Inflation is always a subject of debate, in Venezuela and in the world, although many economists tend to defend that such a debate does not exist and that inflationary phenomena have a single, clear and defined cause, which does not admit discussion. This primordial reason is taken mainly from the axiom issued by the American economist Milton Friedman, father and guru of what is known as "monetarist theory". in his book The monetarist counterrevolution, first published in 1970, it goes like this:
"Inflation, always and everywhere, is a monetary phenomenon and must be treated as such, in the sense that it is and can only be produced by a more rapid increase in the quantity of money than in production."
According to this, the metaphorical image would be practically literal, that is to say, that a disproportionate “injection” of money into the economy causes prices to “inflate”, like when a balloon is filled with air. Thus, inflationary phenomena are always explained as the product of an issue by the State of “inorganic” money, that is, it is not backed by actual production levels. With this, the Government would “finance the fiscal deficit”, covering public spending that it could not sustain otherwise. Such a surplus of money circulating means that there is more purchasing power (demand) than the quantity of products available (supply); then, the market tends to balance and therefore prices will tend to rise. But it is not only that, when the State decrees wage increases, it forces companies to raise production costs, an increase that will immediately displace product prices.
With the consolidation of the neoliberal ideology from the Washington Consensus (1989), this way of seeing the economic reality was installed in the academic world as a kind of sacred dogma, an unequivocal truth. But nevertheless, there are voices that differ of this perspective stating that the monetarist hypothesis is far from being the absolute truth and is just one more perspective among others. It is not only that the phenomenon in question is multicausal, but in the socioeconomic reality there are factors, interests and struggles, which are what produce the facts and, it is worth saying, also their interpretations.
The sociologist and political economist Luis Salas Rodríguez, in his book Writings from the economic war, offers an explanation from a very different perspective than the monetarist bible:
“Inflation is an operation to transfer income and social wealth from one sector(s) of the population to another(s) by way of price increases. Basically, this transfer occurs from wage earners to entrepreneurs, but it also occurs from a fraction of the business community to another fraction of them. Or put more clearly: inflation expresses the struggle of fractions or business sectors (especially the most concentrated) to increase their profits at the expense of the wages of the workers (that is, of the majority of the population), but also charged to the profits of other business sectors, especially the small, medium and less concentrated ones”.
It is then not only about "laws" of the market, but about the concrete actions of economic factors that always seek to obtain the greatest possible profit, and this necessarily occurs to the detriment of others.
What do people say?
This introduction is enough to demonstrate how interesting it is to know, beyond the postulates of economists and intellectuals, how we Venezuelans understand the issue of inflation. Especially at the present time, when we have formally just emerged from what they call a four-year "hyperinflationary cycle." In other words, the problem was not only inflation, but we are experiencing a vertiginous, overwhelmed and uncontrolled process of continuous price increases. Hyperinflation, according to economists, occurs when the monthly variation in prices is greater than 50%, and for it to be considered overcome, 12 months must pass with inflation below that figure. This occurred throughout the year 2021 and, particularly, the last four months Venezuela had an inflation figure in one digit (less than 10%), something that had not happened since 2016.
We decided to do a digital poll and ask the audience of Últimas Noticias, through our web portal and social networks, on the determining cause of inflation. Specifically, we ask: "In your opinion, what is the main cause of the inflation that has impacted Venezuelans in recent years?"
We build the response options according to the conventional notion that market disparity can occur either on the supply side or on the demand side. We include two options for each of the market areas. And we also add two alternatives referring to the intentional action of economic actors. So, people decided between: 1) Decreased supply of goods and services; 2) Increased production costs; 3) Increased demand for goods and services; 4) Excess monetary issue; 5) Bullish manipulation of the exchange rate; 6) Commercial speculation. Between Monday, January 10 and Thursday, January 13, 1.805 people participated and the results were as follows.
Manipulated and speculated
It must be said directly that the majority do not believe or use the concepts imposed by the discourse of economists. Rather, he leans toward explanations that have to do with the struggle of interests, what the government calls the "economic war." The most voted option, with 47,4%, was the one that attributes inflation to the upward manipulation of the bolivar-dollar exchange rate. The other important group, 30,2% of the total, affirms that the problem comes from commercial speculation. We have, then, that 77,6% of people do not believe in excess monetary issue or in variations of supply and demand for reasons of a macroeconomic nature.
Equal in third place, with 7,4% each, are the groups that think that the cause of inflation is the excess of monetary issue or the decrease in the supply of goods and services. Only 1,5% chose the increase in demand as the main cause of inflation.
What do we expect?
But we are not alone in the issue of inflation. We take the opportunity to see what are the expectations that people have about the economic future of Venezuela in 2022. After closing last year with a growth of 7,5%, according to President Nicolás Maduro, and if curbed hyperinflation, the general mood seems to be lifting.
In December we did a survey and people responded that in 2021 the economy will improve. That is why we ask this time: “In your opinion, how will the Venezuelan economy behave in 2022?”
The majority (61,2%) responded that things are going to improve. Secondly, we found that a quarter of those surveyed (25,7%) believe that the economy will remain the same and 13,1% said that the situation will get worse.
In this case, the predominant opinion coincides not only with the Government, which generates constant expectations in your speech, but with most analysts from private firms and business groups. Even the Economic Commission for Latin America (ECLAC),in your report Preliminary Balance of the Economies of Latin America and the Caribbean, projected a growth of 3% of the Gross Domestic Product (GDP) for Venezuela in the year 2022. After eight years with falling GDP, it seems that this will finally be the first year of recovery. The economy is not doing well, the current crisis, with its economic and political dimensions, has done a lot of damage to the country. But, at least, there is consensus that we stopped falling. The rest is profit. @angelgonzalezvn