THE LAW OF PRICE RISE

There are many factors that cause prices to rise. Apart from the known factors such as greed on the part of manufacturers, middle men, retailers, labourers (both industrial and agricultural) scarcity of goods or the components go into them and so on,there is one important factor that does not seem to have received adequate publicity. This is the factor of resistance to increase in prices.

Now, let us see what happens when prices increase. There is naturally a clamour against it. Nobody likes to pay more for the same quantity and quality of goods or to get lesser quantity and/or inferior quality of goods for the same amount as paid hitherto. Everyone feels that something should be done about it.

This "something" can take two alternative or simulltaneous routes. One is to make the government to control prices by legislation and implementation thereof. The other is the root of consumer resistance.

In the first case the legislature which consists of elected representatives who are supposed to voice the feelings of their electorates, passes certain legislations. This process costs some money, not much though. Then comes the implemention. The government has necessarily to recruit certain number of people and setup and maintain a price control administration right down to the level of a municipal war or to the level of a village. This costs money.

The traders have to keep their books in a certain way. This costs money. The comman man has to have ration cards or permits. Getting this and maintaining them also costs money. All this expenditure has to be born directly or indirectly by the consumer.

Long after the original reason for the price increase has disappeared, the price control administration continues to rule the roost. A number of vested intersts that have sprung up and the fears of the public see to it. I am ignoring the cost of corruption that would not have existed in the absence of controls but as a factor in perpetuating controls, it cannot be ignored.

The opposition parties mount a protest by way of rallies, strikes and bandhs. This results in loss of production, reduction in GDP and further increase in prices.

Thus, we see that people keep on paying more in a controlled and labourious way for their uncontrol fears or lack of understanding of the real causes of increase in prices.

In the next alternative, the one of consumer resistance , firstly it peters out after a time as no sustained effort is possible. Apaart from this, if people resist a price increase, tha additional cost to the trader on account of countering this resistane makes him either to take to some other trade or further jack up the prices at the first available opportunity. The trader too has his own fears! Even organising a consumer resistance movement and sustaining it, costs money.

We have thus seen any resistance to increase in prices only tends to further increase in prices. We have been resisting price increase ever since the second world war and look at the situation that it has led us to.

The law of price rise can, therefore, be stated as follows:

Price increases are directly propoortional to the amount of resistance offered to them and perpetuate long after the original real cost that led to them has disappeared.

What is then the remedy?

The remedy is very simple and apparently satirical, though realistic. It is this:

A. When a price increasse takes place, grumble (if you must) but do nothing, absolutely nothing about it.

B. If possible, prevent others from doing anything about it.

C. On no account allow those in authority i.e. the political class consisting of the ruling and the opposition parties and the bureaucratic class to know of the increse in prices. They have, you see, a notable weakness of doing "something" about it. The kind that "Denis the menace" does to "help" his mother. We all adore people in authority just as we adore Denis but that does not make Denis's help any more acceptable to his mother except as a means of occasionally relieving boredom.

D. One more thing. Kindly forget that you read this. As it is, T have already pushed up prices by the cost incurred in writing about them!

E. Believe the economists. Work harder, produce more (except babies), consume less, improve productivity and all that rot that we do not like to do.

If the above remedy is not acceptable and you would insted like to have a big holiday, then go on having a series of bandhs, bring about a collapse of the economy, allow coming up of an authoritarian or a fundamentalist Marxist government that forcibly makes you follow the E. part of the above remedy in a violent way. Follow the E. part voluntarily or compulsorily. The choice is yours!