Pound revaluation in the 1920s forced down wages through mass unemployment

Evidence

21 Lloyd (1925). In its critical tone the article clearly specifi es the pitfalls of defl ation. Th e rise of the value of the pound necessarily involved: “1) a rising exchange which was bound to hit the export industries particularly hard; 2) falling prices, which were bound to hamper trade and industry in general; 3) a reduction of costs, which was bound to mean primarily a reduction of wages; and lastly, 4) general unemployment on a large scale, since this is the only known means by which wages can be forced down … and rentiers, as a class, have not had their money incomes reduced as abstract justice would have required” (1925, 414). — Clara E. Mattei, The Capital Order, 1683

Categorization

• DEEPTHINKING: The fourth point—unemployment as the only known means of forcing wages down, while rentiers escaped proportional income loss—captures in one mechanism the entire class-warfare logic of deflationary austerity.
• XREF: connects to: Swedish austerity in the 1920s produced the greatest slump in the nation’s history — Mark Blyth, Austerity: The History of a Dangerous…, 520; Gold-standard return caused depressions across Britain, Japan, and France — Mark Blyth, Austerity: The History of a Dangerous…, 557; Britain’s gold-standard austerity doubled unemployment from 10.4 to 22.1 percent — Mark Blyth, Austerity: The History of a Dangerous…, 514 (+16 more)

Broader Connections

• Monetary austerity deliberately manufactures unemployment to compress wages. #expands (0.90) — Clara E. Mattei, Escape from Capitalism, 284
• Monetary austerity deliberately induced recession to discipline workers. #expands (0.85) — Clara E. Mattei, Escape from Capitalism, 154
• High Bank rates triggered a deflationary spiral in 1920s Britain #corroborates (0.80) — Clara E. Mattei, The Capital Order, 1697
• Higher unemployment suppresses wages and dampens inflation. #expands (0.80) — Clara E. Mattei, Escape from Capitalism, 271
• British monetary austerity after 1920 produced an unhealthy quasi-equilibrium for a full decade #expands (0.75) — Clara E. Mattei, The Capital Order, 1731
• Austerity structurally dismantled the workers’ movement and its economic alternatives #complicates (0.70) — Clara E. Mattei, The Capital Order, 654