Wages and Panic Buttons

Jim heartfield jim at heartfield.demon.co.uk
Fri Aug 6 16:26:16 PDT 1999

>Jim heartfield wrote:

In the 70s

> 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.

In message <v0421011cb3d10d46919a@[]>, Doug Henwood <dhenwood at panix.com> writes

>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?

First off, the specific conditions of the 1970s created the possibility of trying to resolve profitability problems by raising prices. In the first instance this was the kicking-in of Keynesian anti-crisis measures that increased the amount of money in circulation - that was a policy measure, and a short-lived one that was eventually judged to be more destabilising than it was a solution. Second (and this has often been overstated in the Stalinist tradition) it was those producers whose market share approached that of a monopoly that were able to raise prices above their real value. In the first instance, American oil- producers introduced a big hike in price, rapidly followed by the luckless Arabs, who then took the blame.

>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.

'a form of class conflict' is a shorthand that needs unpacking. In the first instance, it is the capitalist class that, as a rule, initiates and generally retains the initiative in most class conflicts. In this case it was the capitalists' own intrinsic problems that led them to try to resolve their crisis at the level of exchange. The fact that this would lead to a pressure on wages was no conscious strategy on the part of the ruling class.

Wages are rarely established simply through a clash of wills. There is an objective level around which the wage fluctuates. It is the cost of the means of working class sustenance and re-production. The characteristic way that wages are cheapened is by productivity increases. In exceptional circumstances, the ruling class will actively drive down the value of labour power. The seventies saw a move in that direction, as did the slump of the eighties.

-- Jim heartfield

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