The shifting sands of capitalism

    ECONOMICS / Inflation rears its ugly head after 40 years at bay.

    Most people of working age know little or nothing about inflation. In the mature economies of Western Europe and North America, globalism has had a good run since the 1990s, producing goods at low prices during a period of historically low interest rates. All that is now ending, and inflation not seen since the 1980s is returning, stoking fears of a return to the hyperinflation of the 1920s that stoked the rise of fascism.

    Fuelled by massive government intervention during the pandemic years and now rapid and sharp increases in the price of gas, oil, wheat and other essentials ignited by the war in Ukraine, the economic outlook is grim. As central banks rapidly increase interest rates to try to quell price and wage inflation, dark days are ahead, German director Matthias Heeder warns in his timely IDFA Docs for Sale title, The Return of Inflation – The Gravy Days Are Gone.

    The Return of Inflation The Gravy Days Matthias Heeder
    The Return of Inflation – The Gravy Days are Gone, a film by Matthias Heeder


    Heeder tackles his scary subject in an accessible manner, weaving expert economic analysis from figures such as economic historian Adam Tooze, academics and European Central Bank economists, with stories from the grassroots – such as a Parisian hairdresser, Kansas dairy farmer, and Turkish garbage collector.

    Entertaining and scary at the same time, Heeder uses his expert speakers sparingly – allowing them to briefly explain complex issues in simple terms before literally going out on the streets to find out what this means to the man and woman in the High Street.

    …the economic outlook is grim.

    In the shadows

    The shadow of Germany in the 1920s hangs like a historic cloud over the country of today, where inflation at the time the film was hovering around 7%, and unionised car workers were beginning to feel the pinch as they discussed demanding a double-figure wage increase at a time their employer was enjoying historic profits.

    In Turkey, where an inflation rate of 7% would be a dream for ordinary people and businesses struggling with annual rates that are officially 80% and unofficially 160%, the central bank is determined to keep interest rates low to avoid mass unemployment. However, all this does is weaken the currency making exports cheaper but imports more expensive. It should mean that locally produced goods, services and foods remain cheap, but that is not the case, as people struggling to keep their heads above the water tell Osman Sirkeci, a genial economist who specialises in ‘street economics’ – an essential field in a country where 60% of people work in the informal economy and millions manage to feed and raise families through such essential tasks as litter collection and recycling.

    Farmers lament that they can no longer afford fertilisers and pesticides to raise crops; street vendors talk about how they are striving to keep price rises within the limits of affordability for their customers; men who hold down full-time jobs talk about getting up at 5 in the morning to go fishing in Izmir – not for fun, but to sell their catches to earn a little more.

    The Return of Inflation The Gravy Days Matthias Heeder
    The Return of Inflation – The Gravy Days are Gone, a film by Matthias Heeder

    Keeping the faith

    Newspapers and television news coverage of economics, rising prices, and the hard winter many in Europe face this year as fuel prices go sky high concentrate on the macro-economic and political picture. In the UK, where Liz Truss held office as Prime Minister for just six weeks before her disastrous experiment in funding tax cuts through borrowing crashed the economy in October and exacerbated an already seriously dysfunctional economic picture after 12 dreary years of economic mismanagement by the ruling Tory party, the country is already gripped by strikes, with nurses voting to strike for the first time.

    What Heeder does is both more informative and less remote than the usual approach. He drives down into the blunt tools of macro-economic management – the choice between curbing inflation and creating widespread unemployment and misery – and looks at whether there is a new way we can reimagine our socioeconomic existence to better manage the shifting sands of capitalism. As the experts opine on how the winners of inflation are those with debts – whose debts decrease in value as a currency depreciates, eaten up by inflation, and the losers are those with shrinking wages, which rarely keep pace with inflation in a system weighed in favour of the wealthy and secure, Heeder dares to ask how we could better manage a fairer approach to our societies in the future. His experts do not have ready answers but do have faith that a new generation facing inflation, last seen when their parents were teenagers, will be educated at a time when their ingenuity will, of necessity, be turned to finding fresh answers to problems that have existed since money was invented.

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    Nick Holdsworth
    Nick Holdsworth
    Our regular critic. Journalist, writer, author. Works mostly from Central and Eastern Europe and Russia.

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