Steve Mann and John Michael Colón discuss their supply chain theory of inflation and its validation by history and economists. The podcast challenges neoclassical views on economics, emphasizing the role of businesses in setting prices. It explores supply chain issues, inflation, and the impact of corporate greed. The hosts encourage listeners to read their work on inflation and promote other podcasts.
Disruptions and bottlenecks in the supply chain can lead to price increases and inflation.
Alternative theories of inflation, such as corporate greed, are gaining mainstream adoption alongside the supply chain theory.
Inflation triggers a distributional conflict between labor and capital, highlighting the need for fair resource allocation.
Deep dives
Supply chain theory of inflation
The podcast episode explores the supply chain theory of inflation, which suggests that price increases are influenced by disruptions and bottlenecks in the supply chain. This theory emphasizes that when businesses face biophysical stressors or external shocks like energy price hikes or natural disasters, they may be forced to raise prices due to increased costs or scarcity of inputs. These price increases propagate through the supply chain, affecting downstream businesses and leading to a general rise in prices. The theory highlights the interdependency of businesses and the importance of understanding supply chain linkages when analyzing inflationary trends.
Mainstream adoption of alternative theories
The podcast discusses the mainstream adoption of alternative theories of inflation that align with the supply chain theory. This adoption is exemplified by the work of economists like Isabella Weber, who have explored the effects of corporate greed on price increases. While the theory of corporate greed influencing prices is part of the narrative, it is important to note that disruptions in supply chains and biophysical stressors are the primary drivers of inflation according to the supply chain theory. The podcast emphasizes the need to consider both factors when analyzing the causes and consequences of inflation.
Implications for labor and capital
The podcast delves into the implications of inflation on the labor-capital relationship. As inflation disrupts supply chains and raises prices, it triggers a distributional conflict between capital and labor. With rising costs of living, labor demands higher wages to maintain purchasing power, while capital seeks to protect its profits. This dynamic leads to ongoing battles over the allocation of resources and the impact on workers and management. The podcast highlights the need to address these power dynamics and consider the social implications of inflation in order to achieve a fair and equitable distribution of resources.
Inflationary episodes are not solely caused by union fights
The podcast episode explores the misconception that inflationary episodes are solely caused by union fights. While union fights play a role in labor militancy and cost push, the data shows that inflation is not primarily driven by these factors. The information diffusional component, where people learn about the outcome of union fights and replicate it, contributes to the misunderstanding. Additionally, the limited percentage of the population in unions further challenges the notion that unions are the main driver of inflation. The podcast highlights the importance of considering multiple causes within specific supply chains to understand the true dynamics of inflation.
The COVID-induced bottlenecks and supply chain disruptions led to inflation
The podcast discusses how the COVID-19 pandemic and its associated disruptions in supply chains caused significant inflation. Shortages in semiconductors, agricultural and manufacturing bottlenecks, and container shortages resulted in cost increases in key sectors of the economy. These disruptions impacted transportation, manufacturing, and food production, leading to higher prices for goods such as cars, wheat-based products, and groceries. The podcast emphasizes the need to analyze specific supply chains and their costs to comprehend the causes of inflation accurately. Understanding these dynamics can help inform strategic actions, such as negotiations for fair wages in response to cost increases.
Mia talks with Steve Mann and John Michael Colón about their supply chain theory of inflation was vindicated by history and then adopted by economists.
