A Marxist-Leninist analysis of inflation, falling wages, and the class war waged through prices
Across Britain and France, the working class faces a relentless assault on its standard of living. Food prices have risen sharply year after year. Energy bills have doubled and tripled. Rents devour an ever-greater share of wages. Meanwhile, real wages stagnate or decline, purchasing power erodes, and the gap between what workers earn and what they need to survive widens into a chasm.
In Britain, food price inflation reached levels not seen in decades, with staple goods — bread, milk, cooking oil, rice — increasing by 15 to 25 percent in a single year. Energy bills surged past two thousand pounds annually for an average household after the removal of the price cap's protective ceiling. In France, the pattern repeats: electricity costs climb despite the country's vast nuclear capacity, food prices surge in the supermarkets while agricultural workers earn poverty wages, and rents in Paris and Lyon push working families further into the periphery.
This is not a temporary disruption. It is not caused by a virus, a war, or a supply chain hiccup — though the bourgeois press deploys these explanations eagerly. The cost of living crisis is a structural feature of capitalism in its monopoly stage, an expression of the fundamental contradiction between social production and private appropriation.
Marxist political economy provides the tools to understand what bourgeois economics deliberately obscures. The cost of living crisis is, at its root, a crisis of surplus value extraction — of the intensifying exploitation of the working class by capital.
The value of labour-power — the wage — is determined by the cost of reproducing the worker: food, shelter, clothing, transport, the raising of the next generation of workers. When the prices of these necessities rise but wages do not keep pace, the real value of labour-power falls. The worker receives less in real terms, while capital appropriates a greater share of the value produced. This is the mechanism of relative impoverishment — the tendency, identified by Marx, for the working class to receive an ever-diminishing share of the wealth it creates.
Inflation is not a neutral economic phenomenon. It is class warfare conducted through the price mechanism. When energy monopolies raise prices, they are transferring value from the working class to shareholders. When supermarket chains mark up food while squeezing producers, they are extracting surplus from both ends of the supply chain. When landlords raise rents above wage growth, they are appropriating a greater portion of the worker's already-exploited wages.
“The modern labourer, instead of rising with the progress of industry, sinks deeper and deeper below the conditions of existence of his own class. He becomes a pauper, and pauperism develops more rapidly than population and wealth.” — Karl Marx and Friedrich Engels, Manifesto of the Communist Party (1848)
The worker produces more value than they receive in wages — the surplus is appropriated by capital as profit. When prices rise and wages stagnate, the rate of exploitation intensifies. The worker works the same hours but can afford less. Capital pockets the difference. The cost of living crisis is an acceleration of this fundamental mechanism of capitalist exploitation.
Nominal wages may rise slightly, but real wages — adjusted for inflation — have been declining for decades across both Britain and France. British workers in 2025 had less purchasing power than in 2008. French workers face the same erosion. This is not a failure of policy but a success of capital: wages are driven down to maximise profit, while prices are driven up by monopoly power.
Bourgeois economists present inflation as a technical problem requiring technocratic solutions — interest rate adjustments by central banks. In reality, inflation in the era of monopoly capitalism is driven by corporate pricing power. Energy companies, food conglomerates, and property firms raise prices not because costs demand it, but because market dominance permits it. Inflation redistributes wealth upward.
The cost of living crisis cannot be understood apart from the monopolisation of the economy. In both Britain and France, a handful of corporations dominate the supply of essential goods and services. Six energy companies control the British market. Four supermarket chains command the majority of food retail. A small number of landlord corporations and property firms own vast portfolios of rental housing.
Monopoly capital does not operate according to the textbook model of competitive markets. Monopolies set prices to maximise profit, not to reflect costs. They engage in price-fixing, cartel behaviour, and the deliberate restriction of supply. When energy prices spike on international markets, monopoly suppliers pass costs on immediately and in full. When wholesale prices fall, retail prices remain elevated — the difference flows directly to shareholders as excess profit.
In France, the electricity market illustrates this clearly. Despite the state ownership of EDF, successive governments have imposed market liberalisation, forcing the public provider to sell power at below cost to private competitors who then resell it at inflated prices. The logic of the market — profit above all — infects even nominally public enterprises when the capitalist state manages them in the interest of capital.
The response of bourgeois governments to the cost of living crisis reveals whose interests the state serves. In Britain, the Conservative government offered limited, temporary energy subsidies while simultaneously cutting benefits in real terms, imposing austerity on public services, and providing tax breaks to corporations. The Labour Party, having long abandoned any pretence of socialism, offered only marginally different policies — managing capitalism more gently rather than challenging it.
In France, the Macron government responded to the crisis with means-tested handouts and fuel rebates while pressing ahead with pension reforms that extended the working life of the proletariat. The gilets jaunes movement erupted precisely because the working class recognised that the state was taxing their fuel while subsidising corporate profits.
Austerity is not an error of economic management. It is a deliberate policy of transferring the costs of capitalist crisis from capital to labour. Public services are cut so that corporate taxes can be reduced. Benefits are frozen so that subsidies to business can continue. The capitalist state, as Lenin demonstrated, is an instrument of class rule — it serves the bourgeoisie, and its economic policies reflect that fundamental function.
“The state is an organ of class rule, an organ for the oppression of one class by another; it is the creation of 'order', which legalises and perpetuates this oppression.” — V. I. Lenin, The State and Revolution (1917)
The experience of the Soviet Union demonstrates that the cost of living crisis is not an inevitable feature of human society — it is a feature of capitalism. Under socialism, the provision of basic necessities was organised according to social need, not private profit.
Soviet citizens paid approximately 3 to 5 percent of their income on housing — a fraction of the 30 to 50 percent that British and French workers pay today. Rents were fixed at low levels by the state and did not rise with inflation. Utilities — heating, electricity, water — were provided at minimal cost, often included in the rent.
Food prices in the Soviet Union were centrally regulated and subsidised to ensure affordability. Bread, milk, and basic staples were available at stable, low prices for decades. While Western propagandists focus on occasional shortages, they deliberately ignore the fact that Soviet workers never faced the choice between heating and eating that millions of British and French workers confront today.
Healthcare was free at the point of use. Education was free from primary school through university. Public transport was heavily subsidised. The burden of reproduction — the cost of keeping the worker alive and capable of working — was borne collectively by society, not extracted individually from each worker's wages by landlords, energy companies, and food monopolies.
This was possible because the means of production were socially owned. There were no shareholders demanding dividends, no landlords extracting rent, no energy monopolies maximising profit. The surplus produced by workers was reinvested in social provision rather than accumulated as private wealth.
Energy is a necessity without substitute. Workers cannot choose not to heat their homes or cook their food. This makes energy supply an instrument of class domination. Private energy monopolies exploit this captive market to extract maximum profit. Nationalisation of all energy production and supply, under workers' control, is the only solution that removes the profit motive from an essential human need.
The food industry is dominated by a handful of multinational corporations that control production, processing, distribution, and retail. They squeeze agricultural producers — many of them working farmers — while charging consumers inflated prices. The difference is pure profit. Meanwhile, millions of workers rely on food banks. Socialist planning would reorganise food production to guarantee adequate nutrition for all.
The level of wages is determined by class struggle — by the balance of forces between capital and labour. Decades of anti-trade-union legislation, deindustrialisation, and the casualisation of labour have weakened the organised working class, allowing capital to suppress wages. Rebuilding militant, class-conscious trade unions is essential to the immediate defence of working-class living standards.
The MLPBF advances the following demands as part of a transitional programme — measures that address the immediate suffering of the working class while pointing toward the necessity of socialist transformation:
These demands are not utopian. They are practical measures that have been implemented, in whole or in part, by socialist states throughout the twentieth century. What makes them impossible under capitalism is not their technical difficulty but the resistance of the bourgeoisie to any measure that threatens its profits. The full realisation of these demands requires the overthrow of capitalist property relations and the establishment of a workers' state.
The cost of living crisis will not be resolved by petitions, parliamentary debates, or appeals to the conscience of the ruling class. The bourgeoisie has no conscience — it has interests, and those interests are served by the continued exploitation of the working class.
What is required is the organisation of the working class into a disciplined, revolutionary party guided by Marxist-Leninist theory. The immediate tasks are clear: build militant trade unions that fight for real wage increases; organise tenants against rent increases and evictions; unite workers across national boundaries against the international bourgeoisie; study and apply the science of revolution.
The cost of living crisis is not a problem to be managed. It is a symptom of a dying system. Capitalism has long since ceased to develop the productive forces for the benefit of humanity — it now develops them only for the accumulation of private profit, at the direct expense of the working class. The solution is not reform but revolution: the abolition of private ownership of the means of production, the establishment of a planned economy under workers' control, and the construction of a socialist society in which the wealth produced by the many serves the needs of all.
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