Abstract

It is not the prices that vary in accordance with the amount of money in circulation;
it is rather the amount of money in circulation that varies in accordance with the variation
of the sum of prices. It is not the rising of earnings that causes the rising of the prices.
On the contrary, it is the rising of the prices, producing depreciations in the currency, that
provokes in consequence losses of the earnings’ acquisitive power. When increases in the
sum of prices occur, whatever their origins, we will have one of the following inevitable consequences:
on the one hand, the same quantity of commodities is then exchanged for a larger
amount of money; on the other hand, the same amount of money then buys a smaller quantity
of commodities. This happens in the internal trading relations as well as in the international trading relations of each country. In both cases, the main fact to point out is the reduction
of the money’s acquisitive power. This reduction can be produced either spontaneously,
by the action of the forces of the market, or as a result – as in the case of the alterations of
the rate of exchange – by the intervention of the government authority. Therefore, according
to Marx, contrary to the different theories supported by the “vulgar economy”, the inflationary
phenomenon begins with the currency depreciation, of which are consequences or
subsequences, the price increases, and the reduction of the earnings’ acquisitive power. The
Brazilian inflation in the ‘70s and ‘80s was seriously aggravated by the world’s cyclical crisis,
by the capital’s overproduction in the rich countries, by imports of surplus capital through
banking loans, and by the monetary anarchy which displaced the investments of the productive
sectors, deviating them to the non-productive sectors.

JEL Classification: E31; E51; B51.