Wages and Panic Buttons

Doug Henwood dhenwood at panix.com
Fri Aug 6 15:09:36 PDT 1999

Jim heartfield wrote:

>As I remember it there was a big row between orthodox Marxists (David
>Yaffe) and 'profit-squeeze' theorists like John Harrison and Tony Cliff
>over wages and inflation in the seventies. The latter saw wages as
>cutting into profits, and repeated the conventional wisdom that
>inflation was the effect of the contest over the social product between
>capital and labour.
>The orthodox marxists rejected the argument that wage rises could
>account for inflation. As they said then - a wage rise is just one kind
>of price rise, so it is just a tautology to say that price rises cause
>price rises. The argument ran that the underlying cause of inflation was
>the declining profitability of capital, which led capitalists to
>artificially hike prices in an attempt to realise profits on the market
>that they had not earned through increased productivity.

And how do they have the power sometimes to pass along price rises and other times not? If they have the power to raise prices to boost profits, why don't they do it all the time, rather than just when productivity is sagging?

I'd really be suspicious of any theory of wage bargaining that didn't see it as a form of class conflict. A wage rise is not just one kind of price rise, it's about the price of a very specific commodity, living labor.


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