Showing papers on "Purchasing power published in 1974"

Keynesian Chickens Come Home to Roost

Abstract: As we have argued many times in these pages, the monopoly capitalist economy is always in danger of sinking into a state of deep stagnation. The basic reason is that capitalists seek to keep the wages and hence the purchasing power of workers at a minimum, while expanding their capital as rapidly as possible.This article can also be found at the Monthly Review website, where most recent articles are published in full.Click here to purchase a PDF version of this article at the Monthly Review website.

Accounting for inflation – recent proposals and their effects

Abstract: A time-honoured convention in accounting has been that accounts should be based on the principle of historic cost, namely that all items should be recorded in terms of the purchasing power of the pound at the date of each transaction. This convention has the virtue that the accounts are based largely on factual monetary transactions and fewer items need be determined subjectively. It is a valid convention so long as the value of money remains constant, but in a period of inflation, accounts drawn up on this basis become distorted, and the higher the rate of inflation the greater the distortion. For example, amounts based on historic cost which are set aside for depreciation of plant and machinery will, in a period of rapid inflation, be totally inadequate either to provide funds for the eventual replacement of those assets or to maintain the real value of the shareholders' original capital investment. Similarly profits are overstated by the inclusion of profits on stock which arise solely from a general increase in price levels. Again, no account is taken of the real cost of holding cash or other monetary assets when money is losing its purchasing power. Conversely, no credit is taken for the gain derived from having borrowed money, when the liability for repayment of the loan is in real terms reduced.

South Africa enters the electronic age: the decision to introduce television

Abstract: In 1970, 118 nations had television services and an estimated 197 million sets were in use' South Africa was not then, and is not now, over forty years after the techniques for television were developed, one of these nations. Despite its clear lead in technology and purchasing power, in this field South Africa lags behind at least 20 other nations on the African continent, including the Central African Republic, whose TV station services some 40 receiving sets.2Even now, public support for the 1971 decision to introduce television in 1975 is far from unanimous, and a long period of controversy preceded the decision.

Health Services and the New Relationship between China Studies and Visits to China

Abstract: value of money, nor a faithful copy of the Soviet model, which has a greater diversity of institutions, and of procedures for saving and credit. It is above all thanks to its simplicity that the Chinese system has adjusted well to the modem economic situation. In a country where industry and the services contribute only a limited part of the GNP, the existence of numerous financial institutions or of rather elaborate techniques, like the cheque or negotiable bill, would probably be useless. A diversity of institutions or procedures would itself be contrary to the wish of the Chinese leadership to conduct a dynamic economic policy, in a very extensive territory and without external aid, where enterprises and households would to some extent act freely, possibly in opposition to the targets of the Plan. Finally, it seems that the Chinese monetary system has, since 1949, proved its own effectiveness. The control exerted on the liquidity level of enterprises and on the distribution of credit has, it seems, helped totally to eliminate speculation in commodities, notably foodstuffs, which characterized economic life before the accession of the Communist Party to power. Moreover, the maintenance of the purchasing power of the yiian which all observers agree in recognizing, and of which the Chinese press boast at each international monetary crisis, shows that the credit and savings policy has been conducted in a way entirely consistent with the policy of production and distribution of goods and with that of fixed prices.

Quantity vs. Quality of Life.

Abstract: The world population rate is thought to be still increasing. The present age structure of the world population ensures continued growth well into the next century. Among underdeveloped countries this is more acutely the case and fertility is 2-3 times the level needed for replacement. This is a serious obstacle to economic development. As a group the less-developed countries are growing at 2.5% per year and the more developed countries at 1% per year. There is no yardstick by which to measure economic development or to draw quantitative inferences concerning social and economic well-being. Per capita income as an indicator of economic development has many limitations. It is a difficult figure to compile it does not reflect differences in the purchasing power of local currencies and it is of limited value for international comparisons. Today since military strength is more a matter of technology than numbers and since populations are growing at rates that become an economic burden developing countries are adopting policies and programs designed to reduce rates of population growth. Thus far however countries have not found it technologically feasible administratively practical and/or politically strategic to advocate or enforce strong measures that go beyond family planning.

International Banking and the Developing Countries

Abstract: ‘Currently there is a world shortage of capital for which the developing nations must compete.’1 In these few pointed words a leading writer on the subject of economic development has summarised the major problem which will face the developing nations for the remainder of the twentieth century. There are two dimensions of this world-wide capital shortage, in so far as the less developed nations are concerned. These hinge on the need to develop domestic financial market institutions and patterns of behaviour necessary to generate and mobilise capital funds, and the need to provide suitable international channels through which capital may be directed toward the developing countries. The former problem reflects the necessity for achieving a proper allocation of internal resources as between capital and consumer goods, whereas the latter is concerned with the requirement that an international transfer of purchasing power and real resources take place.