Date: Thu, 2 Mar 1995 20:56:41 -0800 From: Tom Condit <tomcondit-AT-igc.apc.org> Subject: Inflation--Second try at upload Dear comrades: I'm posting the text of a leaflet on inflation and the so-called "wage spiral" produced by the Labor Committee of the Los Angeles Peace & Freedom Party. This is intended to be a propaganda leaflet of the type put on literature tables, rather than an agitational leaflet for mass distribution. Needless to say, we'd like it to be factually and theoretically "correct" insofar as possible. In reading over the leaflet, I have an uneasy feeling that something isn't quite right, but I'm not sure what and I don't know whether it's just a stylistic problem. Any expert criticisms? I should say that the authors are "ordinary" (whatever that means) rank and file workers in Los Angeles. I live in the San Francisco Bay Area myself, so I don't know the full composition of the committee, but I know that it includes at least one member each of the Communist Party, Socialist Party and Solidarity, and an ex-member of the Internationalist Workers Party (Fourth Int'l), the U.S. "Morenoite" group. They're not there as representatives of their parties but as individuals. if we're ever going to have left unity in this country (or anywhere), this type of work on joint projects, rather than grandiose unity conferences, is where it's going to come from. Please direct any comments to me at tomcondit-AT-igc.apc.org. Thanks in advance, Tom Condit *** "The Wage-Spiral Theory" A new ideological assault upon Labor and the working class By L.A. County Peace & Freedom Party Labor Committee Alan Greenspan, Chairman of the Federal Reserve Board, has stated repeatedly in recent months his opinion that with underemployment dropping below 7% brakes should be applied to the economic engine. He warns that if the official unemployment rate should fall below 6.2% the economy will "overheat" and lead to a rise in the Consumer Price Index (CPI) and then, Greenspan says, interest rates should be hiked to "slow the rate of growth. The Clinton Administration agrees in principle but would set the rate of considered "healthy" unemployment at a slightly different mark. Laura D'Andrea Tyson, Chair of the President's Council of Economic Advisors stated, "Once source of inflation could be the rate of growth of unit labor cost...but unit labor costs have been decelerating, not accelerating..." She goes on to say, "...Labor market pressures do not push wage inflation higher until the unemployment rate falls to the range of 5.9% to 6.3%." The ruling class has for years attempted to minimize the number of people affected by unemployment through "creative accounting" techniques in the Bureau of Labor Statistics' (BLS) regularly published unemployment figures. It is commonly known that the "official" statistics do not include discouraged workers, those who cannot find work. In 1992, the difference between the official number and the more realistic "correction paper" issued by the BLS was 4.3 million people. The need to cover up the real unemployment figure is tacit recognition that underemployment is an embarrassment and needs to be covered up. But while still covering up the extent of the crisis, the ruling class now seems engaged in an attempt to explain away what unemployment they can't deny as being "natural" or "healthy" and even useful in keeping inflation in check. In a gross display of how the truth is distorted and the lengths that the ruling class will go to divert responsibility, they now tell us that inflation is caused by the unemployed and "wage inflation" (i.e., wage increases) drives up the cost of products and reduces profitability, therefore becoming inflationary. This "blame the victim" tactic is old, but clearly this attempt is desperation. Tying wage increases or "unit labor costs" to the Consumer Price Index and claiming an increase in the former causes an increase in the latter is just not factual. Between 1955 and 1965 the Consumer Price Index went up only 1.6%, the slowest of any post-war decade, while wages increased 20% -- plus gains in supplemental benefits. The unemployment rate was well under the alleged "inflationary" range cited by both the Council of Economic Advisors and the Federal Reserve Board chairman. The fact is higher wages never cause higher prices. Workers are always trying to keep up with price increases, not the other way around. Wages are determined by class struggle between capital and labor. Prices are determined by the values produced, the balance of supply and demand, and the ability of the corporations to boos prices. The difference between what a product sells for and what it costs to make has been increasing. Corporations have been taking more and more of this "surplus value" throughout the century, while workers struggle to keep up with price increases they can't afford. Unemployment does not cause inflation. Increased capitalist expropriation of surplus value does. If there is a connection between unemployment and the Consumer Price Index it is that while corporations try to maintain low wages and working conditions and argue that unemployment is "healthy," prices continue to climb as they extract even greater profits from the increased "surplus value." Unemployment equals increased profits and maintaining this "pool of cheap labor" is why they attempt to hide the extent of the problem or develop wild theories to justify its existence. --- from list marxism-AT-lists.village.virginia.edu --- ------------------
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