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Economics

I pay £1.50 for four pints (2.27 litres) of milk at our local Co-op which is a third more than is strictly necessary. Our local Sainsbury’s sells four pints of milk for £1.15 following a supermarket price war over essentials which began in 2015; this depressed the price of milk to a level below production costs, threatening the UK dairy industry. Consumers suggested that they were willing to pay more for the product and the supermarkets, faced with protests involving cows being herded through their aisles, agreed to pay a minimum price for processed milk to the dairies, which was set at around 26p to 28p per litre. However, guaranteeing a minimum price for milk doesn’t necessarily mean that dairy farmers will benefit because the large dairies supplying the supermarkets might not pay the minimum cost to the farmers. Something is broken in the economy when a staple like milk is sold for less than what it cost to produce so it’s fortunate that consumers, who stand to benefit in the short-term from this high-street competition, have decided that paying 35p more is worth the cost of avoiding the collapse of the industry.


I’ve been buying a fair amount of vinyl recently, both new and second-hand, and I’ve started to wonder if today’s prices are anywhere near equivalent to what I paid for albums in the 70s and 80s. Inflation in the UK was recorded at 5.4% in December 2021 and is expected to average out at 2.3% for the full year, and an online calculator shows me that cumulative inflation in the UK economy since 1973, the year I first bought an LP is 1188.84% with an average annual rate of 5.5%; if the laws of economics have held true, the equivalent of a new release costing £2.50 in 1973 would now set you back a little over £32, so it would appear that a new release 12” LP is comparative to prices in the 70s when you take inflation into account. It should be noted that I used to seek out bargains if I could but these tended to be old releases (my copy of Fripp and Eno’s Evening Star for example, bought for £2.99 from Simons Records in a large basement on London’s Oxford Street in 1981), and ‘cut outs’, sleeves with punch holes or small slits on one edge. These items were excess stock of poor selling records that had been returned to the record company by a retailer, subsequently bought by a third party at a reduced cost and put back into record stores where they were sold at a discounted price. It’s hardly surprising that albums by prog acts were slow selling during the late 70s and early 80s and ended up at sale prices. My cut out edition of Livestock by Brand X cost £2.49 from Virgin Records in Oxford Street in August 1981, the price I was paying for a new release in 1973. It’s interesting that a full price album, using Bryan Ferry’s Boys and Girls as an example because it’s still got the Our Price sticker on it, which cost £5.29 when it was released in 1985, would sell for £17.05 at today’s prices and that the total inflation since 1985 is only of the order of 223% with an average annual rate of 3.22%.


The massive hike in inflation occurred in the mid 70s with CPI inflation peaking at around 24% in 1975 and high inflation persisting into the early 80s. The oil crisis of 1973, precipitated by an embargo by the Organization of Arab Petroleum Export Countries in response to US support for Israel in the Yom Kippur War, generated inflationary forces which increased energy and commodity prices, quadrupling the price of oil in less than four months. At the same time, the world economy was in recession and this was mirrored in the UK economy. It was a period of 'stagflation', in which recession combined with inflation; inflationary wage increases were accompanied by a rise in unemployment, reaching one million in early 1976. High unemployment required increased government expenditure and borrowing. The oil crisis had a direct effect on vinyl, a petrochemical offshoot, causing shortages and a concomitant rise in LP price. It’s been suggested that some vinyl got thinner and my copies of The Six Wives of Henry VIII by Rick Wakeman and Fruupp’s Seven Secrets from this time are semi-transparent and tinted red, presumably from a reduction in the amount of Carbon Black use in the vinyl manufacturing process – the preferred feedstock for Carbon Black production is heavy oil with a high content of aromatic hydrocarbons which would have been affected by oil shortages and price rises.


The Labour Party was elected to government in February 1974 without an overall majority and they pursued a commitment to the 'social contract' (voluntary wage restraint in return for better bargaining rights) and public spending. Unfortunately, an international loss of confidence in sterling followed due to the combination of recession, instability and commitment to social expenditure, and led to the devaluation of sterling. Labour was again voted into power, this time with a tiny majority after a further election in October 1974 and the subsequent budget in April 1975 attempted to reduce the deficit by increasing the basic rate of taxation to 35 per cent, cutting the rate of growth of public expenditure and restricting the supply of money but it was viewed critically in the financial sector and the Wall Street Journal advised against investment in sterling. By mid-1976 the economy was under extreme pressure and Chancellor of the Exchequer Denis Healy made a nationwide broadcast on TV in an attempt to reassure the markets and investigated the possibility of loan arrangements with the chairman of The Group of Ten (richest countries.) Late that year the government was forced to apply to the International Monetary Fund (IMF) for a loan of $3.9bn, with IMF negotiators insisting on deep cuts in public expenditure, which had a huge effect on immediate economic and social policy but also on the politics of the 1980s and beyond.


At this stage I’d like to point out that I have no faith in economic theory because movement of capital seems to be reliant on whim and the perception that a country or organisation may be at any given time in a state of stability or instability. The inflexibility of thinking within the IMF and the European Central Bank dragged out austerity and caused near-irreversible damage to most of the southern European countries and Greece in particular, spawning groups of right-wing nationalists looking for someone to blame for their economic misery. Furthermore, I believe that the global financial system is run by chancers and geared towards enriching those with great wealth. When a government intervenes to bail out some venerable banking group because it’s too big to fail, but the bank denounces regulation and carries on as though nothing has happened. I should also make it clear that I’m not buying vinyl as an investment but because it has always been my preferred medium for listening to music. If there’s anything nostalgic about my habit, it’s the desire to hold a gatefold sleeve in my hands and look at the artwork as originally presented and maybe to count my leisure hours in roughly 20 minute chunks.


I don’t buy too many LPs where I have some updated form on CD though replacing my original King Crimson and Pink Floyd albums after stupidly offloading them was a must; I tend to look in second-hand stores for particular recordings or bands that interested me when I was a youth but never took the plunge. Spyglass Guest by Greenslade, Ricochet by Tangerine Dream, Aqua by Edgar Froese, and Focus' 1975 release Mother Focus are all examples. One of my first excursions from home to see a gig at Lancaster University was for Focus, promoting the just-released follow-up to the excellent Hamburger Concerto. It was one of the most disappointing performances I’ve ever witnessed, where Philip Catherine had replaced Jan Akkerman and the new material was not of a good standard.


I thought it was worth testing the inflation theory some more, wondering if it applied to beer. Pre-Covid I’d go to the pub perhaps every couple of months and on a night out in the summer of 2017 I was paying £4.50 for a pint of Shepherd Neame Bishop’s Finger in the Bishop’s Finger pub between St Bartholomew’s Hospital and Smithfield market. This is obviously central London pricing but when I first started drinking in 1977, a pint of Hartley’s XB ‘best’ bitter cost 28p and by the same calculation I’d expect to pay £1.85 today. There’s a documented price disparity between northern and southern beers but I can’t remember how much I paid for a pint of bitter when I first arrived in London. I had to actively seek out decent beers in an era when real ale in London was in decline – the CAMRA Good Beer Guide was an essential part of the student survival kit. There were a few free houses where you could find the award-winning Ruddles County, the 70s equivalent of the ubiquitous Sharp’s Doom Bar which I’d guess used to sell for around 50p in 1978 so I shouldn’t really expect to pay more than £2.86 for a pint in London today.

A final piece of economics: Ruddles brewery was based in Langham, in Rutland, the smallest historic county in England and produced a good-quality bitter (allegedly at least part due to the unique Langham water) which travelled well. This independent brewery was bought out by Watneys in 1986 and sold on again, to Grolsch in 1992. Following a downturn in fortunes, the beer and brewery were valued at £4.8m and sold to Morland & Co. in 1997. The brewery was closed down in 1999 and production moved to Abingdon but Greene King bought Morland in 2000 and shut down the Abingdon site.


The bottom line, as economists might say, is that whether I’m searching for second-hand or new vinyl, in real terms I’m generally paying less than I would have done in the 70s when you take inflation into account. You might see pristine original pressings of In the Court of the Crimson King selling for over £50 but it’s quite possible to come across the prog albums that interest me in good, very good or excellent condition for anything between £1 and £20, and searching for them costs nothing.


The bulk of this post has previously been published on the old ProgBlog site in August 2017. The inflation data has been updated, along with other minor edits.

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