favourite graph of all time you can see that this is nothing new, but rather has been supercharged by recent events (covid, Ukraine and some others):
…if the system requires us to consistently be more and more productive, whilst having our wages grow in real terms by considerably less than that increase in productivity, then the system is fundamentally broken.
(Really it’s working exactly as intended, to funnel money into the bountiful bank accounts of the few, not the many.)
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