In classical and mainstream economic theory, inflation is defined as a general increase in prices across an economy over a given period, leading to a decline in the purchasing power of money. This view holds that inflation erodes real incomes and savings, distorts price signals, and introduces uncertainty into long-term contracts and investment decisions.

One of the most influential articulations of anti-inflation doctrine came from Milton Friedman, who famously declared that ‘inflation is always and everywhere a monetary phenomenon.’ From this monetarist standpoint, inflation results from excessive growth in the money supply relative to economic output. This led to central bank doctrines focused on inflation targeting, often setting thresholds such as the now-familiar dogmatic 2% annual target, “dogmatic” because its rationale doesn’t seem to exist despite advanced research.

Thus, contemporary central banks, including the Bank of England, the European Central Bank, and the U.S. Federal Reserve, have embedded inflation control into their institutional mandates. Interest rate policy, quantitative easing, and communication strategies are all oriented around maintaining ‘price stability’ under this framework.

Not all instances of inflation, however, are driven by extractive behaviours or distortions in supply and demand. Yet the role of institutionalised asymmetries in pricing, supply bottlenecks[3], and market concentration has become increasingly visible alongside traditional monetary and fiscal factors.

Traditional frameworks still address inflation primarily as a monetary or fiscal issue, but this approach overlooks the gravitational forces within the economic system itself — the pressures that, when sufficiently distorted, necessitate systemic rebalancing. Understanding inflation not merely as a monetary symptom but as an indicator of institutional disequilibrium allows for a deeper reading of how economic dynamics evolve — and why policy must shift from surface-level management to structural recalibration.

In conventional economic thought, inflation is treated as a neutral and generalised rise in prices. Yet a deeper reading suggests it is more accurately understood as the manifestation of growth captured asymmetrically by actors with pricing power, bottleneck control, or strategic advantage. Inflation thus operates not merely as an erosion of value, but as a mechanism for redistributing economic gains toward those positioned to command price and wage structures[4].

Viewed through this lens, the current economic landscape reveals distortions akin to a gravitational imbalance — where economic mass is increasingly concentrated in pockets of pricing power and strategic advantage, pulling systemic value away from broader productive activity. Gravitational rebalancing, therefore, becomes essential to restore equilibrium between institutional structures, price formation, and real economic contribution.

This mechanism functions alongside — and at times in place of — the state’s fiscal instruments. Where governments levy taxes through formal legislation, these actors extract value through market-based pricing authority, often without scrutiny or redistributive mandate. In this respect, inflation can act as a de facto system of private revenue generation, with outcomes not unlike taxation but absent the accountability of Treasury oversight.

In this framing, inflation is ‘growth for some’ — specifically, for those with control over critical points of value formation — while the broader economy experiences its effects as a loss of purchasing power and distorted price signals. This asymmetric capture becomes visible through the expansion of corporate margins during crises (so-called ‘greedflation’), strategic exploitation of supply shocks, and regulatory arbitrage by dominant firms.

Empirical evidence increasingly points to sectors where profit margins have expanded well beyond input cost increases[5] — notably in energy, housing, and key consumer staples — suggesting that strategic price-setting has amplified inflationary dynamics beyond pure supply or monetary causes. In many cases, shifts in retail prices have substantially outpaced both producer costs and official inflation measures, reinforcing the need to examine the structural asymmetries embedded in price formation.

Inflation, far from being a neutral pathology, or a symptom of overheating demand or loose money alone, becomes an institutionalised mechanism of ‘Excumulation’ – as coined in 2004 already.

This reframing echoes insights from the Regulation School, institutional economics, evolutionary economics and recent heterodox theories that see inflation as structurally embedded in regime dynamics. It also explains why deflation — often treated as universally negative in orthodoxy — may in some cases serve as a corrective mechanism that restores coherence between real productivity and price signals and national debts resorption.

While deflation can, under certain conditions, correct extractive price structures and contribute to sustainable economic growth, its systemic risks, especially if understood as narrowly as it usually is  — including debt deflation, financial fragility, and suppressed investment — must not be underestimated. The challenge lies in distinguishing between necessary gravitational rebalancing and destabilising contraction.

The dynamics of this value appropriation are not static. Like a ‘Going Concern’ in John R. Commons’ institutional sense[6], the strategic excumulation regime adapts to changing regulatory, fiscal, and political environments.

It is not a matter of moral judgement, but of institutional coherence. Economic profits that arise from innovation, investment, and the productive meeting of regulatory, legal, and policy standards serve the broader aims of economic wellbeing and sustainable growth. In contrast, profits derived from strategic circumvention — exploiting regulatory gaps, monopolising critical supply chains, institutional asymmetries, abusing labour law, or engineering scarcity — undermine these aims and amount to uncooperative economic games. They represent a departure from the purpose of fair competition and market competition itself, burden compliant actors, and erode the institutional integrity on which economic trust depends: to reward productive contribution, not mere positional advantage.

Recognising this structural distinction is essential to designing economic policies that strengthen the resilience and legitimacy of market economies over freeriding and excumulative strategies — a distinction increasingly critical to the long-term resilience of open market economies. The paradigm proposed here rejects the notion that inflation is inherently destructive or deflation inherently dangerous. Instead, it contends that inflation is a signal of institutionalised value capture — a marker of imbalance in how economic gains are distributed and priced.

This view introduces a revised proposition: inflation should not be understood solely in terms of money supply or demand pressure, but as a structural phenomenon driven by power asymmetries, regulatory failure, and extractive behaviours. Conversely, deflation — when not driven by collapse in aggregate demand — can reflect the rebalancing of overinflated sectors, restoring alignment between real value and systemic pricing.

Rather than targeting a universal inflation rate, economic policy should be grounded in institutional diagnostics: where does pricing power reside, how are margins evolving, and who benefits from prevailing price regimes? In this light, inflation is not a false concept — but it is a mischaracterised one. It is not a neutral rise in costs but the economic expression of unbalanced growth.

The ability to reduce national debts and to finance essential strategic assets — from pensions and critical infrastructure to energy security and scientific sovereignty — ultimately depends on restoring real value creation over extractive dynamics.

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