> Date: Wed, 9 Feb 2000 13:34:24 -0500 (EST)
> From: Rakesh Bhandari <bhandari at phoenix.Princeton.EDU>
>
> This is from today's NYT editorial page. Krugman a bourgeois economist
> here recommends inflation targetting through money creation. By 1974
> Mattick had already revealed such Keynesianism to be a form of
> "civilized" class warfare. Quoting here from Economic Crisis and Crisis
> Theory, p. 147-8 which was translated in 1981:
Rakesh,
Let me rework Mattick to put it into terms I believe to be more consist with what Marx set out in Capital. I think this passage is a clear example of what happens when you confuse wages and v. You may recognize this from my position during the discussion you, I, and Jim H. had months ago about immerisartion and v.
> "Inflation is a weapon in the Keynesian arsenal. Through the more rapid
> increase in prices relative to wages, the profit necessary for expansion
> grows, while the accelerated creation of money reduces the interest on the
> debt, which makes investment easier. The surplus value gained in this way,
> equal to the reduction in the value of labor power transferred from money
> to productive capital, permits a corresponding increase in
> accumulation
No, this does not increase surplus value, but rather it's a way to redistribute it from labor to capital, in the realized forms of wages and profits, respectively. As you know, part of surplus value has been typically paid in wages as the result of the class struggle (wages>v). This contested element of surplus value allows for capital to reclaim a portion in various ways, including Mattick's inflation>wages, by means of the ebb and flow of class struggle, generally without threatening reproduction. Of course, since v is social, not physical, subsistence there is even room for capital to drive wages below v for a time. And in fact that likely has happened in different industries and for periods of time.
> ...The real gains that inflation yields to capital are thus
> only another form of the devaluation of labor power, which happens in
> every crisis.
No, it's a reduction in real wages, not a lowering of v, and this produces no necessary link to crisis.
> What used to be accomplished by deflationary means is now
> effected by inflationary means, not by lowering wages but by raising
> prices--or by a combination of both.
He has slipped into talking of wages now, instead of v, as if wages and v were the same thing.
> The increase in profits by means of
> inflation encounters definite barriers, however, as the reduction of the
> value of labor power has absolute limits, and even these cannot be reached
> because of the resistance of the workers.
You see now a basic problem with equating wages and v. What is this "absolute limit" to the decline of v he mentions? He doesn't say. Does he tell us somewhere else? I don't see how he could, because v has no limit, either up or down. It is the socially determined reproduction cost of labor, determined outside the production process, but of course affected by labor productivity. As you know, for example, rising labor productivity cheapens the necessities of life, thus lowering v. Workers have no reason to resist this and in fact can benefit from it, depending on what happens to wages.
Again, he means wages here, not v. The limit he is talking about is the limit to the fall in wages. And what is that limit? It's v, over time, with the caveat mentioned above about the ability to drive wages below v for some time.
Also, the 1970s talk about the limits to a fall in wages (he mistakenly says v) seems quaint now after the massive assault on them by capital in the last few decades.
RO