E M S NAMBOODIRIPAD
A World without Inflation
THE Economist of London in the issue dated December 7, 1974 carried a report from "the communist world95, captioned ^No inflation? Well, not exactly". It was an attempt to prove that the malady of inflation is not something peculiar to the capitalist world, but affects the socialist countries as well.
As it turned out, the facts quoted in this feature seemed to contradict its conclusion. It was conceded that ^the inflation rate in communist countries has been much lower than in the west. Only Jugoslavia, which is not a member of the east European economic grouping, Gomecon, has a western-style inflation now running at over 20 per cent". The report, however, declared that c(. . . what all communist countries do suffer from is a peculiar phenomenon known as 'repressed inflation5, which is one form of what happens when too much money chases too few goods."
What exactly is this so called 'repressed inflation'? It is explained in these terms:
Russia says it has raised real wages by two-thirds between 1960 and 1972. But because of the scarcity of attractive consumer goods, an over-large portion of this increase has gone into savings. The number of roubles held in savings accounts nearly trebled between 1966 and 1970 and rose by another 45 per cent by 1973. At the last count,