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Richard Wolff On Everything You Need to Know About Inflation
Letters and Politics, 2022
Mitch Jeserich interviews Professor Richard D. Wolff, a professor of economics at the New School University in New York City. Prof. Wolff presents an explanatory theory of how inflation occurs in an economy. Briefly, profit-driven employers raise the price in order to maximize profits of private corporations they own or manage. Furthermore, Wolff explains that at the most basic level of the microeconomics of production, prices rise as a result of specific human decisions, more specifically, the decision of employers who own or manage a firm to increase the price of products they sell on the market. This decision is a result of the profit motive of private corporations. This includes the decision to increase prices of both end-user consumer goods and input component goods to other products. Additionally, Wolff presents and comments on several tactics used in practice to combat excessive inflation, including: increasing interest rates, rationing, freezing prices and wages, and establishing pricing commissions.
Comment from our editors:
This analysis is presented through the lens of Marxian political economy (explicitly) and institutional economics (implicitly through corporate structure). Based on this, Wolff argues that all people can be classified as either employers or employees. Between the two 'classes', it is the cumulative decisions of individual employers in aggregate in the economy who create inflation for the sake of profit.