Inflation as a risk to capitalism
Insights from TPEX consultancy for decision makers.
When boats sink with the tide
Written SH on 2023-02-21.
Internationally and certainly within the UK a significant topic of discourse is the ongoing cost of living crisis. Such matters, short term and occurring, are typically outside of the purview of this blog however pressures of this sort are perhaps indicators of societal shifts and therefore worth mentioning.
In this most recent economic crisis the toolkit of the central banks has been called into question.
The idea is that by increasing the cost of credit, businesses will cut back on staff, increasing unemployment, and so reducing the ability of workers to win higher wages. But wages are not driving inflation – pay has been failing to keep up with inflation for more than a decade in the UK.Boait, F., 2023. Big banks are raking in billions, and we all pay the price – time for a new windfall tax. online.
The choices that have been made within the UK create a group of winners and loser. Such a choice could imperil the current societal contract if works no longer pays. This could manifest as a risk to the business and finical situation within the UK in short, medium and long term frames. Inflation is unlikely to continue rising so dramatically (due to the 12 month measure), but without wage rises the purchasing power of workers can only be restored through deflation. Future planning should consider deflation, wage rises and significant productivity increase as requirements.
Tenth Person
Citizens under distress are likely to act in difficult ways and in disruptive ways. Imagine work forces that exercise their right to withdraw labour, look for alternative employment and imperil the operation of the organisation.
Future Imagining
While still perhaps unlikely the failure of capitalist entities to control excess imperials the stability of capitalist societies. When the settlement is no longer satisfactory citizen are likely to consider others.
References
Boait, F., 2023. Big banks are raking in billions, and we all pay the price – time for a new windfall tax. [online] Available at:
About TPEX
TPEX offers future imagining and tenth person consultancy for decision makers looking to consider the future, before opportunities are missed. We offer online and in-person consultancy to help your business make informed decisions about the future.