The marxian labor-time values of individual commodities fall as productivity improves. This means that if a currency unit is to command a stable quantity of use-values (i.e. physical goods and services) over time, the value of the currency must likewise fall as productivity improves. For a given distribution between wage and profit income, and a given share of value added in total value, a currency unit’s command over use-values will remain stable when money wages rise in line with average productivity. This also promotes price stability.
Monthly Archives: March 2021
Cost-Push Inflation
Inflationary pressures can originate from the demand side or the supply side of the economy. Demand-side inflation, known as demand-pull inflation, becomes increasingly likely as the economy nears full capacity. Inflation driven from the supply side, referred to as cost-push inflation, is possible in the absence of any excess demand for goods and services.