(a) Inflation

So far we have proceeded upon the assumption that, money will continue to exist and to function. Is this correct? Will not money be abolished in a socialist society? Is not this implied by the idea of production for use? As a matter of fact, even to-day many Socialists regard the abolition of money as an essential item in the socialist programme. We have already been shown by the Bolshevists that the best means to achieve this object is inflation, the flooding of the world with banknotes, which eventually become valueless.

It must be evident from the start that, if money is to be abolished, the only way to do so is to render superfluous the functions which money has hitherto fulfilled. Inflation, however, leaves these functions untouched; it only ruins the instrument with which they are fulfilled, and thus obstructs and disturbs the entire social life.

The first and most important function of money is to facilitate the exchange and circulation of commodities. Under commodity production, each person produces that which he does not need himself, and obtains the articles which he needs by exchanging the products of his labour, or of that of his workers, for the products of alien labour.

When complete freedom of competition and of labour prevails, products which require the same expenditure of labour-power are exchanged with each other as equal units of value. The production of commodities by wage-labour instead of by the producer’s own labour modifies this law to some extent, but does not invalidate it.

As soon as the exchange of commodities is effected by money, by a commodity which everybody accepts, the perpetual value of the money commodity and then of the money tokens, which represent specific quantities of the money commodity, becomes an important consideration; for it becomes possible to buy a commodity and to pay for it later. It also becomes possible to sell a commodity without expending the money received for it upon a fresh purchase. If the value of money does not remain constant, if it falls, after the lapse of some time it does not represent as much labour as formerly, and the possessor of this money has expended in vain a portion of his labour or that of his wage-workers. If I sell at its full value a commodity which embodies ten hours of work and the money which I receive only represents nine hours of work after the lapse of a month, I shall have worked one hour for nothing. If the depreciation of money is due to the printing of notes by the State for reasons that are not economically justified, I shall have worked for nothing for the benefit of currency speculators.

Inflation, or the depreciation of money, far from being a socialist measure, is a mode of taxing the people for the benefit of the State and of the speculators. On the one hand, it constitutes a tax which is more unjust, more oppressive, more disturbing, and more senseless than any other kind of tax. It is an indirect tax systematically imposed, and, in addition, is a means of enriching the most injurious elements of the capitalist class. The growing misery which is a consequence of inflation, necessarily creates the increasing wealth of the profiteer, who was neither to be put down by the guillotine at the time of the assignat economy, nor by the Cheka of the Bolshevist Terror.

Under all circumstances, inflation is a terrible evil. In a capitalist State it does not affect the workers alone, but also many capitalists. The profiteer thrives under it, but the rentier is plunged into poverty.

Of quite a different nature are the effects of inflation imposed as a socialist measure in a Soviet Republic of workers and peasants, where the whole capitalist class has already been expropriated, without any kind of compensation. Here money serves almost exclusively as means of payment to workers, officials, and peasants. In that case, currency depreciation is merely a means of cheating the workers, the officials, and the peasants of a portion of their wages or of the product of their labour.

If a Labour regime should find a system of inflation already in existence, it would have every cause to attempt to end it with all rapidity. In no case could it inaugurate such a system or permit it to gain ground.