MONETARY DEVALUATION. - A truthful and innocent index of an evolution, which would not be harmful in itself if it occurred uniformly for all classes and for all lines of transformation (v. PREZZO), is on the contrary a cause of very serious economic and social disorder, since in reality it occurs with an absolutely unequal rhythm and measure in time, in space and across the various economic activities. From the strictly monetary side it is the loss of purchasing power of money, a constant phenomenon in the ascertained measure of about 2-3 percent per year, alternating periods of rapid devaluation (economic crises, wars, misgovernment) with periods of relative stability.
From the side more perceptible to the ordinary consumer, it is identified with the continuous rise in prices. To this the individual reacts by restricting consumption and selling his own services more dearly. But this proves far easier for the classes with variable incomes (producers, merchants, professionals) than for the classes with fixed incomes (workers, employees, pensioners), which manage only with difficulty and slowness to obtain the updating of their monetary incomes in relation to the increased cost of living: whence the class struggle.
I. CAUSES AND REMEDIES
The causes of monetary devaluation are mainly: a) the interest rate on loans, particularly unproductive ones, when it exceeds the reasonable risk premium, and the accumulation of interest (v.); b) useless labor (bureaucracy, commercial intermediaries, trade unionism, politics, advertising, the press), or destructive labor (luxury industries, which serve bureaucracy and war, wartime destruction, reduced or absent productivity due to social unrest). The annual rate of devaluation represents the social cost of the economic errors that are committed.
The path to the remedy is clear: a) to reduce the interest rate on loans, both through the competition of capital made abundant (v. RISPARMIO) and through the insurance of
ŠUWAJR. - Interior of the church of St. Nicholas (1718). Note the iconostasis - Monastery of St. John.
capital itself against risks; b) to reduce useless and harmful labor, through a profound work of moralization and social education, an irreplaceable foundation both for the formation of savings in amounts adequate to necessity and for the spirit of enterprise that must put them to work in order to guarantee everyone the right to work, while at the same time providing for a more rational and agile economic organization, especially of exchanges.
The phenomenon cannot be entirely eliminated, because its fundamental causes cannot be: but a slow, gradual and uniform devaluation, kept within a minimum measure that would not be harmful to savings, would have a salutary effect. A moderate and orderly rise in prices is, in fact, an effective stimulus for activities and initiatives, it punishes the indolence of the beati possidentes, forcing everyone to increase and improve productivity, the yield of labor.
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Mario Baronci