[lbo-talk] inflation and Ernest Mandel

[andie nachgeborenen]

Someone -- I think Chris D -- mentioned the argument
that current military production is more capital
intensive and less labor intensive than social
spending, or indeed old-time military spending
(building tanks and bombers for WWII, eg). In graduate
school --this must have been around 1987 0r 88, really
it doesn't seem to long ago ;} -- I wrote a paper in
which I surveyed research on this topic, and came to
the conclusion (based on the then available data) that
it was supported by the evidence. It makes a diff, I
hypothesized, if the $ pumped in by pump-priming goes
to investors, who may or may not put it to any
productive use, than to workers, who must spend it
all.

jks

--- Wojtek Sokolowski <sokol at jhu.edu> wrote:
> > Ernest Mandel says inflation occurs because
> workers are paid 
> > to work in 
> > the defense industry, but the goods are not used
> by consumers, so 
> > inflation occurs in the chase for commodities.
> > 
> > From Ernest Mandel's "An Introduction to Marxist
> Economic Theory" -
> > 
> > "The fundamental cause of this permanent inflation
> is the 
> > importance of the military sector, of the armament
> sector, in 
> > the economy of most capitalist countries. The
> production of 
> > armaments has this special
> > characteristic: it creates purchasing power in
> exactly the 
> > same way that production of consumer goods or
> production of 
> > producer goods does wages are paid in plants
> making tanks or 
> > rockets, just as they are paid in plants
> manufacturing 
> > machines or textiles, and the capitalist owners of
> these 
> > plants pocket a profit just like the capitalist
> owners of 
> > steel mills or textile plants but in exchange for
> this 
> > supplementary buying power, there is no
> corresponding 
> > supplementary merchandise placed on the market."
> 
> 
> How is the government purchase of a cruise missile
> different from a
> government purchase of, say, a drug rehab program
> for the poor?  Both
> are examples of collective goods purchased through a
> three-party
> transaction in which the goods are paid for by taxes
> (because of their
> collective nature) and are consumed by someone else
> than the payer.
> What is more, none would be purchased (at least in
> the same quantity) in
> the market - in both cases the government props up
> the non-existing
> demand.  It stands to logic that if one 'Keyensian"
> prgram (propping up
> demand through military purchases) causes inflation,
> then all of them
> do,
> 
> Wojtek
> 
> ___________________________________
>
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