WAS: Re: [PEN-L:944] RE: Econ texts - possible to teach Marx seriously?
>I wrote:
> >Though this is true, it is very abstract. The phenomenon of the
> >post-1973 stagnation of wages ...can be explained only at a lower
> >level of abstraction. ...I would explain it in terms of the end of the
> >nation-state-based "model" of capitalist accumulation which involved
> >truces between the major classes and sometimes explicit
> >social-democratic "accords."
Eric writes:
>Jim, your 1973 dating might be off.
no way! I've never made an errors before!
;-)
>It is possible that wage decline has its roots BEFORE the 1973 oil shock.
>And I'm starting to think that the federal government had more to do with
>real wage decline than I once thought.
>
>Federal government inaction/action led to the erosion of the real wage
>floor and to a lowering of the ceiling already by early 1973 before OPEC
>entered the scene.
>
>Low wage industries (e.g., retail industries) were hurt by the failure of
>the minimum wage to keep up with inflation from 1969 and later. Between
>1968 and early 1973 the real minimum wage fell by 20% in real terms and
>this was all caused by domestic inflation rather than by OPEC/food
>inflation of 1973. Federal government minimum wage increases kept the real
>value of the minimum
>wage through the rest of the 1970s at about its early 1973 levels. (The
>1980s were a different matter of course). It was over 1968-1973, then,
>that low wage workers found that the floor under them sunk sharply.
>
>And, then, the government more-or-less went after the construction
>industry in the early 1970s. The 1971 wage/price controls were designed to
>reverse the real wage gains of construction workers and where successful
>in achieving this goal. Construction workers were, importantly, the
>highest paid-and possibly strongest-group of workers by the late 1960s.
>
>So, even before the 1973 oil/grain shock real wages at the top and at the
>bottom of the scale were falling.
I'd say that also that the hike of raw materials prices began before the
steep oil price rise of 1973. The growth of demand had an especially big
effect on raw materials -- including oil -- because they have inelastic
supply. This set the stage for the OPEC hike. It also hurt low wage
workers, as you say.
>(Finance, insurance, and real estate workers-who typically earned in the
>middle range of real wages--also started to experience stagnant wages by
>1971 but I don't know yet why this was the case).
perhaps because they didn't have cost-of-living adjustment built into their
contracts?
>I'm not saying that the 1973 prices increases didn't play a role - they
>obviously did - but the ground for real wage decline was being set before
>OPEC (as alleged productivity problems) entered the scene. Even without
>the post 1973 inflations we might have seen real wages falling or, at the
>very least, stagnating for some time due to forces already acting before 1973.
right. Also, as Brenner makes clear, the profit rate fell before 1973 (it
had peaked circa 1965). This encouraged employers to start looking for more
and more ways to make up for low profits by cutting wages, job security, etc.
Jim Devine [EMAIL PROTECTED] & http://bellarmine.lmu.edu/~jdevine
