> ...The real gains that inflation yields to capital are thus
> only another form of the devaluation of labor power, which happens in
> every 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. . . .
>
> This is way too simple and is contradicted, though not
> refuted, by simple responses. First, if the real wage reduction
> is associated with an employment increase, there is a
> gain to the working class that offsets the loss to
> some extent, possibly great. Second, as employment
> increases, there is upward pressure on real wages that
> offsets the initial push. Third, if there is slack
> in the economy and prices are sticky, the effect of
> an increase in aggregate demand could augment
> employment by increasing both supply and demand for
> labor.
I don't get you here, Max. Mattick posits (in my terms) a redistribution of money from labor to capital through an inflation induced decline in the real wage. Initially there is no change in the demand for labor; capitalists simply have more profits to spend or invest (accumulate). There would be an increase in the supply of labor as workers work longer hours or second jobs to try to maintain purchasing power (real income). This would tend to lower wages further.
But Mattick points out that the resultant increase in the derived demand for labor--from the spending and/or investmant of capitalists-- will work to limit the wage declines from inflation. And, who knows in the abstract, could reverse the real wage declines. This sounds like the same thing you are saying in your first two points.
Of course, bringing real wages back to where they were through economic expansion, will not redress the change in distributional shares between capital and labor due to the inflation induced decline in real wages. That is, labor may return to a real wage of 100, but output would have grown from, say, 150 to 175.
RO
What Mattick wrote:
"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...The real gains that inflation yields to capital are thus only another form of the devaluation of labor power, which happens in every 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. 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. Moreover, the increase in total demand brings with it an increase in the demand for labor power, which in itself restricts the lowering of wages by price inflation." ____________________________________________