Robert Peter Burns wrote: > Let me quote one passage which struck me as liable to > be of interest to many of you: > > In all of the countries that [Blanchflower and > Oswald] studied (United States, Great Britain, > Germany, Austria, Italy, Netherlands, Ireland, > Switzerland, Norway, Canada, and South Korea), > they found an inverse relationship between > unemployment rates and the level of wages. > [i.e. higher wages correlate with lower unemployment] > In fact, this relationship appears to be amazingly > stable. The data show that a doubling of the unemployment > rate is associated with a ten percent decline in the level > of wages, regardless of country. > > This suggests that wage-cutting is not the route to > lower unemployment, as the endless neoclassical dogmatists > would have us all believe. Comments? What it suggests is that there is an inverse relationship between the rate of unemployment (or the size of the industrial reserve army or the relative surplus population, if you prefer) and wages. The causality is: the greater the size of the IRA, the lower will be wages, ceteris paribus. Of course, this ceteris paribus assumption necessarily excludes rather significant variables that can affect wages such as workers' struggles over wages. None of this should come as any surprise to Marxists. If, however, we look at matters from the standpoint of an individual capitalist, it is *true* that wage-cutting can increase firm profitability, ceteris paribus. I believe that the nc perspective, which takes the standpoint of individual capitalists (especially "supply-side economics"), assumes that what is true for an individual capitalist is true for all capitalists. A classic example of the fallacy of composition. There is also the question of the level of aggregate demand, of course. Jerry
